[Federal Register Volume 89, Number 79 (Tuesday, April 23, 2024)]
[Rules and Regulations]
[Pages 30448-30848]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07105]



[[Page 30447]]

Vol. 89

Tuesday,

No. 79

April 23, 2024

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 417, 422, 423, et al.





Medicare Program; Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Program for Contract Year 2024--Remaining 
Provisions and Contract Year 2025 Policy and Technical Changes to the 
Medicare Advantage Program, Medicare Prescription Drug Benefit Program, 
Medicare Cost Plan Program, and Programs of All-Inclusive Care for the 
Elderly (PACE); Final Rule

  Federal Register / Vol. 89 , No. 79 / Tuesday, April 23, 2024 / Rules 
and Regulations  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 417, 422, 423, and 460

Office of the Secretary

[CMS-4201-F3 and CMS-4205-F]
RINs 0938-AV24 and 0938-AU96


Medicare Program; Changes to the Medicare Advantage and the 
Medicare Prescription Drug Benefit Program for Contract Year 2024--
Remaining Provisions and Contract Year 2025 Policy and Technical 
Changes to the Medicare Advantage Program, Medicare Prescription Drug 
Benefit Program, Medicare Cost Plan Program, and Programs of All-
Inclusive Care for the Elderly (PACE)

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

ACTION: Final rule.

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SUMMARY: This final rule will 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, marketing and 
communications, agent/broker compensation, health equity, dual eligible 
special needs plans (D-SNPs), utilization management, network adequacy, 
and other programmatic areas. This final rule also codifies existing 
sub-regulatory guidance in the Part C and Part D programs.

DATES: Effective date: These regulations are effective June 3, 2024.
    Applicability dates: The provisions in this rule are applicable to 
coverage beginning January 1, 2025, except as otherwise noted. The 
updates to marketing and communication provisions at Sec. Sec.  
422.2267(e)(34), 422.2274, and 423.2274 are applicable for all contract 
year 2025 marketing and communications beginning October 1, 2024. The 
updated provisions at Sec. Sec.  422.2267(e)(31)(ii) and 
423.2267(e)(33)(ii) are applicable for all contract year 2026 marketing 
and communications beginning September 30, 2025, however, at plan 
option for contract year 2025 marketing and communications beginning 
September 30, 2024, the plan may use the model notice described in 
Sec. Sec.  422.2267(e)(31)(ii) and 423.2267(e)(33)(ii) to satisfy the 
MLI requirements set forth in Sec. Sec.  422.2267(e)(31)(i) and 
423.2267(e)(33)(i).
    Sections 422.111(l) and 423.530 are applicable beginning January 1, 
2026. This final rule also includes revisions to existing regulations 
in the Risk Adjustment Data Validation (RADV) audit appeals process, 
the appeals process for quality bonus payment determination at Sec.  
422.260, weighting of new Part C and D Star Ratings measures at 
Sec. Sec.  422.166(e)(2) and 423.186(e)(2), and the rule for Part C and 
D Star Ratings non-substantive measure updates at Sec. Sec.  422.164(d) 
and 423.184(d) applicable 60 days after the date of publication. The 
use and release of risk adjustment data provisions at Sec. Sec.  
422.310(f)(1)(vi), 422.310(f)(1)(vii), and 422.310(f)(3)(v) are 
applicable 60 days after the date of publication.

FOR FURTHER INFORMATION CONTACT: 
    Carly Medosch, (410) 786-8633--General Questions.
    Naseem Tarmohamed, (410) 786-0814--Part C and Cost Plan Issues.
    Lucia Patrone, (410) 786-8621--Part D Issues.
    Kristy Nishimoto, (206) 615-2367--Beneficiary Enrollment and Appeal 
Issues.
    Kelley Ordonio, (410) 786-3453--Parts C and D Payment Issues.
    Hunter Coohill, (720) 853-2804--Enforcement Issues.
    Lauren Brandow, (410) 786-9765--PACE Issues.
    Sara Klotz, (410) 786-1984--D-SNP Issues.
    Joe Strazzire, (410) 786-2775--RADV Audit Appeals Issues.
    [email protected]--Parts C and D Star Ratings 
Issues.

SUPPLEMENTARY INFORMATION:

I. Executive Summary and Background

A. Executive Summary

1. Purpose
    The primary purpose of this final rule is to amend the regulations 
for the Medicare Advantage (Part C) program, Medicare Prescription Drug 
Benefit (Part D) program, Medicare cost plan program, and Programs of 
All-Inclusive Care for the Elderly (PACE). This final rule includes a 
number of new policies that will improve these programs beginning with 
contract year 2025 and will codify existing Part C and Part D sub-
regulatory guidance.
    Additionally, this final rule will implement certain sections of 
the following Federal laws related to the Parts C and D programs:
     The Bipartisan Budget Act (BBA) of 2018.
     The Consolidated Appropriations Act (CAA), 2023.
2. Summary of the Major Provisions
a. Part D Medication Therapy Management (MTM) Program: Eligibility 
Criteria
    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).
    Through this final rule, CMS establishes improved targeting 
criteria for the Part D MTM program that will help ensure more 
consistent, equitable, and expanded access to MTM services. After 
consideration of the comments received, we are finalizing proposed 
changes to the MTM eligibility criteria with modifications that are 
effective for January 1, 2025, as follows:
    We are finalizing the provision at Sec.  423.153(d)(2)(iii) that 
Part D sponsors must include all core chronic diseases in their 
targeting criteria for identifying beneficiaries who have multiple 
chronic diseases, as provided under Sec.  423.153(d)(2)(i)(A). As part 
of this provision at Sec.  423.153(d)(2)(iii), we are codifying the 
nine core chronic diseases currently identified in guidance and adding 
HIV/AIDS, for a total of 10 core chronic diseases. The 10 core chronic 
diseases are: (1) Alzheimer's disease; (2) Bone disease-arthritis 
(including osteoporosis, osteoarthritis, and rheumatoid arthritis); (3) 
Chronic congestive heart failure (CHF); (4) Diabetes; (5) Dyslipidemia; 
(6) End-stage renal disease (ESRD); (7) Human immunodeficiency virus/
acquired immunodeficiency syndrome (HIV/AIDS); (8) Hypertension; (9) 
Mental health (including depression, schizophrenia, bipolar disorder, 
and other chronic/disabling mental health conditions); and (10) 
Respiratory disease (including asthma, chronic obstructive pulmonary 
disease (COPD), and other chronic lung disorders). Sponsors retain the 
flexibility to target

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additional chronic diseases beyond those codified as core chronic 
diseases.
    We are not finalizing the proposal at Sec.  423.153(d)(2)(i)(B) to 
decrease the maximum number of Part D drugs a sponsor may require from 
eight to five for Contract Year 2025. At this time, we are retaining 
the maximum number of drugs a plan sponsor may require for targeting 
beneficiaries taking multiple Part D drugs as eight at Sec.  
423.153(d)(2)(i)(B). Part D sponsors will maintain the flexibility to 
set a lower threshold (a number between two and eight Part D drugs) for 
targeting beneficiaries taking multiple Part D drugs. We may consider 
revisiting this or similar policies in future rulemaking.
    We are finalizing the provision at Sec.  423.153(d)(2)(iv) to 
require sponsors to include all Part D maintenance drugs in their 
targeting criteria with minor modifications to the regulatory text to 
clarify that sponsors must include all Part D maintenance drugs and to 
provide flexibility for sponsors to include all Part D drugs in their 
targeting criteria. However, sponsors will not be permitted to limit 
the Part D maintenance drugs included in MTM targeting criteria to 
specific Part D maintenance drugs or drug classes. We are also 
finalizing the requirement at Sec.  423.153(d)(2)(iv) that, for the 
purpose of identifying Part D maintenance drugs, plans must rely on 
information in a widely accepted, commercially or publicly available 
drug information database.
    We are finalizing the provision at Sec.  423.153(d)(2)(i)(C) with 
modification to set the MTM cost threshold at the average cost of eight 
generic drugs, as defined at Sec.  423.4. CMS will calculate the dollar 
amount of the MTM cost threshold based on the average daily cost of a 
generic drug using the PDE data specified at Sec.  
423.104(d)(2)(iv)(C).
    We are also codifying longstanding guidance at Sec.  
423.153(d)(1)(vii)(B)(2) to provide that a beneficiary must be unable 
to accept the offer to participate in the CMR due to cognitive 
impairment. We are also finalizing other technical changes at Sec.  
423.153(d)(1)(vii)(B)(1)(i) to clarify that the CMR must include an 
interactive consultation that is conducted in person or via synchronous 
telehealth.
b. Improving Access to Behavioral Health Care Providers
    We are finalizing regulatory changes that will improve access to 
behavioral health care by adding a new behavioral health provider 
specialty to our MA network adequacy standards. Specifically, we are 
finalizing requirements to add a new facility-specialty type to the 
existing list of facility-specialty types evaluated as part of network 
adequacy requirements and reviews. The new facility-specialty type, 
``Outpatient Behavioral Health,'' will be included in network adequacy 
evaluations and can include providers of various types: Marriage and 
Family Therapists (MFTs), Mental Health Counselors (MHCs), Opioid 
Treatment Program (OTP) providers, Community Mental Health Centers or 
other behavioral health and addiction medicine specialists and 
facilities, including addiction medicine physicians, other providers. 
Other providers may include nurse practitioners (NPs), physician 
assistants (PAs) and Clinical Nurse Specialists (CNSs), who furnish 
addiction medicine and behavioral health counseling or therapy services 
and meet other specific criteria. Beginning January 1, 2024, MFTs and 
MHCs were eligible to enroll in Medicare and start billing for services 
due to the new statutory benefit category established by the 
Consolidated Appropriations Act (CAA) 2023. We aim to strengthen 
network adequacy requirements and improve beneficiary access to 
behavioral health services and providers by expanding our network 
adequacy evaluation requirements for MA organizations.
    To address concerns that NPs, PAs, and CNSs might lack the 
necessary skills, training, or expertise to effectively address the 
behavioral health needs of enrollees and that the absence of criteria 
for incorporating these provider types could result in the creation of 
``ghost networks'' (where providers may be listed in a provider 
directory without actively treating patients for behavioral health), we 
are also adopting specific criteria that MA organizations must use to 
determine when an NP, PA or CNS can be considered part of a network to 
meet the Outpatient Behavioral Health network adequacy standard. MA 
organizations must independently verify that the provider has furnished 
or will furnish such services to 20 patients within a recent 12-month 
period using reliable information about services furnished by the 
provider such as the MA organization's claims data, prescription drug 
claims data, electronic health records, or similar data.
c. Distribution of Personal Beneficiary Data by Third Party Marketing 
Organizations (TPMOs)
    Third-Party Marketing Organizations (TPMOs) are selling and 
reselling beneficiary contact information to skirt existing CMS rules 
that prohibit cold calling so they can aggressively market MA and Part 
D Plans. Beneficiaries are unaware that by placing a call or clicking 
on a generic-looking web-link they are unwittingly agreeing and 
providing consent for their personal contact information to be 
collected and sold to other entities for future marketing activities. 
As a result, we are finalizing requirements to prohibit personal 
beneficiary data collected by TPMOs for marketing or enrolling a 
beneficiary into an MA or Part D plan to be shared with other TPMOs, 
unless prior express written consent is given by the beneficiary. 
Furthermore, we are finalizing a one-to-one consent structure where 
TPMOs must obtain prior express written consent through a clear and 
conspicuous disclosure for each TPMO that will be receiving the 
beneficiary's data. This provision is designed to address complaints we 
have received from beneficiaries and their advocates and caregivers 
about receiving harassing and unwanted phone and email solicitations 
from individuals attempting to enroll them in MA and Part D plans. This 
final rule protects beneficiaries against unwanted calls, texts, email 
solicitations, and other contacts, while still ensuring that 
beneficiaries have control over their personal data and can connect 
with the TPMOs they would like to speak with, creating a more 
transparent and safer environment for beneficiaries to find the plan 
that best fits their health needs.
d. Establish Guardrails for Agent and Broker Compensation
    Section 1851(j) of the Act requires that CMS develop guidelines to 
ensure that the use of agent and broker compensation creates incentives 
to enroll individuals in the MA plan that is intended to best meet 
their health care needs. To that end, for many years CMS has set upper 
limits on the amount of compensation agents and brokers can receive for 
enrolling Medicare beneficiaries into MA and PDP plans. We have 
learned, however, that many MA and PDP plans, as well as third-party 
entities with which they contract (such as Field Marketing 
Organizations (FMOs)) have structured payments to agents and brokers 
that allow for separate payments for these agents and brokers and have 
the effect of circumventing compensation caps. We also note that that 
these separate payments appear to be increasing. In this rule, we are 
finalizing requirements that will generally prohibit contract terms 
between MA organizations and agents, brokers or other TPMOs that may 
interfere with the agent's or broker's ability to objectively assess 
and

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recommend the plan that best fits a beneficiary's health care needs; 
set a single, increased compensation rate for all plans to be updated 
annually; revise the scope of items and services included within agent 
and broker compensation; and eliminate the regulatory framework which 
currently allows for separate payment to agents and brokers for 
administrative services. We are also making conforming edits to the 
Part D agent broker compensation rules at Sec.  423.2274. Collectively, 
we believe the impact of these changes will better align with statutory 
requirements to ensure that the use of compensation creates incentives 
for agents and brokers to enroll individuals in the plan that best fits 
a beneficiary's health care needs. Further, such changes align with the 
Biden-Harris Administration's commitment to promoting fair, open, and 
competitive markets and ensuring beneficiaries can make fully informed 
choices among a robust set of health insurance options.
e. Special Supplemental Benefits for the Chronically Ill (SSBCI)
    We are finalizing regulatory changes that will help ensure that 
SSBCI items and services offered by MA plans are appropriate and meet 
applicable statutory and regulatory standards, including that the SSBCI 
items and services are reasonably expected to improve or maintain the 
health or overall function of chronically ill enrollees. First, we are 
finalizing requirements that, by the date on which it submits its bid 
to CMS, an MA organization must establish a bibliography of relevant 
acceptable evidence that an item or service offered as SSBCI has a 
reasonable expectation of improving or maintaining the health or 
overall function of a chronically ill enrollee. Second, we are 
clarifying in the regulation that an MA plan must follow its written 
policies based on objective criteria for determining an enrollee's 
eligibility for an SSBCI when making such eligibility determinations. 
Third, we are requiring that the MA plan document both denials and 
approvals of SSBCI eligibility. Additionally, we are codifying CMS's 
authority to review and deny approval of an MA organization's bid if 
the MA organization has not demonstrated, through relevant acceptable 
evidence, that its proposed SSBCI has a reasonable expectation of 
improving or maintaining the health or overall function of the 
chronically ill enrollee. Finally, we are codifying CMS's authority to 
review SSBCI offerings annually for compliance, considering the 
evidence available at the time. We believe these revisions to Sec.  
422.102(f) will better ensure that the benefits offered as SSBCI are 
reasonably expected to improve or maintain the health or overall 
function of the chronically ill enrollee while also guarding against 
the use of MA rebate dollars for SSBCI that are not supported by 
acceptable evidence.
    The new SSBCI requirements regarding creation of a bibliography and 
documentation of SSBCI eligibility for enrollees will apply to plans 
beginning with the CY2025 bid process. The codification of other SSBCI 
requirements regarding plans' obligation to follow written SSBCI 
eligibility policies, and our authority to decline to accept a bid if 
the MA organization has not demonstrated that its proposed SSBCI has a 
reasonable expectation of improving or maintaining the health or 
overall function of the chronically ill enrollee do not represent a 
change in policy and CMS will continue in practice during the CY2025 
bid process and in subsequent years.
    In addition, we are finalizing new policies to protect 
beneficiaries and improve transparency regarding SSBCI so that 
beneficiaries are aware that SSBCI are only available to enrollees who 
meet specific eligibility criteria. We are modifying and strengthening 
the current requirements for the SSBCI disclaimer that MA organizations 
offering SSBCI must use whenever SSBCI are mentioned. Specifically, we 
are requiring that the SSBCI disclaimer list the relevant chronic 
condition(s) the enrollee must have to be eligible for the SSBCI 
offered by the MA organization. The MA organization must convey in its 
SSBCI disclaimer that even if the enrollee has a listed chronic 
condition, the enrollee may not receive the benefit because other 
eligibility and coverage criteria also apply. We are also finalizing 
specific font and reading pace parameters for the SSBCI disclaimer in 
print, television, online, social media, radio, other voice-based ads, 
and outdoor advertising (including billboards). Finally, we are 
requiring that MA organizations include the SSBCI disclaimer in all 
marketing and communications materials that mention SSBCI. We believe 
that imposing these new SSBCI disclaimer requirements will help to 
ensure that the marketing of and communication about these benefits is 
not misleading or potentially confusing to enrollees who rely on these 
materials to make enrollment decisions.
f. Mid-Year Enrollee Notification of Available Supplemental Benefits
    In addition, over the past several years, the number of MA plans 
offering supplemental benefits has increased. The benefits offered are 
broader in scope and variety and we are seeing an increasing amount of 
MA rebate dollars directed towards these benefits. At the same time, 
plans have reported that enrollee utilization of many of these benefits 
is low. To help ensure MA enrollees are fully aware of all available 
supplemental benefits and to promote equitable access to care, we will 
now require MA plans to notify enrollees mid-year of the unused 
supplemental benefits available to them. The notice will list any 
supplemental benefits not utilized by the enrollee during the first 6 
months of the year (January 1 to June 30). Currently, MA plans are not 
required to send any communication specific to an enrollee's usage of 
supplemental benefits and CMS believes such a notice could be an 
important part of a plan's overall care coordination efforts. As 
finalized, this policy will educate enrollees on their access to 
supplemental benefits to encourage greater utilization of these 
benefits and ensure MA plans are better stewards of the rebate dollars 
directed towards these benefits.
g. Annual Health Equity Analysis of Utilization Management Policies and 
Procedures
    We are finalizing regulatory changes to the composition and 
responsibilities of the Utilization Management (UM) committee. These 
policies will require that at least one member of the UM committee have 
expertise in health equity. These policies will also require that the 
UM committee conduct an annual health equity analysis of the use of 
prior authorization at the plan-level. The analysis will examine the 
impact of prior authorization on enrollees with one or more of the 
following social risk factors (SRFs): (i) receipt of the low-income 
subsidy or being dually eligible for Medicare and Medicaid (LIS/DE); or 
(ii) having a disability. To enable a more comprehensive understanding 
of the impact of prior authorization practices on enrollees with the 
specified SRFs at the plan level, the analysis must compare metrics 
related to the use of prior authorization for enrollees with the 
specified SRFs to enrollees without the specified SRFs. Finally, the 
policies will require MA organizations to make the results of the 
analysis publicly available on their plan's website in a manner that is 
easily accessible and without barriers.
h. Amendments to Part C and Part D Reporting Requirements
    In this final rule, we are affirming our authority to collect 
detailed information from MA organizations and Part D plan

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sponsors under current regulations, in keeping with the Biden-Harris 
administration's focus on improving transparency and data in MA and 
Part D. We are revising Sec. Sec.  422.516(a)(2) and 423.514(a)(2) as 
proposed (with a minor clarification in Sec.  422.516(a)) to be 
consistent with the broad scope of the reporting requirements. This 
will lay the groundwork for new program-wide data collections to be 
established through the Paperwork Reduction Act (PRA) process, which 
will provide advance notice to interested parties and be subject to 
public comment. An example of increased data collection could be 
service level data for all initial coverage decisions and plan level 
appeals, such as decision rationales for items, services, or diagnosis 
codes to have better line of sight on utilization management and prior 
authorization practices, among many other issues.
i. Enhance Enrollees' Right To Appeal an MA Plan's Decision To 
Terminate Coverage for Non-Hospital Provider Services
    Beneficiaries enrolled in Traditional Medicare and MA plans have 
the right to a fast-track appeal by an Independent Review Entity (IRE) 
when their covered skilled nursing facility (SNF), home health, or 
comprehensive outpatient rehabilitation facility (CORF) services are 
being terminated. Currently, Quality Improvement Organizations (QIO) 
act as the IRE and conduct these reviews. Under current regulations, MA 
enrollees do not have the same access to QIO review of a fast-track 
appeal as Traditional Medicare beneficiaries in connection with 
terminations of these types of services. In this final rule, we are 
finalizing proposals to: (1) require the QIO, instead of the MA plan, 
to review untimely fast-track appeals of an MA plan's decision to 
terminate services in an HHA, CORF, or SNF; and (2) fully eliminate the 
current provision that requires the forfeiture of an enrollee's right 
to appeal a termination of services to the QIO when the enrollee leaves 
the CORF or SNF or ends HHA services. These will bring MA regulations 
in line with the parallel reviews available to beneficiaries in 
Traditional Medicare and expand the rights of MA beneficiaries to 
access the fast-track appeals process in connection with terminations 
of HHA, CORF, or SNF services.
j. Changes to an Approved Formulary--Including Substitutions of 
Biosimilar Biological Products
    Current regulations permit Part D sponsors to immediately remove 
from their formularies 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 proposed in the proposed rule titled ``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,'' which appeared in the December 27, 
2022 Federal Register (hereinafter referred to as the December 2022 
proposed rule), to permit Part D sponsors also 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.
    Our proposed regulatory text in the December 2022 proposed rule did 
not specify how Part D sponsors could treat substitution of biosimilar 
biological products other than interchangeable biological products. 
Under current policy, Part D sponsors have to obtain explicit approval 
from CMS prior to making a midyear formulary change that removes a 
reference product and replaces it with a biosimilar biological product 
other than an interchangeable biological product. Further, if such a 
change is approved, the Part D sponsor may apply the change only to 
enrollees who begin therapy after the effective date of the change. In 
other words, enrollees currently taking the reference product are able 
to remain on the reference product until the end of the plan year 
without having to obtain an exception. In response to comments received 
on our initial proposal in the December 2022 proposed rule (discussed 
in section III.P. of this final rule), and to increase access to 
biosimilar biological products consistent with the Biden-Harris 
Administration's commitment to competition as outlined in Executive 
Order (E.O.) 14036: ``Promoting Competition in the American Economy,'' 
we proposed in the proposed rule titled ``Medicare Program; Contract 
Year 2025 Policy and Technical Changes to the Medicare Advantage 
Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan 
Program, and Programs of All-Inclusive Care for the Elderly; Health 
Information Technology Standards and Implementation Specifications,'' 
which appeared in the November 16, 2023 Federal Register (hereinafter 
referred to as the November 2023 proposed rule) to add substitutions of 
biosimilar biological products other than interchangeable biological 
products to the type of formulary changes that apply to all enrollees 
(including those already taking the reference product prior to the 
effective date of the change) following a 30-day notice.
    Having now considered comments (discussed in section III.P. of this 
final rule) received on the proposals in both the December 2022 and 
November 2023 proposed rules, we are finalizing regulations to permit 
Part D sponsors that meet all requirements: (1) to immediately 
substitute an interchangeable biological product for its reference 
product, a new unbranded biological product for its corresponding brand 
name biological product, and a new authorized generic for its brand 
name equivalent; and (2) to substitute upon 30 days' notice any 
biosimilar biological product for its reference product.
k. Increasing the Percentage of Dually Eligible Managed Care Enrollees 
Who Receive Medicare and Medicaid Services From the Same Organization
    We are finalizing, with some modifications, interconnected 
proposals to: (a) replace the current quarterly special enrollment 
period (SEP) with a one-time-per month SEP for dually eligible 
individuals and others enrolled in the Part D low-income subsidy 
program to elect a standalone PDP, (b) create a new integrated care SEP 
to allow dually eligible individuals to elect an integrated D-SNP on a 
monthly basis, (c) limit enrollment in certain D-SNPs to those 
individuals who are also enrolled in an affiliated Medicaid managed 
care organization (MCO), and (d) limit the number of D-SNP plan benefit 
packages an MA organization can offer for full-benefit dually eligible 
individuals in the same service area that it, its parent organization, 
or any entity that shares a parent organization with the MA 
organization offers an affiliated Medicaid MCO. This final rule will 
increase the percentage of full-benefit dually eligible MA enrollees 
who are in plans that--directly by the MA

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organization or indirectly through the parent organization or a related 
entity--are also contracted to cover Medicaid benefits, thereby 
expanding access to integrated materials, unified appeal processes 
across Medicare and Medicaid, and continued Medicare services during an 
appeal. It will also reduce the number of MA plans overall that can 
enroll dually eligible individuals outside the annual coordinated 
election period, thereby reducing the number of plans deploying 
aggressive marketing tactics toward dually eligible individuals 
throughout the year.
l. For D-SNP PPOs, Limit Out-of-Network Cost Sharing
    We are finalizing a limitation on out-of-network cost sharing for 
D-SNP preferred provider organizations (PPOs) for specific services. 
The final rule will reduce cost shifting to Medicaid, increase payments 
to safety net providers, expand dually eligible enrollees' access to 
providers, and protect dually eligible enrollees from unaffordable 
costs.
m. Contracting Standards for Dual Eligible Special Needs Plan Look-
Alikes
    Under existing regulations, CMS does not contract with and will not 
renew the contract of a D-SNP look-alike--that is, an MA plan that is 
not a SNP but in which dually eligible enrollees account for 80 percent 
or more of total enrollment. We are finalizing a reduction to the D-SNP 
look-alike threshold from 80 percent to 70 percent for plan year 2025 
and 60 percent for plan year 2026 and subsequent years. This provision 
will help address the continued proliferation of MA plans that are 
serving high percentages of dually eligible individuals without meeting 
the requirements to be a D-SNP.
n. Standardize the Medicare Advantage (MA) Risk Adjustment Data 
Validation Appeals Process
    We are finalizing regulatory language to address gaps and 
operational constraints included in existing RADV appeal regulations. 
Currently, if MA organizations appeal both medical record review 
determinations and payment error calculations resulting from RADV 
audits, both issues must be appealed and move through the appeals 
process concurrently, which we foresee could result in inconsistent 
appeal adjudications at different levels of appeal that impact 
recalculations of the payment error. This has the potential to cause 
burden, confuse MA organizations, and negatively impact the operations 
and efficiency of CMS's appeals processes. This final rule will 
standardize and simplify the RADV appeals process for CMS and MA 
organizations, as well as address operational concerns at all three 
levels of appeal. We are finalizing requirements that MA organizations 
must exhaust all three levels of appeal for medical record review 
determinations before beginning the payment error calculation appeals 
process. This will ensure adjudication of medical record review 
determinations are final before a recalculation of the payment error is 
completed and subject to appeal. We are also finalizing several other 
revisions to our regulatory appeals process to conform these changes to 
our procedures.
    Finally, we are clarifying and emphasizing our intent that if any 
provision of this final rule is held to be invalid or unenforceable by 
its terms, or as applied to any person or circumstance, or stayed 
pending further agency action, it shall be severable from this final 
rule and not affect the remainder thereof or the application of the 
provision to other persons not similarly situated or to other, 
dissimilar circumstances. Through this rule, we adopt provisions that 
are intended to and will operate independently of each other, even if 
each serves the same general purpose or policy goal. Where a provision 
is necessarily dependent on another, the context generally makes that 
clear (such as by a cross-reference to apply the same standards or 
requirements).
BILLING CODE P
3. Summary of Costs and Benefits

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B. Background and Summary of the Final Rule

    In this final rule, CMS addresses many of the remaining proposals 
from the December 2022 proposed rule in addition to the proposals from 
the November 2023 proposed rule. There are several proposals from the 
December 2022 proposed rule that were not finalized. CMS may address 
these proposals in a future final rule.
    We received 3,463 timely pieces of correspondence containing one or 
more comments on the November 2023 proposed rule. Some of the public 
comments were outside of the scope of the proposed rule. These out-of-
scope public comments are not addressed in this final rule. Summaries 
of the public comments that are within the scope of the proposed rule 
and our responses to those public comments are set forth in the various 
sections of this final rule under the appropriate heading.

C. General Comments on the December 2022 Proposed Rule and the November 
2023 Proposed Rule Proposed Rule

    We received some overarching comments related to the December 2022 
and the November 2023 proposed rules, which we summarize in the 
following paragraphs:
    Comment: A commenter expressed concern that CMS had not provided 
sufficient time for plan sponsors to understand the impact of recently 
finalized regulations, and the changes they have implemented, before 
proposing more policies that build on these areas. They recommended 
that in future years CMS allows time to measure and observe the impact 
of policy changes on plan sponsors and their members prior to layering 
new proposals.
    Response: We appreciate the commenter's concern regarding the plans 
having enough time to understand the impact of finalized regulations. 
We will take their recommendation into consideration for future 
rulemaking.
    Comment: A commenter requested that CMS extend the comment period 
by 60 days, through March 5, 2024, so they could effectively use the 
extended period in planning and preparing a response.
    Response: Section 1871(b) of the Act requires that we provide for 
notice of the proposed regulation in the Federal Register and a period 
of not less than 60 days for public comment thereon. The proposed rule 
was available for public inspection on federalregister.gov (the website 
for the Office of Federal Register) on November 3, 2023. We did not 
extend the comment period because we believe the required 60 days 
provided the public with adequate time to prepare and submit responses.
    Comment: In response to CMS-4201-P, a commenter suggested that CMS 
had not allowed for a 60-day comment period for the proposed rule 
because the beginning of the comment period was calculated from the 
date the proposed rule was made available for public inspection on the 
Federal Register website rather than the date that it appeared in an 
issue of the Federal Register. The commenter recommended that CMS 
provide an additional 60-day comment period on the proposed rule.
    Response: Section 1871(b) of the Act requires that we provide for 
notice of the proposed regulation in the Federal Register and a period 
of not less than 60 days for public comment thereon. The proposed rule 
was available for public inspection on federalregister.gov (the website 
for the Office of Federal Register) on December 14, 2022. We believe 
that beginning the comment period for the proposed rule on the date it 
became available for public inspection at the Office of the Federal 
Register fully complied with the statute and provided the required 
notice to the public and a meaningful opportunity for interested

[[Page 30457]]

parties to provide input on the provisions of the proposed rule.

D. Status of the Overpayment Proposal in the December 27, 2022, 
Proposed Rule

    Under the governing statute, any Medicare Advantage Organization 
(MA organization) that ``has received an overpayment,'' 42 U.S.C. 
1320a-7k(d)(1), must ``report and return the overpayment,'' 42 U.S.C. 
1320a-7k(d)(1)(A), no later than ``60 days after the date on which the 
overpayment was identified'' 42 U.S.C. 1320a-7k(d)(2)(A). CMS 
implemented this statutory overpayment provision through a May 23, 
2014, final rule titled ``Medicare Program; Contract Year 2015 Policy 
and Technical Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs''. See 79 FR 29844. A group of MA 
organizations challenged that rule's inclusion of instances where an MA 
organization ``should have determined through the exercise of 
reasonable diligence . . . that [it] has received an overpayment'' in 
the regulation's definition of ``identified,'' 42 CFR 422.326(c). The 
District Court for the District of Columbia held that this regulatory 
provision was impermissible under the statute. See 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). CMS views the District Court's ruling as 
having invalidated the definition of ``identified'' set out in 42 CFR 
422.326(c). However, MA organizations remain obligated to report and 
return all overpayments that they have identified within the meaning of 
the statute, 42 U.S.C. 1320a-7k(d)(2)(A). In the December 27, 2022 
proposed rule titled ``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'' (the December 
2022 proposed rule), CMS proposed revisions to regulations primarily 
governing Medicare Advantage (MA or Part C) and the Medicare 
Prescription Drug Benefit (Part D) (87 FR 79452). CMS proposed in the 
December 2022 proposed rule to remove the existing definition of 
``identified'' in the Parts C and D overpayment regulations at 42 CFR 
422.326 and 423.360 (as well as the corresponding Parts A and B 
regulation) (see 87 FR 79559). Under the Parts C and D overpayment 
proposal, an MA organization or Part D sponsor would have identified an 
overpayment when it had actual knowledge of the existence of the 
overpayment or acted in ``reckless disregard'' or ``deliberate 
ignorance'' of the overpayment. CMS has received inquiries regarding 
this proposal and want to be clear that it remains under consideration 
and that CMS intends to issue a final rule to revise the definition of 
``identified'' in the overpayment rules as soon as is reasonably 
possible.

E. Information on Cyber Resiliency

    In light of recent cybersecurity events impacting health care 
operations nationally, we expect all payers to review and implement 
HHS's voluntary HPH Cyber Performance Goals (CPGs). These CPGs are part 
of HHS' broader cybersecurity strategy and designed to help health care 
organizations strengthen cyber preparedness, improve cyber resiliency, 
and ultimately protect patient health information and safety. We 
welcome input on our approach via email at [email protected].

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

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

    Private-fee-for-service (PFFS) plans were established by the 
Balanced Budget Act of 1997 (Pub. L. 105-33) and were originally not 
required to have networks. The Medicare Improvements for Patients and 
Providers Act of 2008 (Pub. L. 110-275) (MIPPA) revised the PFFS 
requirements to require that, beginning with contract year 2011, PFFS 
plans have a network when operating in the same service area as two or 
more network-based plans. 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)(iii)), 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 
54249). A network-based plan, however, has meaning in contexts other 
than PFFS. To ensure that the definition is readily and more broadly 
accessible for those seeking requirements related to network-based 
plans, we proposed in the December 2022 proposed rule (87 FR 79569) to 
move the definition of a network-based plan from Sec.  
422.114(a)(3)(ii) to the definitions section in Sec.  422.2. Further, 
we proposed that the PFFS provision at Sec.  422.114(a)(3)(ii) will 
continue to include language specifying the network requirement.
    This proposed change has no policy implications for other 
provisions in part 422 in which the definition or description of 
network plans plays a role, for example, the network adequacy 
provisions at Sec.  422.116 and the plan contract crosswalk provisions 
at Sec.  422.530. However, in specifying the network adequacy 
requirements for the various plan types, Sec.  422.116(a)(1)(i) 
references the current definition of a network-based plan at Sec.  
422.2 even though the definition for network-based plan currently 
remains at Sec.  422.114(a)(3)(ii) because CMS inadvertently finalized 
what was intended to be a conforming change to Sec.  422.116(a)(1)(i) 
\1\ before we finalized our proposal to move the definition of network-
based plan to Sec.  422.2. In this final rule, we are moving the 
definition to Sec.  422.2, making the current cross reference at Sec.  
422.116(a)(1)(i) correct. With respect to the regulation at Sec.  
422.530(a)(5), that provision 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 and refers to network-based PFFS plans without 
citing a specific definition. Therefore, 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.
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    \1\ Medicare Program; Contract Year 2024 Policy and Technical 
Changes to the Medicare Advantage Program, Medicare Prescription 
Drug Benefit Program, Medicare Cost Plan Program, and Program of 
All-Inclusive Care for the Elderly (88 FR 22120).
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    We did not receive any public comments on our proposal to move the 
definition and are finalizing the proposal for the reasons outlined in 
the December 2022 proposed rule with slight modifications to reorganize 
the regulation text for additional clarity.

[[Page 30458]]

B. Past Performance

    We established at Sec. Sec.  422.502(b) and 423.503(b) that we may 
deny an application submitted by MA organizations and Part D sponsors 
that failed to comply with the requirements of a previous MA or Part D 
contract, which we refer to as ``past performance.'' We proposed 
several technical changes to the regulation text related to past 
performance. These changes are intended to clarify the basis for 
application denials due to past performance and to ensure that the 
factors adequately account for financial difficulties that should 
prevent an organization from receiving a new or expanded MA or Part D 
contract.
    One factor we consider regarding the past performance of MA 
organizations and Part D sponsors is their record of imposition of 
intermediate sanctions, because intermediate sanctions represent 
significant non-compliance with MA or Part D contract requirements. To 
clarify the basis for application denials due to intermediate 
sanctions, at Sec. Sec.  422.502(b)(1)(i)(A) and 423.503(b)(1)(i)(A) we 
proposed to change ``Was subject to the imposition of an intermediate 
sanction'' to ``Was under an intermediate sanction.'' We proposed this 
revision because MA organizations and Part D sponsors may have a 
sanction imposed in one 12-month past performance review period and 
effective for all or part of the subsequent 12-month review period. For 
instance, CMS could impose a sanction in December 2022 that remains in 
effect until September 2023. The sanction would be in effect for the 
past performance review period that runs from March 2022 through 
February 2023 (for Contract Year 2024 MA and Part D applications filed 
in February 2023) and for the past performance review period that runs 
from March 2023 through February 2024 (for Contract Year MA and Part D 
applications filled in February 2024). Our proposal reflects our stated 
intent to deny applications from MA organizations and Part D sponsors 
when an active sanction existed during the relevant 12-month review 
period when we previously codified that intermediate sanctions are a 
basis for denial of an application from an MA organization or Part D 
sponsor in ``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) 
hereinafter referred to as the ``January 2021 final rule.'' When we 
codified this requirement, a commenter requested that sanctions lifted 
during the 12 months prior to the application denial be excluded from 
past performance. We responded that ``The applying organization will 
receive credit for resolving the non-compliance that warranted the 
sanction during the next past performance review period, when, 
presumably, the organization will not have an active sanction in place 
at any time during the applicable 12-month review period'' (86 FR 6000 
through 6001). Since an intermediate sanction may be active during 
multiple consecutive review periods, our proposed language clarifies 
that an organization's application may be denied as long as the 
organization is under sanction, not just during the 12-month review 
period when the sanction was imposed.
    An additional factor we consider regarding the past performance of 
MA organizations and Part D sponsors is involvement in bankruptcy 
proceedings. At Sec. Sec. 422.502(b)(1)(i)(C) and 423.503(b)(1)(i)(C) 
we proposed to incorporate federal bankruptcy as a basis for 
application denials due to past performance and to conform the two 
paragraphs by changing the text to ``Filed for or is currently in 
federal or state bankruptcy proceedings'' from ``Filed for or is 
currently in State bankruptcy proceedings,'' at Sec.  
422.502(b)(1)(i)(C) and ``Filed for or is currently under state 
bankruptcy proceedings'' at Sec.  423.503(b)(1)(i)(C). We codified 
state bankruptcy as a basis for an application denial for the past 
performance of an MA or Part D sponsor in ``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 on 
May 9, 2022 (87 FR 27704). We codified that requirement because 
bankruptcy may result in the closure of an organization's operations 
and entering into a new or expanded contract with such an organization 
is not in the best interest of the MA or Prescription Drug programs or 
the beneficiaries they serve. This concern is equally applicable to 
both federal and state bankruptcy, so we proposed to revise the 
regulation so that applications from MA organizations or Part D 
sponsors that have filed for or are in state or federal bankruptcy 
proceedings may be denied on the basis of past performance. In 
addition, we also proposed to correct two technical issues identified 
since the final rule was published in May 2022. At Sec.  
422.502(b)(1)(i)(B), we proposed to change the reference to the 
requirement to maintain fiscally sound operations from Sec.  
422.504(b)(14) to the correct reference at Sec.  422.504(a)(14). We 
also proposed to remove the duplication of Sec.  422.502(b)(1)(i)(A) 
and (B).
    We invited public comment on this proposal and received several 
comments in support of this proposal. We received no comments opposing 
this proposal. Therefore, we are finalizing this proposal without 
modification.

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

A. 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 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 regulations at Sec. Sec.  422.550 and 423.551, 
respectively. These regulations require 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'' \2\ 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's requirements. If a change 
of ownership occurs and a novation agreement is not completed and the 
entities fail to provide advance notification to CMS, the current 
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

[[Page 30459]]

the new owner through the novation agreement 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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    \2\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c12.pdf.
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    The current regulations do not fully address what happens when the 
contract becomes ``invalid'' due to a change of ownership without a 
novation agreement and/or advance notice to CMS, or in other words, 
what happens to the existing CMS contract that was held by the 
purchased entity. In that circumstance, CMS would still recognize the 
original entity as the owner, even if the contract is now held by a 
different entity. Therefore, we proposed to revise Sec. Sec.  
422.550(d) and 423.551(e) to make it clear that in such a circumstance, 
CMS may unilaterally terminate the affected contract in accordance with 
Sec. Sec.  422.510(a)(4)(ix) and 423.509(a)(4)(ix), which establish 
that failure to comply with the regulatory requirements contained in 
part 422 or part 423 (if applicable) is a basis for CMS to unilaterally 
terminate an MA or Part D contract.
    In addition, we are strengthening CMS's enforcement authority 
regarding this process through the proposed amendments to Sec. Sec.  
422.550(d) and 423.551(e). Pursuant to CMS's authority under sections 
1857 and 1860 of the Act, we proposed to amend the regulations at 
Sec. Sec.  422.550(d) and 423.551(e) to outline the enforcement process 
CMS will follow, which includes 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 either the novation agreement or the 
application process, must ensure that MA organizations and Part D 
Sponsors--through their respective legal entities--are eligible to 
contract with CMS. If CMS has no chance to assess the qualifications of 
the new entity and a change in ownership from one legal entity to 
another occurs without CMS approval of a novation agreement, CMS's 
ability to ensure the integrity of the MA and Part D programs and 
ability to monitor a contract's activity under the new legal entity 
would be compromised, thereby putting enrollees at risk. Thus, any 
change in ownership from one legal entity to another requires CMS to 
determine whether the new entity meets the statutory and regulatory 
requirements for operating a contract under the MA or Part D programs.
    We proposed to impose enrollment and marketing sanctions, as 
outlined in Sec. Sec.  422.750(a)(1) and (a)(3) and 423.750(a)(1) and 
(a)(3) on the affected contract. Such sanctions will remain in place 
until CMS approves the change of ownership, (including execution of an 
approved novation agreement) or the contract is terminated. We also 
proposed to provide an opportunity for organizations to demonstrate 
that the legal entity assuming ownership by way of a change of 
ownership without a novation agreement meets the requirements set forth 
by our regulations. 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 MA or Part 
D 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 an MA or Part D contract 
in the same service area and fails to apply for an MA or Part D 
contract in the same service area at the next opportunity to apply, 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 termination in accordance with 
Sec. Sec.  422.510(a)(4)(ix) or 423.509(a)(4)(x).
    Imposition of intermediate sanctions under Sec. Sec.  422.750(a)(1) 
and (a)(3) and 423.750(a)(1) and (a)(3) triggers the past performance 
rules applicable under Sec. Sec.  422.502(b)(1) or 423.503(b)(1). 
Imposition of intermediate sanctions is a factor considered under CMS's 
evaluation and determination of an organization's information from a 
current or prior contract during the MA and Part D application process.
    We solicited comments on these proposals. We appreciate 
stakeholders' input on the proposed changes. We received the following 
comments and have provided responses.
    Comment: A commenter suggested that CMS not terminate a contract 
when a change of ownership has occurred without notification to CMS, 
but rather suggested CMS apply a substantial penalty or fine to the new 
legal entity.
    Response: In the interest of managing the MA and Part D programs 
and protecting all enrollees, CMS must ensure, through the application 
process, that MA organizations and Part D sponsors are eligible to 
contract with CMS. This is existing policy that is also consistent with 
statutory requirements under sections 1855 and 1857 and 1860D-12 of the 
Act. The option to terminate the contract is a critical tool for CMS to 
ensure that only qualified entities can contract with CMS to serve 
enrollees. Imposing a substantial penalty or fine on the new owner 
would not protect enrollees who are already in MA or Part D plans that 
cannot adequately serve them. Moreover, under Sec. Sec.  422.550(d)(2) 
and 423.551(e)(2), entities can cure any deficiencies within 30 days of 
the imposition of intermediate sanctions. If an entity wishes to avoid 
termination, it will have the opportunity to do so.
    Comment: A commenter indicated that the proposed approach should 
not apply to those changes of ownership that occur under the same 
parent organization.
    Response: In order to ensure the integrity of the MA and Part D 
programs, CMS must review any change in ownership from one legal entity 
to another, regardless of the relationship to the parent organization, 
to confirm whether the new legal entity meets the regulatory 
requirements for operating a contract in a given service area. As 
previously indicated, 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,'' \3\ 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's requirements.
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    \3\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c12.pdf.
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    Comment: A commenter expressed concern that CMS's application 
timelines would negatively impact potential changes of ownership and 
suggested instead that CMS not impose the proposed sanctions or that 
CMS implement the sanctions for a period of

[[Page 30460]]

time that is less time than the application cycle.
    Response: As previously noted, CMS must determine whether the new 
legal entity involved in the change in ownership meets all CMS 
requirements for operating a MA contract. CMS must also have the 
opportunity to review and evaluate the new entity. When a change in 
ownership from one legal entity to another occurs without CMS approval, 
it compromises CMS's ability to ensure the integrity of the MA and Part 
D programs and hampers CMS's ability to monitor a contract's activity 
under the new legal entity, thereby putting enrollees at risk. The 
ability of CMS to ensure that MA and Part D plans are adequate to cover 
enrollees' health care needs outweighs concerns about potential 
timeline issues.
    We believe that our process provides a sufficient opportunity for 
organizations to demonstrate, and CMS to determine, that they meet all 
CMS's requirements as set forth in our regulations.
    Comment: A commenter asked CMS to clarify the types of sanctions 
that would be applicable when a change of ownership without novation 
agreement occurs.
    Response: CMS would impose enrollment and marketing sanctions, 
which are outlined in our regulations at Sec.  422.750(a)(1) and (a)(3) 
and Sec.  423.750(a)(1) and (a)(3). These sanctions will remain in 
place until CMS approves the change of ownership (including execution 
of an approved novation agreement) or the contract is terminated.
    After considering the comments received and for the reasons 
discussed in the proposed rule and our responses to comments, we are 
finalizing our proposal to amend the regulations at Sec. Sec.  
422.550(d) and 423.551(e) with technical corrections to the cross-
references proposed in Sec.  423.551(e). The cross-references in 
paragraphs (e)(1) and (e)(2) have been corrected to reflect the 
appropriate Part D sections in the final regulatory text in this final 
rule. In addition, we are finalizing minor grammatical and 
organizational revisions to the regulations to improve the readability 
and clarity of the text.

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

1. Executive Summary
2. Provisions of the Proposed Regulation (Preamble)
    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 that pertain to the 
information 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 
payment determinations. Therefore, we established that CMS may rectify 
any final payment determination issues in a reopening provision at 
Sec.  423.346. In the January 2005 Part D final rule, we established 
that a reopening was at CMS' discretion and could occur within the 
following timeframes after the final payment determination was issued: 
(1) 12 months for any reason, (2) 4 years for good cause, or (3) 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 our December 2022 proposed rule, we proposed to codify the 
definitions of ``global reopening'' and ``targeted reopening.'' We also 
proposed to modify the timeframe CMS may perform 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 proposed to codify the circumstances under which CMS 
will notify the sponsor(s) of our intention to perform a final payment 
determination reopening and the requirement for CMS to announce when it 
has completed a reopening. We are finalizing our proposed changes 
without modifications.
a. 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 revisions of prescription drug 
event (PDE) data and/or direct and indirect remuneration (DIR) data due 
to plan corrections, CMS system error corrections, post reconciliation 
claims activity, and audit and other post reconciliation oversight 
activity. Based on our experience in the Part D program and the PDE and 
DIR data changes, we understood that this process would require CMS to 
perform an initial payment determination reopening every contract year.
    By calendar year 2013, CMS had reopened the 2006, 2007, and 2008 
Part D payment reconciliations and, approximately 4 years after those 
reopenings were completed, began subsequent Part D payment 
reconciliation reopenings (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 these reopening provisions), 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.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/part%20dreopeningannoucement_199.pdf).
    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.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/second%20reopening%20of%20the%202011%20part%20d%20reconciliation_final_403.pdf) and HPMS memorandum, ``Reopening of the 2014 Final Part D 
Reconciliation for Employer Group Waiver Plans (EGWPs),'' January 11, 
2017 (available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/cy14%20egwp%20reopening%20announcement_01-11-17_404.pdf). 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

[[Page 30461]]

are not performed on a predictable schedule, and instead are utilized 
by CMS in the confines of the reopening timeframes described in the 
current regulation at Sec.  423.346(a)(1) through (3).
    Although CMS has in recent experience utilized targeted reopenings 
as part of our process to correct certain issues, 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 4 years after the Part D payment reconciliation for that 
year.
b. 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 4 years of announcing the completion of 
that reconciliation, CMS performs 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 the 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 the prior example, 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, as discussed subsequently in this 
section.
    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.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hpms%2520memo_reopen%2520and%2520overpay_04-06-2018_205.pdf). 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 proposed 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 an 
establishment of good cause for reopening. This 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 of the look-back period, we would perform the global reopening 
for that contract year within the new 6-year timeframe, to recoup the 
PDE and DIR related overpayments reported by sponsors for that contract 
year (and process underpayments).
    Prior to the new reopening timeframe going into effect, CMS will 
provide operational guidance, as has been done for past regularly 
scheduled global reopenings. The following example describes the timing 
for performing the scheduled global reopening. The data for the 2020 
Part D payment reconciliation was due in June 2021. That reconciliation 
was completed in November 2021. Assuming a 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 in 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 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.
    Comment: We received a comment that supported our proposal and our 
efforts to align the look-back period with the reopening timeframe.
    Response: We thank the commenter for the support.
    Comment: A commenter stated that while they do not have a 
conceptual problem with expanding the timeframe for overpayments 
associated with PDE record data and DIR data, they were concerned that 
looking back more than 4 years would result in administrative costs 
that exceed the value of the overpayment recoupment and recommended 
that CMS withdraw the proposal unless an analysis demonstrates that the 
expanded timeframe would result in overpayment

[[Page 30462]]

recoupments that exceed increased administrative costs.
    Response: We are not, as the commenter states, expanding the 
timeframe for overpayments. Under the existing requirements, described 
at Sec.  423.360(f), sponsors are required to report and return any 
overpayment identified within the 6 most recently completed payment 
years. To clarify, we proposed to modify the reopening timeframe, 
described at Sec.  423.346(a)(2), which does not have any impact on the 
existing timeframe for reporting and returning overpayments.
    We decline the commenter's recommendation to withdraw the proposal 
unless an analysis demonstrates that the expanded timeframe would 
result in overpayment recoupments that exceed increased administrative 
costs. We do not believe that expanding the reopening timeframe from 
within 4 years to within 6 years will result in any additional burden. 
Additionally, the intent of the proposed change is not strictly focused 
on overpayment recoupment, but rather, is a remedy to operational 
challenges associated with the misalignment of the overpayment look-
back period and the reopening timeframe.
    Comment: A commenter expressed concerns that DIR fees collected 
from pharmacies challenge patient access and pharmacies' viability. The 
commenter was concerned that extending the timeframe at Sec.  
423.346(a)(2) from within 4 years to within 6 years without any 
guardrails or protections in place for community pharmacies could lead 
to instances in which sponsors take advantage of the process to further 
claw back payments from pharmacies. To address this concern, the 
commenter requested that CMS consider establishing protections to 
prevent sponsors from recouping pharmacy overpayments.
    Response: The intent of the proposed change is to remedy 
operational challenges associated with the misalignment of the 
reopening timeframe, described at Sec.  423.346(a)(2), and 6-year 
overpayment look-back period, described at Sec.  423.360(f). The change 
in the reopening timeframe from within 4 years to within 6 years does 
not, in any way, change a sponsor's responsibility to report and return 
overpayments within the 6-year look-back period. The impact of DIR fees 
collected from pharmacies, pharmacy claw backs, and the recoupment of 
overpayments from pharmacies are outside of the scope of the proposed 
change.
    After consideration of comments, we are finalizing the proposed 
requirements related to aligning the timing of reopenings to the 
overpayment look-back period without modification.
c. Standards for Performing Global and Targeted Reopenings
    Consistent with the existing regulation at Sec.  423.346(a) and 
(d), reopenings are at CMS's 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 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 completed after 
the deadline to submit data for the scheduled global reopening. In 
addition, we are unlikely to conduct a reopening solely pursuant to a 
sponsor's request.
    We proposed 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. We 
also proposed that if CMS has sent a nonrenewed or terminated contract 
the ``Notice of final settlement,'' as described at 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 Sec.  423.521, 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 proposed to codify these 
inclusion criteria at Sec.  423.346(g).
    We also proposed 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 targeted 
Part D contract reopenings 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. Accordingly, sponsors would not be aware of this specific 
inclusion criteria unless CMS informed the sponsors of the CMS-
identified issue and the sponsors' contracts were impacted. Therefore, 
we proposed that CMS notify sponsors of this specific inclusion 
criteria via the proposed reopening notification and/or the proposed 
reopening completion announcement.
    We did not receive comments on this section of the proposal and are 
finalizing the proposed requirements related to the standards for 
performing global and targeted reopenings without modification.
c. Reopening Notification and Reopening Completion Announcement
    We proposed to add new paragraphs (e) and (f) at Sec.  423.346 to 
codify our existing policy regarding reopening notifications and 
reopening completion announcements, respectively. We proposed 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

[[Page 30463]]

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 sponsor(s) to submit data prior to a 
reopening, we proposed to notify the sponsor(s) only after CMS 
completes 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.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/second%20reopening%20of%20the%202011%20part%20d%20reconciliation_final_403.pdf).
    We proposed at Sec.  423.346(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 proposed that the deadline to submit 
this data will be at least 90 calendar days after the date of the 
notice.
    In addition, we proposed 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 proposed 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 
proposed 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 Sec.  423.346(f)(2), we proposed to include in the 
announcement 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 proposed to specify which contracts or contract types 
are included in the reopening in both the announcement of the 
completion of the reopening and the reopening notification because CMS' 
proposal would not require issuing 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 Sec.  423.346(f)(3), we proposed 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 proposed 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.
    We did not receive comments on this section of the proposal and are 
finalizing the proposed requirements related to the reopening 
notification and the announcement of the completion of the reopening 
without modification.
d. Definitions of ``Global Reopening'' and ``Targeted Reopening''
    We proposed to establish definitions of global reopening and 
targeted reopening at Sec.  423.308. We proposed to define a global 
reopening as a reopening under Sec.  423.346 in which CMS includes all 
Part D sponsor contracts that meet the inclusion criteria described at 
proposed Sec.  423.346(g). We proposed to define a targeted reopening 
as a reopening under Sec.  423.346 in which CMS includes one or more 
(but not all) Part D sponsor contracts that the meet the inclusion 
criteria described at proposed Sec.  423.346(g). Finally, consistent 
with these proposed definitions, we proposed to include the terms 
``global reopening'' and ``targeted reopening'' at the beginning of 
existing Sec.  423.346(a) to clarify that the reopenings that CMS may 
perform under Sec.  423.346(a) may be global or targeted, as defined in 
proposed Sec.  423.308.
    Comment: We received a comment supporting our proposal to codify 
the definitions of ``global reopening'' and ``targeted reopening.''
    Response: We thank the commenter for the support.
    We are finalizing the proposed definitions of ``global reopening'' 
and ``targeted reopening'' without modification.
    The proposals described in this section of the final rule are 
consistent with our current guidance and requirements. None of the 
proposed changes would place additional requirements on Part D 
sponsors, nor do the proposed changes to Sec. Sec.  423.308 and 423.346 
place any additional burden on the Part D sponsors or their pharmacy 
benefit managers (PBMs). Our proposed rule does 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, as our changes do not 
result in additional burden, we have not included a discussion a of 
this provision in the COI section of this rule. In addition, we are not 
scoring this provision in the Regulatory Impact Analysis section 
because industry is already complying with this process.
    Based on the comments received and for the reasons outlined in the 
proposed rule and our responses to comments, we are finalizing the 
proposed changes to the reopening provision at Sec.  423.346 and the 
related changes to Sec.  423.308 without modification.

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

    In our December 2022 proposed rule, we proposed 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, nonrenewed, or otherwise terminated. As 
described subsequently in this section, we are finalizing our proposed 
changes.
    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 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

[[Page 30464]]

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. This 
final rule will 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 a 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 subsequently in this section. 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 one year to the next. 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 
subsequently in this section. 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.\4\
---------------------------------------------------------------------------

    \4\ 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.\5\ CMS tracks all payment adjustments for a 
terminated contract for use in the final settlement for that contract.
---------------------------------------------------------------------------

    \5\ 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 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.\6\
---------------------------------------------------------------------------

    \6\ Once a contract has completed final settlement, the MA 
organization or Part D sponsor may still have financial 
responsibilities under any other applicable statute or regulation.
---------------------------------------------------------------------------

    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

[[Page 30465]]

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.
    In our proposed rule, we proposed to codify longstanding and 
existing guidance pertaining to procedures for the final settlement 
process described in the previous paragraphs. In addition, we proposed 
to add a new appeals process for MA organizations or Part D sponsors 
that disagree with the final settlement amount. MA organizations 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 will 
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 will 
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 will be necessary or required. Failure to request 
appeal within 15 calendar days of the date of issuance of the notice of 
final settlement will indicate acceptance of the final settlement 
amount. We 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's final settlement amount 
calculation, we proposed to add two additional levels of appeal: (1) an 
informal hearing conducted by the CMS Office of Hearings to review 
CMS's initial determination, following a request for appeal of the 
reconsideration of CMS's 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 
will only be available to appeal CMS's final settlement amount 
calculation and will 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 will 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 will 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 will 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 will 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 will be considered.
    CMS did not receive comments on this section of the proposal.
2. Process for Appealing 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 will have to specify the calculation with which they 
disagree and the reasons for their disagreement, as well as provide 
evidence supporting the assertion that CMS's calculation of the final 
settlement amount described in the notice of final settlement is 
incorrect. MA organizations and Part D sponsors will not be able to 
submit 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 purpose of retroactively adjusting a 
prior reconciliation.
    CMS will 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 will 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 will 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 will be able to request an informal 
hearing from a CMS hearing officer. The MA organization or Part D 
sponsor will 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 will be required to provide a copy of CMS's decision, 
the findings or issues with which it disagrees, and the reasons why it 
disagrees with CMS's decision. As the hearing officer's review will be 
limited to a review of the existing record, the MA organization or Part 
D sponsor will not be able to submit new evidence to support its 
assertion that CMS's calculation of the final settlement amount 
described in the notice of final settlement is incorrect in addition to 
the evidence submitted during CMS's reconsideration.
    The CMS hearing officer will provide written notice of the time and 
place of the informal hearing at least 30 days before the scheduled 
date and the CMS

[[Page 30466]]

reconsideration official will provide a copy of the record that was 
before CMS when CMS made its reconsideration decision to the hearing 
officer. The CMS hearing officer will not receive new testimony or 
accept new evidence in addition to the evidence submitted by the MA 
organization or Part D sponsor during CMS's reconsideration to support 
its assertion that CMS's calculation of the final settlement amount is 
incorrect.
    Once the hearing officer has reviewed the record, the hearing 
officer will 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 will 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 will be able to request an additional, 
final review from the CMS Administrator. The MA organization or Part D 
sponsor will 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 will be able to submit written 
arguments to the Administrator for review but will not be able to 
submit evidence in addition to the evidence submitted during CMS's 
reconsideration.
    The CMS Administrator will 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 will 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 will review the information included in the 
record of the hearing officer's decision and any written argument 
submitted by the MA organization or Part D sponsor. Based on this 
review, the Administrator may uphold, reverse, or modify the hearing 
officer's decision. The Administrator's decision will be final and 
binding and no other requests for review will 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 will 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 will be limited to CMS's calculation of the final settlement 
amount. CMS will not consider information submitted for the purposes of 
retroactively adjusting a prior reconciliation. The MA organization or 
Part D sponsor will bear the burden of proof by providing evidence 
demonstrating that CMS's calculation of the final settlement amount is 
incorrect.
    CMS did not receive comments on this section of the 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 proposed 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 proposed to add a definition for the term final 
settlement amount, which will 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, 
nonrenewal, or other termination. The proposed definition provides that 
CMS will calculate the final settlement amount by summing retroactive 
payment adjustments for a contract that accumulate after that contract 
consolidates nonrenews, 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 proposed to add a definition for the term final settlement 
process as the process by which CMS will 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 
previously in section XXX) 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 
will specify that the final settlement process begins after all 
applicable reconciliations have been completed.
b. Final Settlement Process and Payment
    We proposed 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 will be made.
    CMS will calculate and 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 proposed to codify that 
CMS will 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 will 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.
    At paragraph (b) of proposed Sec. Sec.  422.528 and 423.521, we 
proposed to establish that MA organizations and Part D sponsors will 
have 15 calendar days from the date of issuance of the notice to 
request an appeal. We proposed 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 will be required, 
and that, if an MA organization or Part D sponsor does not request an 
appeal within 15 calendar days, CMS will not consider any subsequent 
requests for appeal of the final settlement amount.

[[Page 30467]]

    At paragraph (c) of proposed Sec. Sec.  422.528 and 423.521, we 
proposed to codify the actions that will take place if an MA 
organization or Part D sponsor does not appeal the final settlement 
amount. Specifically, at paragraph (c)(1), we proposed to specify that, 
if an MA organization or Part D sponsor owed a final settlement amount 
from CMS does not appeal, CMS will remit payment within 60 calendar 
days of the date of the issuance of the notice of final settlement. At 
proposed paragraph (c)(2), we proposed that an MA organization or Part 
D sponsor that owes money to CMS and does not appeal will 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 will be subject to 
having any debts owed to CMS referred to the Department of the Treasury 
for collection.\7\
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    \7\ 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 paragraph (d) of proposed Sec. Sec.  422.529 (for MA) and 
423.522 (for Part D), we proposed to establish the actions following 
submission of a request for an appeal that will be taken.
    At paragraph (e) of proposed Sec. Sec.  422.529 (for MA) and 
423.522 (for Part D), we proposed 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 will no longer apply 
retroactive payment adjustments for the terminated contract and there 
will be no adjustments applied to the final settlement amount.
c. Requesting an Appeal of the Final Settlement Amount
    We proposed 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 will 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 
proposed to establish requirements that will apply to MA organizations' 
and Part D sponsors' requests for appeal of the final settlement amount 
calculation.
    Specifically, at proposed paragraph (a)(1), we proposed to 
establish the process under which an MA organization or Part D sponsor 
may request reconsideration of the final settlement amount. We proposed 
to specify that the 15-calendar-day period for filing the request will 
begin on the date the notice of final settlement from CMS is issued. We 
also proposed that MA organizations and Part D sponsors will have to 
include in their request: (1) the calculation with which they disagree 
and (2) evidence supporting the assertion that the CMS calculation of 
the final settlement amount is incorrect. We further specify that CMS 
will not consider (for purposes of retroactively adjusting a prior 
reconciliation), and 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.
    At proposed paragraph (a)(1)(iii), we proposed to establish that 
the CMS reconsideration official will review the final settlement 
calculation and evidence timely submitted by the MA organization or 
Part D sponsor supporting the assertion that the CMS calculation of the 
final settlement amount is incorrect. We further proposed to establish 
that the CMS reconsideration official will inform the MA organization 
or Part D sponsor of their decision on the reconsideration in writing 
and that their decision will be final and binding unless the MA 
organization or Part D sponsor requests a hearing officer review.
    At proposed paragraph (a)(2), we proposed to establish that MA 
organizations and Part D sponsors that disagree with CMS's 
reconsideration decision under paragraph (a)(1) of this section will be 
able to request an informal hearing by a CMS hearing officer.
    Specifically, at paragraph (a)(2)(i), we establish that MA 
organizations and Part D sponsors will 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 proposed that MA 
organizations and Part D sponsors will have to include in their request 
a copy of CMS's decision, the specific findings or issues with which 
they disagree, and the reasons for which they disagree. At paragraph 
(a)(2)(iii), we proposed to establish the informal hearing procedures. 
Specifically, we proposed that the CMS hearing officer will provide 
written notice of the time and place of the informal hearing at least 
30 calendar days before the scheduled date and the CMS reconsideration 
official will provide a copy of the record that was before CMS when CMS 
made its reconsideration decision to the hearing officer. We further 
proposed that the hearing will be conducted by a hearing officer who 
will neither receive testimony nor accept new evidence. We finally 
proposed that the hearing officer will be limited to the review of the 
record that CMS had when making its decision. At paragraph (a)(2)(iv), 
we proposed that the CMS hearing officer will 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 proposed 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 proposed to establish at paragraph (a)(3) that MA 
organizations and Part D sponsors that disagree with the hearing 
officer's decision will be able to request a review by the CMS 
Administrator.
    At paragraph (a)(3)(i), we establish that MA organizations and Part 
D sponsors will 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 proposed that the CMS Administrator will 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 proposed that if the Administrator declines to review the 
hearing officer's decision, the hearing officer's decision will be 
final and binding. We proposed at paragraph (a)(3)(iii) that, 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 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 proposed that the 
Administrator's determination will be final and binding.
    At proposed paragraph (b), we proposed 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 proposed to 
establish that the Part D sponsor's appeal will be limited to CMS's 
calculation of the final settlement amount. We further proposed that 
CMS will not consider information submitted for the purposes of 
retroactively adjusting a prior reconciliation. At proposed paragraph 
(b)(2), we proposed that the MA organization or Part D sponsor will 
bear the burden of proof by providing evidence demonstrating that

[[Page 30468]]

CMS's calculation of the final settlement amount is incorrect.
    At proposed paragraph (c), we proposed 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 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-calendar-day timeframe, CMS will 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 will 
limit an MA organization or Part D sponsor's responsibility to comply 
with any other applicable statute or regulation.
    CMS did not receive comments on this section of the proposal.
    Based on the lack of comments received, we are finalizing the 
additions to Sec. Sec.  422.500(b), 422.528, 422.529, 423.501, 423.521, 
and 423.522 to codify the final settlement process as proposed.

D. 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 \8\ 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.
---------------------------------------------------------------------------

    \8\ 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 
amounts 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.\9\
---------------------------------------------------------------------------

    \9\ 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. https://www.federalregister.gov/documents/2021/01/19/2021-00538/medicare-and-medicaid-programs-contract-year-2022-policy-and-technical-changes-to-the-medicare. Hereinafter referred to 
as the January 2019 final rule). In January 2019 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) \10\ 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.
---------------------------------------------------------------------------

    \10\ 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 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 determines it is necessary to impose the maximum CMP 
amount permitted under statute, or an amount that is 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 proposed to modify 
its rules pertaining to minimum penalty amounts.
    Specifically, we proposed 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. We also proposed 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, we proposed to 
revise and add new provisions Sec. Sec.  422.760(b)(3) and 
423.760(b)(3), which explain 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 
paragraph (b) 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

[[Page 30469]]

non-compliance warrants a penalty that is higher than would be applied 
under the minimum penalty amounts set by CMS.
    Once 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 will also be incorporated in forthcoming revised CMP 
calculation methodology guidance.
    Comment: A commenter suggested that removing the minimum penalty 
amount increase policy would lead to inconsistencies, and a lack of 
parity, in the CMP amounts we impose.
    Response: We disagree with this comment. First, as discussed above 
and in the proposed rule, CMS has always had the statutory authority to 
impose up to the maximum CMP amount authorized under sections 
1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act. Second, CMS would 
continue to follow our existing CMP methodology, which allows for 
parity, fairness, and consistency in calculating CMP amounts. We would 
only impose up to the maximum CMP amount in instances where we 
determine non-compliance warrants a higher penalty to adequately 
address the non-compliance.
    After consideration of the comments received, we are finalizing our 
changes to Sec. Sec.  422.760(b)(3) and 423.760(b)(3) as proposed.

E. 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)(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. 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) \11\ in their Part D drug management program (DMP) for MTM. CMS 
has codified the MTM targeting criteria at Sec.  423.153(d)(2).
---------------------------------------------------------------------------

    \11\ Defined at Sec.  423.100.
---------------------------------------------------------------------------

    As discussed in the December 2022 proposed rule (87 FR 79452), MTM 
eligibility rates have steadily declined over time to 8 percent in 
2020. In conjunction with the decreasing eligibility rates, 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 CMS finalized the current regulatory requirements 
for targeting criteria over 13 years ago, CMS elected to continue to 
give plan sponsors significant flexibility in establishing their MTM 
eligibility criteria. However, sponsors have used this flexibility to 
adopt increasingly restrictive criteria that we believe are limiting 
access to MTM for vulnerable, clinically high-risk beneficiaries.
    We performed an extensive analysis to identify potential 
disparities in MTM program eligibility and access, as discussed in the 
December 2022 proposed rule, and we identified the high cost threshold 
and increasingly restrictive plan criteria (e.g., targeting select core 
chronic diseases or specific drugs) as the main drivers of the 
eligibility gaps. The targeting criteria used by most plans now require 
three or more chronic diseases, require eight or more Part D drugs, and 
target a narrow and variable list of chronic diseases. And because of 
variation in plans' criteria for MTM enrollment, 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. Under the current MTM cost threshold 
methodology at Sec.  423.153(d)(2)(i)(C), the annual cost threshold for 
2024 is $5,330, which also significantly limits the number of 
beneficiaries who are eligible to be targeted for MTM enrollment. In 
the December 2022 proposed rule, CMS proposed changes to the MTM 
program eligibility criteria to address these concerns and help ensure 
beneficiaries with more complex drug regimens who would benefit most 
from MTM services are eligible.
    The proposed changes included:
     Requiring plan sponsors to target all core chronic 
diseases identified by CMS, codifying the current nine core chronic 
diseases in regulation,\12\ and adding HIV/AIDS for a total of 10 core 
chronic diseases;
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    \12\ 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 (*).
---------------------------------------------------------------------------

     Lowering the maximum number of covered Part D drugs a 
sponsor may require from eight to five drugs and requiring sponsors to 
include all Part D maintenance drugs in their targeting criteria; and
     Revising the methodology for calculating the cost 
threshold ($5,330 in 2024) to be commensurate with the average annual 
cost of five generic drugs ($1,004 in 2020).
    CMS received many comments on these proposed changes, including the 
following general comments, and our responses follow.
    Comment: Many commenters cited studies that demonstrated the value 
of MTM services and supported changes to the targeting criteria to 
optimize therapeutic outcomes, decrease adverse medication events, and 
avoid unnecessary costs. Commenters also acknowledged that studies show 
medication-related problems such as poor medication adherence and 
polypharmacy are widespread among individuals taking multiple 
prescription medications. These studies emphasized the value of MTM, 
including maintaining the wellbeing of Part D enrollees, resolving 
medication-related problems, improving health outcomes, empowering 
patients, and coordinating care. Some commenters cited a study that 
showed net cost savings (i.e., a reduction in total annual health 
expenditures minus patient copayments, coinsurance, and deductible 
amounts) divided by the incremental cost of providing MTM services 
resulted in a return on investment of more than $12 in cost savings for 
each $1 spent on MTM. Commenters added that when patients better 
understand the goals of their medication therapy, medication adherence 
may increase, and hospital readmissions can be reduced. One commenter 
cited an analysis by a regional Medicare Advantage plan that found 
enrollees who received a comprehensive medication review (CMR) had an 
average savings of up to $4,000 in medical claims compared to members 
who did not receive a CMR. The commenter stated that the analysis also 
found that all enrollees who received a CMR had a 5 percent reduction 
in total cost of care compared to those who were eligible for but did 
not receive a CMR. Another commenter emphasized that access to 
pharmacists'

[[Page 30470]]

clinical skills and increased opportunities for patient-centric care 
through MTM could help offset shortages of physicians and nurses. 
Lastly, commenters pointed out that MTM fosters collaboration between 
clinicians, pharmacists, and patients who take multiple medications 
and/or have multiple chronic diseases.
    Several commenters agreed that the proposed changes to the MTM 
eligibility criteria have the potential to significantly improve the 
effectiveness of the MTM program and achieve equity for underserved 
Medicare patients. One commenter noted studies highlighting that 
individuals with multiple comorbid chronic conditions tend to have the 
greatest disparities in accessing the care and treatments they need. 
The commenter also cited studies that noted that the current MTM 
eligibility criteria do not optimally target beneficiaries most at risk 
of underuse or poor adherence and that eligibility is limited to 
beneficiaries with high drug use and high spending, which 
systematically excludes beneficiaries who could benefit from these 
services. Another commenter suggested that rather than using MTM to 
improve outcomes and reduce health care costs for Part D enrollees with 
multiple chronic diseases, plan sponsors have instead used it as a cost 
control tool by focusing on enrollees who take high-cost drugs.
    Response: We thank the commenters for their support of the proposed 
changes to the MTM eligibility criteria to better focus on 
beneficiaries with more complex drug regimens who would benefit most 
from MTM. We appreciate the citation of many studies reinforcing the 
value of MTM and the need for more equitable access. Almost all of the 
chronic diseases targeted for MTM identified at section 1860D-
4(c)(2)(A)(ii)(I)(aa) of the Act and in the current CMS MTM guidance 
(See HPMS Memorandum Contract Year 2024 Part D Medication Therapy 
Management Program Guidance and Submission Instructions dated April 21, 
2023) are more prevalent among minorities and lower income populations. 
As a result, we anticipate that these changes will increase eligibility 
rates among those populations by promoting more equitable access to MTM 
services and closing eligibility gaps.
    Comment: Many commenters opposed the proposed eligibility criteria 
changes partially or in whole, and several expressed significant 
concerns about the costs and resource burden associated with 
implementing such a large-scale expansion of the MTM program. Some of 
these commenters opined that the proposed changes would increase Part D 
premiums and cost sharing for all enrollees. One commenter estimated 
that the proposed changes would more than double MTM administrative 
costs. Some commenters stated that the proposed MTM expansion would be 
cost-prohibitive without any documented benefit to enrollees. Another 
commenter suggested finalizing the proposed changes would result in a 
loss of rebate dollars that would otherwise be used to improve 
affordability or provide supplemental benefits that support enrollee 
well-being. Several commenters referenced competing priorities between 
the proposed MTM expansion and implementation of the Inflation 
Reduction Act of 2022 (IRA). A few commenters emphasized that many of 
the same resources needed to support IRA implementation for 2024 and 
beyond would also be needed to implement changes to the MTM program, 
and finalizing the MTM changes as proposed would put successful 
implementation of both the IRA and the MTM expansion at risk.
    Response: We acknowledge the concerns raised regarding the cost and 
burden of the proposed expansion of MTM. In light of these comments, we 
are finalizing the proposed changes with modifications that will result 
in a more moderate program size increase and less burden and lower 
costs than initially estimated in our December 2022 proposed rule. We 
provide more details about the specific modifications in the responses 
to comments later in this section of the preamble.
    Comment: Several commenters who were opposed to the proposed 
changes raised concerns about a decline in MTM program quality that 
could result from a significant increase in program size, which would 
dilute plans' ability to target MTM interventions to those 
beneficiaries who would most benefit from them. Other commenters were 
concerned that MTM providers may ``water down'' their approach due to 
the increased volume resulting in lower-value programs that satisfy the 
MTM requirements but are much less likely to improve health outcomes 
due to shorter consultations or fewer interventions. Another commenter 
stated that the pool of MTM vendors has decreased while costs have 
increased due to the loss of competition, hindering the ability of plan 
sponsors to administer quality MTM programs.
    Response: We understand the commenters' concerns about the impact 
on the quality of the MTM programs and services delivered due to a 
large increase in program size as proposed. CMS is finalizing the 
proposed changes with modifications that will ensure a smaller increase 
in program size and promote the administration of high-value MTM 
programs. Currently, due to the increasing cost threshold and 
variations in the targeting criteria adopted 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 (for example, with the same chronic 
diseases and taking the same Part D drugs) may or may not be eligible 
for MTM depending on the criteria their plan requires. The eligibility 
criteria changes we are finalizing in this rule aim to address the key 
drivers of the eligibility gaps, discussed in detail in the December 
2022 proposed rule, while maintaining a reasonable program size and the 
ability of plans to administer effective MTM services.
    MTM is a patient-centric and comprehensive approach to improve 
medication use, reduce the risk of adverse events, and improve 
medication adherence. To continue to provide quality MTM services to an 
expanded population and better manage resources, we remind sponsors 
that the delivery of MTM may be tailored to meet each enrollee's needs. 
For example, the length of the CMR consultation or number of follow-up 
interventions needed following targeted medication reviews (TMRs) may 
vary between MTM enrollees with more complex drug regimens and those 
who are stable on their medication regimens as long as the minimum 
level of MTM services is met as specified in Sec.  423.153(d)(1)(vii). 
Sponsors may also leverage effective MTM programs to improve several 
measures in the Medicare Part D Star Ratings and display page such as 
medication adherence, polypharmacy, and gaps in therapy. Lastly, while 
we acknowledge commenters' concerns regarding the availability of MTM 
vendors, we note that Part D plan sponsors may use in-house resources, 
one or more external vendors, or a combination of both, to administer 
their MTM programs.
    Comment: Some commenters stated that a large increase in the MTM 
enrollee population would require significant resources and that there 
would be limited time to hire and train additional staff, implement the 
necessary processes, and upgrade clinical and administrative 
infrastructures. Commenters estimated needing to double or triple their 
staffing to accommodate MTM enrollment increases of up to 60 percent in 
one year. A commenter stated that many plan sponsors that utilize local

[[Page 30471]]

community pharmacists to furnish MTM services would not be able to meet 
the higher demand in time, or that there would be pressure to use call 
centers, possibly employing customer service representatives without 
clinical training, which may lead to lower quality of care or member 
experience. Other commenters were concerned that rapid expansion of the 
MTM program size would exacerbate the existing pharmacist workforce 
shortage or would not be feasible given the expanded scope of pharmacy 
practice. One commenter also suggested that MTM vendors would drop 
smaller clients to service larger ones as a result of not being able to 
hire enough pharmacists to accommodate the increase in MTM enrollees.
    Response: We are optimistic that the increase in demand for MTM 
services will incentivize plan sponsors to strengthen their hiring 
efforts. It is not clear what methodology the commenters used to 
estimate staffing needed to accommodate certain MTM program size 
increases. However, CMS plans to finalize our proposed changes to the 
MTM eligibility criteria with the modifications described later in this 
section of the preamble. CMS believes that this scaled back MTM 
expansion may alleviate a portion of the staffing concerns raised by 
commenters.
    Comment: A few commenters, particularly commenters representing 
dual eligible special needs plans (D-SNPs), were concerned that due to 
the higher prevalence of chronic diseases in their enrollees, they will 
be disproportionately impacted by the changes in the MTM eligibility 
criteria and estimated that the majority of their plan enrollment would 
be eligible for the MTM program. They asserted that it would not be 
feasible to perform outreach or offer the MTM services to all their 
enrollees.
    A few other commenters stated that when combined the proposed 
changes would result in MTM enrollment increases that exceeded the 
estimated program-wide size (23 percent of Part D enrollees) in the 
proposed rule (for example, increasing enrollment to 60 percent of 
their Medicare population, by five times, etc.), depending on the 
population or type of plan. Commenters asserted that such an increase 
in MTM enrollment would increase administrative costs, resulting in 
increased premiums, and could limit the offering of Part D plans.
    Response: We acknowledge that some Part D contracts may have actual 
MTM enrollment rates above or below the average rate for the program as 
a whole because they have higher or lower enrollments of beneficiaries 
with the chronic diseases targeted for MTM under the changes to the MTM 
requirements we are finalizing in this rule. This is also true under 
the current MTM requirements, and there is no evidence that higher than 
average MTM enrollment has increased administrative costs and thus 
premiums to the point of limiting Part D plans' offerings, including 
MA-PDs that are D-SNPs. However, based in part on considerations about 
how the estimated program size under the proposals in the December 2022 
proposed rule would impact MTM enrollment differently across contracts 
and increase the MTM enrollment volume to greater levels than some 
sponsors could feasibly handle, we are finalizing the proposed changes 
to the MTM eligibility criteria with modifications that we expect to 
decrease estimated program size relative to the proposed rule.
    Comment: Some commenters expressed concerns that Part D MTM 
programs overlap with other programs such as disease management or care 
management (including post-discharge medication reconciliation; 
hypertension, diabetes, and dyslipidemia case management; and annual 
wellness visits) and may cause enrollee confusion, frustration, or 
complaints due to multiple outreach attempts, beneficiaries not 
answering calls from the plan sponsor, or beneficiaries requesting to 
be placed on the plan's do-not-call list. A commenter discussed that 
MTM-like interventions occur outside of the Part D MTM program and 
achieve improvements to health outcomes, and many MTM services, such as 
drug-drug interaction (DDI) analyses, could be automated (outside of 
CMRs) without beneficiary participation.
    Response: We believe that Part D MTM programs complement efforts 
under other programs rather than overlap with them. MTM programs--which 
use a comprehensive approach to improve medication use, reduce the risk 
of adverse events, and improve medication adherence for beneficiaries 
at increased risk of medication-related problems due to having multiple 
chronic diseases and taking multiple Part D drugs--are distinct from 
disease-specific disease management programs. We acknowledge that 
recommendations arising from MTM services may result in referrals to 
other specialized, disease-specific programs that may not be a part of 
the Part D MTM program. To reduce the risk of beneficiary confusion and 
frustration, plan sponsors should be mindful of the timing and 
frequency of enrollee outreach for MTM relative to complementary 
disease management programs.
    In addition, we remind Part D sponsors that while a CMR must be an 
interactive consultation with the beneficiary and the pharmacist or 
other qualified provider, other aspects of MTM may be automated as 
described in CMS MTM guidance (See HPMS Memorandum Correction to 
Contract Year 2024 Part D Medication Therapy Management Program 
Guidance and Submission Instructions dated April 21, 2023).\13\ As 
described in this guidance, sponsors are required to perform TMRs for 
all beneficiaries enrolled in their MTM program with follow-up 
interventions when necessary. Part D sponsors must assess the findings 
of these reviews to determine if a follow-up intervention is necessary 
for the beneficiary and/or their prescriber. These assessments could be 
person-to-person or system generated.
---------------------------------------------------------------------------

    \13\ https://www.cms.gov/files/document/memo-contract-year-2022-medication-therapy-management-mtm-program-submission-v-083121.pdf.
---------------------------------------------------------------------------

    Comment: Many commenters stated that the proposed eligibility 
criteria changes would result in a substantive update to the Part D 
Star Rating MTM Program CMR Completion Rate measure (MTM Star Rating 
Measure) due to the program size expansion and impacts to resources. 
Therefore, the commenters urged CMS to move the MTM Star Rating Measure 
to a display measure for at least 2 years to adjust to the new levels. 
A few commenters suggested specification changes to the MTM Star Rating 
Measure. Other commenters suggested that expanding the program size in 
such a short timeframe would incentivize plans to prioritize quantity 
over quality of care.
    Response: Per Sec. Sec.  422.164(d)(2) and 423.184(d)(2), 
substantively updated Star Ratings measures are moved to the display 
page for at least 2 years after the substantive update is adopted.\14\ 
Refer to sections VII.B.2 and VII.D of this final rule, where we 
address the proposal to modify the Medication Therapy Management (MTM) 
Program Completion Rate for Comprehensive Medication Review (CMR) 
measure and discuss the weight of newly modified measures, 
respectively. The MTM Program Completion Rate for CMR measure is being 
updated in this rule to align with the revised targeting criteria 
finalized at Sec.  423.153(d); the updated

[[Page 30472]]

measure will move to the display page entirely for the 2025 and 2026 
measurement years and will return as a new measure to the Star Ratings 
program no earlier than the 2027 measurement year for the 2029 Star 
Ratings. We will share the additional suggestions for specification 
changes with the Pharmacy Quality Alliance (PQA), the measure steward.
---------------------------------------------------------------------------

    \14\ Information for measures on the display page are available 
online at: https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data. Please download the zipped file ``2024 Display 
Measures'' for display measure scores, data and explanatory 
technical notes.
---------------------------------------------------------------------------

    Comment: A few commenters suggested that MTM program expansion 
could be limited to those beneficiaries who are newly eligible for the 
Part D MTM program or have recently added, removed, or changed drugs. 
One commenter also asserted that the newly eligible would see the 
greatest benefit from MTM services, resulting in improved health 
outcomes and reduced overall costs. This commenter also stated that the 
value of the CMR declines for enrollees with no changes in health 
status and that broadening the targeted disease states would increase 
burden and administrative costs with diminishing benefits for both plan 
sponsors and enrollees. Another commenter suggested that enrollees who 
have had a CMR in the last 12 months should requalify for MTM only with 
the addition of a new drug to their drug regimen and/or a new disease 
state.
    Response: 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. 
Furthermore, 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. These requirements are codified in the regulations at Sec.  
423.153(d)(1) and (2).
    We acknowledge that the needs and goals of newly eligible MTM 
enrollees may be different from those who have already received MTM 
services and continue to be eligible for MTM. However, for both 
populations of beneficiaries, annual CMRs may be an opportunity to 
understand new information about the beneficiary, including but not 
limited to if the beneficiary's goals have changed, if they have new or 
unresolved medication therapy problems, or if they have any social risk 
factors that may be affecting their medication use that can only be 
assessed through an interactive consultation.
    Comment: A few commenters suggested that CMS should engage the 
industry to determine alternative options for better targeting or 
increased CMR participation rather than finalize the proposed 
modifications to the eligibility criteria. A commenter stated that many 
MTM enrollees choose not to participate, and to be more consistent with 
the Administration's health equity goals, CMS should engage those 
already eligible, who have the greatest need. Another commenter 
suggested changes to the Medicare Plan Finder (MPF) that would 
highlight the value added by specific plans' MTM programs and provide 
guidance to beneficiaries on why selecting plans based on MTM program 
specifics may be beneficial. The commenter cited recent precedent in 
2019 to 2020 when CMS engaged plans, PBMs, developers, and patient 
groups on how to improve the MPF, resulting in major improvements 
supported by a wide range of interested parties. A few commenters also 
suggested that CMS could engage plans and PBMs to assess MTM and 
alternative programs to determine whether MTM eligibility criteria 
expansion is warranted, whether to include cancer as a core chronic 
condition, the effect of including any additional core chronic diseases 
on specialized MTM provider training and program size, and whether MTM 
services are an effective mechanism for management of certain diseases 
(for example, those with high use of Part B drugs or frequently 
changing medication regimens).
    Response: Through this rulemaking, we have engaged numerous 
interested parties to solicit feedback on implementing MTM eligibility 
criteria changes. We have also engaged in our own analysis. As 
discussed in the December 2022 proposed rule, we conducted an extensive 
data analysis that identified several issues with the current MTM 
targeting criteria, and we proposed specific regulatory changes 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, we believed that 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.
    As discussed later in this preamble, we are finalizing the 
proposals with modifications in response to public comments we 
received. However, we are committed to addressing the main drivers of 
the inequities in MTM program eligibility discussed in the December 
2022 proposed rule. Accordingly, we will continue to request input from 
interested parties on improving aspects of the MTM program in the 
future, including enhanced targeting and better engagement with MTM 
enrollees. We will also look for opportunities to improve the 
information available for beneficiaries on CMS' websites about Part D 
MTM programs.
    Comment: A few commenters suggested that additional analyses are 
needed to assess the effectiveness of MTM programs, optimize current 
MTM programs, and review alternative medication management methods 
already being used by plan sponsors and their contracted providers. One 
commenter asserted that CMS would be unable to determine which part of 
the eligibility criteria expansion worked or failed as they believed 
the metrics for MTM success to be ill-defined. The commenter also asked 
if CMS has conducted any evaluation of the requirement to target DMP 
enrollees for MTM enrollment. Another commenter encouraged CMS to find 
a new approach to measuring MTM success in the future through metrics 
that assess the quality of MTM services provided and not just the 
overall volume of services provided. Another commenter noted the 
documented successes of MTM in a number of situations but recognized 
room for improvement in the program. The commenter stated that in many 
cases, MTM benefits patients directly and can decrease the burden of 
healthcare costs, but that results are not consistent across the board, 
suggesting a need to increase the overall quality of MTM evaluations. 
The commenter concurred with researchers in recommending that future 
studies should consider increasing study size and incorporating 
multiple sites to bolster the reliability of the results and suggested 
that CMS could use its authority to influence changes to MTM studies. 
Another commenter suggested that further study can help improve the MTM 
program due to limited evidence that MTM improves medication adherence 
and patient outcomes. The commenter recommended that CMS initiate a 
study including a large set of geographically diverse, Part D plans to 
better understand the overall effectiveness of the MTM program and

[[Page 30473]]

potential areas for improvement. The commenter also suggested that it 
would be particularly useful to understand the experience and impact of 
pharmacists' involvement in MTM programs.
    Response: We routinely analyze CMS and plan-reported data to 
oversee the Part D MTM programs, including implementation of the new 
requirement to target DMP ARBs for MTM enrollment. However, we agree 
that additional analysis would be beneficial to assess MTM program 
effectiveness, and we will continue to explore ways of conducting such 
analysis. We appreciate the comments on potential research and analysis 
topics and agree that the high degree of variability between MTM 
program targeting criteria has made it difficult to evaluate MTM 
programs. We are hopeful that standardizing the criteria as finalized 
in this rule will allow more research to be done on MTM outcomes. We 
will also engage with industry to develop additional consensus-based 
measures to evaluate the quality of MTM programs which may be 
considered for the Star Ratings program in the future, and we are 
encouraged by recent efforts by the PQA to convene MTM leaders on 
evidence-based priorities for measurement.\15\
---------------------------------------------------------------------------

    \15\ https://www.pqaalliance.org/mtm-convenes.
---------------------------------------------------------------------------

    Comment: Another commenter urged CMS to increase transparency 
regarding the costs of the MTM program (that is, how much plans are 
saving versus how much they are allocating to pay pharmacists for the 
services) and whether Part D plans are incentivized to offer robust MTM 
services.
    Response: We remind commenters that per Sec.  423.153(d)(5)(ii), 
even though a Part D sponsor must disclose to CMS the amount of the 
management and dispensing fees and the portion paid for MTM services to 
pharmacists and others, reports of these amounts are protected under 
the provisions of section 1927(b)(3)(D) of the Act.
    Comment: A commenter stated that CMS's proposals in the December 
2022 proposed rule to add Part D measures to the Star Ratings, such as 
the focus on polypharmacy measures, may present an opportunity to 
improve MTM. The commenter felt that the proposed changes to the MTM 
program eligibility criteria would expand eligibility but do not 
address the issue of providing MTM to Medicare beneficiaries who could 
truly benefit from it.
    Response: We thank the commenter for the feedback. We agree that 
MTM programs may present an opportunity to improve plan performance in 
Star Ratings measures such as polypharmacy and help with overall 
improvement of medication use among Part D beneficiaries. Refer to 
Section VII.B.3 for discussion about the Part D Polypharmacy Use of 
Multiple Central Nervous System Active Medications in Older Adults 
(Poly-CNS), Polypharmacy Use of Multiple Anticholinergic Medications in 
Older Adults (Poly-ACH), and Concurrent Use of Opioids and 
Benzodiazepines (COB) Measures.
    Comment: Some commenters encouraged CMS to continue to examine 
policy options that expand access to MTM and improve patient outcomes 
and, in particular, to release the findings from the fifth and final 
year of the Part D Enhanced MTM model (Enhanced MTM model). Another 
commenter suggested that the Enhanced MTM model can address alarming 
trends of medication underuse and overuse. The commenters also 
encouraged CMS to collaborate with interested parties to leverage the 
findings from the Enhanced MTM model and identify best practices in MTM 
to scale nationally, as well as to guide future reforms before taking 
action to change MTM.
    Response: CMS will continue to examine policy options within our 
authority that expand access to MTM and improve patient outcomes. In 
February 2023, CMS released the fifth and final evaluation report for 
the Enhanced MTM model available at: https://www.cms.gov/priorities/innovation/innovation-models/enhancedmtm. We will continue to review 
the results of the Enhanced MTM model and collaborate with interested 
parties to identify best practices and lessons learned that may help 
improve the traditional Part D MTM programs. We disagree that CMS 
should leverage model findings or run additional analyses before making 
changes to the Part D MTM programs, as our disparities analysis 
discussed in the December 2022 proposed rule identified specific 
eligibility gaps that need to be addressed. As such, we are moving 
forward with finalizing modifications to the MTM targeting criteria in 
this final rule.
    Comment: A commenter urged CMS to require plan sponsors to report 
MTM enrollee data and analyze the data using demographic information to 
measure and address disparities among the enrollees.
    Response: Plan sponsors are currently required to report MTM 
program beneficiary-level data to CMS through the Part D Reporting 
Requirements (OMB 0938-0992). We used these data and other program 
data, including demographic information, to perform the MTM disparities 
analysis. Furthermore, researchers may request access to a Part D MTM 
data file through ResDAC \16\ which could be linked to encrypted 
beneficiary and demographic variables in the CCW.
---------------------------------------------------------------------------

    \16\ Information on the Part D MTM Data File available through 
ResDAC at: https://resdac.org/cms-data/files/part-d-mtm.
---------------------------------------------------------------------------

    Comment: Many commenters suggested that if CMS finalizes the 
combination of changes as proposed, the updated eligibility criteria 
should be implemented on a delayed or phased-in basis. Commenters 
stated that such an approach would provide plan sponsors with the 
additional time necessary to build up staffing, processes, and 
infrastructure over several years; to coordinate with other internal 
programs to manage medications for the core chronic diseases; and to 
ensure local networks can accommodate the increased volume. Commenters 
who suggested delays were concerned about implications for costs and 
the timing for bid submissions as well as the need for operational 
enhancements. Commenters who advocated for a phased-in approach 
suggested ways to finalize one or more of the proposed MTM criteria 
changes over time on an annual basis. Another commenter suggested that 
CMS take a stepwise approach by first finalizing the proposal to 
require plan sponsors to target all 10 core chronic diseases to 
evaluate how MTM engagement improves, and then allow some flexibility 
in how plans target within broad therapeutic categories.
    Response: We appreciate the suggestions to implement the proposed 
changes using a delayed or phased-in approach. However, we do not agree 
that such an approach is necessary because CMS is finalizing the 
proposed changes with modification, and--as discussed later in this 
preamble--the resulting program size will be about 35 percent smaller 
than originally estimated in the December 2022 proposed rule. The 
reduced program size mitigates the need for a phased-in approach to 
accommodate the new MTM enrollees. Additionally, the changes will be 
effective in 2025 rather than 2024 as initially proposed, which will 
provide additional time for Part D plan sponsors to build up the 
necessary infrastructure to support the anticipated increase in MTM 
enrollment.
    We now address comments on specific aspects of the proposed 
eligibility criteria changes and describe our rationale for finalizing 
the proposed changes with modifications.

[[Page 30474]]

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 three chronic diseases being the maximum number a Part D sponsor 
may require for targeted enrollment. In the current CMS MTM guidance 
(See HPMS Memorandum Correction to Contract Year 2024 Part D Medication 
Therapy Management Program Guidance and Submission Instructions dated 
April 21, 2023), CMS identifies nine core chronic diseases.
    In the December 2022 proposed rule, we proposed 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 proposed to codify the nine core 
chronic diseases currently identified in guidance and to add HIV/AIDS, 
for a total of 10 core chronic diseases. We explained that the current 
flexibility afforded to plans to identify enrollees with multiple 
chronic diseases had led to variability across plans and was a main 
driver of eligibility gaps and inequitable beneficiary access to MTM 
services. Under our proposal to codify the 10 core chronic diseases, 
plan 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 the December 2022 proposed rule, CMS also solicited 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.\17\ We sought comments 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. We were 
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 solicited 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.
---------------------------------------------------------------------------

    \17\ https://www.whitehouse.gov/cancermoonshot/ CE.
---------------------------------------------------------------------------

    The comments we received on our proposed policies with respect to 
targeting of core chronic diseases are summarized below along with our 
responses.
    Comment: Many commenters supported the proposal to add HIV/AIDS to 
the list of core chronic diseases. Several commenters applauded CMS for 
recognizing and attempting to address disparities within the HIV/AIDS 
community. Other commenters pointed out that antiretroviral medications 
are not only high cost but part of complex regimens that require 
frequent monitoring and re-evaluation. Supporters of this proposal also 
emphasized the importance of MTM services for HIV/AIDS patients with 
many comorbidities.
    Response: CMS thanks the commenters for their support for the 
proposal to add HIV/AIDS as a core chronic disease. We agree that Part 
D enrollees with HIV/AIDS often have complex Part D drug regimens where 
medication adherence is critical, very high Part D drug costs, and 
multiple comorbidities. In addition, these individuals are more likely 
to be members of populations affected by health disparities. For these 
reasons and for the reasons discussed in the December 2022 proposed 
rule, we are finalizing the proposal to include HIV/AIDS in the core 
chronic diseases at Sec.  423.153(d)(2)(iii).
    Comment: Many commenters were opposed to including HIV/AIDS as a 
core chronic disease and expressed concerns regarding the potential of 
MTM programs disrupting therapy that is already being closely monitored 
by a specialized team. Other commenters were concerned that the 
pharmacists reviewing the drug regimen for individuals with HIV/AIDS 
may not have the specialized training needed. One commenter suggested 
additional qualifications to identify high-risk medication use among 
this population. Lastly, some commenters stated that the data needed 
for a successful CMR for this population, including lab values, are not 
always available.
    Response: We acknowledge that Part D sponsors, especially PDPs, may 
not always have complete and up to date information at the time of a 
CMR, but the CMR may provide the opportunity to obtain additional 
information regarding an individual's current therapy. As discussed in 
CMS MTM guidance (See HPMS Memorandum Contract Year 2024 Part D 
Medication Therapy Management Program Guidance and Submission 
Instructions dated April 21, 2023), a CMR is a systematic process of 
collecting patient-specific information, assessing medication therapies 
to identify medication-related problems, developing a prioritized list 
of medication-related problems, and creating a plan to resolve them 
with the patient, caregiver, and/or prescriber. The CMR is designed to 
improve patients' knowledge of their prescriptions, over-the-counter 
(OTC) medications, herbal therapies and dietary supplements, identify 
and address problems or concerns that patients may have, and empower 
patients to self-manage their medications and their health conditions. 
MTM services should be complementary, not disruptive, to services 
furnished by the beneficiary's care team, and an MTM provider may make 
referrals or recommendations to the beneficiary's prescribers to 
resolve potential medication-related problems or optimize the 
beneficiary's medication use.
    The CMS analysis presented in the December 2022 proposed rule found 
that, on average, Part D enrollees with HIV/AIDS have 4 core chronic 
diseases (including HIV/AIDS), take 12 Part D covered drugs (including 
eight maintenance drugs), and incur $40,490 in Part D annual drug 
spend. Because beneficiaries with HIV/AIDS are likely to have complex 
drug regimens and are at increased risk of medication-related problems, 
they could benefit from MTM to improve medication use. Despite having 
multiple chronic diseases, taking multiple Part D drugs, and incurring 
high Part D drug costs, many of these individuals were not eligible for 
MTM because their plan did not target HIV/AIDS or did not target enough 
of their other chronic diseases. However, we also found that HIV/AIDS 
was more likely to be targeted by plans (about 10 percent of plans in 
2021) than any other non-core chronic disease, suggesting that these 
plans have already recognized the value of offering MTM services to 
this population.
    Comment: Some commenters questioned whether data privacy policies 
and state laws would allow Part D sponsors to engage in data sharing 
with MTM vendors. Others voiced concern over the sensitive nature of an

[[Page 30475]]

HIV/AIDS diagnosis and that giving MTM providers access to enrollees' 
health information would increase the risk of a data breach or cause 
member concerns over privacy.
    Response: CMS requires Part D sponsors to comply with all Federal 
and State laws regarding confidentiality and disclosure of medical 
records or other health and enrollment information per Sec.  423.136. 
Those laws may require additional steps for Part D sponsors to share 
information with MTM providers, such as obtaining beneficiary consent. 
In establishing the requirement to include HIV/AIDS as a core chronic 
disease, we do not intend to change or modify any legal obligations 
that entities may have under the Health Insurance Portability and 
Accountability Act of 1996 (HIPAA) Privacy Rule or any other law. 
Regarding the potential for data breaches, we expect plan sponsors and 
their MTM providers to have appropriate safeguards in place to protect 
personal health information for beneficiaries with HIV/AIDS just as 
they do for enrollees with other diseases or medication regimens.
    Comment: Many commenters supported the proposal to require Part D 
sponsors to include all core chronic diseases when identifying 
enrollees who have multiple chronic diseases. Some of these commenters 
emphasized the importance of MTM services for beneficiaries with 
diseases such as ESRD and mental health conditions. We received 
suggestions to expand the inclusion of Alzheimer's disease on the list 
of core chronic diseases to include neurodegenerative diseases 
(including multiple sclerosis) and/or other dementias such as Lewy Body 
disease or frontotemporal lobar degeneration and pain as core chronic 
diseases.
    Other commenters who supported the proposal suggested that 
requiring the 10 core chronic diseases should provide more consistency 
in MTM eligibility between plans and broaden beneficiaries' eligibility 
for MTM in each plan.
    Response: We thank the commenters for their supportive comments 
regarding our proposal to require sponsors to include all core chronic 
diseases when identifying enrollees who have multiple chronic diseases. 
We are finalizing that proposal at Sec.  423.153(d)(2)(iii). Plan 
sponsors will be required to target all 10 core chronic diseases 
beginning January 1, 2025. This change will address the concerns we 
discussed in the December 2022 proposed rule regarding increasingly 
restrictive criteria implemented by plan sponsors (for example, by 
targeting select core chronic diseases), which have been one of the 
main drivers of reduced eligibility rates for MTM. By reducing the 
variability in targeting criteria across plans, we will eliminate 
situations where enrollees meet the requirement in Sec.  
423.153(d)(2)(i)(A) of having three chronic diseases but are not 
targeted for MTM enrollment because their plan does not target their 
chronic diseases. This change will also ensure that plan sponsors are 
targeting all of the chronic diseases specified in the statute at 
section 1860D-4(c)(2)(A)(ii)(I)(aa) of the Act, along with certain 
other chronic diseases that we have identified as prevalent in the Part 
D population and commonly treated with Part D drugs. This reduced 
variability should also allow CMS to more accurately estimate program 
size when calculating burden and assessing impact.
    We will continue to analyze chronic diseases 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, 
including those suggested by the commenters, and may consider proposing 
additional core chronic diseases such as neurodegenerative diseases 
and/or other dementias in future rulemaking. Although we are not adding 
pain as a core chronic disease in this final rule, we remind sponsors 
that as of January 1, 2022, they are now required to target ARBs as 
defined at Sec.  423.100 for MTM enrollment. We also note that plan 
sponsors retain the flexibility to target additional chronic diseases 
beyond those codified as core chronic diseases.
    Comment: Many commenters opposed the proposal to require Part D 
sponsors to include all core chronic diseases to identify beneficiaries 
who meet the targeting criterion of having multiple chronic diseases. 
Some commenters suggested that CMS limit core diseases to those that do 
not require specialized training or requested extra time to hire 
specialized staff. Another commenter urged CMS to continue to allow 
plan sponsors to have flexibility to establish a targeted population 
within the 10 core chronic diseases. Other commenters wanted to limit 
the core chronic diseases to those that are easily identified using 
Part D claims only or to those associated with the Star Ratings 
medication adherence measures. A commenter noted that even though the 
core chronic diseases are not entirely new, the requirement for 
sponsors to include all of them will necessitate IT development for 
file transfer of medical claims data, adding complexity, as most plans 
utilize only prescription drug claims data to identify members. For 
example, the commenter mentioned that to target beneficiaries with many 
of the core chronic diseases, plans will need to submit diagnosis codes 
from medical claims to MTM vendors in order to identify such members. 
Another commenter was concerned that lab work or other relevant data 
points may not be easily accessible by the plan's MTM pharmacist. One 
commenter felt that MTM pharmacists are not in the best position to 
positively impact (and may detract from) a beneficiary's care with a 
CMR and routine TMR assessments for ESRD.
    Response: Plan sponsors' flexibility to target select core chronic 
diseases was a main driver of inequitable access to MTM in the Part D 
program that we addressed in our proposed changes to the Part D MTM 
requirements in the December 2022 proposed rule. CMS strongly believes 
pharmacists or other qualified MTM providers with extensive knowledge 
and training of prescribed medications are in an excellent position to 
impact a beneficiary's medication use, regardless of the chronic 
diseases they have or the Part D drugs they take. For instance, 
beneficiaries with ESRD typically have multiple co-morbidities being 
treated with multiple Part D drugs which may benefit from a CMR and 
assessment for dose adjustments due to kidney function. If a 
beneficiary requires more specialized services or coordinated care, MTM 
may be a means to identify and refer the beneficiary to such services. 
We also remind commenters that the eligibility criteria, including core 
chronic diseases, help identify beneficiaries who may be at increased 
risk of medication-related problems. However, MTM services should not 
focus only on the core chronic diseases or drugs within classes used to 
treat those diseases. For example, the CMR should include a review of 
all of the MTM enrollee's prescription medications, OTC medications, 
herbal therapies, and dietary supplements. As they do today, plan 
sponsors should optimize their targeting algorithms and methods using 
data available to them to identify enrollees who are eligible for MTM. 
Some plan sponsors may need to update their IT systems or workflows to 
expand the use of data sources available to them to better optimize 
their targeting methods.
    Comment: Some commenters requested clarification on whether all 
diseases included under the 10 core chronic disease categories must be 
targeted, or whether plans will have the flexibility to choose specific 
diseases within the core chronic diseases. A few

[[Page 30476]]

commenters were concerned that requiring targeting for all core chronic 
diseases removes sponsors' ability to customize their MTM program to 
target members they deem well-suited for MTM services.
    Response: Plan sponsors must target all 10 core chronic diseases, 
including all conditions within each core chronic disease. As discussed 
in the proposed rule, our analysis found that a significant proportion 
of the Part D population that we identified as having three or more 
core chronic diseases and using eight or more drugs were not eligible 
to be targeted for MTM, and variation in plan-specific targeting 
criteria (for example, plans targeting fewer than all of the core 
chronic diseases) was a key driver of gaps in eligibility for MTM. By 
reducing the variability in targeting criteria across plans, we can 
significantly reduce situations where enrollees meet the requirement in 
Sec.  423.153(d)(2)(i) of having three chronic diseases but are not 
targeted for MTM enrollment because their plan does not target their 
chronic diseases. The proposal to require plan sponsors to target all 
10 core chronic diseases, which we are finalizing in this rule, 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. Plan 
sponsors will still have the flexibility of targeting additional 
chronic diseases beyond the core diseases codified in this rule.
    Comment: A commenter wanted CMS to provide greater specificity when 
codifying core diseases. For example, they asked that CMS clarify how 
``other chronic lung disorders'' are defined under respiratory disease 
and how ``chronic/disabling mental health conditions'' are defined 
under mental health.
    Response: CMS does not have guidance for plan sponsors to define or 
code core chronic diseases such as ``other chronic lung disorders'' or 
``chronic/disabling mental health conditions.'' Sponsors should retain 
documentation supporting their eligibility criteria determinations.
    Comment: In response to our request for information and feedback on 
including additional diseases, such as cancer, in the list of core 
chronic diseases, a couple of commenters supported including cancer as 
a core chronic disease. One commenter felt it would align well with 
some pharmacies' specialty pharmacy offerings and clinical services. We 
also received some comments opposed to adding cancer as a core chronic 
disease for MTM program eligibility. Some commenters indicated that 
complex cancer treatment needs timely, on-going monitoring by 
specialists with expertise across Part B and Part D medications (for 
which data sets may or may not be available) and may not be best 
managed by Part D MTM programs through annual CMRs or by pharmacists 
without specialized training. Other commenters noted that specialty 
pharmacies, which dispense the majority of oral cancer medications 
(including specialty pharmacies within oncology clinics), already 
provide monitoring or counseling for their oncology patients. A 
commenter was concerned that beneficiaries with cancer may find MTM 
outreach to be intrusive and unwanted, and another was concerned with 
patient sensitivity when in remission. Another commenter that opposed 
including cancer as a core chronic disease noted that beneficiaries who 
meet the current MTM eligibility criteria who are also taking oncology 
drug(s) would still benefit from the MTM review for side effects, 
safety, and potential drug-drug interactions.
    Response: Equitable access to cancer screening and targeting the 
right treatments for cancer patients is a top priority under the goals 
of the Cancer Moonshot. However, while section 1860D-
4(c)(2)(A)(ii)(I)(aa) of the Act provides us the authority to specify 
and include other chronic diseases, after consideration of the comments 
received in response to the RFI, we do not believe it would be 
appropriate to add cancer to the core chronic diseases specified in 
Sec.  423.153(d)(2)(iii) in this final rule. We agree that including 
cancer may be potentially disruptive to the medication management that 
is already a part of standard clinical practice in oncology and 
specialty centers. Moreover, it is unclear that cancer patients' needs 
can be met through Part D MTM program annual CMRs centered on Part D 
medication use delivered by MTM pharmacists who typically lack the 
specialized training in oncology. Cancer treatment goals are often 
different than the goals for treatment of the other chronic diseases 
included in Part D MTM program (such as diabetes), where MTM may be 
used to review and stabilize drug regimens that are likely to be long 
term. In contrast, many cancers involve a high utilization of 
physician-administered Part B drugs and frequently changing medication 
regimens. Also, cancer is not currently commonly targeted by Part D 
plans as a chronic disease for their MTM program eligibility.
    While we are not adding cancer as a core chronic disease at this 
time, we emphasize that some cancer patients may still be eligible for 
MTM based on meeting the eligibility criteria. We encourage Part D 
plans and MTM providers to seek opportunities to promote cancer 
screening where possible for MTM enrollees and to coordinate with 
specialty cancer programs to develop medication safety recommendations 
for cancer patients. In support of the Cancer Moonshot, CMS has 
initiated other activities, such as the Enhancing Oncology Model 
(EOM),\18\ which is designed to test how best to place cancer patients 
at the center of high-value, equitable, evidence-based care. CMS has 
also adopted rules providing payment for principal illness navigation 
services to help patients and their families navigate cancer treatment 
and treatment for other serious illnesses.\19\
---------------------------------------------------------------------------

    \18\ https://www.cms.gov/newsroom/press-releases/biden-administration-announces-new-model-improve-cancer-care-medicare-patients.
    \19\ https://www.cms.gov/newsroom/press-releases/cms-finalizes-physician-payment-rule-advances-health-equity?ref=upstract.com.
---------------------------------------------------------------------------

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 eight is the 
maximum number of Part D drugs a Part D plan sponsor may require for 
targeted MTM enrollment. In accordance with the technical HPMS User 
Guide for the MTM Program submission module, sponsors are permitted to 
include all Part D drugs, all Part D maintenance drugs, or specific 
drug classes.
    We proposed to revise Sec.  423.153(d)(2)(i)(B) to decrease the 
maximum number of Part D drugs a sponsor may require for targeted 
enrollment from eight to five for plan years beginning on or after 
January 1, 2024. As discussed in the preamble to the December 2022 
proposed rule, while there is no consensus definition of polypharmacy 
in terms of the use of a certain number of medications or medication 
classes concurrently, the proposed change would ensure the MTM program 
continues to focus on more individuals with complex drug regimens and 
increased risk of medication therapy problems. In addition, although we 
proposed changes to the targeting criteria with respect to the number 
of Part D drugs, we noted that the CMR described in Sec.  
423.153(d)(1)(vii)(B) should continue to include review of all 
prescription medications, OTC medications, herbal therapies, and 
dietary supplements.
    We also proposed to add a new provision at Sec.  423.153(d)(2)(iv) 
to

[[Page 30477]]

require all sponsors to include all Part D maintenance drugs in their 
targeting criteria. 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 proposed 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 solicited public comment on our 
proposed parameters for defining maintenance drugs, including potential 
additional sources for making such determinations.
    Below, we address comments on the proposed revisions to the maximum 
number of covered Part D drugs a plan sponsor may require and our 
proposal to require sponsors to include all Part D maintenance drugs in 
their targeting criteria. We also describe our rationale for finalizing 
the proposed changes with modifications.
    Comment: Many commenters supported the proposal to lower the 
maximum number of covered Part D drugs a sponsor may require from eight 
to five drugs. These commenters supported overall expansion of the MTM 
program, which they believed would increase medication safety. A 
commenter who supported the proposal suggested additional targeting 
criteria, such as targeting individuals taking high-risk medications.
    Response: We appreciate the support for this proposal. However, we 
remind commenters that section 1860D-4(c)(2)(A)(ii) of the Act requires 
plans to target beneficiaries taking multiple covered Part D drugs. We 
note, however, that plans retain the flexibility to enroll 
beneficiaries taking high-risk medications in their MTM programs 
through expanded eligibility, even if they do not meet the statutory 
criteria for targeted enrollment. In addition, high-risk medication use 
may be addressed through MTM interventions.
    Comment: Many commenters opposed the proposal to lower the maximum 
number of covered Part D drugs a sponsor may require from eight to five 
drugs. Commenters were concerned that MTM would not be as useful for 
beneficiaries with less complex drug regimens and suggested that 
beneficiaries should qualify for MTM enrollment based on higher pill 
burdens and more complicated medication regimens. One commenter stated 
that a typical enrollee with three or more chronic diseases takes 
between seven and 10 medications and recommended retaining the current 
maximum number of drugs at eight. Another commenter suggested initially 
only decreasing this threshold from eight to five drugs for sponsors 
that use specific classes of drugs in their criteria, and then fully 
implementing the proposed change for all plan sponsors the following 
year.
    Response: After consideration of these comments, and the general 
comments expressing concerns about increased burden and costs, current 
pharmacy and vendor shortages, and other resource challenges due to the 
combination of MA and Part D program policy changes plan sponsors must 
implement over the next several years, we are not finalizing our 
proposal to lower the maximum number of covered Part D drugs a sponsor 
may require from eight to five drugs at this time. We are retaining the 
maximum number of drugs a plan sponsor may require for targeting 
beneficiaries taking multiple Part D drugs at eight (see Sec.  
423.153(d)(2)(i)(B)). Plan sponsors will maintain the flexibility to 
set a lower threshold (between two and eight Part D drugs) for 
targeting. This will maintain the MTM program focus on beneficiaries 
with the most complex drug regimens and will result in a more moderate 
expansion of the MTM program size. Additionally, our decision not to 
finalize this aspect of our proposed modifications to the MTM 
eligibility criteria is supported by CMS' data analysis included in the 
December 2022 proposed rule (87 FR 79542-79546). We found that the 
beneficiaries identified as having 3 or more core chronic conditions 
and using 8 or more drugs who were not eligible for MTM took on average 
eight to nine Part D drugs, which suggests that the number of Part D 
drugs criterion is not a main driver of MTM eligibility disparities 
under our current policies. This change to our proposal allows us to 
respond to commenters' concerns regarding the potential impact of 
reducing the maximum number of Part D drugs from eight to five, while 
still addressing the barriers to eligibility posed by the increasingly 
restrictive plan criteria (for example, by targeting select core 
chronic diseases or drugs) and the high cost threshold, which were 
identified in our analysis as the main drivers of reduced eligibility 
rates for MTM. CMS will continue to monitor the impact of the number of 
Part D drugs criterion on MTM eligibility rates and consider whether to 
propose any changes in future rulemaking.
    Comment: No commenters specifically supported or opposed the 
proposal to include all Part D maintenance drugs in the targeting 
criteria. One commenter requested clarification on whether specific 
Part D drug classes could still be targeted. A few commenters 
recommended either Medispan or First DataBank as sources for 
identifying maintenance drugs but wanted discretion to determine which 
one they use.
    Response: We appreciate the comments. As we stated in the December 
2022 proposed rule, under the proposed modifications to the MTM 
eligibility criteria, Part D 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 at a minimum. However, plans would 
retain the option to expand their criteria by targeting additional Part 
D drugs or all Part D drugs. While we proposed that plan sponsors would 
be required to identify Part D maintenance drugs using information 
contained within a widely accepted drug database, such as Medi-Span or 
First Databank, we expressly stated that Part D plans would retain 
discretion to determine which database to use.
    We are finalizing the proposed provision at Sec.  423.153(d)(2)(iv) 
with modification. Specifically, we are revising the regulation text to 
clarify that sponsors must include all Part D maintenance drugs and to 
expressly state that Part D sponsors retain the flexibility to include 
all Part D drugs in their targeting criteria. Additionally, we are 
finalizing the requirement that sponsors rely on information contained 
within a widely accepted, commercially or publicly available drug 
information database to identify Part D maintenance drugs. We are also 
updating the text of this provision to reflect that these requirements 
will apply beginning on January 1, 2025. We are not finalizing the 
proposal to lower the maximum number of covered Part D drugs a sponsor 
may require from eight to five drugs at this time.
d. Annual Cost Threshold
    Section 1860D-4(c)(2)(A)(ii) of the Act specifies that 
beneficiaries targeted for MTM must be likely to incur annual costs for 
covered Part D drugs that

[[Page 30478]]

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 2024 is $5,330. 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. 
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 diseases 
and are taking multiple Part D drugs. 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.
    In the December 2022 proposed rule, we proposed to amend the 
regulation at Sec.  423.153(d)(2)(i)(C) to set the MTM cost threshold 
at the average cost of five generic drugs, as defined at Sec.  423.4, 
for plan years beginning on or after January 1, 2024. Under this 
proposal, CMS would calculate the dollar amount of the MTM cost 
threshold based on the average daily cost of a generic drug using the 
PDE data specified at Sec.  423.104(d)(2)(iv)(C). As noted in the 
December 2022 proposed rule, based on 2020 data, the average annual 
cost of five generic drugs was $1,004. In the proposed rule, CMS 
indicated that 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. Based on 2022 PDE data analyzed 
after publication of the December 2022 proposed rule, the average 
annual cost of five generic drugs was $994. In the December 2022 
proposed rule, we noted that in subsequent years, the MTM cost 
threshold would be published in the annual Part D Bidding Instructions 
memo.
    Below, we address comments on the proposed revisions to the annual 
cost threshold and describe our rationale for finalizing a modified MTM 
cost threshold methodology at Sec.  423.153(d)(2)(i)(C) based on the 
average annual cost of eight generic drugs, which will be applicable 
beginning January 1, 2025.
    Comment: Many commenters opposed the proposal to set the MTM cost 
threshold at the average cost of five generic drugs. While many of 
these commenters agreed that the current MTM cost threshold is too 
high, they opposed our proposal to base the cost threshold on the 
average cost of five generic drugs due to the estimated impact on MTM 
program size. Instead, some commenters supported a less significant 
cost threshold reduction. A few commenters suggested that the cost 
threshold is irrelevant as the number of drugs, not their cost, is a 
key metric. A health plan commented that over 40 percent of its 
enrollees would have annual drug costs that meet the proposed MTM cost 
threshold and suggested that the overarching aim should instead be to 
continue targeting enrollees who are at risk for polypharmacy. This 
commenter cited a study suggesting the range of rates of ambulatory 
elderly patients who experience adverse drug reactions is 20 to 25 
percent and that targeting a much larger percentage of Medicare 
Advantage membership to enroll in an MTM program may divert the focus 
from the population that would most benefit from program inclusion. 
Other commenters did not recommend decreasing the cost threshold to 
align with annual average generic drug costs because that would target 
beneficiaries who would not benefit from a CMR consultation regarding 
cost savings opportunities. Another commenter suggested that CMS 
consider increasing the annual cost threshold, instead of decreasing 
it, to better account for inflation in the prescription drug market and 
allow plans to have greater capacity to target MTM services to high 
need members.
    Some commenters suggested alternative proposals for lowering the 
MTM cost threshold. One commenter suggested CMS seek insight from the 
industry, such as the PQA, on how best to adjust the cost threshold. A 
few commenters recommended alternative approaches to establish the cost 
threshold, such as commensurate with the average cost of eight generic 
drugs, a specific dollar amount, the cost of a mix of brand and generic 
drugs as many beneficiaries take at least one brand drug, or an 
incremental approach to decreasing the cost threshold, starting with 
the annual cost of six or seven drugs.
    Response: After considering the comments and suggestions we 
received, we are persuaded to finalize a modified MTM cost threshold 
methodology at Sec.  423.153(d)(2)(i)(C) based on the average annual 
cost of eight generic drugs beginning January 1, 2025. This revised 
cost threshold methodology aligns with our decision not to finalize our 
proposal to reduce the maximum number of covered Part D drugs a sponsor 
may require from eight to five drugs. Lowering the cost threshold 
removes a significant barrier to MTM enrollment, but setting the 
threshold at the cost of eight (instead of five) generic drugs yields a 
more moderate program size expansion, which will address commenters' 
concerns about cost and burden. Encouraging the use of generic or lower 
cost drugs when medically appropriate remains a pillar of the Part D 
program. Under our final policy, beneficiaries meeting the criteria of 
having multiple chronic diseases and taking multiple Part D drugs, but 
who are taking lower cost generic alternatives, may now be targeted for 
MTM enrollment. MTM enrollees, especially those with high drug costs, 
may continue to benefit from cost saving opportunities from CMRs. 
However, even if a CMR consultation does not result in cost savings, 
there are other benefits of CMRs beyond cost savings.
    Comment: Many commenters requested clarification regarding the MTM 
cost threshold calculation, including which five generic drugs will be 
used to determine this new cost threshold; what methodology CMS will 
use to select the drugs; how authorized generics, biosimilars, or un-
branded biologics factor into the determination; whether the proposed 
methodology would utilize the top five utilized generic drugs by 
prescription volume or the top five generic drugs by plan paid amount; 
whether the calculation includes or excludes generic specialty 
medications; whether there is a process to detect outlier national drug 
codes (NDCs) to ensure they are not included in the calculation; and 
whether the cost of five generic drugs is per 30-day supply of 
medication. A few commenters asked if the proposed cost threshold would 
be expected to increase or decrease annually. Another commenter 
suggested that CMS reevaluate cost data for generic drugs, as costs of 
many generic drugs have increased since 2020 due to global supply chain 
issues after the COVID-19 pandemic. One commenter asked if enrollees 
would be required to receive the generic drugs only.
    Response: The average daily cost of one generic drug was calculated 
as total gross drug cost divided by total days supply for all Part D 
covered generic drugs utilized by all Part D enrollees during the plan 
year. The average daily

[[Page 30479]]

cost of one generic drug was then multiplied by eight drugs and 365 
days to compute an average annual cost of eight generic drugs. The 
total gross drug cost used in this calculation is the sum of the 
ingredient cost, dispensing fees, sales tax, and vaccine administration 
fees, if applicable, during the relevant plan year and includes both 
plan paid amounts and enrollee cost sharing. This calculation does not 
include the cost of biologic products or authorized generics. Compound 
drug claims are also excluded.
    Beginning January 1, 2025, CMS will calculate the dollar amount of 
the MTM cost threshold based on the average daily cost of a generic 
drug as determined 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 provision at Sec.  423.104(d)(2)(iv)(C). CMS will 
analyze the PDE data for all Part D covered generic drugs utilized by 
all Part D enrollees during the plan year to calculate the average 
daily cost of one generic fill and multiply the average daily cost of 
one generic fill by 365 days to determine an annual amount. Therefore, 
the cost threshold may change annually. Although average costs for all 
Part D covered generic drug fills will be used to calculate the MTM 
cost threshold, a beneficiary would not be required to only take 
generic drugs to meet the eligibility criteria for MTM, and 
beneficiary-specific drug costs may vary from the averages.
    For example, based on 2022 PDE data, the average annual cost of 
eight generic drugs was $1,591. If the MTM threshold were set at this 
amount, plans would be required to target beneficiaries who are likely 
to incur annual covered Part D drug costs greater than or equal to 
$1,591 (across all Part D drugs they take, not just generic drugs) and 
meet the other MTM targeting criteria for having multiple chronic 
diseases and taking multiple Part D drugs for enrollment in their MTM 
program.
    Based on analysis of 2023 PDE data, the MTM cost threshold will be 
$1,623 for 2025. The MTM cost threshold will be published in the annual 
Part D Bidding Instructions memo for future years.
    Following consideration of the comments received on the cost 
threshold, as well as on the maximum number of Part D drugs plans may 
target, we are finalizing a modified MTM cost threshold methodology at 
Sec.  423.153(d)(2)(i)(C) based on the average annual cost of eight 
generic drugs as defined at Sec.  423.4. This new cost threshold 
methodology will be applicable beginning January 1, 2025.
e. Summary
    After consideration of the comments received, we are finalizing 
proposed changes to the Part D MTM program eligibility requirements 
with the modifications discussed. The changes are effective January 1, 
2025 and are summarized below.
     We are finalizing the provision at Sec.  
423.153(d)(2)(iii) that Part D sponsors must include all core chronic 
diseases in their targeting criteria for identifying beneficiaries who 
have multiple chronic diseases, as provided under Sec.  
423.153(d)(2)(i)(A). As part of this provision at Sec.  
423.153(d)(2)(iii), we are codifying the nine core chronic diseases 
currently identified in guidance and adding HIV/AIDS, for a total of 10 
core chronic diseases. The 10 core chronic diseases are: (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). Sponsors retain the 
flexibility to target additional chronic diseases beyond those codified 
as core chronic diseases.
     We are not finalizing the proposal at Sec.  
423.153(d)(2)(i)(B) to decrease the maximum number of Part D drugs a 
sponsor may require from eight to five at this time. We are retaining 
the maximum number of drugs a plan sponsor may require for targeting 
beneficiaries taking multiple Part D drugs as eight at Sec.  
423.153(d)(2)(i)(B). Part D sponsors will maintain the flexibility to 
set a lower threshold (a number between two and eight Part D drugs) for 
targeting beneficiaries taking multiple Part D drugs. We may revisit 
the maximum number of Part D drugs (eight) a sponsor may require in 
future rulemaking.
     We are finalizing the provision at Sec.  423.153(d)(2)(iv) 
to require sponsors to include all Part D maintenance drugs in their 
targeting criteria with minor modifications to the regulatory text to 
clarify that sponsors must include all Part D maintenance drugs and to 
provide flexibility for sponsors to include all Part D drugs in their 
targeting criteria. However, sponsors will not be permitted to limit 
the Part D maintenance drugs included in MTM targeting criteria to 
specific Part D maintenance drugs or drug classes. We are also 
finalizing the requirement at Sec.  423.153(d)(2)(iv) that, for the 
purpose of identifying Part D maintenance drugs, plans must rely on 
information in a widely accepted, commercially or publicly available 
drug information database.
     We are finalizing the provision at Sec.  
423.153(d)(2)(i)(C) with modification to set the MTM cost threshold at 
the average cost of eight generic drugs, as defined at Sec.  423.4. CMS 
will calculate the dollar amount of the MTM cost threshold based on the 
average daily cost of a generic drug using the PDE data specified at 
Sec.  423.104(d)(2)(iv)(C).
    We believe these final policies will allow us to address specific 
gaps identified in MTM program eligibility by reducing marked 
variability across plans and ensuring more equitable access to MTM 
services; better align with Congressional intent while focusing on 
beneficiaries with complex drug regimens; and keep the program size 
manageable. The changes also take into consideration the burden a 
change in the MTM program size would have on sponsors, MTM vendors, and 
the health care workforce as a whole. With these changes, we estimate 
that the number and percent of Part D enrollees eligible for MTM will 
increase from 3.6 million (7 percent of Part D enrollees based on 
actual 2022 MTM enrollment data) to a total of 7.1 million (13 percent 
of Part D enrollees estimated using 2022 data), which is smaller than 
the estimated program size of 11 million beneficiaries in the December 
2022 proposed rule. Burden estimates and impacts are discussed in 
sections X. and XI. of this proposed rule, respectively.
2. Define ``Unable To Accept an Offer To Participate'' in a 
Comprehensive Medication Review (CMR)
    In guidance issued annually, CMS has consistently stated that we 
consider a beneficiary to be unable to accept an offer to participate 
in a CMR only when the beneficiary is cognitively impaired and cannot 
make decisions regarding their medical needs. In the December 2022 
proposed rule, we proposed 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.

[[Page 30480]]

    We received the following comments on this proposal, and our 
responses follow:
    Comment: A commenter voiced their support for our proposal.
    Response: CMS appreciates the commenter's support.
    Comment: A few commenters opposed or voiced concerns about the 
proposal, stating that many beneficiaries who are not cognitively 
impaired request that their caregiver or a trusted family member 
participate in the CMR on their behalf. For example, one commenter 
mentioned hearing impairment as a barrier for the beneficiary receiving 
the CMR directly from the provider. Another commenter pointed out that 
many beneficiaries receive MTM services in long-term care facilities 
where nurses who manage their medications should be allowed to 
participate in the reviews on the beneficiary's behalf. They argued 
that caregivers should be allowed to participate in the CMR as long as 
HIPAA Privacy Rule policies are not violated, and proper documentation 
is maintained.
    Response: Our proposal to codify the definition of ``unable to 
participate'' does not preclude beneficiaries from inviting other 
individuals to join them for the CMR. MTM enrollees may continue to 
include caregiver or family member participation during the MTM 
process, though we emphasize that MTM is a beneficiary-centric program. 
Instead, this rule codifies the definition of ``unable to 
participate,'' which is different from a beneficiary requesting a CMR 
to be completed with another individual. Generally, we expect the 
beneficiary being ``unable to participate'' due to cognitive impairment 
to be an uncommon designation that should be reported through the Part 
D Reporting Requirements (OMB 0938-0992). We will continue to monitor 
the percentages of beneficiaries who are unable to accept a CMR offer 
for outlier rates, and sponsors should retain documentation supporting 
any instance in which a beneficiary is designated as ``unable to 
participate'' in their reported data.
    CMS would also like to remind plan sponsors that they are expected 
to put in place safeguards against discrimination based on the nature 
of their MTM interventions. Hearing impairment should not prevent a 
beneficiary from receiving MTM services. Relevant federal regulations 
for MTM programs may include Federal Communications Commission 
requirements for accessibility, as defined in 47 CFR part 64 Subpart F; 
Americans with Disabilities Act (ADA): Nondiscrimination on the Basis 
of Disability by Public Accommodations and in Commercial Facilities, 28 
CFR part 36; Nondiscrimination on the Basis of Race, Color, National 
Origin, Sex, Age, or Disability in Health Programs or Activities 
Receiving Federal Financial Assistance and Programs or Activities 
Administered by the Department of Health and Human Services Under Title 
I of the Patient Protection and Affordable Care Act or by Entities 
Established Under Such Title, 45 CFR Part 92; Section 504 of the 
Rehabilitation Act, Nondiscrimination on the Basis of Handicap in 
Programs or Activities Receiving Federal Financial Assistance, 45 CFR 
part 84; and 21st Century Communications and Video Accessibility Act 
(CVAA). Part D sponsors should also refer to the standards for 
communications and marketing found at 42 CFR 423.2267(a).
    After consideration of the comments received, we are finalizing the 
definition of a ``unable to accept an offer to participate'' in a CMR 
as proposed at Sec.  423.153(d)(1)(vii)(B)(2) to provide that a 
beneficiary must be unable to accept the offer to participate in the 
CMR due to cognitive impairment.
3. Requirement for In Person or Synchronous Telehealth Consultation
    As discussed in the December 2022 proposed rule, we proposed to 
amend 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. As discussed in the 
December 2022 proposed rule, 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.
    We received the following comments on this proposal, and our 
responses follow:
    Comment: Several commenters supported clarifying the regulatory 
language on the use of telehealth. A few commenters expressly stated 
that their support for the proposal was conditioned on ``telehealth'' 
including a telephone option. Another commenter expressed concern 
regarding lower levels of engagement due to fewer people wanting in-
person interactions in a pharmacy setting and fewer people answering 
their phone, even when it is their local pharmacy calling.
    Response: We thank these commenters for their feedback and confirm 
that telephonic communication meets the definition of synchronous 
telehealth. We believe updating the regulation to clarify that a CMR 
must include an interactive consultation that is conducted in real-
time, regardless of whether it is done in person or via telehealth, 
will ensure that beneficiaries receiving a CMR via telehealth have the 
same opportunities to engage with their providers in real time as 
beneficiaries who receive a CMR in-person. Sponsors are encouraged to 
offer multiple methods of engagement since beneficiaries may prefer in-
person or telehealth interactions.
    After consideration of the comments received, we are finalizing the 
proposed revisions to Sec.  423.153(d)(1)(vii)(B)(1)(i) without 
modification.
4. MTM Program Technical Changes
    In the December 2022 proposed rule, we proposed several technical 
changes to the regulation text related to the Part D MTM program. At 
Sec.  423.4, we proposed 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 proposed to remove the dash and replace it 
with a period to be consistent with other paragraph headings in Subpart 
D. We proposed 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 proposed to 
replace ``MTMP'' with ``MTM program'' to ensure that the terminology is 
used consistently.
    We did not receive any comments regarding these changes and are 
finalizing these MTM program technical changes as proposed.

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

    At Sec.  423.505(i), we proposed 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 proposed 
that this prior notice be required in contracts with FDRs that perform 
critical functions on the sponsor's behalf, as described in the 
December 2022 proposed rule. We believe this change is necessary to 
protect beneficiaries from disruptions in receiving Part D benefits and 
to protect

[[Page 30481]]

the Part D program from incurring additional financial liability. We 
are finalizing this provision as proposed.
    As discussed in the December 2022 proposed rule preamble, 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.
    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 the 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 was terminated in the middle of March 2021 due, in part, 
to the PDP's 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 
proposed 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 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). Because Part D sponsors are paid 
prospectively and in units of no less than one calendar month, they and 
their subcontractors should be able to negotiate arrangements for 
access to covered Part D drugs in no less than 1-month increments by, 
for example, requiring Part D 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 Part D sponsors because mid-month terminations have been very rare 
to date.
    The proposed provision at new paragraph (6) requires 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 failing to receive necessary drugs or incurring 
unnecessary costs.
    We received comments on this proposal, which are summarized below, 
and respond to them as follows.
    Comment: One commenter requested clarification on whether the 
proposed rule was applicable to terminations initiated by Part D 
sponsors or limited to terminations initiated by FDRs.
    Response: The proposed rule would only apply to terminations 
initiated by FDRs. Part D sponsors would remain free to terminate their 
FDRs mid-month or on less than 60 days' notice if their contracts with 
FDRs permit such terminations. CMS notes that any sponsor seeking to 
terminate an FDR mid-month or on short notice would remain accountable 
for ensuring that its enrollees continue to receive uninterrupted Part 
D benefits in compliance with the statute, regulation, and its contract 
with CMS.
    Comment: A few commenters expressed support for the proposal but 
requested that CMS include an exemption for terminations initiated by 
Part D sponsors based on fraud or member harm.

[[Page 30482]]

    Response: CMS appreciates commenters' support. We note that the 
proposed rule would not limit Part D sponsors' ability to terminate 
their FDRs for any reason. Therefore, sponsors' ability to terminate 
FDR contracts based on fraud or member harm would be unaffected by the 
proposed rule.
    After considerations of the comments and for the reasons outlined 
in the proposed rule and our response to comments, we are finalizing 
the provision as proposed with one grammatical edit regarding 
capitalization.

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

    In the December 2022 proposed rule, we proposed 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 entering into 
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 entering into a new or 
expanded PDP contract in the PDP region(s) they exited and would not 
prevent them from entering into a new or expanded contract in another 
region(s). We also proposed to clarify that the 2-year exclusion 
applies whenever a PDP sponsor terminates all of its plan 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 or mutual termination, 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 or mutual 
termination 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.
    As described in the proposed rule, 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 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 the Part D 
sponsors choosing to stop serving LIS beneficiaries would be only one 
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 proposed to modify Sec. Sec.  423.507(a) 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 2 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 2-year ban.
    Similarly, we proposed 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 proposed 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 received a comment on this proposed provision.
    Comment: The commenter was generally supportive of the proposal and 
of exempting EGWP plans from the 2-year ban following nonrenewal or 
mutual termination. The commenter requested that we also exempt PDP 
PBPs and contracts terminated as part of a consolidation of plans and 
contracts after an acquisition.
    Response: We appreciate the commenter's support for our proposal. 
We understand the commenter's concern regarding the application of the 
2-year ban following a PDP consolidation, but do not believe any 
modification of the proposal is necessary because the termination of a 
PDP contract as part of a consolidation would not trigger the 2-year 
ban so long as the surviving contract continued to offer PDP PBPs in 
the affected regions. A consolidation occurs when two or more PDP 
contracts operated by the same sponsor or by sponsors that are 
subsidiaries of the same parent organization combine into a single 
contract. Consolidations often occur after the acquisition of a sponsor 
by a parent organization that has subsidiaries that offer PDP PBPs in 
the same region as the acquired sponsor. CMS limits the

[[Page 30483]]

number of PDP PBPs that a sponsor (or subsidiaries of the same sponsor) 
can offer to three plans per region under Sec.  423.265(b)(3) and 
consolidations are often required to comply with this requirement 
following an acquisition. So long as the contract into which the plans 
are consolidated continues to offer PDP PBPs in the affected region(s), 
the sponsor (or the sponsor's parent organization) is not exiting the 
region and therefore would not be subject to the 2-year ban on 
reentering the region.
    After consideration of the comments received and for the reasons 
outlined in the proposed rule and our response to those comments, we 
are finalizing the provision as proposed with minor grammatical and 
formatting changes.

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

1. Overview and Summary
    In the December 2022 proposed rule, we proposed 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 defined plan crosswalks and crosswalk exceptions; codified 
the circumstances under which enrollees can be transferred into 
different PDP PBPs from year to year; established the circumstances 
under which enrollees can be transferred into PDP PBPs offering 
different types of prescription drug coverage (``basic'' or ``enhanced 
alternative'' coverage); established the circumstances under which 
enrollees can be transferred due to contract consolidations of PDPs 
held by subsidiaries of the same parent organization; and provided 
protections against excessive premium increases resulting from 
crosswalks. We also proposed to limit the ability of PDP sponsors to 
create new PDP PBPs to replace non-renewing PBPs under certain 
circumstances.
    We requested comment on whether and under what circumstances we 
should permit crosswalks from PBPs offering basic prescription drug 
coverage to PBPs offering enhanced alternative 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 limitations we should place on premium and cost increases for 
enrollees who are crosswalked between different PBPs. We were 
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 proposed to codify the current procedures that a Part D 
sponsor must follow when submitting a crosswalk or crosswalk exception 
request.
2. 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 
codifying 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 proposed to define a plan crosswalk as 
the movement of enrollees from one PDP PBP to another PDP PBP. We noted 
that this definition is consistent with current policy and with the 
definition of crosswalks for MA plans, codified at Sec.  422.530(a)(1).
    We proposed at Sec.  423.530(a)(2)(i) through (iii) to adopt the 
crosswalk prohibitions in current CMS subregulatory guidance, described 
in the ``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 to the CMS 
website at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionbDrugCovbContra/Downloads/Guidance-for-Prescription-Drug-Plan-PDP-Renewals-and-Non-Renewals-.pdf. First, we proposed 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 proposed to 
prohibit crosswalks that split enrollment of one PBP into multiple 
PBPs. Third, we proposed to prohibit crosswalks from PBPs offering 
basic coverage to PBPs offering enhanced alternative coverage.
    In the preamble to the December 2022 proposed rule, we noted that, 
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 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 the December 2022 
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 enhanced alternative PBP might therefore 
have to pay more than they would in the available basic PBP, even if 
the enhanced alternative PBP has a lower overall premium. 87 FR 79602. 
Therefore, we proposed to continue our current policy in order to 
protect LIS-eligible beneficiaries from unanticipated premium 
increases.
    We solicited comments on whether and under what circumstances to 
allow crosswalks from PBPs offering basic prescription drug coverage to 
enhanced alternative coverage. CMS was 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 proposed at Sec.  423.530(a)(3) to require sponsors 
seeking crosswalks to comply with rules in Sec. Sec.  423.506 and 
423.507 governing renewals and non-renewals, respectively. This 
requirement is consistent with the requirement for MA plan crosswalks 
codified at Sec.  422.530(a)(3). We also proposed 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. Finally, 
we proposed 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

[[Page 30484]]

process for enrollment in employer group health or waiver plans, rather 
than in accordance with the proposed provisions of Sec.  423.530. This 
proposal would ensure that the process for enrollment in employer group 
health or waiver plans is not disrupted by this proposed rule.
3. Mandatory Crosswalks (Sec.  423.530(b))
    We proposed 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. As discussed in the December 2022 proposed rule preamble, 
this requirement would continue to apply to PBPs offering both enhanced 
alternative and basic coverage and would continue to facilitate 
evergreen enrollment as required by section 1851(c)(3)(B) of the Act. 
We also noted that the proposal was consistent with the requirements 
for MA renewal crosswalks codified at Sec.  422.530(b)(1)(i).
4. Plan Crosswalk Exceptions (Sec.  423.530(c))
    We proposed at Sec.  423.530(c) to classify consolidated renewal 
and contract consolidation crosswalks as ``crosswalk exceptions.'' We 
proposed to define ``consolidated renewals'' and ``contract 
consolidations'' consistent with the current policy described 
previously in section IV.AD.2. of the December 2022 proposed rule. We 
proposed to codify our current policy for the two types of plan 
crosswalk exceptions with some modifications.
    For consolidated renewals, we proposed to codify current policy at 
Sec.  423.530(c)(1)(i) through (iv) with modifications that balance 
concerns for beneficiaries in non-renewing plans losing coverage with 
concerns about market stability and limiting unexpected premium 
increases. Specifically, we proposed that:
     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.
    We also proposed four major modifications to current policy with 
respect to consolidated renewals:
     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 other requirements 
of Sec.  423.530;
     At Sec.  423.530(c)(1)(v), 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;
     At Sec.  423.530(c)(1)(vi), to prohibit plan crosswalks 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; and
     At Sec.  423.530(c)(1)(vii), to prohibit sponsors that 
fail to request and receive a plan crosswalk exception from offering a 
new enhanced alternative PBP in the same service area for the contract 
year after they non-renew an enhanced alternative PBP.
    As discussed in the preamble to the December 2022 proposed rule, 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 solicited 
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 also requested 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. Finally, we sought comment on 
alternatives to using the base beneficiary premium. Potential 
alternatives included a fixed 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.
    These four proposed changes represented a significant shift from 
current policy. As such, we solicited comments on alternative 
approaches. Possible alternatives included, but were 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 also proposed 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. We proposed 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.
    We proposed the following significant changes to current policy 
with respect to contract consolidations:
     At Sec.  423.530(c)(2)(v), require plan crosswalks from 
non-renewing PBPs offering enhanced alternative coverage into the PBP 
that would result in the lowest premium increase; and
     At Sec.  423.530(c)(2)(vi), 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

[[Page 30485]]

described in Sec.  423.286(c), compared to the current year premium for 
the non-renewing PBP.
5. Procedures for Requesting Plan Crosswalks (Sec.  423.530(d))
    We proposed 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 proposed that a Part D sponsor must submit all mandatory 
plan crosswalks in writing through the bid submission process in HPMS 
by the bid submission deadline. We further proposed that a Part D 
sponsor must submit all plan crosswalk exceptions by the plan crosswalk 
exception request deadline announced annually by CMS. 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 
ultimately request a crosswalk exception through the crosswalk 
exception functionality in HPMS in accordance with the deadline 
announced annually. 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 
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.
6. Response to Comments
    We are finalizing crosswalk requirements for PDPs at Sec.  423.530 
without modification, as discussed in the responses to comments that 
follow.
    Comment: Several commenters asked that we consider plan 
characteristics other than total premiums when determining which plan 
or plans beneficiaries could be crosswalked into. They noted that 
crosswalks can result in more changes than just a change in premium, 
including changes to cost sharing and formulary drugs. They suggested 
that CMS consider factors such as the beneficiary OOPC estimate in the 
plan bid and the formulary composition and structure, in addition to 
the plan premium, when assessing which PBP beneficiaries can be 
crosswalked into in consolidated renewal and contract consolidation 
scenarios.
    Response: CMS acknowledges and shares the concerns that commenters 
expressed regarding the impact that changing PBPs can have on 
individual beneficiaries' costs and access to drugs. However, it is 
very difficult to predict which formulary will be best for the greatest 
number of beneficiaries. CMS reviews all formularies to ensure that 
they contain the required number of Part D drugs from each therapeutic 
category and class and an appropriate range of strengths and dosages of 
those drugs, that utilization management requirements (including prior 
authorization and step therapy requirements) are appropriate, and that 
the formularies otherwise meet all Part D requirements. While this 
ensures that all plans offer appropriate coverage of and access to Part 
D drugs, individual beneficiaries may find that certain formularies 
offer better coverage of, or pricing for, the drugs they utilize. CMS 
does not currently have a methodology to determine whether a particular 
approved formulary will be ``better'' for a group of beneficiaries than 
another approved formulary, given the variety of ways that an 
individual beneficiary may deem a certain formulary ``better'' and the 
diversity of needs from one beneficiary to the next. For instance, one 
beneficiary may find inclusion of utilization management to be off-
putting whereas another values a low tier placement. Despite these 
hypotheticals, premiums have been shown to be a key factor in plan 
choice for beneficiaries.
    Each plan does have an estimated OOPC value, which estimates the 
average monthly out-of-pocket costs for enrollees in a PBP. But while 
that is a useful bid review and actuarial tool, the actual costs 
incurred by beneficiaries are highly variable because they are based on 
characteristics--including but not limited to LIS status, health 
status, medications used, pharmacies chosen--that vary widely among 
beneficiaries. Premiums, on the other hand, are uniform for all 
beneficiaries. We believe that attempting to use other information, 
including OOPC and formulary composition and structure, to determine 
which plans beneficiaries may be crosswalked into is too complicated to 
be practical at this time.
    CMS will continue to encourage beneficiaries to investigate the 
cost and benefits of available Part D plans during each Annual Election 
Period (AEP). Beneficiaries can use Medicare Plan Finder and other 
tools to assess which plans offer the combination of premiums, cost 
sharing, pharmacy networks, and formulary coverage that best meets 
their individual needs. Part D sponsors will continue to be required to 
send Annual Notices of Change (ANOCs), Evidences of Coverage (EOCs) and 
other materials as described in Sec.  423.2267(e) to all beneficiaries 
enrolled in their plans before the AEP so that beneficiaries will have 
information such as formulary coverage, cost sharing, and prior 
authorization requirements to use when comparing plans.
    Comment: A few commenters requested that CMS provide a special 
election period (SEP) to beneficiaries subject to consolidated renewal 
and contract consolidation crosswalks. These commenters believe that 
beneficiaries do not always realize how their Part D benefits are 
changing for the new year and that they may benefit from an SEP so they 
may select new plans after the new plan year begins.
    Response: CMS acknowledges commenters' concerns. However, plan 
premiums, cost sharing, and formularies can significantly change year-
to-year even when beneficiaries are not being crosswalked into a new 
PBP. CMS does not believe that beneficiaries subject to crosswalks, 
particularly with the safeguards we are finalizing in this rule, are 
any more vulnerable to not understanding the resulting changes to their 
Part D benefits than beneficiaries who are continuing in the same PBP 
without being crosswalked. Therefore, we do not believe an SEP is 
appropriate for crosswalked beneficiaries. Crosswalked beneficiaries 
will receive the same notice of changes--the ANOC--that all other 
beneficiaries in continuing Part D coverage will receive before the 
AEP. They will also receive all other required material, including the 
EOC and Summary of Benefits, which provide details about premiums, 
deductibles, and cost sharing for the new plan. CMS continues to 
encourage all beneficiaries to compare available coverage offerings 
during every AEP.
    Comment: One commenter representing a Part D plan requested that 
CMS delay the effective date of the crosswalk provisions until after 
the premium stabilization protections in the Inflation Reduction Act of 
2022 (``IRA'') go into effect.
    Response: CMS notes that the premium stabilization provisions of 
the IRA, which provide a mechanism to limit the growth in the base 
beneficiary premium (used to calculate the plan-specific base premium) 
to a 6 percent increase compared to the previous year, went into effect 
for plan year 2024. There is therefore no need to further

[[Page 30486]]

delay implementation of the crosswalk provisions based on the concerns 
expressed by this commenter.
    Comment: Some commenters opposed limiting consolidated renewal and 
contract consolidation crosswalks to those that would result in the 
lowest premium increase and barring such crosswalks when they would 
result in premium increases greater than 100 percent. These commenters 
believed plans needed greater flexibility in determining the 
appropriate plan into which to crosswalk members. Specifically, they 
wanted CMS to take formulary structure, cost sharing, and network 
composition into account. They also expressed concern over the effect 
that the implementation of various provisions of the IRA would have on 
plan premiums. They were concerned that the cost sharing limits for 
insulin and certain adult vaccines (which went into effect in 2023), 
ending beneficiary cost sharing for covered Part D drugs during the 
catastrophic phase of the benefit (effective in 2024), and the new 
beneficiary Part D out-of-pocket spending limit (effective in 2025), 
among other provisions, will create unanticipated volatility in Part D 
premiums. They requested that if CMS finalizes these requirements as 
proposed, we delay implementation of the provisions of the proposed 
crosswalk regulation that limit premium increases until at least 2026 
to give the market time to adjust to the changes.
    Response: As we noted in the preamble to the proposed rule, 
crosswalks have rarely resulted in premium increases greater than 100 
percent. We therefore do not think it is necessary to preserve 
``flexibility'' for plans to implement such crosswalks in the future. 
We also note that the proposed crosswalk requirements would grant plans 
more flexibility in some respects by allowing them to choose to non-
renew an enhanced alternative plan without crosswalking enrollees into 
another plan. Earlier in this preamble, we also pointed out in response 
to a comment requesting that CMS consider factors other than premiums 
in assessing the appropriateness of a proposed crosswalk that taking 
formulary comparisons or anticipated out-of-pocket costs into account 
would not be practical at this time.
    CMS understands the commenters' concerns about the unanticipated 
consequences of changes to the Part D program required by the IRA. As 
discussed earlier in this preamble in response to another comment, the 
IRA includes a mechanism to limit the growth in the base beneficiary 
premium (used to calculate the plan-specific base premium) for Part D 
plans starting on January 1, 2024. The 2024 Part D premiums reflect 
both the IRA's premium stabilization provisions and its provisions 
limiting cost sharing for covered insulin products and recommended 
adult vaccines and ending beneficiary cost sharing for covered Part D 
drugs during the catastrophic phase of the benefit. Rather than 
increasing, the average total monthly premium for Medicare Part D 
coverage was projected to decrease 1.8 percent from $56.49 in 2023 to 
$55.50 in 2024 for 2024.\20\ We anticipate that premiums will continue 
to remain stable as the IRA is fully implemented.
---------------------------------------------------------------------------

    \20\ CMS Press Release, ``Medicare Advantage and Medicare 
Prescription Drug Programs to Remain Stable in 2024,'' September 26, 
2023, available at https://www.cms.gov/newsroom/press-releases/medicare-advantage-and-medicare-prescription-drug-programs-remain-stable-2024.
---------------------------------------------------------------------------

    While we do not believe it is necessary to suspend or delay these 
elements of the proposed rule, we will delay implementation of this 
proposal until January 1, 2026 to allow time for necessary system 
updates to be made to the CMS systems for the 2026 bid cycle that 
commences in June 2025. To the extent that commenters are concerned 
about the burden of implementing the new crosswalk requirements while 
adjusting to major changes under the IRA, this delay should allay their 
concerns.
    Comment: A commenter recommended allowing LIS beneficiaries to be 
crosswalked from basic to enhanced alternative plans when the premium 
for the enhanced alternative plan is lower than for the available basic 
plan. The commenter believed that this would save the government money 
by reducing LIS payments. The commenter alternatively recommended 
allowing the creation of LIS-only plans to be offered by all sponsors 
to address the unique needs of LIS beneficiaries.
    Response: We thank the commenter for their input. While we 
acknowledge that a lower premium enhanced alternative plan may indeed 
lower the LIS subsidy the government would pay for an LIS beneficiary 
enrolled in the plan, the commenter's recommendation does not address 
the primary reason we prohibit such crosswalks. As we discussed in the 
proposed rule, CMS can only provide the LIS for the portion of the 
monthly beneficiary premium attributable to basic coverage, pursuant to 
Sec.  423.780(b)(1)(i). 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. The commenter's recommendation for an LIS-only 
offering is beyond the scope of our proposal.
    Comment: One commenter requested clarification on how CMS would 
compare a premium increase to the base beneficiary premium when 
considering whether to allow a crosswalk that would result in a premium 
increase of over 100 percent compared to the non-renewing plan's total 
plan premium. The commenter interpreted the requirement proposed for 
Sec.  423.530(c)(1)(vi) and (2)(vi) to compare the base beneficiary 
premium to the premium increase amount, not to the total premium after 
the increase. The commenter interpreted our proposal to allow a 
consolidated renewal or contract consolidation crosswalk if the premium 
increase were the same or lower than the base beneficiary premium and 
asked for confirmation of that interpretation.
    Response: The commenter's interpretation of the proposed language 
is accurate. CMS will evaluate compliance with this requirement by 
comparing the anticipated premium increase for crosswalked 
beneficiaries to the base beneficiary premium.
    Comment: One commenter expressed concern that ``forcing'' plans to 
crosswalk members into certain plans would negatively impact current 
members in those plans by increasing premiums based on the claims 
history of the crosswalked members.
    Response: This commenter appears to confuse our current crosswalk 
policy, which does mandate crosswalks when sponsors non-renew an 
enhanced alternative plan while continuing to offer PDP PBPs in a 
service area, with the proposal, which would no longer require such 
crosswalks. Under the proposed policy, sponsors could choose not to 
perform a consolidated renewal crosswalk for members from a non-
renewing enhanced alternative PDP PBP into another PBP under the same 
contract. CMS would bar the sponsor from creating a new enhanced 
alternative plan to replace the non-renewing one if the sponsor opted 
not to crosswalk membership from the non-renewed plan, but CMS would no 
longer require plans to perform such crosswalks.
    Comment: A commenter expressed general support for codifying the

[[Page 30487]]

crosswalk requirements as proposed because it would create clear 
requirements for PDP crosswalks. They asked that CMS consider other 
factors in the PDP market that create incentives for plan sponsors to 
consolidate PDP offerings and that may result in unnecessary premium 
increases. Specifically, the commenter asked that CMS make 
modifications to the Prescription Drug Hierarchical Condition Category 
(Rx-HCC) Risk Adjustment Model to enhance the predictive power of the 
tool and ensure more appropriate reimbursement to plan sponsors. They 
believe that the current model may no longer adequately mitigate 
against plan sponsors' incentives to engage in risk selection. They 
specifically asked that CMS take steps to reduce the lag time for 
including updated claims data in the model to not more than three 
years.
    Response: CMS appreciates the commenter's support for this proposed 
rule. CMS does not believe there are additional factors related to 
premium increases that could be addressed through our proposed 
crosswalk requirements. The comments regarding the Rx-HCC Risk 
Adjustment Model are beyond the scope of this proposal.
    After considerations of the comments and for the reasons outlined 
in the proposed rule and our response to comments, we are finalizing 
the plan crosswalk provisions as proposed but with minor grammatical 
and formatting changes and a delayed effective date from January 1, 
2025 to January 1, 2026.

I. Call Center Text Telephone (TTY) Services (Sec. Sec.  422.111 and 
423.128)

    We proposed to make a technical change by modifying Sec. Sec.  
422.111(h)(1)(iv)(B) and 423.128(d)(1)(v)(B) to require a plan's call 
center to establish contact with a customer service representative 
within 7 minutes on no fewer than 80 percent of incoming calls 
requiring TTY services, rather than establishing contact with a TTY 
operator within 7 minutes on no fewer than 80 percent of incoming 
calls. Our proposed change was intended to remove any ambiguity that 
might result from our use of the term ``TTY operator,'' because our 
intent was to ensure a beneficiary could establish contact with a 
customer service representative within 7 minutes. 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, when MA organizations 
and Part D sponsors use 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.
    We received several comments supporting and no comments opposing 
this proposal. CMS thanks those in support of our proposal. For the 
reasons outlined in the proposed rule, we are finalizing the revision 
as proposed.

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

1. Overview and Summary
    In the December 2022 proposed rule, we summarized the history of 
our treatment of substantially incomplete applications and proposed to 
amend the language in Sec. Sec.  422.502 and 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 also proposed to codify 
longstanding criteria for determining that an application is 
substantially incomplete. We are finalizing these provisions as 
proposed.
    We proposed 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), we proposed to codify that we do 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 our 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 proposed 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 the MA or Part D application. 
Pursuant to Sec. Sec.  422.501(c) and 423.502(c), entities seeking to 
qualify as an MA organization (or to qualify to offer a specialized MA 
plan for special needs individuals (a SNP)) and/or Part D sponsor to 
must fully complete all parts of a certified application, in the form 
and manner required by CMS. Applications for service area expansions 
are subject to the same rules and review processes because 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 
proposed 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 information and/or materials, 
including failing to include required content or responsive material 
for any section of the application, in their submission by the 
application 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 include (by uploading to the application system) 
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

[[Page 30488]]

few pharmacies that CMS could reasonably 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 an 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 might 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 proposed 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 to file an 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.
    We do 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. We believe 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 received comments on this proposal, which are summarized below:
    Comment: A commenter expressed support for the proposal and 
appreciated the clarifications regarding what constitutes a 
substantially incomplete application.
    Response: CMS appreciates the commenter's support.
    Comment: Several commenters generally supported the proposal but 
requested clarification on what documentation would be sufficient to 
indicate that an application was not substantially incomplete. A few 
commenters specifically requested further clarification on what 
constitutes evidence that a state licensure application was filed. One 
commenter wanted additional clarity on what evidence would indicate 
that a plan made ``best efforts'' to complete an application.
    Response: CMS appreciates the commenters' support. As summarized 
from the proposed rule earlier in this section, an example of a 
substantially incomplete application is one where the organization 
failed to provide evidence of state licensure or documentation that the 
state received a licensure application from the applicant before the 
CMS application due date. When an entity submits, with the MA 
application, documentation that the entity has filed a complete state 
licensure application with the appropriate state before the CMS MA and 
Part D application due date, CMS will not determine that the 
application is substantially incomplete based on a failure to provide 
responsive materials in the state licensure section of the MA 
application. (However, all other portions of the MA application must 
also be complete for CMS to review and evaluate the application.) 
Documentation to demonstrate that the entity has applied for the 
appropriate state licensure for its MA application could consist of a 
copy of the application and a receipt or other documentation that the 
application was sent to and received by the state before the CMS MA and 
Part D application due date. MA organizations must be licensed in the 
state(s) of the service area(s) covered by the application in order to 
ultimately have their application approved by CMS.
    CMS did not propose and does not currently use a ``best efforts'' 
standard for determining whether an application is substantially 
incomplete. In the proposed rule (87 FR 79520), we described an example 
of an MA applicant submitting a list of providers that was so few that 
CMS could only conclude that that applicant had not even made a good 
faith effort to create a complete network by the application deadline, 
which is key to demonstrating the ability to provide adequate access to 
covered services. For example, an application would be substantially 
incomplete if it only included a single pharmacy in the retail pharmacy 
network submission, regardless of how much effort the organization 
submitting the application put into enrolling pharmacies in the 
network. An organization that was acting in good faith would not have 
filed an application wherein they certified they met application 
requirements if they had not been able to enroll more than a single 
pharmacy by the application deadline. While CMS recognizes that it can 
be challenging for an organization to prepare to offer MA and Part D 
plans, CMS expects any organization filing an application to have 
already made sufficient progress in its preparations to provide 
responsive materials to all parts of the application.
    After consideration of the comments and for the reasons outlined in 
the proposed rule and our response to comments, we are finalizing the 
revisions to Sec. Sec.  422.502(a)(3) and 423.503(a)(4) as proposed 
without substantive modification. The final regulation text includes 
minor stylistic changes.

K. Expanding Network Adequacy Requirements for Behavioral Health

    Section 1852(d)(1) of the Act allows 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 assures continuity in the provision of 
benefits. Further, our regulation at Sec.  422.112(a), requires that a 
coordinated care plan maintain a network of appropriate providers that 
is sufficient

[[Page 30489]]

to provide adequate access to covered services to meet the needs of the 
population served. To establish standards for these requirements, CMS 
codified network adequacy criteria and access standards 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. Further, as part of the ``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) proposed rule, hereinafter 
referred to as the ``January 2022 proposed rule,'' we solicited 
comments through a Request for Information (RFI), regarding challenges 
in building MA behavioral health networks and opportunities for 
improving access to services. In response to the RFI, 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. 
As a result, in the ``Medicare Program; Contract Year 2024 Policy and 
Technical Changes to the Medicare Advantage Program, Medicare 
Prescription Drug Benefit Program, Medicare Cost Plan Program, and 
Programs of All-Inclusive Care for the Elderly'' final rule, which 
appeared in the Federal Register on April 12, 2023, (88 FR 22120) 
hereinafter referred to as the ``April 2023 final rule,'' CMS finalized 
the addition of two new specialty types to the provider-specialty types 
list at Sec.  422.116(b)(1), Clinical Psychology and Clinical Social 
Work, to be subject to the specific time and distance and minimum 
provider number requirements used in CMS's network adequacy evaluation.
    While our regulation at Sec.  422.116(b)(3) authorizes the removal 
of a specialty or facility type from the network evaluation criteria 
for a specific year without rulemaking, CMS did not implement a process 
in Sec.  422.116 to add new provider types without rulemaking. In a 
continued effort to address access to behavioral health services within 
MA networks, we proposed to add to the list of provider specialties at 
Sec.  422.116(b) and add corresponding time and distance standards at 
Sec.  422.116(d)(2).
    In addition to meeting the network adequacy evaluation 
requirements, MA organizations are required at Sec.  422.112(a) to 
maintain and consistently monitor their provider networks to ensure 
they are sufficient to provide adequate access to covered services that 
meet the needs of enrollees. This also helps MA organizations maintain 
a complete and accurate health plan provider directory as required 
under Sec. Sec.  422.111(b)(3) and 422.120(b). The Health Plan 
Management System (HPMS) provides MA organizations with access to the 
``Evaluate my Network'' functionality, which allows MA organizations 
the opportunity to test their provider networks against the evaluation 
standards in Sec.  422.116 outside of a formal network review. The 
``Evaluate my Network'' functionality provides MA organizations the 
ability to test their networks using the standards in Sec.  
422.116(a)(2) in different scenarios, including at the Plan Benefit 
Package (PBP) level, to consistently monitor whether their provider 
networks are meeting the current network adequacy standards. We 
encourage MA organizations to utilize the HPMS ``Evaluate my Network'' 
tool to monitor their PBP-level active provider networks and keep 
abreast of any network issues that could hinder access to care for 
enrollees. We also remind MA organizations to report any compliance 
issues or significant changes in their provider network to their CMS 
Account Manager.
    With the revisions applicable to coverage beginning January 1, 
2024, MA organizations are required to demonstrate that they meet 
network adequacy for four behavioral health specialty types: 
psychiatry, clinical psychology, clinical social work, and inpatient 
psychiatric facility services. The Consolidated Appropriations Act 
(CAA), 2023 (Pub. L. 117-328) amended the Act to authorize payment 
under Medicare Part B for services furnished by a Marriage and Family 
Therapist (MFT) and by a Mental Health Counselor (MHC), effective 
January 1, 2024. Specifically, section 4121 of the CAA amends section 
1861(s)(2) of the Act by adding a new subparagraph (II) that 
establishes a new benefit category under Part B for MFT services (as 
defined in section 1861(lll) of the Act) and MHC services (as defined 
in section 1861(lll) of the Act). MA organizations are required to 
cover virtually all Part B covered services. As such, these new 
services must be covered as defined and furnished, respectively, by 
MFTs, as defined in section 1861(lll)(2) of the Act, and MHCs, as 
defined in section 1861(lll)(4) of the Act. As a practical matter, MA 
organizations need to ensure access to these new Medicare-covered 
services that can only be provided by these types of individual 
providers and therefore must contract with these types of providers in 
order to furnish basic benefits as required by section 1852 of the Act 
(when furnished by different providers, the services will be 
supplemental benefits covered by the MA plan).
    In addition, we discussed in the April 2023 final rule that the 
responses CMS received to the January 2022 proposed rule RFI emphasized 
the importance of expanding network adequacy standards to include other 
outpatient behavioral health physicians and health professionals that 
treat substance use disorders (SUDs) to better meet behavioral health 
care needs of enrollees. Medicare fee-for-service claims data for 2020 
shows that Opioid Treatment Program (OTP) providers had the largest 
number of claims for SUD services during that timeframe. At the time of 
publishing our April 2023 final rule, we indicated that while we were 
not able to finalize adding a combined specialty type called 
``Prescribers of Medication for Opioid Use Disorder,'' which included 
OTPs and Medication for Opioid Use Disorder (MOUD) waivered providers 
to the facility-specialty type list in Sec.  422.116(b)(2) as proposed, 
we would consider the appropriateness of setting network adequacy 
standards for OTPs in future rulemaking.
    Considering the statutory changes to section 1861 of the Act as 
mentioned, and our interest in establishing network adequacy standards 
for SUD providers, CMS proposed to amend the MA network adequacy 
requirements to address the new provider types and SUD provider types 
through a combined behavioral health specialty type to include MFTs, 
MHCs, OTPs, Community Mental Health Centers and other behavioral health 
and addiction medicine specialty providers that will help us enhance 
behavioral health access for enrollees. This is consistent with the 
explanation in our April 2023 final rule that setting a meaningful 
access standard for the OTP specialty type will be possible under a 
combined behavioral health specialty type.
    CMS is committed to improving access to behavioral health care 
services for enrollees in the MA program. The

[[Page 30490]]

CMS Behavioral Health Strategy,\21\ aims to improve access and quality 
of mental health care and services, including access to substance use 
disorder prevention and treatment services. We proposed to extend 
network adequacy requirements to additional behavioral health and 
substance use disorder providers and facilities by adding time and 
distance and minimum provider number requirements for a combined 
provider category. Specifically, we proposed to add Outpatient 
Behavioral Health as a new type of facility-specialty in Sec.  
422.116(b)(2) and to add Outpatient Behavioral Health to the time and 
distance requirements in Sec.  422.116(d)(2). For purposes of network 
adequacy evaluations under Sec.  422.116, Outpatient Behavioral Health 
can include, MFTs (as defined in section 1861(lll) of the Act), MHCs 
(as defined in section 1861(lll) of the Act), OTPs (as defined in 
section 1861(jjj) of the Act), Community Mental Health Centers (as 
defined in section 1861(ff)(3)(B) of the Act), or those of the 
following who regularly furnish or will regularly furnish behavioral 
health counseling or therapy services, including, but not limited to, 
psychotherapy or prescription of medication for substance use 
disorders: physician assistants, nurse practitioners, and clinical 
nurse specialists (as defined in section 1861(aa)(5) of the Act); 
addiction medicine physicians; or outpatient mental health and 
substance use treatment facilities. Per Sec.  422.2, the term 
``provider'' means (1) any individual who is engaged in the delivery of 
health care services in a State and is licensed or certified by the 
State to engage in that activity in the State; and (2) any entity that 
is engaged in the delivery of health care services in a State and is 
licensed or certified to deliver those services if such licensing or 
certification is required by State law or regulation. Although we are 
not using the term ``provider'' specifically here in listing the type 
of healthcare professionals that we expect to be available to furnish 
services in order to count for purposes of the proposed new network 
evaluation standard, all applicable laws about the practice of medicine 
and delivery of health care services must be met and specific 
healthcare professionals must be appropriately licensed or certified to 
furnish the applicable services.
---------------------------------------------------------------------------

    \21\ https://www.cms.gov/cms-behavioral-health-strategy.
---------------------------------------------------------------------------

    We proposed to add this combined facility-specialty type instead of 
adding individual provider-specialty types for a few reasons. First, 
data from the U.S. Department of Labor, Bureau of Labor Statistics show 
that currently MFTs and MHCs are generally providing services in 
outpatient behavioral health settings, such as community mental health 
centers, substance abuse treatment centers, hospitals, and some private 
practices. 22 23 These types of clinical settings offer a 
fuller range of services and usually provide access to additional 
providers, such as advanced practice nurses and physician assistants 
who provide counseling and other therapeutic services to individuals 
with behavioral health conditions; our review of the Place of Service 
codes recorded on professional claims for behavioral health services in 
the Medicare FFS program illustrates this. In addition, currently, 
there are a limited number of (if any) claims in the Medicare FFS 
program from MFTs and MHCs; combining the MFT and MHC provider types 
into the ``Outpatient Behavioral Health'' facility type provides time 
for CMS to develop additional data as FFS claims are submitted by MFTs 
and MHCs to show patterns of access to these provider types across the 
country. CMS needs such claims and utilization data to support the 
development of time and distance standards for these particular 
provider-specialty types. Finally, categorizing these provider 
specialties as a facility type is consistent with our practice under 
Sec.  422.116, wherein physical therapy (PT), occupational therapy 
(OT), and speech therapy (ST) providers have traditionally been 
categorized as facility types, even though care is typically furnished 
by individual health care providers. These provider types (that is, PT, 
OT, ST) are reported for network adequacy purposes under facility 
specialty types on Health Service Delivery (HSD) tables.
---------------------------------------------------------------------------

    \22\ Bureau of Labor Statistics, U.S. Department of Labor, 
Occupational Outlook Handbook, Marriage and Family Therapists, at 
https://www.bls.gov/ooh/community-and-social-service/marriage-and-family-therapists.htm (visited July 03, 2023).
    \23\ Bureau of Labor Statistics, U.S. Department of Labor, 
Occupational Outlook Handbook, Substance Abuse, Behavioral Disorder, 
and Mental Health Counselors, at https://www.bls.gov/ooh/community-and-social-service/substance-abuse-behavioral-disorder-and-mental-health-counselors.htm (visited July 06, 2023).
---------------------------------------------------------------------------

    As mentioned previously, the statutory change under the CAA will 
allow MFTs and MHCs to bill Medicare directly for services provided 
beginning January 1, 2024. We acknowledge that these provider types may 
not always be located in facilities and provide facility-based 
services. As such, we will continue to monitor the appropriateness of 
maintaining this proposed new behavioral health specialty type as a 
facility-specialty type (that is, under Sec.  422.116(b)(2)) for 
network adequacy review purposes. Similarly, as the list \24\ of OTPs 
enrolled in Medicare continues to expand, we will continue to monitor 
whether network adequacy for OTPs is best measured under a combined 
facility type for the purpose of network adequacy reviews. Thus, we may 
engage in future rulemaking to revise this requirement if the landscape 
of providers changes such that access will be best evaluated separately 
for MFTs, MHCs, or OTPs instead of under the one facility-specialty 
type we proposed in this rule. Any related changes will be proposed in 
future rulemaking. We proposed that MA organizations are allowed to 
include on their facility HSD tables for the proposed new facility type 
(Outpatient Behavioral Health) the following: contracted individual 
practitioners, group practices, or facilities that are applicable under 
this specialty type. We proposed that MA organizations may not submit a 
single provider for purposes of meeting the Outpatient Behavioral 
Health requirement if they have already submitted that provider under 
another specialty. For example, MA organizations would not be permitted 
to submit a single provider as a psychiatry, clinical social work, or 
clinical psychologist provider specialty and as an Outpatient 
Behavioral Health facility.
---------------------------------------------------------------------------

    \24\ https://data.cms.gov/provider-characteristics/medicare-provider-supplier-enrollment/opioid-treatment-program-providers.
---------------------------------------------------------------------------

    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 facility 
specialty types under Sec.  422.116(b)(2), we proposed base time and 
distance standards in each county type for the new specialty type as 
follows:

[[Page 30491]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.004

    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 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). Further, we explained 
in the February 2020 proposed rule how CMS determines the minimum 
number requirement for all provider and facility specialty types, which 
is now codified in Sec.  422.116(e). We codified at Sec.  
422.116(e)(2)(iii) that all facilities, except for acute inpatient 
hospitals facilities, have a minimum number requirement of one. Because 
we had previously established paragraph (e)(2)(iii) to refer to all 
facility types listed in paragraph (b)(2)(ii) through (xiv) and 
proposed to add Outpatient Behavioral Health as a facility type at 
paragraph (b)(2)(xiv), we did not propose any revisions to paragraph 
(e)(2)(iii). We followed the analysis and methodology described in the 
February 2020 proposed rule to develop the time and distance standards 
that we proposed to apply to the new behavioral health facility-
specialty type described here. However, we utilized updated data, 
including outpatient facility and professional Part B claims data from 
August 1, 2021, through July 31, 2022, to inform our proposed standard.
    Finally, as we indicated in the April 2023 final rule, 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 
(88 FR 22170). Per Sec.  422.116(d)(5), MA plans may receive a 10-
percentage point credit towards the percentage of beneficiaries that 
reside within published time and distance standards for certain 
providers 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. Currently, Sec.  
422.116(d)(5) specifies 14 specialty types for which the 10-percentage 
point credit is available. Because we understand from stakeholders who 
commented on our April 2023 final rule that they were supportive of 
usage of the 10-percentage point credit for behavioral health specialty 
types, we also proposed to add the new Outpatient Behavioral Health 
facility-specialty type to the list at Sec.  422.116(d)(5) of the 
specialty types 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 solicited comments on this proposal. Our responses to the 
comments received are outlined below.
    Comment: Numerous commenters supportive of our proposal to improve 
behavioral health network adequacy standards in MA plans. Commenters 
commended CMS for continuing to work towards increasing access to 
behavioral health and improving health equity for MA enrollees through 
these efforts. However, several commenters expressed concerns regarding 
the proposal to consolidate several specialty and facility types into a 
new single category for purposes of evaluating network adequacy in MA. 
Specifically, commenters expressed concern that combining mental health 
(MH) and substance use disorder (SUD) specialties into one category may 
diminish the distinct access needs for these individual specialty types 
and that the combined standard as proposed was too broad.
    Recognizing the specialized nature of these services, commenters 
advocated for differentiating MH and SUD network adequacy requirements. 
Many commenters recommended establishing separate specialty categories 
for ``Outpatient Mental Health'' and ``Outpatient Substance Use 
Disorder,'' while other commenters suggested separate categories for 
Opioid Treatment Programs (OTPs), and separate standards for MFTs and 
MHCs. Commenters stated that the creation of separate standards for 
these specialties would allow for more visibility for enrollees of the 
availability of these services and better meet enrollees' behavioral 
health and SUD needs.
    Response: We thank commenters for their support and careful 
consideration of our proposal. We agree with stakeholders that 
establishing policies that improve network adequacy is critical to 
improving access to behavioral health care, including access to 
substance use disorder prevention and treatment services in MA.
    We indicated in the November 2023 proposed rule that setting 
meaningful network adequacy standards that include MFTs, MHCs, and OTPs 
at this time is possible under a combined behavioral health specialty 
type. We determined this through our review of U.S. Department of Labor 
data and the Place of Service codes recorded on certain professional 
claims data from 2017-2020 for behavioral health services in the 
Traditional Medicare program, which indicate that MFTs and MHCs are 
generally providing services in outpatient behavioral health 
settings.25 26 As we have also stated in our April 2023 
final rule, setting a meaningful access standard for the OTP specialty 
type would be possible under a combined behavioral health specialty 
type. We are taking this approach to provide additional time for CMS to 
collect the specific claims and utilization data for MFTs and MHCs. We 
may engage in future rulemaking to establish specific time and distance

[[Page 30492]]

standards for these specialties separately. More robust claims and 
utilization data will help us to evaluate how enrollees are accessing 
these benefits in Medicare Advantage and Traditional Medicare. 
Additionally, we noted our intent to continue monitoring the 
availability of OTPs across the country and determine whether network 
adequacy for OTPs is best measured separately from the broader 
Outpatient Behavioral Health facility-specialty type.
---------------------------------------------------------------------------

    \25\ Bureau of Labor Statistics, U.S. Department of Labor, 
Occupational Outlook Handbook, Marriage and Family Therapists, at 
https://www.bls.gov/ooh/community-and-social-service/marriage-and-family-therapists.htm (visited July 03, 2023).
    \26\ Bureau of Labor Statistics, U.S. Department of Labor, 
Occupational Outlook Handbook, Substance Abuse, Behavioral Disorder, 
and Mental Health Counselors, at https://www.bls.gov/ooh/community-and-social-service/substance-abuse-behavioral-disorder-and-mental-health-counselors.htm (visited July 06, 2023).
---------------------------------------------------------------------------

    The Outpatient Behavioral Health facility-specialty type will 
include individual practitioner and facility providers that furnish 
psychotherapy and/or counseling services to individuals with mental 
health or substance use disorders. Our review of certain Traditional 
Medicare claims data from 2017-2020 (Place of Service codes, Type of 
Bill codes, CCN codes, and Revenue Center codes) indicates that 
facility types treat individuals with both mental health disorders and 
substance use disorders. While the individual providers may specialize 
in either mental health or substance use disorder treatment, many of 
the facility providers will offer a variety of services and provider 
types to meet the range of enrollees' behavioral health needs. In the 
absence of more robust utilization and claims data, the Outpatient 
Behavioral Health specialty type should be effective for use in our MA 
plan network adequacy standards at this time.
    Finally, Sec.  422.116(a) requires that each network-based MA plan 
demonstrate that it has an adequate contracted provider network that is 
sufficient to provide access to medically necessary covered services 
consistent with standards in section 1851(d) of the Act, the 
regulations at Sec. Sec.  422.112(a) and 422.114(a), and when required 
by CMS, an MA organization must attest that it has an adequate network 
for access and availability of a specific provider or facility type 
that CMS does not independently evaluate in a given year (see section 
II.A. of this final rule regarding the definition of ``network-based 
plan''). In addition, Sec.  422.112 requires MA coordinated care plans 
(which are network-based plans) to ensure covered services are 
accessible and available to enrollees. Therefore, MA organizations must 
always provide access to all covered services whether or not access to 
a particular provider specialty is specifically evaluated by CMS 
through our network adequacy standards.
    Comment: Many commenters requested that CMS revise the proposed 
Outpatient Behavioral Health time and distance standards to align with 
those already established for Qualified Health Plans (QHPs). Commenters 
emphasized that shortening the standards to reflect the benchmarks set 
for QHPs would potentially benefit enrollees as behavioral health 
services may be needed more frequently. Commenters emphasized that 
aligning these standards would provide consistent and adequate access 
across Federal programs and support operational needs of health plans.
    Response: We are interested in aligning policies across Medicare, 
Marketplace, and Medicaid wherever practicable. However, for MA plans, 
CMS utilizes data on the unique health care utilization patterns and 
geographic locations of Medicare beneficiaries and providers and 
facilities to set the MA network adequacy time and distance as well as 
the minimum provider and facility number requirements under 42 CFR 
422.116. Therefore, at this time, we believe the requirements we 
proposed, and are finalizing in this rule, are appropriate for 
providing access and meeting the health care needs of the specific 
beneficiary population served by this program.
    Comment: Multiple commenters expressed concerns that MA provider 
network adequacy standards could be met utilizing Nurse Practitioners 
(NPs), Physician Assistants (PAs), and Clinical Nurse Specialists 
(CNSs) within the new Outpatient Behavioral Health facility-specialty 
type. Commenters suggested that the absence of clear and transparent 
criteria for incorporating these provider types could result in the 
creation of ``ghost networks,'' and one commenter referred to ghost 
networks as networks where providers may be listed in a provider 
directory without actively treating patients for behavioral health. 
Further, commenters indicated that these provider types (NPs, PAs, 
CNSs) might lack the necessary skills, training, or expertise to 
effectively address the mental health and substance use disorder needs 
of enrollees.
    Response: We appreciate the feedback regarding the inclusion of 
NPs, PAs, and CNSs within the new Outpatient Behavioral Health 
facility-specialty type. We reiterate that the revisions to Sec.  
422.116(b) and (d), as proposed and finalized, mandate that for 
purposes of network adequacy evaluation, providers, including NPs, PAs, 
and CNSs, must regularly furnish or will regularly furnish behavioral 
health counseling or therapy services, including psychotherapy or the 
prescription of medication for substance use disorders, in order for 
those providers to be included in the new facility specialty Outpatient 
Behavioral Health. Further, by defining the new facility specialty 
Outpatient Behavioral Health so broadly, we expect that these 
facilities will generally deliver a comprehensive array of services. 
This includes services from MFTs, MHCs, OTPs, community mental health 
centers, addiction medicine physicians, and outpatient mental health 
and substance use treatment facilities.
    Recognizing the diverse capabilities of NPs, PAs, and CNSs in 
providing services to beneficiaries, CMS acknowledges the concerns 
raised by stakeholders regarding the use of NPs, PAs, and CNSs to 
satisfy the Outpatient Behavioral Health network adequacy standards 
without verifying their qualifications to address and actual practice 
of addressing behavioral health or SUD needs. To address this, we are 
finalizing a clarification in Sec.  422.116(b)(2)(xiv) to limit when MA 
organizations may list an NP, PA, or CNS, for purposes of network 
evaluation under the Outpatient Behavioral Health facility-specialty 
type. Specifically, the final rule establishes a standard to identify 
when an NP, PA, or CNS regularly furnishes, or will furnish, behavioral 
health counseling or therapy services, including psychotherapy or 
medication prescription for SUDs.
    For an NP, PA, or CNS to satisfy the Outpatient Behavioral Health 
network adequacy standards, the NP, PA, and/or CNS must have furnished 
certain psychotherapy or SUD prescribing services to at least 20 
patients within the previous 12-months. The 20-patient threshold is 
consistent with the minimum denominator requirement of several quality 
measures, including many that are measured at the clinician-level in 
the Merit-based incentive payment system (MIPS) in Traditional 
Medicare. If the threshold is an important minimum for individual 
practitioners being held accountable for the quality of care delivered 
in Traditional Medicare, then having a similar threshold here for when 
the practitioner ``regularly furnishes'' behavioral health care will 
ensure that the NP, PA, or CNS is providing a meaningful amount of 
behavioral health counseling or therapy services, including 
psychotherapy or medication prescription for SUDs. In addition, we 
believe the 12-month period timing will provide the best reflection of 
current practice and is a sufficient time predicter of the next year's 
practice by the provider.
    Further, this standard supports the intent that a provider who is 
an NP, PA or CNS, must ``regularly furnish or will regularly furnish'' 
behavioral health

[[Page 30493]]

services. This will help ensure that organizations only include 
providers who have expertise in delivering services to be counted for 
network adequacy purposes. The 12-month and 20 patient threshold 
demonstrates that an NP, PA, or CNS has provided the applicable 
services on an ongoing basis, and it will also provide a standard for 
organizations that wish to utilize these provider types for network 
adequacy evaluation.
    As part of this minimum threshold for identifying that a specific 
PA, NP and CNS regularly furnishes behavioral health services, we are 
adopting specific requirements in new paragraphs (b)(2)(xiv)(A) and (B) 
for how this threshold will be used. The list of psychotherapy or SUD 
prescribing services to be used for this purpose will be identified by 
CMS in the Health Service Delivery (HSD) Reference File (described in 
Sec.  422.116(a)(4)(i)). CMS will identify the applicable services in 
the HSD Reference File, using HCPCS code(s), narrative descriptions, or 
something sufficiently similar to specify the necessary type of 
services on an annual basis.
    The MA organization must annually verify that this standard is met 
by each individual NP, PA and/or CNS it intends to submit for purposes 
of the Outpatient Behavioral Health facility type by analyzing reliable 
information about services furnished by the provider such as the MA 
organization's claims data, prescription drug claims data, electronic 
health records, or similar data. This analysis must be performed at 
least annually using a recent 12-month period and must be completed 
before the MA organization includes the NP, PA and/or CNS to CMS for 
purposes evaluation of the MA organization's network for the Outpatient 
Behavioral Health facility type. If there is insufficient evidence of 
these provider types having previous practice experience sufficient to 
meet the threshold of 20 patients within a recent 12-month period, MA 
organizations must have a reasonable and supportable basis for 
concluding that the provider will meet the threshold in the next 12 
months. If an NP, PA, or CNS is new to independent practice (and 
therefore doesn't have the appropriate claims record in previous 
years), has received psychiatry or addiction medicine specialized 
training, and is listed as a psychiatry or addiction medicine NP, PA, 
or CNS on public-facing websites, this would be a reasonable and 
supportable basis for concluding that the practitioner would meet the 
requirement in the next 12 months, and therefore able to be utilized 
towards meeting network adequacy standards for Outpatient Behavioral 
Health. We are establishing these requirements in Sec.  
422.116(b)(2)(xiv)(B)(1) and (2).
    This requirement is designed to prevent MA organizations from 
including providers in their networks submitted to CMS for review that 
are lacking a history of delivering or intent to deliver behavioral 
health services, thereby improving the reliability of MA organization's 
network's once operational. Further, this requirement will help MA 
organizations identify the requisite services that NPs, PAs, and CNSs 
must provide. MA organizations may be required to demonstrate, in the 
specified form and manner requested by CMS, that the MA organization 
has verified the service provision threshold. These criteria aim to 
enhance transparency and accountability while preventing the formation 
of ``ghost networks.'' This ensures that beneficiaries receive care 
from providers with proven expertise in treating mental health and 
substance use disorders.
    Finally, we are also adopting a requirement, at Sec.  
422.116(b)(2)(xiv)(B)(3) that an MA organization must submit evidence 
and documentation to CMS, upon request and in the form and manner 
specified by CMS, of the MA organization's determination that the PA, 
NP, and/or CNS has furnished or is reasonably expected to furnish one 
or more of the specified psychotherapy or medication prescription to at 
least 20 patients within a 12 month period.
    This provision will help to ensure compliance.
    Comment: Some commenters stressed that network adequacy 
requirements should accurately reflect the actual availability of 
health care providers. These commenters emphasized that CMS should 
tailor its approach to address the unique barriers that underserved 
rural areas face in accessing behavioral health services. Some 
commenters suggested that including NPs, PAs, and CNSs is particularly 
important in rural areas where there is often a shortage of health care 
providers. Commenters noted that NPs are increasingly providing 
behavioral health services, with a significant percentage treating 
conditions like depression in their practice. Commenters supported the 
proposed changes to expand the definition of behavioral health 
providers through the Outpatient Behavioral Health network adequacy 
requirement since it will not only address the provider shortage, but 
also align with the goal of ensuring that MA enrollees have access to 
comprehensive and high-quality behavioral health care.
    Response: We thank commenters for their support of our proposal to 
include certain provider types such as NPs, PAs, and CNSs as part of 
the Outpatient Behavioral Health network adequacy standard. Our network 
adequacy standards take into account the unique access challenges in 
rural areas. Network adequacy is assessed at the county level, and 
counties are classified into five county type designations: Large 
Metro, Metro, Micro, Rural, or CEAC (Counties with Extreme Access 
Considerations), this allows us to set our criteria to represent the 
geographic variations across the United States based on population size 
and density of each county.
    Comment: We received numerous comments supporting our proposal to 
add Outpatient Behavioral Health specialty type to the list at Sec.  
422.116(d)(5), which would provide a 10 percent credit towards the 
percentage of beneficiaries residing within published time and distance 
standards when the plan includes one or more telehealth providers that 
offer additional telehealth benefits as defined in Sec.  422.135 in its 
contracted network. Commenters agreed that network access through 
telehealth benefits is critical, especially for enrollees in rural 
areas where traditional services may be less accessible.
    A few commenters suggested that CMS should increase the telehealth 
credit from the proposed 10 percent up to 30 percent or that we 
increase the credit and make it applicable to all behavioral health 
network adequacy standards under Sec.  422.116(d)(5). Other commenters 
expressed concerns regarding CMS's proposal to add Outpatient 
Behavioral Health to the list at Sec.  422.116(d)(5). Commenters 
cautioned against an over-reliance on telehealth that may not provide 
the same level of care as in-person visits. These commenters emphasized 
the need for telehealth services to adhere to the same capacity and 
accessibility standards as in-person services, including the ability to 
accept new patients and deliver specified services promptly.
    Response: Our decision to extend the telehealth credit for the new 
Outpatient Behavioral Health facility-specialty type is consistent with 
our established practice for MA organizations receiving the credit as 
part of a network adequacy evaluation. As we previously mentioned, 
Medicare Fee-For-Service (FFS) claims data indicated that telehealth 
was the second most common place of service for claims with a

[[Page 30494]]

primary behavioral health diagnosis in 2020.
    The telehealth credit is designed to encourage the use of 
telehealth services but is not a replacement for in-person care. Per 
Sec.  422.116(d)(5), the telehealth credit is available when the MA 
plan includes one or more telehealth providers that provide additional 
telehealth benefits, as defined in Sec.  422.135, in the listed 
specialties. Consistent with Sec.  422.135, MA plans that cover 
additional telehealth benefits must offer enrollees the option to 
choose their preferred mode of care delivery and to access the services 
in person. This requirement underlines our commitment to encouraging 
use of and access to telehealth without compromising the availability 
of in-person care. Providers who receive the telehealth credit are 
listed under Sec.  422.116(d)(5) and currently include all outpatient 
behavioral health providers that are evaluated for network adequacy 
purposes.
    We understand and appreciate the concerns raised about the 
potential over-reliance on telehealth services. We agree it is 
necessary for these services to meet the same standards of capacity and 
accessibility as in-person visits, including the acceptance of new 
patients and the timely delivery of specified services. We recognize 
the careful balance between expanding access through telehealth and 
maintaining the quality and immediacy of care. As we move forward, CMS 
will continue to monitor the effectiveness and impact of the telehealth 
credit on network adequacy, especially in the context of Outpatient 
Behavioral Health services. We remain open to considering adjustments 
to the telehealth credit percentage in future rulemaking based on 
evidence, stakeholder feedback, and the evolving landscape of 
telehealth services. Our goal is to ensure that our policies support 
the effective use of telehealth in enhancing access to care while 
maintaining high standards of care delivery for MA enrollees.
    Comment: Commenters requested clarification from CMS on whether 
primary care practices that integrate behavioral health services, 
including those staffed by MFTs, MHCs, and addiction medicine 
physicians, fall under the ``Outpatient Behavioral Health'' category. 
Commenters expressed that this clarification is critical to accurately 
reflect network adequacy, especially since many MFTs work in medical 
offices that provide behavioral health services.
    Response: We confirm that primary care practices that integrate 
behavioral health services are within the scope of the ``Outpatient 
Behavioral Health'' category provided that the practice includes 
providers of the type listed in Sec.  422.116(b)(2)(xiv), such as MFTs 
and MHCs, and PAs, NPs, CNSs, and addiction medicine physicians who 
regularly furnish or will regularly furnish behavioral health 
counseling or therapy services. These services can be represented at 
the level of individual providers or as a facility, depending on their 
billing practices.
    We are committed to conducting an in-depth evaluation of network 
adequacy, acknowledging the changing landscape of healthcare delivery 
where behavioral health services are becoming an integral part of 
primary care. To that end, CMS annually publishes a Provider Supply 
file (42 CFR 422.116(a)(4)(ii)) that lists available providers and 
facilities and their corresponding office locations and specialty 
types. MA organizations may use this as a resource to identify 
providers and facilities. However, given the dynamic nature of the 
market, MA organizations remain responsible for conducting validation 
of data used for network adequacy review purposes.
    Comment: Some commenters raised concerns regarding the possibility 
of delays in the enrollment of MFTs and MHCs as Medicare providers, as 
these providers will be registering for the first time. Commenters 
suggested that CMS should closely monitor any potential backlogs of 
providers or delay implementation of this rule if such issues arise.
    Response: We are monitoring any potential issues or backlogs with 
MFTs and MHCs enrolling as Medicare providers. We do not foresee any 
such barriers to new provider enrollments at this time, and therefore 
would not need to delay implementation of this rule.
    Comment: Several commenters suggested that CMS should create a 
complete list of qualifications for MFTs and MHCs so that MA plans can 
properly determine and incorporate eligible providers.
    Response: The qualifications for MFTs and MHCs are specified in 
section 1861(lll) of the Act. Specifically, MFT services are defined in 
section 1861(lll)(1) and the term MFT is defined in section 
1861(lll)(2); MHC services are defined in section 1861(lll)(3) and the 
term MHC is defined in section 1861(lll)(4) of the Act. These 
definitions provide the necessary information for MA organizations to 
understand and comply with the requirement to cover Part B covered 
services, which now includes the services furnished by MFTs and MHCs as 
newly defined eligible providers. MA organizations are required to 
cover these services as defined in the Act and ensure that they are 
furnished by providers who meet the qualifications specified in section 
1861(lll)(2) of the Act for MFTs and in section 1861(lll)(4) of the Act 
for MHCs. We also direct readers to the regulations at 42 CFR 410.53 
and 410.54 for CMS regulations on Medicare-covered MFT and MHC 
services.
    Comment: Commenters suggested policy adjustments to allow for more 
realistic and flexible standards for network adequacy in underserved 
rural areas. For example, a few commenters recommended that CMS 
introduce waivers or exceptions to address difficulties faced by plans 
in contracting with a diverse range of providers due to workforce 
shortages.
    Response: We acknowledge the unique circumstances in rural areas. 
CMS already addresses these circumstances when setting network time and 
distance standards according to county type to account for the 
different level of access in existing patterns of care for populations 
in these areas. To further account for the specific landscape in a 
particular area, CMS's time and distance standards measure the 
relationship between the approximate locations of beneficiaries and the 
locations of the network providers and facilities (42 CFR 
422.116(d)(1)(i)). In addition, we have established guidelines under 42 
CFR 422.116(f), which were finalized in our June 2020 final rule, that 
outline the circumstances under which an MA plan may request an 
exception to the network adequacy criteria. These provisions are 
designed to provide flexibility while ensuring that beneficiaries have 
access to necessary healthcare services.
    Comment: Commenters expressed that many behavioral health providers 
possess multiple professional credentials, enabling them to qualify for 
more than one behavioral health specialty category. Commenters 
recommended that CMS permit providers holding multiple credentials to 
be included in the new behavioral health specialty category and be 
counted within each applicable specialty.
    Response: In our proposal, we indicated that MA organizations may 
not submit a single provider as a psychiatry, clinical social work, or 
clinical psychologist provider specialty to meet that network specialty 
requirement and then submit that same provider as an ``Outpatient 
Behavioral Health facility'' to meet this separate standard. 88 FR 
78485. We explained that because Outpatient Behavioral Health is not a 
specialty on its own,

[[Page 30495]]

such as other specialty types like Primary Care Physicians or 
Cardiologists, but rather is an umbrella term for which several 
specialties can be used to meet the requirement, it is important to 
make this distinction. We acknowledge that there are other 
circumstances when providers may hold multiple credentials that enable 
them to be counted under more than one network adequacy standard. We 
clarify here that MA organizations are still allowed to submit these 
types of providers, for purposes of network adequacy evaluation, under 
each applicable category that meets the specialty type requirements as 
defined under statute and meet the requirements of the standard in 
Sec.  422.116. Organizations are responsible for ensuring that the 
contracted providers meet state and federal licensing requirements as 
well as the organization's credentialing requirements for each 
specialty type.
    Comment: A few commenters requested that CMS consider postponing 
the new Outpatient Behavioral Health network adequacy standard until 
2026 in order to provide flexibility for provider certification and 
contracting discussions with the relevant provider types.
    Response: Behavioral health services, including the OTP benefit, 
MFT and MHC services are covered under Traditional Medicare today, so 
MA plans should have a network in place that assures adequate access to 
those services when medically necessary for enrollees under section 
1852(d) of the Act and Sec.  422.112. Therefore, we expect that MA 
organizations are already conducting ongoing work related to provider 
contracting and evaluating prevailing patterns of health care delivery 
in their service areas. We anticipate issuing guidance on the specified 
behavioral health services that need to be regularly furnished by PAs, 
NPs, and CNSs, for them to be submitted under the Outpatient Behavioral 
Health facility-specialty type after release of this final rule so that 
MA organizations can determine how to include those providers in their 
HSD tables for CMS to evaluate the provider network. The applicability 
date of January 1, 2025, of this final rule, provides sufficient time 
for organizations to prepare to include these provider types for the 
formal network adequacy evaluations conducted by CMS under Sec.  
422.116 beginning in 2025.
    Based on our review and consideration of the comments received and 
for the reasons outlined in the proposed rule and our responses to 
comments, we are finalizing these provisions as proposed with 
modifications to outline the criteria MA organizations must use to 
determine when an NP, PA or CNS can be considered as part of a network 
to meet the Outpatient Behavioral Health network adequacy standard. To 
address concerns that NPs, PAs, and CNSs might lack the necessary 
skills, training, or expertise to effectively address the behavioral 
health needs of enrollees and that the absence of criteria for 
incorporating these provider types could result in networks where these 
providers may be listed in a provider directory without actively 
treating patients, '' we are finalizing provisions in Sec.  
422.116(b)(2)(xiv) to establish specific criteria that MA organizations 
must use to determine when an NP, PA or CNS can be considered part of a 
network to meet the Outpatient Behavioral Health network adequacy 
standard. MA organizations must independently verify that the provider 
has furnished or will furnish certain services to 20 patients within a 
recent 12-month period, using reliable information about services 
furnished by the provider such as the MA organization's claims data, 
prescription drug claims data, electronic health records, or similar 
data. For NPs, PAs, or CNSs new to independent practice, MA 
organizations must have a reasonable and supportable basis for 
concluding that the practitioner would meet the requirement in the next 
12 months, including information related to psychiatry or addiction 
medicine specialized training, and that the provider listed as a 
psychiatry or addiction medicine NP, PA, or CNS on public-facing 
websites.

L. Improvements to Drug Management Programs (Sec. Sec.  423.100 and 
423.153)

    Section 1860D-4(c)(5)(A) of the Act requires that Part D sponsors 
have a drug management program (DMP) for beneficiaries at risk of abuse 
or misuse of frequently abused drugs (FADs), currently defined by CMS 
as opioids and benzodiazepines. CMS codified the framework for DMPs at 
Sec.  423.153(f) in the April 16, 2018 final rule ``Medicare Program; 
Contract Year 2019 Policy and Technical Changes to the Medicare 
Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare 
Prescription Drug Programs, and the PACE Program'' (83 FR 16440), 
hereafter referred to as the April 2018 final rule.
    Under current DMP policy, CMS identifies potential at-risk 
beneficiaries (PARBs) who meet the clinical guidelines described at 
Sec.  423.153(f)(16), which CMS refers to as the minimum 
Overutilization Monitoring System (OMS) criteria. CMS, through the OMS, 
reports such beneficiaries to their Part D plans for case management 
under their DMP. There are also supplemental clinical guidelines, or 
supplemental OMS criteria, which Part D sponsors can apply themselves 
to identify additional PARBs. Under Sec.  423.153(f)(2), sponsors are 
required to conduct case management for PARBs, which must include 
informing the beneficiary's prescribers of their potential risk for 
misuse or abuse of FADs and requesting information from the prescribers 
relevant to evaluating the beneficiary's risk, including whether they 
meet the regulatory definition of exempted beneficiary.
    If the sponsor determines through case management that the enrollee 
is an at-risk beneficiary (ARB), after notifying the beneficiary in 
writing, the sponsor may limit their access to opioids and/or 
benzodiazepines to a selected prescriber and/or network pharmacy(ies) 
and/or through a beneficiary-specific point-of-sale claim edit, in 
accordance with the requirements at Sec.  423.153(f)(3). CMS 
regulations at Sec.  423.100 define exempted beneficiary, at-risk 
beneficiary, potential at-risk beneficiary, and frequently abused drug.
1. Definition of Exempted Beneficiary Sec.  423.100
    Section 1860D-4(c)(5)(C)(ii) of the Act defines an exempted 
individual as one who receives hospice care, who is a resident of a 
long-term care facility for which frequently abused drugs are dispensed 
for residents through a contract with a single pharmacy, or who the 
Secretary elects to treat as an exempted individual. At Sec.  423.100 
CMS defines an exempted beneficiary as an enrollee being treated for 
active cancer-related pain, or who has sickle-cell disease, resides in 
a long-term care facility, has elected to receive hospice care, or is 
receiving palliative or end-of-life care.
    The OMS criteria finalized in the April 2018 final rule were 
developed to align with available information and guidelines, such as 
the Centers for Disease Control and Prevention (CDC) Guideline for 
Prescribing Opioids for Chronic Pain (2016 CDC Guideline) issued in 
March 2016.\27\ The current policy to exempt beneficiaries with cancer 
from DMPs was developed through feedback from interested parties and 
alignment with the 2016 CDC Guideline's active cancer treatment 
exclusion. Patients within the scope of

[[Page 30496]]

the 2016 CDC Guideline included cancer survivors with chronic pain who 
have completed cancer treatment, were in clinical remission, and were 
under cancer surveillance only. The 2022 CDC Clinical Practice 
Guideline for Prescribing Opioids for Pain (2022 CDC Guideline) \28\ 
expands and updates the 2016 CDC Guideline to provide evidence-based 
recommendations for prescribing opioid pain medication for acute, 
subacute, and chronic pain for outpatients aged >=18 years, excluding 
pain management related to sickle cell disease, cancer-related pain 
treatment, palliative care, and end-of-life care.
---------------------------------------------------------------------------

    \27\ https://www.cdc.gov/mmwr/volumes/65/rr/rr6501e1.htm.
    \28\ https://www.cdc.gov/mmwr/volumes/71/rr/rr7103a1.htm.
---------------------------------------------------------------------------

    In the interest of alignment with the 2022 CDC Guideline regarding 
applicability in individuals with cancer, we proposed to amend the 
regulatory definition of ``exempted beneficiary'' at Sec.  423.100 by 
replacing the reference to ``active cancer-related pain'' with 
``cancer-related pain.'' With this proposal, we would expand the 
definition of exempted beneficiary to more broadly refer to enrollees 
being treated for cancer-related pain to include beneficiaries 
undergoing active cancer treatment, as well as cancer survivors with 
chronic pain who have completed cancer treatment, are in clinical 
remission, or are under cancer surveillance only.
    We solicited comments on this proposal.
    Comment: Most commenters supported the proposal to expand the 
definition of exempted beneficiary to more broadly refer to enrollees 
being treated for cancer-related pain to include beneficiaries 
undergoing active cancer treatment, as well as cancer survivors with 
chronic pain who have completed cancer treatment, are in clinical 
remission, or are under cancer surveillance only. One commenter 
suggested that expanding the definition to cancer-related pain beyond 
beneficiaries undergoing active cancer treatment better encompasses the 
range of patients with cancer related circumstances who are in need of 
extended pain relief. Other commenters agreed that the proposed 
definition was aligned with the 2022 CDC Guideline regarding 
individuals with cancer or cancer-related pain treatment. Other 
commenters agreed that enrollees being treated for cancer-related pain 
require long-term pain management, commonly including opioid pain 
medications, and thus, should be exempted from DMPs that are intended 
to address potential opioid misuse. Another commenter wanted to ensure 
that patients experiencing pain while not in the active cancer phase 
can still reliably access treatment options. Another commenter agreed 
that many patients in cancer survivorship experiencing pain-related 
lasting effects of treatment or disease should be excluded from these 
exemptions.
    Response: We thank the commenters for their support.
    Comment: A commenter appreciated CMS's efforts to improve the 
definition of an ``exempted beneficiary'' but was concerned that the 
proposal was too broad and would inadvertently include individuals who 
are not experiencing cancer- or cancer treatment-related pain, but 
instead are experiencing pain and have a prior, unrelated cancer 
diagnosis. The commenter wanted to ensure clinicians involved in case 
management will be able to exercise their professional judgement in 
determining whether an opioid used for ``cancer-related pain'' is 
reasonable, particularly when the cancer has been resolved for several 
years and/or required minimal treatment. The commenter wanted to ensure 
that CMS does not change the OMS criteria based on this change in 
definition. The commenter also suggested that a member who meets the 
criteria for identification in the OMS should not be omitted based 
solely on a diagnosis code indicating a history of cancer or cancer-
related pain.
    Response: CMS disagrees that the proposal is too broad. Our 
analysis of beneficiary data estimates only a small increase in 
exempted beneficiaries as a result of the proposed updated definition, 
which we used to estimate burden in the proposed rule. Refer to section 
X. Collection of Information Requirements, ICRs Regarding to 
Improvements to Drug Management Programs in this final rule for 
additional details. Beneficiaries who meet the regulatory definition 
for exempted beneficiary must be exempted from the DMP despite meeting 
all other OMS criteria. CMS attempts to remove exempted beneficiaries 
from OMS reporting; however, we acknowledge that the data we have at 
the time of quarterly OMS reporting may not be complete. Part D 
sponsors must use data available to them or obtained through case 
management to identify exempted beneficiaries, including those who are 
reported by OMS or when the sponsor is reviewing cases and making its 
own determinations based on OMS criteria. Therefore, a Part D sponsor's 
DMP may identify a beneficiary who meets the OMS criteria and allow 
clinicians to perform case management until it is determined that the 
beneficiary is exempt and must be removed from the program. This 
proposal changes the definition of ``exempted beneficiary'' at Sec.  
423.100 and does not change the OMS criteria or clinical guidelines 
described at Sec.  423.153(f)(16).
    Comment: One commenter was concerned with identification of 
patients whose opioid use is appropriately linked to cancer-related 
pain but who are not otherwise receiving active treatment for some form 
of cancer. The commenter pointed out that while plans have access to 
clinical data on members, there is a need to conduct additional 
administrative and clinical reviews of patient records to properly 
exempt individuals meeting this new standard from participation in 
DMPs. The commenter also anticipated a slight increase in the number of 
individuals who will be exempted from DMPs due to cancer-related pain 
under the proposed definition and a transition period in which existing 
processes designed to identify ARBs evolve to match the broader 
exemption for cancer-related pain.
    Response: We acknowledge that there will be a transition period for 
DMPs to adapt their processes for the proposed exemption. Part D 
sponsors may identify exempted beneficiaries before or during case 
management. We expect sponsors to diligently engage in case management, 
but there is no deadline for sponsors to complete it. We also recognize 
that every case is unique and that the time needed for case management 
will vary depending on many factors, such as the complexity of the 
case, and the promptness with which, and whether, prescribers respond 
to sponsors' outreach. While the approach to case management may vary 
based on the facts and circumstances of the case, the general goal of 
case management is to understand why the beneficiary meets the OMS 
criteria and whether a limitation on access to coverage for FADs is 
warranted for the safety of the beneficiary. Thus, Part D sponsors are 
expected to address all cases without unreasonable delay and to triage 
their review of the most concerning cases to the extent possible.
    Comment: A commenter agreed with the proposed updates but 
recommended that CMS establish a clinical documentation code that 
reflects the new definition, as is the case today with ``active cancer-
related pain.'' The commenter suggested that for accurate 
identification of exempted beneficiaries, Part D plans would need 
specific exclusion identifiers for the term ``cancer-related pain.'' 
The commenter also asked that CMS provide guidance allowing case 
management

[[Page 30497]]

documentation to be sufficient for ``cancer-related pain'' in 
situations when there is no code submitted by a provider. Another 
commenter suggested that it would be extremely helpful if CMS could 
indicate in the detailed OMS report the reason why a member was 
identified for DMP review and, when this is based on a diagnosis, when 
the diagnosis was made. The commenter also stated that stand-alone 
Prescription Drug Plans (PDPs) have no access to medical encounter data 
or to the member's medical history and even Medicare Advantage 
Prescription Drug Plans (MA-PDs) lack visibility into events that pre-
date a member's enrollment with the MA-PD.
    Response: We will share all exemption codes used in the OMS 
reporting in the technical user guide, including any codes for cancer-
related pain. Should there be no code for cancer-related pain available 
from a provider, plans should ensure that case management documentation 
is sufficiently clear to justify OMS case responses to CMS.
    We will also consider how best to update future OMS reporting, 
including the level of detail reported for PARBs. As detailed in the 
OMS technical user guide available on the CMS Part D Overutilization 
website,\29\ the quarterly OMS report to Part D sponsors currently 
provides a list of beneficiaries meeting the minimum OMS criteria 
during the measurement period and information including the criteria 
met (i.e., based on level of opioid use from multiple prescribers/
pharmacies (referred to as MIN1) or history of opioid-related overdose 
(referred to as MIN2)).
---------------------------------------------------------------------------

    \29\ https://www.cms.gov/medicare/coverage/prescription-drug-coverage-contracting/improving-drug-utilization-review-controls-part-d.
---------------------------------------------------------------------------

    Comment: Another commenter agreed with the proposed updates to the 
definition of exempted beneficiary but requested further guidance on 
when and how to intervene earlier when it is unclear that a beneficiary 
is using drugs aberrantly, which may increase DMP case volume without 
achieving the program's goal. The commenter also requested that CMS 
publish any criteria under consideration for use.
    Response: While Part D sponsors may not vary the OMS criteria to 
include more or fewer beneficiaries in their DMPs, they may apply the 
criteria more frequently than CMS currently does, which is quarterly. A 
sponsor must remove an exempted beneficiary from a DMP as soon as it 
reliably learns that the beneficiary is exempt (including in their 
internal claims systems), whether that be via the beneficiary, the 
facility, a pharmacy, a prescriber, or an internal or external data 
source. As part of ongoing case management, CMS expects plan sponsors 
to have a process in place to regularly monitor such information for 
enrollees in their DMP, and to take appropriate action expeditiously, 
when they obtain new information. In the November 2023 proposed rule, 
CMS provided information on data analysis and solicited feedback on 
potentially using a machine-learning model to enhance the minimum or 
supplemental OMS criteria in the future. This Request for Information 
is addressed in section III.N. Improvements to Drug Management 
Programs, OMS Criteria Request for Feedback of this final rule.
    Comment: Another commenter agreed with the proposed update but 
added that the CDC Guideline also refers to specialty guidelines as an 
evidence-based resource for pain management in certain populations. A 
commenter noted that the guidelines may be an additional useful 
resource for plans as this policy is updated and implemented. The 
commenter referred to the National Comprehensive Cancer Network (NCCN) 
Clinical Practice Guidelines in Oncology: Adult Cancer Pain, NCCN 
Clinical Practice Guidelines in Oncology: Survivorship, and Management 
of Chronic Pain in Survivors of Adult Cancers: American Society of 
Clinical Oncology Clinical Practice Guideline for recommendations on 
pain management for patients with cancer and patients who have survived 
cancer and American Society of Hematology 2020 Guidelines for Sickle 
Cell Disease: Management of Acute and Chronic Pain.
    Response: We thank the commenter for the feedback and agree that 
CMS should refer Part D sponsors to the guidelines for both cancer-
related pain and sickle-cell disease. We remind Part D sponsors that 
while both cancer-related pain and sickle-cell disease diagnoses exempt 
Part D enrollees from DMPs and coverage limitations on FADs, Part D 
sponsors must still comply with other utilization management 
requirements in Sec.  423.153 to continue to monitor the safe use of 
opioids.
    After reviewing the comments received, we are finalizing the 
proposal to amend the regulatory definition of ``exempted beneficiary'' 
at Sec.  423.100 by replacing the reference to ``active cancer-related 
pain'' with ``cancer-related pain'' without modification.
2. Drug Management Program Notices: Timing and Exceptions Sec.  
423.153(f)(8)
    As discussed above under section III.N. Improvements to Drug 
Management Programs of this final rule, sponsors must provide case 
management for any PARB that meets the OMS criteria to determine 
whether the individual is an ARB and whether to implement a limitation 
on their access to FADs. Under section 1860D-4(c)(5)(B)(i)(I) of the 
Act, a sponsor must send an initial and second notice to such 
beneficiary prior to imposing such limitation. In the April 2018 final 
rule (83 FR 16440), CMS adopted requirements for the initial and second 
notices at Sec. Sec.  423.153(f)(5) and 423.153(f)(6). The initial 
notice must inform the beneficiary that they have been identified as a 
PARB and must include information outlined in Sec.  423.153(f)(5)(ii). 
The second notice must inform the beneficiary that they have been 
identified as an ARB and of the limitations on the beneficiary's 
coverage of FADs, as specified in Sec.  423.153(f)(6)(ii). In the event 
that, after sending an initial notice, a sponsor determines that a PARB 
is not an ARB, a second notice is not sent; instead, an alternate 
second notice is sent. Though not required by the Act, CMS codified a 
requirement at Sec.  423.153(f)(7) to provide an alternate second 
notice for the purpose of informing the beneficiary that they are not 
an ARB and that no limitation on their coverage of FADs will be 
implemented under the DMP.
    Section 1860D-4(c)(5)(B)(iv) of the Act establishes that sponsors 
must send a second notice on a date that is not less than 30 days after 
the initial notice. The 30 days allow sufficient time for the 
beneficiary to provide information relevant to the sponsor's 
determination, including their preferred prescribers and pharmacies. 
CMS codified at Sec.  423.153(f)(8) the timing for providing both the 
second notice and alternate second notice. Currently, CMS requires 
sponsors to send either the second or alternate second notice on a date 
not less than 30 days from the date of the initial notice and not more 
than the earlier of the date the sponsor makes the determination or 60 
days after the date of the initial notice.
    We proposed to change the timeframe within which a sponsor must 
provide an alternate second notice to a beneficiary who is determined 
to be exempt from the DMP subsequent to receiving an initial notice. 
Specifically, we proposed to redesignate existing Sec.  
423.153(f)(8)(ii) as Sec.  423.153(f)(8)(iii), and to revise the text 
at Sec.  423.153(f)(8)(ii) to specify that, for such exempted 
beneficiaries, the sponsor must provide the alternate second notice 
within 3 days of determining the beneficiary is exempt, even if that 
occurs less than 30 days from the date of the initial notice. In other 
words, we proposed to remove the

[[Page 30498]]

requirement that sponsors wait at least 30 days from the date of the 
initial notice to send the alternate second notice to exempted 
beneficiaries.
    Through program oversight, including audits of Part D sponsors, CMS 
has observed that initial notices are sometimes sent to Part D 
enrollees who meet the definition of an exempted beneficiary at Sec.  
423.100, often because the sponsor does not have the necessary 
information--for example, that the enrollee has a cancer diagnosis or 
is receiving palliative care or end-of-life care--at the time the 
sponsor sends the initial notice. However, this information may be 
provided later by the enrollee or their prescriber in response to the 
initial notice. In some cases, sponsors identify exemptions very 
quickly after issuing the initial notice, prior to 30 days elapsing. 
Under current CMS regulations, if a beneficiary meets the definition of 
an exempted beneficiary, the beneficiary does not meet the definition 
of a PARB. For this reason, exempted beneficiaries cannot be placed in 
a Part D sponsor's DMP. Therefore, as stated in the preamble to the 
April 2018 final rule (83 FR 16455), a sponsor must remove an exempted 
beneficiary from a DMP as soon as it reliably learns that the 
beneficiary is exempt (whether that be via the beneficiary, their 
representative, the facility, a pharmacy, a prescriber, or an internal 
or external data source, including an internal claims system). CMS 
understands that sponsors may have already been sending alternate 
second notices after determining that a beneficiary is exempt, without 
waiting for 30 days to elapse. This proposed change would specify that 
sponsors must send such notices to exempted beneficiaries sooner than 
30 days after the provision of the initial notice.
    CMS reminds Part D sponsors that, during their review and during 
case management, they are expected to use all available information to 
identify whether a PARB is exempt in advance of sending an initial 
notice to protect these vulnerable beneficiaries from unnecessary 
burden, anxiety, and disruptions in medically necessary drug therapy. 
Thorough review of plan records and robust outreach efforts to 
prescribers during case management help to minimize the risk that an 
exempted beneficiary would receive an initial notice.
    Sections 8.1 and 8.2.2 of the DMP guidance \30\ state that if a 
sponsor learns that a beneficiary is exempt after sending an initial 
notice, the sponsor should inform the beneficiary that the initial 
notice is rescinded. If less than 30 days have passed since the initial 
notice, a sponsor should send a Part D Drug Management Program 
Retraction Notice for Exempted Beneficiaries. The model retraction 
notice addresses the required 30-day timing issue in the current 
regulation. As proposed, the Part D Drug Management Program Retraction 
Notice for Exempted Beneficiaries would no longer be used because 
sponsors would instead send the alternate second notice. We did not 
estimate any reduction of burden for sponsors no longer using the 
Retraction Notice. The Retraction Notice was implemented as a temporary 
solution for Part D sponsors to use for exempted beneficiaries in place 
of the alternate second notice, which had been accounted for in the 
latest version of CMS-10141 (OMB control number 0938-0964).
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    \30\ https://www.cms.gov/files/zip/cy-2023-part-d-dmp-guidance-april-20-2023.zip.
---------------------------------------------------------------------------

    We note that sponsors may determine that a PARB is not an ARB prior 
to 30 days elapsing for reasons other than the beneficiary being 
exempt. However, we believe the existing 30-day requirement before a 
sponsor may send an alternate second notice in such situations is 
important to maintain because it allows the beneficiary and other 
prescribers enough time to provide the sponsor with information that 
may influence the sponsor's determination.
    We received the following comments on this proposal and our 
responses follow.
    Comment: We received several comments supporting our proposal to 
eliminate the requirement that sponsors wait 30 days to send an 
alternate second notice to a beneficiary determined to be exempt after 
receiving an initial notice. Commenters described the proposal as 
efficacious, reasonable, and aimed at protecting exempted beneficiaries 
from unnecessary burden, including interrupted treatments. No 
commenters opposed this proposal. One commenter expressed support for 
discontinuing use of the Part D DMP Retraction Notice for Exempted 
Beneficiaries, noting that the Retraction Notice would no longer be 
needed under this proposal.
    Response: We thank the commenters for their support and are 
finalizing this provision as proposed.
    We proposed an additional technical change related to the timeframe 
for providing second notices and alternate second notices. The current 
regulation at Sec.  423.153(f)(8)(i) requires that a sponsor provide a 
second notice or alternate second notice not more than the earlier of 
the date the sponsor makes the relevant determination or 60 days after 
the date of the initial notice. It is critical that beneficiaries 
receive timely written notice about changes to their access to Part D 
drugs, as well as information about appeal rights, and the second 
notice and alternate second notices are tied to the date of the plan's 
determination. However, CMS understands that sponsors may not always be 
able to issue printed notices on the exact day they make a 
determination for a variety of reasons, such as they made the 
determination on a day when there is no United States Postal Service 
mail service, or later in the day after files have been sent to a print 
vendor. Specifically, we proposed to add at Sec.  423.153(f)(8)(i)(A) a 
window of up to 3 days to allow for printing and mailing the second 
notice or alternate second notice. We noted in the proposed rule that 
this change would provide sponsors sufficient time to print and mail 
the notices while ensuring that beneficiaries receive timely 
information about DMP limitations. Sponsors must continue to issue 
these notices as soon as possible when a determination is made, and CMS 
does not expect that sponsors will routinely take the maximum amount of 
time.
    We did not propose to change the requirement in Sec.  
423.153(f)(8)(i)(B) that the second notice or alternate second notice 
must be provided no later than 60 days from the date of the initial 
notice. This is because sponsors have ample time to account in advance 
for the days needed to print and mail these notices.
    We received the following comments on this proposal and our 
responses follow.
    Comment: We received several comments on this proposal. Commenters 
were supportive of adding a window of time between making a 
determination and providing the second notice or alternate second 
notice; no commenters were opposed. Most of these commenters noted the 
importance of notifying beneficiaries as soon as practicable about DMP 
determinations.
    Response: CMS thanks the commenters for their support.
    Comment: Several of the commenters that generally supported this 
proposal opined that CMS should allow more than 3 days for sponsors to 
provide the second notice or alternate second notice following a 
determination, and offered specific recommendations, including allowing 
up to 4 days, 5 business days, or 7 calendar days. One commenter stated 
that weekends and holidays would make the proposed 3-day window almost 
impossible to meet. Another commenter opined that sponsors should not 
be held to the same timeframe that applies to written notice of a Part 
D coverage determination

[[Page 30499]]

because of the impracticality of verbally conveying the information in 
a DMP notice prior to mailing the written notice. The commenter instead 
recommended that the timing align with the 7-day window that applies to 
other current requirements, including certain DMP data disclosure 
requirements. One commenter appeared to have misunderstood the existing 
timeframes for providing the second notice and alternate second notice.
    Response: We thank the commenters for their feedback but disagree 
with their recommendations to allow more than 3 days between making the 
determination and providing the notice. These notices contain important 
information concerning a beneficiary's prescription drug access and 
must not be unnecessarily delayed. As described above and in the 
November 2023 proposed rule, there is precedent for establishing a 3-
day window for sponsors to provide a written notice for coverage 
determinations under Sec. Sec.  423.568(d) and (f) and 423.572(b). CMS 
recognizes that the DMP notices do not follow initial verbal 
notification, but that makes timely written notification even more 
important for these cases. Additionally, sponsors already have 
established processes for providing written notices within a 3-day 
timeframe, and these processes can be leveraged for sending DMP 
notices.
    Regarding the data disclosure provision at Sec.  
423.153(f)(15)(ii)(D) that requires sponsors to update DMP information 
in MARx as soon as possible but no later than 7 days from the date the 
sponsor provides an initial notice or second notice to a PARB or ARB or 
terminates a DMP limitation, it is important to note that this 
requirement is unrelated to beneficiary notification and thus not as 
urgent. The purpose of the data disclosure is not comparable to the 
purpose of sending beneficiary notices regarding a restriction on their 
access to Part D drugs; therefore, it is not an appropriate benchmark 
to use to establish this timeframe. CMS does not expect plans to 
routinely take the maximum amount of time possible and reminds sponsors 
that the maximum 60-day timeframe from the date of the initial notice 
is unchanged under our proposal. For example, if a determination is 
made on day 60, the second notice or alternate second notice must be 
provided on the same day.
    Currently, under Sec.  423.153(f)(8)(i), Part D sponsors must 
provide the second notice or the alternate second notice on the date of 
the determination, with no additional window of time for providing 
(i.e., printing and mailing) the written notice. As such, this change 
extends from 0 days to up to 3 days the time sponsors have to provide a 
notice after making a determination. After consideration of the 
comments received and existing Part D beneficiary notice requirements, 
CMS believes this change allows sponsors sufficient time to print and 
mail the notices while ensuring that beneficiaries receive timely 
information about their DMP limitations.
    Comment: Some commenters requested clarification on how CMS will 
calculate the 3-day window for providing the alternate second notice 
and second notice and whether the provision refers to calendar or 
business days. One commenter asked whether CMS intends for plans to 
ensure the DMP notices are mailed within 3 days of the determination, 
or whether CMS intends for the beneficiary to receive the notice within 
3 days of the determination.
    Response: CMS intends that a sponsor will have issued (i.e., 
printed and mailed, or sent electronically if the beneficiary has 
indicated such a preference) the second notice or alternate second 
notice within 3 days of making the relevant determination. We do not 
require sponsors to send these notices in a manner that tracks receipt 
by the beneficiary and consequently would be unable to enforce such a 
timeframe. We further clarify that this proposal refers to calendar 
days, consistent with the other DMP notice requirements specified at 
Sec.  423.153(f)(8) and various beneficiary notice requirements 
throughout Part 423, Subpart M. CMS will update the 2025 DMP guidance 
to provide these clarifications as they relate broadly to the DMP 
beneficiary notice requirements.
    After consideration of the comments received, we are finalizing the 
regulation text at Sec. Sec.  423.153(f)(8)(i)(A) and 423.153(f)(8)(ii) 
as proposed.
3. OMS Criteria Request for Feedback
    CMS regulations at Sec.  423.153(f)(16) specify that CMS and Part D 
sponsors identify PARBs and ARBs using clinical guidelines that are 
developed with stakeholder consultation, derived from expert opinion 
backed by analysis of Medicare data, and include a program size 
estimate. In addition, the clinical guidelines (also referred to as the 
``OMS criteria'') are based on the acquisition of FADs from multiple 
prescribers, multiple pharmacies, the level of FADs used, or any 
combination of these factors, or a history of opioid-related overdose.
    PARBs are the Part D beneficiaries who CMS believes are potentially 
at the highest risk of opioid-related adverse events or overdose. The 
current minimum OMS criteria \31\ identifies PARBs who (1) use opioids 
with an average daily morphine milligram equivalents (MME) of greater 
or equal to 90 mg for any duration during the most recent six months, 
who have received opioids from 3 or more opioid prescribers and 3 or 
more opioid dispensing pharmacies, or from 5 or more opioid prescribers 
regardless of the number of dispensing pharmacies (also referred to as 
``MIN1'' minimum OMS criteria), or (2) have a history of opioid-related 
overdose, with a medical claim with a primary diagnosis of opioid-
related overdose within the most recent 12 months and a Part D opioid 
prescription (not including Medication for Opioid Use Disorder \32\ 
(MOUD)) within the most recent 6 months (also referred to as ``MIN2'' 
minimum OMS criteria). Sponsors may use the current supplemental OMS 
criteria to address plan members who are receiving opioids from a large 
number of prescribers or pharmacies, but who do not meet a particular 
MME threshold. These are (1) use of opioids (regardless of average 
daily MME) during the most recent 6 months; AND (2) 7 or more opioid 
prescribers OR 7 or more opioid dispensing pharmacies.
---------------------------------------------------------------------------

    \31\ April 20, 2023 HPMS memorandum, CORRECTION--Contact Year 
2023 Drug Management Program Guidance available at: https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/rxutilization.
    \32\ Referred to as medication-assisted treatment (MAT) in past 
guidance.
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    In 2019, CMS assigned the Health Federally Funded Research and 
Development Center (FFRDC) to develop evidence-based recommendations 
for improving the OMS criteria for the future. The Health FFRDC 
conducted a literature review, facilitated a Technical Expert Panel 
(TEP), and performed data analyses. All three activities served as 
inputs into the evidence-based recommendations. The Health FFRDC 
recommended that the results of the literature review and data analysis 
support the continued inclusion of average MME, number of opioid 
dispensing pharmacies, and number of opioids prescribers as indicators 
for PARBs. In addition, they recommended that further data analysis 
would be necessary to determine which additional criteria would be 
appropriate to potentially adopt. CMS conducted subsequent literature 
reviews and analysis.
    In recent years, there has been a marked decrease in Part D 
prescription opioid overutilization, but opioid-related overdose deaths 
continue to be

[[Page 30500]]

a growing problem throughout the United States.\33\ While the CDC found 
synthetic opioids (other than methadone) to be the main driver of 
opioid overdose deaths, accounting for 82 percent of all opioid-
involved deaths in 2020,\34\ we must remain vigilant regarding the 
risks of prescription opioids including misuse, opioid use disorder 
(OUD), overdoses, and death. CMS tracks prevalence rates for Part D 
beneficiaries with an OUD \35\ diagnosis and beneficiaries with an 
opioid poisoning (overdose). While overall opioid-related overdose 
prevalence rates among Part D enrollees have declined over the period 
from contract year 2017 through 2021 at about 6.5 percent per annum, 
overall opioid-related overdose prevalence rates increased by 1.0 
percent between 2020 and 2021. Furthermore, about 1.6 percent of all 
Part D enrollees had a provider diagnosed OUD in Contract Year 2021, 
and the OUD prevalence rate has grown by 3.2 percent per annum since 
contract year 2017.
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    \33\ Spencer, Merianne R. et al. (2022). Drug Overdose Deaths in 
the United States, 2001-2021. (457).
    \34\ https://www.cdc.gov/drugoverdose/deaths/synthetic/index.html.
    \35\ CMS used a modified version of the Chronic Condition 
Warehouse (CCW) definition that excludes undiagnosed OUD 
beneficiaries such as those with an opioid OD event and also limits 
analysis to the particular measurement period instead of the prior 
two years.
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    A past overdose is the risk factor most predictive for another 
overdose or suicide-related event.\36\ CMS finalized regulations to 
implement section 2004 of the Substance Use-Disorder Prevention that 
Promotes Opioid Recovery and Treatment for Patients and Communities 
(SUPPORT) Act to include beneficiaries with a history of opioid-related 
overdose as PARBs in DMPs. While the implementation of the SUPPORT ACT 
enables identification of beneficiaries with a history of opioid-
related overdose and continues to identify PARBs who receive high 
levels of opioids through multiple providers who may be more likely to 
misuse prescription opioids,\37\ CMS is working on alternative methods 
to identify beneficiaries potentially at risk before their risk level 
is diagnosed as an OUD or the person experiences an opioid-related 
overdose.
---------------------------------------------------------------------------

    \36\ Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, Katz IR. 
Substance use disorders and the risk of suicide mortality among men 
and women in the U.S. Veterans Health Administration. Addiction. 
2017 Jul;112(7):1193-1201. doi: 10.1111/add.13774.
    \37\ Over 30,000 Part D enrollees met the minimum OMS criteria 
and were reported to sponsors through OMS reports in 2022 (18 
percent met the level of opioid use though multiple provider 
criteria, and 82 percent met the history of history of opioid-
related overdose criteria).
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    A recently published article that evaluated the use of machine 
learning algorithms for predicting opioid overdose risk among Medicare 
beneficiaries taking at least one opioid prescription concluded that 
the machine learning algorithms appear to perform well for risk 
prediction and stratification of opioid overdose especially in 
identifying low-risk groups having minimal risk of overdose.\38\ 
Machine learning is a method of data analysis that automates analytical 
model building, based on the idea that systems can learn from data, 
identify patterns and make decisions with minimal human intervention.
---------------------------------------------------------------------------

    \38\ Lo-Ciganic WH, Huang JL, Zhang HH, Weiss JC, Wu Y, Kwoh CK, 
Donohue JM, Cochran G, Gordon AJ, Malone DC, Kuza CC, Gellad WF. 
Evaluation of Machine-Learning Algorithms for Predicting Opioid 
Overdose Risk Among Medicare Beneficiaries With Opioid 
Prescriptions. JAMA Netw Open. 2019 Mar 1;2(3):e190968. doi: 
10.1001/jamanetworkopen.2019.0968. Erratum in: JAMA Netw Open. 2019 
Jul 3;2(7):e197610. PMID: 30901048; PMCID: PMC6583312.
---------------------------------------------------------------------------

    While we did not propose changes to the clinical guidelines or OMS 
criteria in the November 2023 proposed rule, we provided information on 
our data analysis to date and welcome feedback for future changes. 
Using predictor variables identified through the literature reviews, 
CMS performed a data analysis to determine the top risk factors for 
Part D enrollees at high-risk for one of two outcomes: (1) having a new 
opioid poisoning (overdose) or (2) developing newly diagnosed OUD. 
Since Part D enrollees with a known opioid-related overdose are already 
identified in OMS, CMS focused on individuals at high risk for a new 
opioid-related overdose or OUD. We anticipated no additional sponsor 
burden since we did not propose regulatory changes and solicited 
feedback.
    In the analysis, we utilized Medicare data and traditional logistic 
regression as well as machine learning models like Random Forest, Least 
Absolute Shrinkage and Selection Operator (LASSO), and Extreme Gradient 
Boosting (XGBoost) \39\ Cross Validation (CV) to examine and evaluate 
performance in predicting risk of opioid overdose and OUD. The models 
were compared based on the following criteria: Area Under the Curve 
(AUC), sensitivity, specificity, positive predictive value (PPV), 
negative predictive value (NPV), and number needed to examine (NNE). An 
XGBoost model with CV performed best according to the specified 
criteria and was selected as the model of choice for predicting a 
beneficiary with a new opioid overdose or OUD diagnosis.
---------------------------------------------------------------------------

    \39\ Extreme Gradient Boosting (XGBoost) model--data mining 
technique that is similar to Random Forest that combines multiple 
decision trees into a single strong prediction model, but it differs 
in doing so in an iterative manner by building one tree at a time 
and optimizing a differentiable loss function.
---------------------------------------------------------------------------

    The model population included 6,756,152 Medicare beneficiaries 
contemporaneously enrolled in Part D and Parts A, B, or C during the 
period from January to June 2019, who were prescribed at least one non-
MOUD prescription opioid during the measurement period and did not have 
a DMP exemption (that is, cancer, sickle cell disease, hospice, LTC 
facility resident, palliative care, or end-of-life care). We excluded 
beneficiaries with a prior opioid-related overdose or an OUD diagnosis 
in the year prior to the prediction period. The training dataset used 
to build the model consisted of a random 75 percent sample of the study 
population (5,067,114). The remaining 25 percent of the population 
(1,689,038) was used for validating the prediction performance of the 
model. The measurement period to obtain information for the predictor 
variables (for example, opioid use patterns, demographics, 
comorbidities, etc.) was from January 1 to June 30, 2019, and the 
prediction period we used to identify beneficiaries with a new opioid 
overdose event or new OUD diagnosis was from July 1 to December 31, 
2019.
---------------------------------------------------------------------------

    \40\ Multicollinearity tests were undertaken in order to ensure 
that there was no collinearity among the explanatory variables used 
in the model.
---------------------------------------------------------------------------

    The following risk factors \40\ were incorporated into the XGBoost 
model:
BILLING CODE P

[[Page 30501]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.005

     
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    \41\ The Generic Product Identifier (GPI) designates any or all 
of a drug's group, class, sub-class, name, dosage form, and 
strength.

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[[Page 30502]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.006

    We evaluated the performance of the model using the confusion 
matrix generated by applying the prediction model to the validation 
dataset to calculate various metrics.

[[Page 30503]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.007

[GRAPHIC] [TIFF OMITTED] TR23AP24.008

    The top 15 risk factors that were highly associated with a new OUD 
or opioid-related overdose diagnosis were:

[[Page 30504]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.009

    The number of short-acting prescription opioid fills and the 
average daily MME were found to contribute most to XGBoost model 
predictions of a new OUD or opioid-related overdose diagnosis. Risk was 
present across a range of MME levels and increased with higher MME 
levels. The risk of developing a new OUD or opioid-related overdose 
diagnosis also increased with the number of diagnosed mental health or 
substance use disorders. Utilization of opioids with other high-risk 
medications like anticonvulsants, benzodiazepines, anti-psychotics, and 
anti-anxiety medications were positively associated with higher risk. 
Also, utilization of opioids like oxycodone and morphine were 
positively associated with higher risk, while utilization of codeine, 
tramadol, and opioids in the other category were positively associated 
with lower risk.
    Lastly, we applied our finalized model to data from October 1, 2021 
through March 31, 2022 to predict future new opioid-related overdose 
events and OUD diagnoses during the period from April 1, 2022 to 
September 30, 2022 to understand program size estimates and NNE values.

[[Page 30505]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.010

BILLING CODE C
    Between 9 percent and 15 percent of the beneficiaries with a 
predicted new opioid-related overdose/OUD actually experienced a new 
overdose or OUD diagnosis during the evaluation period (April 1, 2022, 
through September 30, 2022) depending on the Risk Probability 
Threshold. The Top 1 percent threshold (n = 62,571) reported the lowest 
precision score, while the Top 1,000 threshold showed the highest 
precision. Among those who had a new opioid-related overdose/OUD in the 
evaluation period, about 92 percent developed a new OUD; the proportion 
with a new opioid overdose increased from 10 percent to 17 percent as 
the risk probability threshold increased from the Top 1 percent to the 
Top 1,000; and, as the risk probability threshold increased, about 2 
percent to 8 percent had both a new opioid overdose and were identified 
as having a newly diagnosed OUD. Among the different Risk Probability 
Thresholds, between 93 to 98 percent of the correctly predicted new 
overdoses/OUDs do not meet the current OMS criteria. The percentage 
that meets the current OMS criteria decreases as the Risk Probability 
Threshold becomes more restrictive. Thus, our analysis shows that there 
is very little overlap between the population identified through this 
model and beneficiaries already identified through the OMS.\42\ 
Furthermore, our analysis confirms that machine learning models can 
analyze large datasets and identify complex patterns that are not 
easily discernible by current non-statistical approaches. This makes 
them a powerful tool for identifying new opioid-related overdose or OUD 
risk and capturing an additional population of potential at-risk 
beneficiaries who have not been identified through our current OMS 
criteria.
---------------------------------------------------------------------------

    \42\ CMS also notes that historically, only about 1.6 percent of 
the beneficiaries meeting the history of opioid-related overdose 
(MIN2) OMS criteria also meet the (MIN1) minimum OMS criteria.
---------------------------------------------------------------------------

    In the November 2023 proposed rule, we discussed that CMS next 
plans to assess risk in the model, validate the stability of the model 
as new data become available, and develop guidelines on how to feasibly 
implement the model into the existing DMP and OMS processes. We 
solicited feedback on the following:
     Potentially using such a model to enhance the minimum or 
supplemental OMS criteria in the future (either in addition to the 
current criteria or as a replacement).
     How to avoid the stigma and/or misapplication of 
identification of a PARB at high risk for a new opioid-related overdose 
or OUD using the variables in the model.
     Implementation considerations, such as effectively 
conducting case management, as described in 423.153(f)(2), with 
prescribers of PARBs identified by the model; opportunities to promote 
MOUD, co-prescribing of naloxone, or care coordination; or potential 
unintended consequences for access to needed medications.
     Other factors to consider.
    Comment: Commenters supported our machine learning model approach 
or further testing. Several commenters encouraged CMS to provide a 
demographic breakdown or the fairness analysis used to evaluate the 
model. Several commenters suggested that CMS use clearly defined risk 
factors that foster case management, ensure correctness of the risk 
factors used, or focus on distinguishing factors to identify at-risk 
beneficiaries and to minimize misapplication of the criteria for 
beneficiaries with low risk of overdose or OUD. One commenter 
recommended methods to better identify overdose risk such as removing 
beneficiaries who do not show continuous use of opioids after an 
overdose event and shortening look back windows.
    Response: We thank the commenters for their support of our machine 
learning model approach and thoughtful input. CMS will consider the 
feedback, and we will proceed with further testing to improve the model 
and risk factors.

[[Page 30506]]

The model focused on Part D beneficiaries at high-risk of one of two 
outcomes: (1) having a new opioid poisoning (overdose) or (2) 
developing newly diagnosed OUD. Since Part D beneficiaries with a known 
opioid-related overdose are already identified in OMS, CMS focused on 
individuals at high risk for a new opioid-related overdose or OUD. CMS 
also excluded beneficiaries with a prior opioid-related overdose or an 
OUD diagnosis in the year prior to the prediction period. Also, we did 
include demographic factors in the initial model and a few of the 
factors were highly associated with a new OUD or opioid-related 
overdose diagnosis as described above and in the November 2023 proposed 
rule. We will look for opportunities to provide additional details or 
output from the analysis after we conduct more testing.
    Comment: Some commenters recommended that CMS assess whether any 
new criteria resulting from the use of such model could unintentionally 
lead providers to be less likely to diagnose someone with OUD, as that, 
in turn, would decrease access to MOUD.
    Response: We will evaluate unintentional consequences of using 
updated criteria that may affect the likelihood of diagnosing 
beneficiaries with OUD. We encourage sponsors and prescribers to 
promote co-prescribing of naloxone, MOUD, or other treatment referrals 
through the DMP case management process.
    Comment: Some commenters requested sufficient lead time and proper 
communication language be in place before CMS implements any changes.
    Response: We did not propose changes to the clinical guidelines or 
OMS criteria in the November 2023 proposed rule. Changes would be 
proposed through a future notice of proposed rulemaking with sufficient 
lead time and guidance, if finalized.

M. Codification of Complaints Resolution Timelines and Other 
Requirements Related to the Complaints Tracking Module (CTM) (42 CFR 
417.472(l), 422.125, 423.129, and 460.119)

    CMS maintains the CTM in the Health Plan Management System (HPMS) 
as the central repository for complaints received by CMS from various 
sources, including, but not limited to the Medicare Ombudsman, CMS 
contractors, 1-800-MEDICARE, and CMS websites. The CTM was developed in 
2006 and is the system used to comply with the requirement of section 
3311 of the Affordable Care Act for the Secretary to develop and 
maintain a system for tracking complaints about MA and Part D plans 
received by CMS, CMS contractors, the Medicare Ombudsman, and others. 
Complaints from beneficiaries, providers, and their representatives 
regarding their Medicare Advantage (MA) organizations, Cost plans, 
Programs of All-inclusive Care for the Elderly (PACE) organizations, 
and Part D sponsors are recorded in the CTM and assigned to the 
appropriate MA organization (MAO), Cost plan, PACE organization, and 
Part D sponsor if CMS determines the plan, organization, or sponsor is 
responsible for resolving the complaint. Unless otherwise noted, 
``plans'' applies to MAOs, Part D sponsors, Cost plans, and PACE 
organizations for purposes of this section.
    We proposed to codify existing guidance for the timeliness of 
complaint resolution by plans in the CTM. Currently, Sec. Sec.  
422.504(a)(15) and 423.505(b)(22) require MAOs and Part D sponsors to 
address and resolve complaints received by CMS against the MAO and Part 
D sponsor through the CTM; we proposed to codify the expectation in 
guidance that Cost plans and PACE organizations also address and 
resolve complaints in the CTM. We proposed to codify the existing 
priority levels for complaints based on how quickly a beneficiary needs 
to access care or services and to codify a new requirement for plans to 
make first contact with individuals filing non-immediate need 
complaints within 3 calendar days. This timeframe will not apply to 
immediate need complaints because those complaints need to be resolved 
within two calendar days.
    CMS codified the requirement for MAOs and Part D sponsors to 
address and resolve complaints in the CTM at Sec. Sec.  422.504(a)(15) 
and 423.505(b)(22) in the ``Medicare Program; Changes to the Medicare 
Advantage and the Medicare Prescription Drug Benefit Programs for 
Contract Year 2012 and Other Changes'' (76 FR 21431), which appeared in 
the April 15, 2011 Federal Register (hereafter referred to as the 
``April 2011 final rule''). As described in the April 2011 final rule, 
the regulation requires that MAOs and Part D sponsors provide a summary 
of the resolution in the CTM when a complaint is resolved. (76 FR 
21470)
    As Part D sponsors, Cost plans and PACE organizations that offer 
Part D coverage have been required to comply with Sec.  423.505(b)(22). 
We proposed to add language to Sec. Sec.  417.472(l) and 460.119 to 
codify in the Cost plan regulations and PACE regulations, respectively, 
the requirement that Cost plans and PACE organizations address and 
resolve complaints in the CTM. This proposed new requirement will apply 
to all complaints in the CTM for Cost plans and PACE organizations, not 
just complaints about Part D.
    In addition, CMS has issued guidance describing our expectations 
for how complaints should be handled. In the Complaints Tracking Module 
Plan Standard Operational Procedures (CTM SOP), the most recent version 
of which was released on May 10, 2019, via HPMS memo,\43\ CMS provides 
detailed procedures for plans to use when accessing and using the CTM 
to resolve complaints. This includes describing the criteria CMS uses 
in designating certain complaints as ``immediate need'' or ``urgent'' 
(all other complaints are categorized ``No Issue Level'' in the CTM), 
setting forth our expectation that plans should review all complaints 
at intake, and documentation requirements for entering complaint 
resolutions in the CTM. The CTM SOP defines an ``immediate need 
complaint'' for MAOs, Cost plans, and PACE organizations as ``a 
complaint where a beneficiary has no access to care and an immediate 
need exists.'' For Part D sponsors, ``an immediate need complaint is 
defined as a complaint that is related to a beneficiary's need for 
medication where the beneficiary has two or less days of medication 
remaining.'' The CTM SOP defines an ``urgent complaint'' for MAOs, Cost 
plans, and PACE organizations as a complaint that ``involves a 
situation where the beneficiary has no access to care, but no immediate 
need exists.'' For Part D sponsors, ``an urgent complaint is defined as 
a complaint that is related to the beneficiary's need for medication 
where the beneficiary has 3 to 14 days of medication left.''
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    \43\ Available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/ctm%20plan%20sop%20eff053019.pdf.
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    In Chapter 7, section 70.1 of the Prescription Drug Benefit Manual, 
``Medication Therapy Management and Quality Improvement Program,'' \44\ 
CMS requires Part D sponsors to resolve any ``immediate need'' 
complaints within two (2) calendar days of receipt into the CTM and any 
``urgent'' complaints within seven (7) calendar days of receipt into 
the CTM. Chapter 7, section 70.1 also sets forth CMS's expectation that 
Part D sponsors promptly review CTM complaints and notify the enrollee 
of the plan's action as expeditiously as the case requires based on the 
enrollee's health status.
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    \44\ Available at https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/dwnlds/chapter7pdf.

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[[Page 30507]]

    Requirements for resolution of complaints received in the CTM do 
not override requirements related to the handling of appeals and 
grievances set forth in 42 CFR part 422 subpart M (which apply to cost 
plans as well as MAOs per Sec.  417.600), Part 423 subpart M, for Part 
D sponsors, and Sec. Sec.  460.120-460.124 for PACE organizations. 
Rather, CTM requirements supplement the appeals and grievance 
requirements by specifying how organizations must handle complaints 
received by CMS in the CTM and passed along to the plan. The 
requirement for organizations to enter information on the resolution of 
complaints in the CTM within specified time periods allows CMS to track 
and ensure accountability for complaints CMS itself received, either 
directly from beneficiaries or via entries in the CTM from the Medicare 
ombudsman, CMS contractors, or others. A beneficiary who filed a 
complaint directly with CMS may later contact CMS to find out the 
status of the complaint and the plan's use of the system will allow CMS 
to answer the beneficiaries inquires more expeditiously. In order to 
comply with the applicable regulations, plans must handle any CTM 
complaint that is also an appeal or grievance within the meaning of the 
regulation in such a way that complies with the notice, timeliness, 
procedural, and other requirements of the regulations governing appeals 
and grievances.
    We proposed to codify the timeliness requirements for MAOs and Part 
D plans at new Sec. Sec.  422.125 and 423.129, both titled ``Resolution 
of Complaints in Complaints Tracking Module.'' We proposed to codify 
these requirements for Cost plans and PACE organizations at Sec. Sec.  
417.472(l) and 460.119 by adopting Sec. Sec.  422.504(a)(15) and 
422.125 by reference into the requirements for Cost plans and PACE 
organizations, respectively.
    Specifically, we proposed to codify at Sec. Sec.  422.125(a) and 
423.129(a) the definitions of ``immediate need'' and ``urgent'' 
complaints in substantially the same way as they are currently defined 
in guidance for MA and Part D-related complaints. However, we proposed 
to specify that immediate need and urgent complaints for MA plans (as 
well as Cost plans, and PACE) also include situations where a 
beneficiary has access to enough of a drug or supply to last fewer than 
2 days or from 3 to 14 days, respectively, as part of the definition 
that these complaints are about situations that prevent the beneficiary 
from accessing care or a service. This proposed change recognizes that 
some complaints to an MAO (or Cost plan or PACE organization) may 
overlap with Part D access, such as when a beneficiary reports a 
problem with their enrollment in an MA-PD plan that is blocking access 
to Part D coverage. The change also recognizes that non-Part D MA, Cost 
plan, and PACE complaints relate not just to access to physician 
services but to drugs and supplies that may be covered by the MA plan, 
Cost plan, or PACE organization's non-Part D benefit (for example, Part 
B drugs or diabetic test strips covered under the medical benefit of an 
MA plan). Further, MA plans, Cost plans, and PACE also cover Part B 
drugs.
    We also proposed to codify at Sec. Sec.  422.125(b) and 423.129(b) 
the current timeframes reflected in section 70.2 of Chapter 7 of the 
Prescription Drug Benefit Manual for resolving immediate need and 
urgent complaints. A two (2) calendar day deadline for resolving plan-
related immediate need complaints is both consistent with current 
practice by plans and logically follows from the definition of an 
``immediate need'' complaint. By its nature, an immediate need 
complaint requires swift action. Because we define immediate need, in 
part, as a situation where a beneficiary has access to two or fewer 
days' worth of a drug or supply they need, a timeline greater than two 
calendar days for resolving a complaint would represent an unacceptable 
risk to beneficiaries.
    Similarly, a 7 calendar day deadline for ``urgent'' complaints 
reflects the importance of not delaying resolution of a situation that 
is preventing access to care or services a beneficiary needs. Because 
we define ``urgent'' in part as a situation where a beneficiary has 3 
to 14 days' worth of a drug or supply they need, allowing more than a 
week to elapse before resolving the complaint will put beneficiaries at 
unacceptable risk of not receiving replacement drugs or supplies 
timely.
    For all other Part D and non-Part D complaints in the CTM, we 
proposed requiring resolution within 30 days of receipt. This is 
consistent with current practice and the guidance in section 70.2 of 
Chapter 7 of the Prescription Drug Benefit Manual, and we believe will 
prevent complaints from lingering for months without resolution in the 
CTM. Further, a 30-day timeframe for resolving complaints in the CTM 
aligns with the 30-day period provided in Sec. Sec.  422.564(e) and 
423.564(e) for resolution of grievances. Although those regulations 
permit an extension of up to 14 days for resolving the grievance if the 
enrollee requests the extension or if the organization justifies a need 
for additional information and documents how the delay is in the 
interest of the enrollee, we do not believe that including the 
authority to extend the deadline to resolve complaints in the CTM is 
appropriate because complaints received into the CTM are often the 
result of failed attempts to resolve issues directly with the plan. 
Allowing plans to further extend the time to resolve the complaint only 
allows further delays in addressing beneficiary concerns. Moreover, 
recent evidence indicates that the vast majority of non-immediate need 
or urgent complaints are resolved within 30 days--98 percent of such 
complaints were resolved by plans within 30 days in 2022.
    All timeframes for resolution will continue to be measured from the 
date a complaint is assigned to a plan in the CTM, rather than the date 
the plan retrieves the complaint from the CTM. This is consistent with 
current guidance and practice. Measuring the timeframe in this manner 
is the best way to protect beneficiaries from delayed resolution of 
complaints and encourages organizations to continue retrieving CTM 
complaints in a timely manner so that they have sufficient time to 
resolve complaints.
    We do not anticipate that plans will have difficulty meeting these 
timeframes. The vast majority of complaints are currently resolved in 
the timelines specified for the priority level of the complaint. For 
example, in 2022, plans resolved 97 percent of complaints within the 
required time frames for the level of complaint. Plans resolved 94 
percent of immediate need complaints within two (2) calendar days, 97 
percent of urgent complaints within seven (7) calendar days, and 98 
percent of complaints with no issue level designated within thirty (30) 
calendar days. Codifying the timeframes as proposed merely formalizes 
CMS's current expectations and the level of responsiveness currently 
practiced by plans.
    We also proposed to create a new requirement for plans to contact 
individuals filing non-immediate need complaints. At Sec. Sec.  
422.125(c) and 423.129(c), we proposed to require plans to contact the 
individual filing a complaint within three (3) calendar days of the 
complaint being assigned to a plan. While current guidance generally 
includes the expectation that organizations inform individuals of the 
progress of their complaint, CMS has never specified a timeframe for 
reaching out to a complainant. CMS has observed that, particularly for 
complaints that are not assigned a priority level, plans sometimes wait 
until the timeframe for resolution has almost elapsed to contact the 
complainant. Because the timeframe

[[Page 30508]]

for resolving uncategorized complaints is 30 days, an individual who 
files a complaint may wait weeks to hear back from the plan responsible 
for resolving it. We believe that such delays cause unnecessary 
frustration for beneficiaries and are inconsistent with the customer 
service we expect from plans.
    We acknowledge that our proposed timeframe for reaching out to the 
complainant concerning a CTM complaint is more specific than our 
requirement at Sec. Sec.  422.564(b) and 423.564(b) for plans to 
``promptly inform the enrollee whether the complaint is subject to its 
grievance procedures or its appeals procedures.'' We proposed a 
specific timeframe for contacting the beneficiary regarding a CTM 
complaint because, unlike with complaints received by the plans outside 
the CTM, the complainant has not reached out directly to the plan and 
may not know that their complaint has been passed on to the plan by CMS 
via the CTM. Moreover, as previously noted, CMS monitors the handling 
of complaints it receives through the CTM in real time. Part of 
handling CTM complaints through the CTM, as required by Sec. Sec.  
422.504(a)(15) and 423.505(b)(22), is entering information into the CTM 
when the plan reaches out to the complainant. CMS will therefore be 
able to monitor whether a plan has reached out to a beneficiary within 
the required timeframe and follow up with the plan well before 
timeframe for resolving the complaint has elapsed.
    We proposed a three (3) calendar day timeframe for reaching out to 
the individual filing the complaint because it will provide a timely 
update to individuals filing both urgent and uncategorized complaints 
without delaying resolution of immediate need complaints. We expect 
that a plan will indicate in this communication that the plan has 
received and is working on the complaint, and that they provide contact 
information that the individual filing the complaint could use to 
follow up with the plan regarding the complaint. We solicited comment 
on whether this timeframe is appropriate and whether a longer or 
shorter timeframe will better balance the needs of beneficiaries with 
the capacity of plans to respond to complaints.
    We also proposed conforming changes to Sec. Sec.  422.504(a)(15) 
and 423.505(b)(22) to incorporate the proposed new requirements into 
the existing contractual requirements for MAOs and Part D sponsors. The 
proposed revisions to Sec. Sec.  417.472(l) and 460.119 incorporate 
both the requirements in proposed Sec.  422.125 and the requirement for 
a contract term for resolving complaints received by CMS through the 
CTM for Cost plans and PACE organizations and their contracts with CMS.
    We received comments on the proposal and our responses to the 
comments are below.
    Comment: Several commenters supported the proposed rule, with one 
noting that they support any effort to improve the timeliness and 
transparency associated with enrollee complaints to MA plans. One 
organization was particularly appreciative of CMS's goal to ensure that 
beneficiaries receive a timely response to complaints. Another 
commenter likewise expressed the need to codify a timeline for letting 
complainants know that the plan had received the complaint, stating 
that beneficiaries and their representatives frequently have no idea if 
a plan has received and is addressing the complaint.
    Response: We appreciate the support for our proposal. We agree that 
establishing clear timelines for MA plans, Cost plans, PACE 
organizations and Part D plans to respond to CTM complaints is 
important.
    Comment: A few comments supported the proposal and suggested that 
CMS adopt measures to promote greater transparency and accountability 
for beneficiary and provider complaints. Specifically, they suggested 
making CTM complaints publicly available on Medicare Plan Finder or 
elsewhere, carefully monitoring trends in CTM complaints and use them 
to focus CMS audits, creating an online portal for all stakeholders to 
enter complaints about plans, and creating a provider hotline similar 
to 1-800-MEDICARE specifically for providers to submit complaints.
    Response: We appreciate the commenter's support. While the 
commenter's suggestions are out of scope for the proposed rule, we will 
consider them as we continue to explore ways to improve transparency 
and accountability. We already closely monitor CTM complaints and that 
complaint rates are used to calculate Star Ratings for MA and Part D 
plans.
    Comment: A commenter supported the proposal, but expressed concern 
that many CTM complaints appear to be the result from MAO attempts to 
shield denials of coverage from review by the Independent Review 
Entities (IREs) that handle reconsiderations of adverse appeals and 
coverage determination decisions by MAOs and Part D sponsors. The 
commenter was particularly concerned that CMS does not appear to have 
an effective mechanism to monitor what should have been sent to the IRE 
for review but was not.
    Response: This comment is out of scope for this proposal, but we 
appreciate the commenter's concern. We agree it is critical for MAOs, 
Part D sponsors and cost plan organizations (which must comply with the 
MA appeal regulations per Sec.  417.600) to send all of the cases to 
the IRE that should be sent to the IRE. See section VII.E of this rule 
for a discussion of our revision to the process for identifying data 
completeness issues at the IRE and calculating scaled reductions for 
the Part C appeals measures to help ensure that all of the cases that 
should be sent to the IRE are sent.
    Comment: A commenter expressed concern with CMS's statements that 
CTM complaints must be handled as appeals or grievances when 
appropriate. The commenter stated that treating all CTM complaints as 
appeals or grievances would result in conflicting timeframes for 
resolution and duplicative communications to members. The commenter 
requested clarification of whether CMS expects all complaints to be 
treated as appeals or grievances and, if not, whether complaints that 
are appeals or grievances would be held to the CTM timeframes in 
addition to the appeals and grievance timeframes.
    Response: We understand the commenter's concern. We wish to clarify 
that CTM complaints should only be treated as appeals or grievances 
when they otherwise meet the definition of appeals or grievances under 
the applicable regulations. We note that MA and Part D appeals and 
grievances must be resolved ``as expeditiously as the case requires'' 
and that this would require resolution of the appeal or grievance 
within the proposed timeframe for immediate need and urgent complaints 
if the appeal or grievance involved a service or drug for which the 
beneficiary has a need that meets the definition of ``immediate need'' 
or ``urgent'' that we proposed and are finalizing in Sec. Sec.  422.125 
and 423.129. See Sec. Sec.  422.564(e)(1), 422.630(e) and 423.564(e)(1) 
regarding the timeline for responses to enrollee appeals and 
grievances. Although the regulations at Sec. Sec.  422.564(e)(2), 
422.630(e)(2), and 423.564(e)(2) permit the 30-day timeframe resolution 
of grievances to be extended by up to 14 days if the enrollee requests 
the extension or if the organization justifies a need for additional 
information and documents how the delay is in the interest of the 
enrollee, the stricter timing requirements for CTM complaints addressed 
in Sec. Sec.  422.125 and 423.129

[[Page 30509]]

will control where a CTM complaint has been filed.
    Similarly, PACE service determinations and appeals must be resolved 
as ``expeditiously as the participant's condition requires'', but no 
later than three days after the request is received for service 
determinations, 30 days after the request is received for appeals, and 
72 hours after the appeal request is received for expedited appeals. 
See Sec. Sec.  460.121(i), 460.122(c)(6), and 460.122(f) regarding the 
timelines for response to PACE participant service determination 
requests and appeals and the definition of expedited appeals. Pursuant 
to provisions of this rule, PACE grievances must also be resolved as 
``expeditiously as the case requires,'' but no later than 30 calendar 
days after the PACE organization receives the grievance. See section 
XI.H of this rule, adopting changes to Sec.  460.120, including a 
timeline for resolution of PACE grievances at Sec.  460.120(g). 
Immediate need complaints that also qualify as PACE grievances, service 
determination requests, appeals, or expedited appeals therefore need to 
be resolved within two days under both PACE requirements and the 
requirements of this rule. Although the regulations at Sec. Sec.  
460.121(i)(1) and 460.122(f)(3) allow the timeline for resolution of 
service determination requests and expedited appeals to be extended by 
five days or 14 days, respectively, under certain circumstances, the 
stricter timing requirements for CTM complaints addressed in Sec. Sec.  
422.125 and 423.129 will control where a CTM complaint has been filed 
in the same way they would for MA and Part D grievances.
    Because existing CMS regulations explicitly permit extension for MA 
and Part D appeals and grievances, we do not think it is appropriate to 
penalize an organization for extending the resolution of a non-
immediate need and non-urgent CTM complaint that meets the definition 
of an MA or Part D appeal or grievance. Therefore we are adding a new 
paragraph (4) to Sec. Sec.  422.125(b) and 423.129(b) to allow 
organizations to extend the timeline to respond to a CTM complaint if 
the complaint is also a grievance within the scope of Sec. Sec.  
422.564, 422.630 or 423.564 and if it meets the requirements for an 
extension of time under Sec. Sec.  422.564[euro](2), 422.630(e)(2), or 
423.564(e)(2) as applicable. (Depending on the type of organization--MA 
plan, applicable integrated plan, Part D plan, or cost plan the 
specific regulation that governs the time frame for responding to a 
grievance will vary.) This extension will not be available for any 
complaint that meets the definition of an immediate need complaint or 
urgent complaint or that requires expedited treatment under Sec. Sec.  
422.564(f), 422.630(d), or 423.564(f) because such a delay would 
present an unacceptable risk of harm to the beneficiary. PACE 
organizations are not permitted to extend the 30-day timeframe for 
resolution grievances under the revisions to Sec.  460.120 finalized in 
this rule or for non-expedited appeals under Sec.  460.122(c)(6) and 
service determinations must be resolved within eight days even with the 
permitted five-day extension under Sec.  460.121(i), so it is not 
necessary to allow an extension of the 30-day timeline for non-
immediate need and non-urgent complaints that also qualify as PACE 
grievances, service determination requests, or appeals.
    We also acknowledge the potential conflict between the timelines 
for resolving immediate need complaints or urgent complaints and the 
requirement for organizations to respond within 24-hours to MA and Part 
D grievances that meet the definition of ``expedited grievances'' under 
Sec. Sec.  422.564(f), 422.630(d), and 423.564(f). Similarly, there is 
a potential conflict between the timeline for resolving urgent 
complaints and the three days and 72 hours permitted to respond to PACE 
service determination requests and expedited appeals under Sec. Sec.  
460.121(i) and 460.122(f)(2). We did not intend to allow organizations 
to take longer to resolve an expedited MA or Part D grievance or PACE 
service determination request or expedited appeal than is currently 
required under the regulation merely because the grievance, service 
determination request, or appeal was received as a CTM complaint. 
Therefore, we are adding a new paragraph (5) to Sec. Sec.  422.125(b) 
and 423.129(b) to make clear that organizations must comply with the 
shortest applicable timeframe for resolving a CTM complaint when the 
complaint also qualifies as a grievance, PACE service determination 
request, or PACE appeal. By shortest applicable timeframe, we mean the 
timeframe that (1) applies under this new CTM provision for the type of 
complaint (that is, immediate need complaint, urgent complaint, or 
other type of CTM complaint), the grievance regulation (that is 
Sec. Sec.  422.56, 422.630, 423.564, or 460.120), or the PACE service 
determination or appeals regulation (that is Sec. Sec.  460.121 or 
460.122) and (2) is the shortest of those two applicable time frames. 
So, if a CTM complaint qualifies as both an urgent complaint and an 
expedited MA or Part D grievance, the organization responsible for 
responding to the complaint would be required to do so within 24 hours, 
as required by Sec. Sec.  422.564(f), 422.630(d), and 423.564(f), and 
not within the seven days permitted under Sec. Sec.  422.125(b)(2) and 
423.129(b)(2) for urgent complaints. Similarly, with respect to the 
requirement for organizations to contact the individual making the 
complaint in the CTM within a specific timeframe, we expect that 
organizations will meet this timeframe for CTM complaints that also 
meet the definition of MA, Part D, or PACE grievances. To the extent 
that the requirement in Sec. Sec.  422.564(b) and 423.564(b) to 
``promptly inform the enrollee whether the complaint is subject to its 
grievance procedures or its appeals procedures'' would permit 
organizations to take longer than seven days to notify enrollees, 
Sec. Sec.  422.125(c) and 423.129(c) would nevertheless require 
organizations to contact individuals who file a complaint that 
qualifies as a grievance in the CTM within seven days.
    Comment: A commenter recommended shorter timeframes for resolving 
complaints submitted in the CTM. The commenter urged CMS to require 
that immediate need complaints be resolved within 24 hours and that all 
other cases be resolved within 72 hours. The commenter noted that this 
would reflect timelines for the appeals processes for Part B drugs and 
Part D benefits, which require that decisions be made ``as soon as the 
beneficiary requires'' but not later than 72 hours for standard 
requests (Sec. Sec.  422.568 and 423.568) and 24 hours for expedited 
requests (Sec. Sec.  422.572 and 423.572). The commenter noted that a 
seven-day resolution timeline for urgent complaints in which patients 
have three to fourteen days of treatment left would potentially leave 
patients without needed care for four days.
    Response: We acknowledge that some complaints may require quicker 
resolution than the timeframes currently required for CTM complaints. 
As previously discussed, we expect organizations to treat complaints 
that meet the definition of appeals or grievances in a manner 
consistent with the requirements prescribed in the regulation for 
handling appeals and grievances. When a CTM complaint is actually an 
appeal, the organization must comply with the appeal regulations; 
nothing in the new regulations we are finalizing to address handling of 
CTM complaints changes or creates an exception to the appeal 
regulations that apply to cost plans, MA plans (including applicable 
integrated plans), Part D plans or PACE

[[Page 30510]]

organizations. We are finalizing a new paragraph (b)(4) as part of 
Sec. Sec.  422.125 and 423.129 to make clear that organizations should 
comply with the shortest timeline called for in the applicable 
regulations when the timeliness requirements related to CTM complaints 
and grievances both apply. Therefore, an organization would have to 
respond to an immediate need complaint that also meets the definition 
of an expedited grievance within the 24 hours required by Sec. Sec.  
422.564(f), 422.630(d), or 423.564(f). Similarly, if an urgent 
complaint meets the definition of a grievance under Sec. Sec.  422.561 
and 423.560, or a PACE service determination request or appeal under 
Sec. Sec.  460.121 and 460.122, and involves a beneficiary with only 
four days of medication remaining, the organization would be required 
to resolve the issue within four days because Sec. Sec.  422.564I(1), 
422.630(e), 423.564(e)(1), 460.121(i), and 460.122(c)(6) require 
organization notify an enrollee of its decision on a grievance (or PACE 
service determination request or appeal) ``as expeditiously as the case 
requires'' based on the enrollee's health status.
    The resolution timeframes of two days for immediate need 
complaints, seven days for urgent complaints, and 30 days for all other 
CTM complaints have been in effect for many years and we do not have 
evidence that beneficiaries entitled to quicker resolutions under the 
regulations for grievances have had those resolutions delayed as a 
result. We are finalizing the resolution timeframes for CTM complaints 
as proposed in Sec. Sec.  422.125 and 423.129 with the modifications 
described for Sec. Sec.  422.125(b)(4) & (5) and 423.129(b)(4) & (5), 
but we will continue to monitor CTM complaint resolutions and appeals 
and grievances procedures and records for evidence that the CTM 
resolution timeframes are causing unnecessary delays in the resolution 
of appeals and grievances.
    Comment: A commenter supported the proposed requirement to contact 
complainants within three days of filing a CTM complaint but 
recommended that CMS require organizations to provide beneficiaries 
with the CTM complaint ID number in addition to the plan contact 
information. The commenter also recommended that CMS require plans to 
document the contact within one to two business days of making the 
contact.
    Response: We appreciate the commenter's support. We agree that 
organizations should provide the complainant with the CTM complaint ID 
number when reaching out to them regarding the complaint. However, we 
do not believe that it is necessary to codify this expectation at this 
time. Individuals filing CTM complaints receive the complaint ID number 
when they call 1-800-MEDICARE, and we do not think organizations 
reaching out to complainants would ordinarily fail to provide this 
information when contacting the individual to update them on the status 
of the complaint. We also agree that organizations should update the 
CTM promptly when contacting complainants and resolving complaints. We 
currently monitor CTMs on an ongoing basis and our experience is that 
organizations meet this expectation. Therefore, we do not believe that 
it is necessary to codify this expectation at this time.
    Comment: A commenter noted that their State guidance requires 
health plans to acknowledge a complaint within ten days. They 
questioned whether there was a way to align the CMS requirement with 
the State requirement.
    Response: We recognize that States may have different expectations 
with respect to handling complaints. However, State insurance laws 
other than licensure and solvency do not apply to MA plans under 
section 1856(b)(3) of the Act, and we do not believe that it is 
necessary or practical to allow organizations a longer time to contact 
complainants or resolve complaints merely because a State may permit 
longer timeframes for other types of health plans. We expect and will 
continue to expect MA plans, cost plans, Part D plans, and PACE 
organizations to meet the federal timeframes for beneficiary contact 
and complaint resolution adopted here (or in other applicable laws).
    Comment: A commenter was generally supportive of the proposal but 
noted that complaints related to D-SNPs may require action from State 
Medicaid agencies, which may require longer to resolve. The commenter 
recommended that CMS modify the proposal to account for the need to 
involve State Medicaid agencies in the resolution of D-SNP complaints.
    Response: We appreciate the commenter's support and acknowledge 
that some complaints for D-SNPs may require action by or input from 
State agencies or others that are not bound by CMS requirements. 
However, we do not believe a modification related to potential 
involvement of a State Medicaid agency to the requirements we proposed 
and are finalizing in this rule is necessary. Some CTM complaints have 
always required action by or input from outside agencies. This has not 
caused any significant delays in complaint resolution. Our experience 
is that most States recognize the need to resolve urgent complaints and 
immediate need complaints quickly and that States rarely take longer 
than 30 days to respond to other complaints. Isolated complaints may 
take longer to resolve as a result of inaction by outside agencies, but 
we do not believe that it is necessary to extend the timeframe for 
resolution to account for these outlier events. Rather, we will 
continue to exercise its discretion to take into account such outliers 
when determining whether compliance or enforcement actions are 
necessary in a particular circumstance.
    Comment: A few commenters expressed concern that CMS would expect 
organizations to actually make contact with beneficiaries within the 
required timeframes, rather than requiring them to attempt to make 
contact. They requested that CMS clarify whether an attempt to make 
contact within the specified timeframe would satisfy the requirement. 
They also requested that CMS clarify the means by which the 
organization make contact.
    Response: We recognize that beneficiaries are not always available 
to receive calls when plans reach out to them. We are therefore 
finalizing the proposed regulations at Sec. Sec.  422.125(c) and 
423.129(c) rule with a modification to clarify that organizations 
attempt to make contact with individuals filing complaints in the CTM 
within the specified timeframe. We believe that this ensures that plans 
will reach out to complainants in a timely manner without creating an 
unrealistic expectation that plans be able to reach complainants who 
may not be available to receive calls or other communications within 
the specified timeframes.
    We also recognize that plans have many ways to contact 
beneficiaries, including by phone or mail. We expect plans to attempt 
to contact complainants regarding time sensitive matters by the most 
expeditious means available. We also expect that plans would generally 
use the same method to reach out to complainants as the complainants 
used to file complaints. Generally, this would require that plans 
attempt to contact complainants by phone, since this is the way the 
vast majority of complaints are made and the quickest way to reach 
individuals in real time. Our experience operating the CTM indicates 
that organizations do attempt to contact complainants by phone. We 
therefore do not believe that it is necessary to explicitly codify this 
expectation at this time. However, we

[[Page 30511]]

will continue to monitor CTM complaints to ensure that organizations 
continue to observe best practices for reaching out to complainants.
    Comment: Several commenters requested greater flexibility in the 
timeframes for resolving CTM complaints and reaching out to individuals 
filing complaints. Some requested that CMS use a business day standard 
rather than a calendar day standard, stating that it would allow PACE 
organization to better manage communications outside of weekends and 
holidays. One commenter suggested extending the time period for 
contacting a complainant to five calendar days as an alternative to a 
business day standard to balance the need for timely communication 
against PACE organizations' need for flexibility. Another commenter was 
concerned that contacting the complainant within three calendar days of 
filing a complaint does not guarantee that the individual will get 
meaningful feedback and may result in beneficiary confusion regarding 
the status of their complaint. Some commenters believe that requiring 
contact within three calendar days for a complaint that MAOs and Part D 
sponsors have 30 days to resolve would negatively impact the resources 
needed to investigate and resolve immediate need and urgent cases. They 
noted that they already strive to reach out within four to seven days 
for urgent and uncategorized complaints. One commenter also noted that 
beneficiaries often express frustration with receiving calls at 
inopportune times, such as on holidays, especially when the complaint 
is not an immediate need complaint.
    Response: We appreciate the commenters' desire for greater 
flexibility and the difficulty plans may experience in meeting a 3-
calendar day timeframe for reaching out to beneficiaries. However, we 
do not believe that switching from a calendar day to a business day 
standard would be the best way to balance the needs of the beneficiary 
for transparency with the plans' needs for flexibility. The need for 
health care services can occur at any time, regardless of holidays or 
business schedules. Moreover, different states and territories 
celebrate different holidays, making it difficult for us to hold plans 
accountable to a uniform standard that is based on business days. We 
have long applied a calendar day standard to requirements related to 
complaints, as well as to appeals and grievances. It would therefore be 
inconsistent to switch to a business day standard when codifying CTM 
resolution requirements.
    We also do not share the commenter's concern that contacting 
complainants before a complaint has been resolved would be premature or 
confusing. As discussed previously, one of the major purposes of 
requiring organizations to contact individuals filing complaints before 
the complaint has been resolved is to ensure that the complainant knows 
that the organization has received and is working to resolve the 
complaint. We do not believe such communications would be confusing for 
beneficiaries.
    However, we do recognize that a three-calendar day requirement to 
contact beneficiaries is a new requirement that may prove difficult for 
organizations to adhere to and that it may not significantly improve 
the beneficiary experience such that burden is sufficiently outweighed. 
Based on these comments, we are finalizing a slightly longer deadline 
by which organizations must attempt to contact individuals filing non-
immediate need complaints as finalized Sec. Sec.  422.125(c) and 
423.129(c) require organizations to attempt to contact the complainant 
within 7 calendar days of the organization being assigned the complaint 
from the CTM. We believe that this strikes a balance between providing 
individuals timely information regarding the handling of their 
complaints with plans' valid concerns about being able to meet a 
shorter timeframe. We also believe that this will address commenter's 
concerns about the difficulty of contacting beneficiaries on non-
business days--it is unusual for an organization to have more than two 
or three consecutive non-business days in a 7-day period, so 
organizations should be able to meet the longer 7-day timeframe 
regardless of whether a complaint was received immediately before a 
weekend or holiday.
    Final Decision: We thank commenters for their input. We note that 
comments were generally supportive, with many commenters representing 
plans requesting more flexibility and some commenters representing 
beneficiaries and providers requesting more stringent requirements and 
improved transparency. We received several comments requesting greater 
public transparency for CTM complaints and increased scrutiny of plans' 
handling of appeals and grievances that were out of scope for the 
proposal, but which we will take into account as we continue to monitor 
plan performance in these areas. Based on the comments received and for 
the reasons outlined in the proposed rule and our responses to 
comments, we are finalizing the proposed rule with four significant 
modifications: (1) changing the requirement to make contact to a 
requirement to attempt contact, (2) adding language that permits the 
extension of time to resolve non-immediate need and non-urgent 
complaints that also qualify as non-expedited grievances in a manner 
consistent with the extension permitted for grievances under Sec. Sec.  
422.564, 422.630, and 423.564, (3) adding language that requires 
organizations to adhere to the shortest timeframe required by the 
regulation for CTM complaints and grievances when a CTM complaint also 
qualifies as a grievance; and (4) requiring that organizations contact 
individuals filing complaints within 7 calendar days rather than 3 
calendar days.

N. Changes to an Approved Formulary--Including Substitutions of 
Biosimilar Biological Products (Sec. Sec.  423.4, 423.100, 423.104, 
423.120, 423.128, and 423.578)

    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. Section 1860D-
11(e)(2)(D) of the Act specifically permits approval only if the 
Secretary does not find that the design of the plan and its benefits, 
including any formulary and tiered formulary structure, are likely to 
substantially discourage enrollment by certain Part D eligible 
individuals. Section 1860D-4(c)(1)(A) of the Act requires ``a cost-
effective drug utilization management program, including incentives to 
reduce costs when medically appropriate.'' Lastly, 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 covered Part D drug from a formulary 
or changing the preferred or tiered cost-sharing status of such a drug.
    In section III.Q., Changes to an Approved Formulary, of the 
December 2022 proposed rule, we proposed regulations related to (1) 
Part D sponsors obtaining approval to make changes to a formulary 
already approved by CMS, including extending the scope of immediate 
formulary substitutions (also generally referred to as immediate 
substitutions herein); \45\ and (2) Part D

[[Page 30512]]

sponsors providing notice of such changes.
---------------------------------------------------------------------------

    \45\ In the subsequent November 2023 proposed rule, we noted the 
distinction between formulary substitutions made by a plan sponsor 
and product substitutions made by a pharmacist at the point of 
dispensing. As we described in section III.F.2.a.(2) of the November 
2023 proposed rule, state laws govern the ability of pharmacists to 
substitute biological products at the point-of-dispensing. By 
contrast, the Secretary's statutory authority under section 1860D-
11(e)(2) of the Act governs approval of, and by extension any 
changes to, Part D formularies. The provisions we describe herein 
strictly apply to changes to Part D formularies made by plan 
sponsors, and do not apply to substitutions made by pharmacists at 
the point of dispensing.
---------------------------------------------------------------------------

    For reasons discussed therein, the December 2022 proposed rule 
proposed regulatory changes on how to obtain approval to make changes 
to a formulary already approved by CMS and to provide notice of such 
changes. We proposed 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.
    Approval of formulary changes: Specifically, we proposed 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 proposed 
to 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 the 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 Part D sponsors must not implement 
any non-maintenance changes until they receive notice of approval from 
CMS. We also proposed 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).
    In support thereof, we proposed to define ``negative formulary 
changes'' to Part D drugs in Sec.  423.100 to include drug removals, 
moves to higher cost-sharing tiers, and adding or making more 
restrictive prior authorization (PA), step therapy (ST), or quantity 
limit (QL) requirements. We proposed to specify that negative formulary 
changes can be classified in one of three categories, which we also 
proposed to define in that same section as--
     ``Maintenance changes,'' which we proposed to 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 proposed to 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 we proposed to encompass all types of immediate substitutions 
or market withdrawals under Sec.  423.120(e)(2)(i) or (ii) 
respectively.
    As an exception to the general rule requiring prior CMS approval of 
formulary changes, our current regulations permit immediate generic 
substitutions and the removal of drugs ``deemed unsafe'' by FDA or 
``removed from the market by their manufacturer.'' We proposed in the 
December 2022 proposed rule to move and incorporate that regulation 
text as follows: In Sec.  423.120(e)(2)(i), we proposed to permit 
``immediate substitutions,'' meaning Part D sponsors could make 
immediate 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 proposed to 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 also defining ``biological product,'' ``brand name 
biological product,'' and ``reference biological product'' in Sec.  
423.4. In proposing in Sec.  423.120(e)(2)(ii) to continue to permit 
plans to immediately remove from their formulary any Part D drugs 
deemed unsafe by FDA or withdrawn from sale by their manufacturer, we 
proposed to newly describe these changes as ``market withdrawals.'' 
Under Sec.  423.120(e)(2), as proposed in the December 2022 proposed 
rule, 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. 
However, proposed Sec.  423.120(f)(2) and (3) would require Part D 
sponsors to provide advance general notice of such changes and to 
submit specific changes with their next required or scheduled CMS 
formulary updates.
    We proposed in respective Sec. Sec.  423.120(b)(3)(i)(B) and 
423.120(e)(4) to conform our regulations such 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 (previously we 
only specified in regulation that this exception applied to immediate 
generic substitutions).
    We also proposed to update and move to a new place 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 proposed to 
update such regulation 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).
    We also proposed miscellaneous changes in Sec.  423.100 in support 
of the previously described changes, including 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.
    Permitted formulary changes and the IRA: We also proposed in the 
December 2022 proposed rule a change related to the Inflation Reduction 
Act of 2022 (IRA). Section 11001 of the IRA added section 1860D-
4(b)(3)(I)(i) of Act to require, starting in 2026, Part D sponsors to 
include on their formularies each covered Part D drug that is a 
selected drug under section 1192 of the Act 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 clarifies 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 proposed 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.
    Notice of formulary changes: We proposed to move, with some 
revisions and streamlining, current regulations on

[[Page 30513]]

notice of changes, and align them with our proposed approval 
requirements. Specifically, in Sec.  423.120(f)(1) we proposed to 
specify that maintenance and non-maintenance negative formulary changes 
would require 30 days' advance notice to CMS, other specified entities, 
and in written form to affected enrollees. We proposed 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 the point of sale as 
specified. We also proposed to move and extend our existing 
requirements for immediate generic substitutions to include immediate 
substitutions of corresponding drugs and market withdrawals, by 
requiring 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 
proposed 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 proposed at Sec.  423.120(f)(4) to reorganize and renumber 
our current requirements for the contents of the direct written notice, 
and to provide more flexibility by no longer restricting appropriate 
alternative drugs to those in the same therapeutic category or class or 
cost-sharing tier. Our proposed revision aimed to make clear that the 
contents of the written notice would be largely the same regardless of 
the timing: whether Part D sponsors were 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) as proposed). Section 423.120(f)(5) proposed to 
newly specify how to provide advance general notice and specific notice 
of changes other than negative formulary changes.
    We also proposed conforming amendments to update Sec.  
423.128(d)(2)(iii) to require online notice of ``negative formulary 
changes'' and to update cross citations in Sec. Sec.  
423.104(d)(2)(iv)(A)(6) and 423.128(e)(6) to reflect the fact we 
proposed to move the bulk of our requirements on formulary changes from 
Sec.  423.120(b)(5) and (6) to Sec.  423.120(e) and (f). We proposed 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).
    After receiving comments on the December 2022 proposed rule, we 
identified a limited number of changes that we wanted to make to that 
proposed regulatory text, which we proposed in the November 2023 
proposed rule. We noted that the November 2023 proposed rule reflected 
our intent to consider the formulary change proposals in section III.Q. 
of the December 2022 proposed rule, as updated by the limited changes 
proposed in the November 2023 proposed rule, for inclusion in future 
rulemaking.
    In the November 2023 proposed rule, we noted that commenters on 
section III.Q. of the December 2022 proposed rule did not agree on the 
requirements that should apply to formulary substitutions of Food and 
Drug Administration (FDA) approved and licensed biosimilar biological 
products. Different commenters submitted divergent requests that 
formulary substitutions of biosimilar biological products other than 
interchangeable biological products be treated as immediate 
substitutions, be treated as maintenance changes, or not be permitted 
whatsoever. Our proposed regulatory text in the December 2022 proposed 
rule only addressed substitution of interchangeable biological products 
and unbranded biological products, and did not specify how Part D 
sponsors could treat substitution of biosimilar biological products 
other than interchangeable biological products. We stated that we 
believed, in part because of the interest in the topic, it would be 
appropriate to propose changes then to solicit comment directly on the 
subject.
    Accordingly, we proposed in the November 2023 proposed rule to 
update the regulatory text we proposed in the December 2022 proposed 
rule to the extent necessary to permit Part D sponsors to treat 
substitutions of biosimilar biological products other than 
interchangeable biological products as ``maintenance changes,'' as 
defined in the December 2022 proposed rule. We also proposed to define 
a new term, ``biosimilar biological product,'' distinct from our 
previously proposed term ``interchangeable biological product.'' We 
also proposed some technical changes to the term ``interchangeable 
biological product.'' We believe these proposals from the November 2023 
proposed rule add to the December 2022 proposed rule to increase access 
to biosimilar biological products in the Part D program, consistent 
with the Biden-Harris Administration's commitment to competition as 
outlined in Executive Order (E.O.) 14306: ``Promoting Competition in 
the American Economy.'' \46\
---------------------------------------------------------------------------

    \46\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/.
---------------------------------------------------------------------------

    We specifically proposed to define biosimilar biological products 
consistent with sections 351(i) and (k) of the Public Health Service 
Act (PHSA) to include interchangeable biological products. As we noted 
in section III.F.2.b.(1) of the November 2023 proposed rule, in section 
III.Q of the December 2022 proposed rule, we originally proposed to 
permit maintenance changes and immediate substitutions involving 
interchangeable biological products. In the November 2023 proposed 
rule, we also proposed to allow substitution of biosimilar biological 
products other than interchangeable biological products for reference 
products as a maintenance change. To ensure clarity, we proposed in the 
November 2023 proposed rule to address the application of these 
policies to interchangeable biological products and to biosimilar 
biological products other than interchangeable biological products in 
separate paragraphs of the proposed definition of maintenance change in 
Sec.  423.100.
    Further, in considering a comment on immediate formulary 
substitutions we received on the December 2022 proposed rule, we also 
determined it would be appropriate to propose in the November 2023 
proposed rule to provide Part D sponsors with additional flexibility 
with respect to the timing requirements for maintenance changes and 
immediate substitutions than as originally proposed in the December 
2022 proposed rule. Rather than requiring a Part D sponsor to add a 
``corresponding drug'' and make a ``negative formulary change'' (as 
both such terms are defined in the December 2022 proposed rule) to its 
related drug ``at the same time'' for a maintenance change, we proposed 
in the definition of maintenance change in Sec.  423.100(1) in the 
November 2023 proposed rule to allow Part D sponsors to make a negative 
formulary change to the related drug within 90 days of adding the 
corresponding drug. We made similar changes in Sec.  423.100(2) 
requiring negative formulary changes be made to a reference product 
within 90 days of adding a biosimilar biological product other than an 
interchangeable biological product. This means that the same 
flexibility is available when Part D sponsors make any biosimilar 
biological product substitutions that are maintenance changes. Lastly, 
we also

[[Page 30514]]

proposed to make similar adjustments to the timing requirements for 
immediate substitutions of corresponding drugs in Sec.  
423.120(e)(2)(i). Specifically, as proposed in the November 2023 
proposed rule, Part D sponsors would be able to make negative formulary 
changes to a brand name drug, a reference product, or a brand name 
biological product within 30 days of adding a corresponding drug (as 
such terms are defined in the December 2022 proposed rule, as updated 
by the November 2023 proposed rule).
    Additionally, we also proposed in the November 2023 proposed rule a 
technical change to our proposed definition of ``corresponding drug'' 
in Sec.  423.100 included in the December 2022 proposed rule to specify 
that the reference to an ``unbranded biological product of a biological 
product'' is intended to refer to ``an unbranded biological product 
marketed under the same BLA [Biologics License Application] as a brand 
name biological product.''
    Lastly, we proposed in the November 2023 proposed rule to address a 
technical change to the regulatory text proposed in the December 2022 
proposed rule to specify in introductory language to the Sec.  423.100 
proposed definition of ``maintenance change'' that maintenance changes 
apply with respect to ``a covered Part D drug.''
    As discussed earlier, we noted in the November 2023 proposed rule 
that we intended to consider section III.Q. of the December 2022 
proposed rule, as updated by the limited proposed changes discussed in 
that November 2023 proposed rule, for inclusion in future rulemaking. 
Even though we acknowledged in the November 2023 proposed rule at a 
high level some comments regarding the December 2022 proposed rule that 
informed the limited changes we proposed in the November 2023 proposed 
rule, we stated that if we were to move forward in future rulemaking, 
we would respond to comments received in response to section III.Q. of 
the December 2022 proposed rule, as well as comments received in 
response to the changes proposed in section III.F. of the November 2023 
proposed rule. We summarize those comments, and our responses as 
follows:
    Comment: Many commenters voiced general and specific support for 
the proposals both in the December 2022 and November 2023 proposed 
rules. Somewhat fewer commenters offered criticism, in whole or in 
part, including some commenters who generally supported the proposals 
but had concerns with specific parts.
    Response: We thank supporters for their support and all commenters 
for providing us with their feedback. We address specific comments 
about the proposals in more detail below.
    Comment: Several commenters supported that our proposal in the 
December 2022 proposed rule codified rules on formulary changes in one 
place, with a few appreciating the clarity. A few supporters also 
specifically supported certain proposed definitions such as ``negative 
formulary change''; ``maintenance change'' and ``non-maintenance 
change''; and ``affected enrollee.'' Conversely, a few commenters 
suggested that we change certain definitions (as discussed in specific 
comments and responses below). Another commenter stated that the policy 
was too complex and required streamlining rather than a discussion in 
two preambles, and suggested we use a chart and that we not only 
explain the relationship of our proposals to Chapter 6 of the 
Prescription Drug Benefit Manual \47\ but also update that manual 
chapter. A few other commenters stated that the proposed regulation did 
not conform to the guidance in Chapter 6.
---------------------------------------------------------------------------

    \47\ https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/part-d-benefits-manual-chapter-6.pdf.
---------------------------------------------------------------------------

    Response: We thank those commenters who supported our proposal and 
specific definitions. One of our major goals with this proposal was to 
codify in one place guidance that had long stood apart from related 
regulations and conform the two in a reorganized regulation. We 
acknowledge that the policy related to changes to an approved formulary 
has been and remains intricate and that the December 2022 proposed rule 
and November 2023 proposed rule addressed a wide range of issues 
related to formulary changes, including with respect to conforming 
current regulations and longstanding guidance, while proposing new 
policies (for example, related to substitutions of biosimilar 
biological products). We will take the chart suggestion under 
consideration for any future updates to guidance and Chapter 6, but we 
do not think that the final rule is the appropriate location for such a 
chart. Where there is a conflict between the regulations and the manual 
chapter, the regulations supersede and take precedence. We discuss 
substantive issues related to interpretations of manual guidance later 
in these responses.
    Comment: A commenter stated that CMS should not distinguish between 
authorized generic drugs and unbranded biological products in formulary 
placement policy because they are approved or licensed (respectively) 
under the same New Drug Application (NDA) or BLA as the brand name drug 
and, other than the fact that they are not labeled with a brand name on 
their label, they are the branded product. A product that is identical 
in all respects because it is approved or licensed under the same NDA 
or BLA should not be considered a ``negative'' formulary change, 
immediate or otherwise.
    Response: While the commenter is technically correct that we could 
look at formulary replacement of a branded drug product with its 
authorized generic or unbranded biological product, as applicable, as 
not being a formulary change at all, we do not think this would be a 
meaningful distinction for enrollees.
    When an enrollee goes to the pharmacy, they would not know the 
difference between an authorized generic drug or a generic drug as 
those terms will be defined in Sec.  423.4. Similarly, if the name 
changes from the branded biological product to an unbranded biological 
product licensed under the same BLA, an enrollee might not know the 
difference between the unbranded biological product and a biosimilar of 
the branded biological product. Consequently, to avoid enrollee 
confusion, we are finalizing a rule that treats all these replacements 
as substitutions.
    Comment: A commenter thanked CMS for the steps we proposed to take 
to eliminate ``barriers'' for patients to access lower-cost treatment 
options by permitting plans to add biosimilar biological products to 
formularies as they become available, while another commenter suggested 
that requiring 30 days' notice before the effective date of maintenance 
changes was an unnecessary ``barrier'' to patients getting the exact 
treatment they need.
    Response: There have never been any barriers to Part D sponsors 
adding at any time to their formularies any Part D drugs that they 
think their enrollees need for treatment (such as new biosimilar 
biological products) or from adding those drugs on lower cost-sharing 
tiers or with fewer restrictions than those that apply to related drugs 
already on the formulary (such as reference products). Our guidance in 
section 30.3.3.1 of Chapter 6 of the Prescription Drug Benefit Manual 
states that Part D sponsors may add any Part D drug to their 
formularies at any time. We note, however, that we have and continue to 
maintain approval and notice requirements that Part D sponsors must 
follow when they seek to remove

[[Page 30515]]

a drug or make negative formulary changes to drugs already on the 
formulary and that enrollees may currently be taking.
    Comment: Several commenters stated we should not permit any midyear 
changes to formularies because enrollees enroll in plans with the 
expectation that they will have access to the same drugs for the 
entirety of the plan year and to permit any changes is tantamount to a 
bait and switch. A few commenters suggested that CMS should not permit 
any midyear formulary changes because enrollees cannot leave plans 
midyear, with one commenter requesting a special enrollment period 
(SEP) for enrollees to join other plans midyear following formulary 
changes.
    Response: We do not agree that formularies should be static for the 
plan year. As discussed more fully in section III.Q.2.a. of the 
December 2022 proposed rule, section 1860D-4(b)(3)(E) of the Act itself 
contemplates that Part D sponsors may make changes to formularies 
during a plan year. For example, there is a need for certain changes to 
an approved formulary to reflect the availability of new drug therapies 
as well as for Part D sponsors to take advantage of opportunities to 
improve safety and quality and lower costs.
    We understand that enrollees sign up for plans with the expectation 
of continued access to their drugs. Accordingly, we have established, 
and are codifying in this final rule, approval and notice requirements 
for different kinds of formulary changes. We are permitting the 
following changes to drugs currently provided on a formulary: (i) 
immediate substitutions of corresponding drugs, such as new generic 
drugs for brand name drugs and interchangeable biological products for 
reference products; (ii) immediate removal of drugs withdrawn from sale 
by their manufacturer or that FDA determines to be withdrawn for safety 
or effectiveness reasons; (iii) maintenance changes, which include 
substitutions of generic drugs for brand name drugs that are not being 
made on an immediate substitution basis; substitutions of 
interchangeable biological products for their reference products; and 
removals based on long term shortage and market availability; (iv) non-
maintenance changes, which can only be made if CMS provides explicit 
approval and which do not apply to enrollees currently taking the 
applicable drug; and (v) enhancements to the formulary (for instance, 
Part D sponsors can add a drug to the formulary or lower its cost-
sharing), which can be made at any time.
    We believe these requirements strike the appropriate balance 
between protecting enrollees by ensuring they have adequate notice of 
changes to their plan's formulary, while ensuring Part D sponsors have 
the flexibility to ensure formularies reflect the latest market 
developments and clinical guidelines. We monitor negative change 
request submissions and changes to HPMS formularies as a matter of 
standard operations, and we are not aware of widespread complaints from 
beneficiaries stating they have been subject to formulary changes 
without proper notice. Part D sponsors submit all maintenance and non-
maintenance changes to CMS for approval and, even if approved, non-
maintenance changes do not apply to enrollees currently taking a drug 
for the remainder of the plan year. In addition, enrollees can avail 
themselves of the formulary exception process if the enrollee or their 
physician believes it is necessary that the enrollee remain on a drug 
that is subject to a midyear change. The request for a SEP based on a 
midyear formulary change is out of scope.
    Comment: A few commenters specifically supported the time periods 
within which we required specific notice. A few other commenters 
pointed to the fact that section 30.3.4.1 of Chapter 6 of the 
Prescription Drug Benefit Manual requires 60 days' advance direct 
notice and asked that we conform any final regulation to that guidance.
    Response: We appreciate commenters' support for the specific notice 
time periods that we proposed. Our intent in the December 2022 proposed 
rule was to codify much of our longstanding guidance. However, while 
Chapter 6 of the Prescription Drug Benefit Manual specifies a 
requirement for 60 days' advance direct notice, the current Sec.  
423.120(b)(5)(i) has required Part D sponsors to provide 30 days' 
notice rather than 60 days' notice for formulary changes since the 
effective date of 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 
April 16, 2018 Federal Register (hereinafter referred to as the April 
2018 final rule). Where there is a conflict between the regulations and 
the manual chapter, the regulations supersede and take precedence. The 
same considerations for adopting a 30-day requirement that we discussed 
in the November 2017 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) (hereafter referred to 
the November 2017 proposed rule), and which led us to finalize the 
April 2018 final rule, strike us as applicable today. Additionally, we 
have several years of operational experience with the requirements of 
the April 2018 final rule, for which we have not received widespread 
complaints.
    As discussed in section II.A.14 of the November 2017 proposed rule, 
we believe the 30 days' notice provides the necessary beneficiary 
protections and affords enrollees sufficient time to either change to a 
covered alternative drug or to obtain needed prior authorization or an 
exception for the drug affected by the formulary change. CMS 
regulations establish robust beneficiary protections in the coverage 
determination and appeals processes. CMS requires at Sec.  423.568(b) 
that standard coverage determinations are completed within 72 hours and 
at Sec.  423.572(a) that expedited coverage determinations for exigent 
circumstances are completed within 24 hours. If an initial coverage 
determination is unfavorable, the enrollee or prescriber can request a 
standard redetermination, which in accordance with Sec.  423.590(a) 
must be completed within 7 days of receipt of the request, or an 
expedited redetermination, which in accordance with Sec.  423.590(d)(1) 
must be completed within 72 hours. (See a later response addressing 
comments supporting and opposing the advance direct notice requirements 
we would require for Part D sponsors seeking formulary to substitution 
of biosimilar biological products for reference products as maintenance 
changes.)
    Comment: A commenter suggested that we no longer require any 
notification of immediate substitutions because it would be confusing 
to send a notice about a change that already took effect. In contrast, 
another commenter suggested that permitting sponsors to provide notice 
as late as almost two months after an immediate formulary substitution 
takes effect is too long a time period and asked that we not finalize 
the requirement to provide notice ``no later than the end of the month 
following any month in which a change takes effect.'' They suggested 
that such notice be provided on or before the effective date of the 
change. A few other commenters recommended that there should be advance 
direct notice for any changes made to a

[[Page 30516]]

formulary, including immediate substitutions.
    Response: We disagree with the suggestion to do away entirely with 
requiring direct notice to affected enrollees of immediate 
substitutions. It is still important that affected enrollees learn 
about formulary changes made to the drugs they take, even in the 
context of immediate substitutions that may have already taken effect. 
For immediate substitutions, under proposed Sec.  423.120(f)(2), and 
under current Sec.  423.120(b)(5)(iv)(C), permitting immediate 
substitutions of generic drugs for brand name drugs, Part D sponsors 
must provide advance general notice in beneficiary communications 
materials describing the types of changes that can be made without 
giving advance direct notice of specific changes, including to 
enrollees currently taking a drug subject to substitution. Part D 
sponsors must specify in this advance general notice that affected 
enrollees will receive direct notice of any specific changes made to 
drugs they take, which may arrive after the change is effective, and 
that will explain steps they may take to request coverage 
determinations, including exceptions. Proposed Sec.  423.120(f)(3) and 
current Sec.  423.120(b)(5)(iv)(E) require that Part D sponsors provide 
retrospective direct notice to affected enrollees. Additionally, Sec.  
423.128(d)(2)(ii) requires Part D sponsors to update their online 
formulary monthly. However, we decline to require that notice be 
provided in advance or at the same time as the effective date of an 
immediate substitution. A central reason that we do not require advance 
direct notice of specific changes in these cases is to support and 
encourage Part D sponsors to add corresponding drugs to their 
formularies as soon as possible. We are not aware of a notable volume 
of enrollee complaints related to the notice requirements for immediate 
substitutions of generic drugs under the current Sec.  
423.120(b)(5)(iv), which we finalized in the April 2018 final rule to 
permit Part D sponsors to send retrospective direct notice of immediate 
generic substitutions to affected enrollees after such changes take 
effect. We do not believe that extending similar rules to immediate 
substitutions of authorized generics, interchangeable biological 
products, and unbranded biological products will have different results 
for enrollees and, therefore, we decline to change that regulation now 
or to require different notice requirements for immediate substitutions 
of products that qualify as corresponding drugs other than generics.
    Comment: A commenter stated that there was a technical error in our 
definition of maintenance change proposed in Sec.  423.100 because it 
failed to indicate that corresponding drugs must be newly available to 
align with sub-regulatory guidance at Chapter 6, section 30.3.3.1, of 
the Prescription Drug Benefit Manual, which the commentor interprets as 
requiring that maintenance changes involving brand-name drugs being 
substituted with generic drugs to be limited to newly available generic 
drugs only.
    Response: The comment pointing to a technical error with respect to 
maintenance changes misinterprets our guidance. While section 30.3.3.1 
of Chapter 6 provides an example of a maintenance change involving a 
new generic drug, our sub-regulatory guidance has not limited 
maintenance changes to only newly approved generic drugs. Notably, 
section 30.3.3.2 states that ``CMS will generally give positive 
consideration to the following types of formulary changes'' including 
``[r]emoval or placement in a less preferred tier of a brand name drug 
upon the availability and addition of an A-rated generic or multi-
source brand name equivalent, at a tier with lower cost to the 
beneficiary.'' It does not require that generic drugs added to the 
formulary as part of maintenance changes be newly available. However, 
to make an immediate substitution, the generic drug being added to the 
formulary must be newly available.\48\ Although some sponsors might 
choose to make maintenance changes only to substitute newly marketed 
generics, we do not want to preclude sponsors from making maintenance 
changes to add generics that are not newly available because there are 
other appropriate factors that Part D sponsors could consider when 
determining when to make such formulary substitutions. For example, a 
Part D sponsor might not make a formulary substitution when a generic 
first becomes available on the market because there may not be a 
significant price difference between the first generic and brand name 
drug. However, as more generics are introduced to the market, the price 
of all generic drugs may decrease to the point a Part D sponsor could 
later decide a formulary change would be advantageous.
---------------------------------------------------------------------------

    \48\ Section 423.120(b)(5)(iv) requires in part that, ``The Part 
D sponsor previously could not have included such therapeutically 
equivalent generic drug on its formulary when it submitted its 
initial formulary for CMS approval consistent with paragraph (b)(2) 
of this section because such generic drug was not yet available on 
the market.'' In the proposed regulatory reorganization, this 
requirement would appear at Sec.  423.120(e)(2)(i) and would apply 
to immediate substitutions of corresponding drugs.
---------------------------------------------------------------------------

    Comment: A few commenters supported all or parts of our proposal, 
as updated in the November 2023 proposed rule, to require Part D 
sponsors to remove, or otherwise apply a negative formulary change to, 
a brand name drug, reference product, or brand name biological product 
within 30 days of adding a corresponding drug as part of an immediate 
substitution (under proposed Sec.  423.120(e)(2)(i)) or within 90 days 
of adding a corresponding drug or biosimilar biological product as part 
of a maintenance change (under subparagraphs (1) and (2), respectively, 
of the proposed Sec.  423.100 definition of maintenance change). A few 
commenters did not support the change as proposed but had differing 
views on what the policy should be. One commenter stated that we must 
continue to require immediate substitutions to take place ``at the same 
time'' because there was no evidence that the existing requirement 
created a problem that needs to be fixed. A few other commenters asked 
that we provide more time than a 30- or 90-day window within which to 
apply a negative formulary change to a brand name drug or reference 
product after adding a corresponding drug or biosimilar biological 
product other than an interchangeable biological product to the 
formulary. Another commenter said that we should apply the same 90-day 
window to both types of changes because implementing different time 
frames within which to complete immediate substitutions and maintenance 
changes could be burdensome for Part D sponsors and confuse enrollees, 
pharmacies, and providers. Another commenter stated that the 30- and 
90-day windows did not provide enough time for Part D sponsors to 
evaluate new products' attributes and availability in the marketplace, 
update systems, and consider market condition for pricing changes (for 
instance, whether a generic price will drop even more after additional 
entries). Another commenter asked that we monitor this flexibility on 
an annual basis to ensure providing more time to complete immediate 
substitutions would not permit Part D sponsors to game the system by 
delaying coverage for generic drugs.
    Response: We appreciate comments on both sides of the issue. We 
think 30- and 90-day limits to make negative formulary changes after 
adding a drug as part of an immediate substitution or maintenance 
change under

[[Page 30517]]

Sec.  423.120(e)(2)(i) or subparagraphs (1) and (2) of the definition 
of a maintenance change in Sec.  423.100, respectively, are reasonable. 
As for evidence to support our proposal, we proposed these 
flexibilities in our November 2023 proposed rule in response to a 
comment we received in response to our December 2022 proposed rule that 
stated it was difficult to make substitutions ``at the same time''. The 
commenter suggested that while they could quickly add a drug to the 
formulary, before removing or making negative formulary changes to a 
drug currently on the formulary they needed time to, for instance, 
evaluate new product attributes such as formulation, 
interchangeability, and pricing; determine sufficient availability in 
the marketplace; communicate changes; and update systems. In response 
to our November 2023 proposed rule, the original commenter repeated its 
concerns and a couple of other commenters also asked for more time. 
Additionally, a couple of commenters specified that they supported the 
90-day window. We believe these comments, as well as our appreciation 
of formulary management considerations and the practicalities of 
programming internal systems, provide sufficient evidence to support 
the proposed timeframes.
    To respond to commenters to the November 2023 proposed rule that 
asked for longer times frames within which to make negative changes to 
the drug on the formulary, the purpose of immediate substitutions is to 
support quick action, in which Part D sponsors put a newer 
corresponding drug on the formulary right away and remove the drug it 
replaces as soon as possible. To encourage this quick action, we permit 
Part D sponsors implementing immediate substitutions to provide notice 
to affected enrollees of the specific changes after they have taken 
effect. For that reason, we continue to encourage that immediate 
substitutions take place ``at the same time.'' Extending the time 
within which to remove a brand name drug, brand name biological 
product, or reference product past 30 days would negate the concept of 
an ``immediate'' change.
    While maintenance changes are not as urgent a matter, it would be 
challenging for CMS to monitor negative formulary changes that take 
place more than 90 days after adding a corresponding drug or biosimilar 
biological product other than an interchangeable biological 
product.\49\ Further, the more days that pass after a Part D sponsor 
adds a replacement drug and before it removes or makes another other 
negative formulary change to the drug on the formulary it will replace, 
the more the two actions seem less like a substitution of one drug for 
another so much as two unrelated formulary changes.
---------------------------------------------------------------------------

    \49\ Please note that the definition of corresponding drug in 
Sec.  423.120 includes interchangeable biological products.
---------------------------------------------------------------------------

    In response to the concern that implementing different time frames 
to make immediate substitutions versus maintenance changes creates a 
burden for Part D sponsors, they are not required to take advantage of 
the flexibility offered. The respective 30- and 90-day timeframes to 
make a negative formulary change after adding a corresponding drug to 
the formulary are limits, not requirements. Under the proposal, a Part 
D sponsor could decide to ensure all immediate substitutions and 
maintenance changes take place ``at the same time.''
    We have carefully considered the commenter's concern that 
implementing different windows could confuse enrollees, providers, and 
pharmacies. It is possible that Part D sponsors are currently removing 
brand name drugs after the date they add corresponding generic drugs. 
As discussed in our November 2023 proposed rule, there has been a 
longstanding operational limitation that Part D sponsors remove a brand 
name drug from the formulary within 90 days of adding a generic drug. 
We also do not believe that enrollees will be aware of the exact moment 
that a Part D sponsor decides to add a drug. Rather, affected enrollees 
will most likely learn that their plan will be making, or already has 
made, a formulary substitution either when they receive direct notice 
or request a refill on a brand name drug or reference product. We are 
not aware that the current limitation has resulted in undue confusion 
and do not expect that to be the case with this rule. We will also 
continue to review beneficiary complaints in our Complaint Tracking 
Module, should any complaints arise related to confusion about the 
different timeframes.
    Lastly, we do not believe that monitoring immediate substitutions 
on an annual basis would provide a means to determine or address if 
Part D sponsors are gaming the system by delaying coverage for generic 
drugs because this provision has not and will not require Part D 
sponsors to offer generic drugs.
    Comment: A commenter asked that we clarify whether we mean business 
or calendar days in all instances that apply a number of days to a 
requirement.
    Response: For regulations related to notice and approval of changes 
to approved formularies, any requirements that refer to days are a 
reference to calendar days. This includes Sec.  423.120(b)(5) and (6) 
and proposed (e) and (f) and related definitions including 
``maintenance changes'' as defined in Sec.  423.100. We believe the use 
of calendar days for regulations related to notice and approval of 
changes to approved formularies is appropriate because they are easier 
for CMS, plan sponsors, enrollees, and others to track.
    Comment: Several commenters stated that maintenance changes did not 
require prior approval from CMS, with a commenter characterizing such 
changes as ``near-immediate.''
    Response: While it is technically true that Part D sponsors may not 
receive explicit notice of approval of a negative change request for a 
maintenance change, the proposed Sec.  423.120(e)(3)(i) would codify 
longstanding sub-regulatory guidance from Chapter 6, section 30.3.3.2, 
of the Prescription Drug Benefit Manual, under which Part D sponsors 
may assume a maintenance change request has been approved if they do 
not hear from CMS within 30 days of submission. This is in contrast to 
our longstanding policy for non-maintenance changes, which we proposed 
to codify at Sec.  423.120(e)(3)(ii), under which Part D sponsors must 
not implement non-maintenance changes until they receive explicit 
notice of approval of the negative change request from CMS. Regardless 
of whether approval can be assumed after a period of time, contrary to 
the commenters' assertions, both longstanding guidance and our proposal 
require Part D sponsors to submit maintenance and non-maintenance 
change requests to CMS for approval. Moreover, it is important to note 
that approval of maintenance changes is not automatic. While we noted 
in our preamble to the November 2023 proposed rule that most such 
requests are routinely approved, CMS endeavors to review all requests 
and we have denied maintenance change requests, albeit infrequently, 
before the end of the 30-day approval period. Furthermore, we have 
instituted edits within the HPMS Negative Change Request module which 
can raise flags on issues that require our review or in some cases will 
prevent Part D sponsors from submitting a negative change request that 
would not meet CMS requirements. Lastly, should a Part D sponsor make a 
change to their HPMS

[[Page 30518]]

formulary file that is inconsistent with an approved (or assumed 
approved) negative change request, CMS may deny the formulary change 
via the line-level review process.
    Comment: A couple of commenters asked CMS to expand the proposed 
definition of maintenance changes to include as additional categories 
of maintenance changes (1) applying PA to exclude non-Part D drugs or 
to reflect new indications or (2) placing PA or ST on protected class 
drugs specified under section 1860D-4(b)(3)(G)(iv) of the Act to ensure 
they are used for protected indications. Another commenter requested 
that CMS allow prescribers to continue to prescribe the reference 
product to an enrollee currently taking the affected product without a 
lengthy prior authorization requirement.
    Response: We did not propose to permit the midyear addition of PA 
to prevent use of drugs for excluded uses, when a new indication is 
approved, or to permit Part D sponsors to cover only protected 
indications for protected class drugs. We appreciate commenters raising 
these issues, and we may take some of these suggestions into 
consideration for future rulemaking. Generally, we expect Part D 
sponsors to submit such PA or ST requirements for review and approval 
with their annual formulary submissions. Additionally, under current 
policy, Part D sponsors can submit these types of requests midyear as 
non-maintenance change requests for consideration by CMS. In the 
absence of a PA requirement on a particular drug, Part D plans may 
conduct retrospective review under Sec.  423.153(c)(3) to confirm that 
a dispensed drug is being used for a medically accepted indication. We 
note that non-protected indications for protected class drugs are not 
excluded from Part D coverage as long as the use is for a medically 
accepted indication, as defined in section 1860D-2(e)(4) of the Act.
    Our intent is to allow Part D sponsors to promote utilization of 
biosimilar biological products. We believe the current PA process 
continues to be the appropriate mechanism for providers to provide the 
necessary justification for continuing on a reference product.
    Comment: A few commenters offered divergent views on our proposal 
that the list of alternative drugs, which we require under the current 
Sec.  423.120(b)(5)(ii)(D) to be provided as part of the written notice 
of a formulary change, no longer be limited under our proposed Sec.  
423.120(f)(4)(iv) to alternative drugs in the same therapeutic category 
or class as the drug to which the negative formulary change applies. A 
couple of commenters were concerned that Part D plans would use this 
flexibility to switch patients under the immediate substitution rules 
to drugs with different forms or modes of therapeutic action. In 
contrast, a supporter noted that drugs may span multiple therapeutic 
categories and appreciated the extra flexibility provided for Part D 
sponsors to negotiate discounts and reduce overall prescription drug 
spending. Another supporter asked that we permit clinical experts 
outside of the P&T committee to identify appropriate formulary 
alternatives because P&T committees only meet quarterly.
    Response: We appreciate commenters' support. For commenters that 
did not support our proposed policy, we clarify that the current 
requirement that Part D sponsors list alternative drugs in Sec.  
423.120(b)(5)(ii)(D) addresses a different topic than does the current 
regulation Sec.  423.120(b)(5)(iv), which specifies drugs that can be 
immediately substituted. Section 423.120(b)(5)(ii) addresses the 
content that must be included in notices of change--including a list of 
alternatives--but, contrary to the commenters' suggestions, does not 
govern what types of drugs can be substituted or the conditions for 
making such changes. Rather, Sec.  423.120(b)(5)(iv) governs what types 
of drugs can be immediately substituted and the conditions for making 
such changes.
    While Sec.  423.120(b)(5)(ii) does not govern the types of drugs 
that can be substituted, it requires Part D sponsors to list 
alternatives. We believe provision of this list could affect treatment 
in that it might provide alternatives that an enrollee and their 
provider have not considered, or steer the enrollee to certain drugs on 
that list given their coverage on their formulary. An enrollee and 
their provider can consider the list of alternatives to the drug that 
is being removed or otherwise subject to a negative formulary change as 
they decide whether to try the new drug added to the formulary, try 
another drug that appears on the list of alternatives, or to request an 
exception for coverage of the removed drug. As we noted in our 
proposal, there can be multiple drug options to treat the same 
condition and we believe that the list of alternatives should not limit 
possibilities of treatment by a strict adherence to class and category, 
particularly since Part D sponsors are not required to use a particular 
classification system for their Part D formularies. Therefore, we are 
finalizing Sec.  423.120(f)(4)(iv) as proposed.
    As to the question regarding who can determine what drug 
alternatives exist, we do not believe it is appropriate for Part D 
sponsors to outsource consideration of formulary alternatives to 
clinical experts outside of the P&T committee. Section 423.120(b)(1) 
specifies that a P&T committee must develop and revise the formulary. 
Applying a negative formulary change to a drug is a formulary revision, 
and we believe that consideration of the formulary in its entirety is 
part and parcel of any formulary revision decision. We do not see how, 
for example, a decision could be made to remove or apply utilization 
management restrictions to a drug without examining which drugs are 
being added to or are already on the formulary that could treat the 
same conditions as the drug subject to the negative formulary change.
    Comment: A couple of commenters supported our proposal in the 
December 2022 proposed rule to identify Sec.  423.120(e)(2)(i) as the 
successor regulation to Sec.  423.120(b)(5)(iv) under section 1860D-
4(b)(3)(I)(ii) of the Act, as added by the IRA. Another commenter asked 
us to clarify expectations for when a Part D drug that is a selected 
drug under section 11001 of the IRA is removed from the formulary and 
give plans the flexibility to determine lowest price on a drug-by-drug 
basis.
    Response: We thank the commenters for their support. Section 1860D-
4(b)(3)(I)(i) of the Act requires Part D sponsors to include on their 
formularies each covered Part D drug that is a selected drug under 
section 1192 of the Act for which a maximum fair price is in effect 
with respect to the plan year. Because maximum fair prices will not 
take effect until 2026, the formulary inclusion requirement in section 
1860D-4(b)(3)(I)(i) of the Act does not apply in 2025. As a result, we 
are not finalizing the proposed language in Sec.  423.120(b)(5) to 
identify a successor regulation for purposes of section 1860D-
4(b)(3)(I)(ii) of the Act at this time.
    It is not within the scope of this provision on formulary changes 
to address the request for flexibility to determine the lowest price of 
the drug.
    Comment: A commenter pointed out that our regulation assumes all 
enrollees receive and comprehend notices of midyear formulary changes, 
whereas in reality enrollees may experience low health literacy, 
language barriers, or cognitive impairments that impede their 
understanding of such notices. Furthermore, the commenter noted that 
enrollees from socioeconomically disadvantaged communities and those 
experiencing major health challenges

[[Page 30519]]

such as rare diseases may not be capable of navigating the exceptions 
process. The commenter suggested that, by ignoring health disparities, 
our proposed policy for formulary substitution of biosimilar biological 
products as maintenance changes could cause disproportionate harm to 
vulnerable patient communities.
    Response: We certainly appreciate that the health care system, 
along with all its complexities, presents significant challenges for 
those experiencing health care and other disparities. CMS continues to 
take action to address those disparities. However, we do not believe 
that our biosimilar biological product policy on maintenance changes 
widens health care disparities. In fact, our intent is quite the 
opposite. For example, if this proposal improves access to more 
biosimilar biological products in the Part D program, it could lead to 
greater utilization of lower price biosimilar biological products that 
have been determined by FDA to be just as safe and effective as their 
reference products.
    CMS has implemented various requirements to help protect enrollees, 
address disparities, and mitigate confusion and burdens for enrollees, 
especially those with low health literacy, language barriers, and 
cognitive and other health care impairments. For example, under Sec.  
423.2267(a), we require Part D sponsors to provide: translated 
materials proactively in any non-English language that at least 5 
percent of the beneficiaries in their service area speak, and materials 
in alternative formats (such as recordings and braille) to 
beneficiaries who are visually impaired. Furthermore, pursuant to Sec.  
423.128(d), we require all plans to have call centers to respond to 
current and prospective enrollee requests for assistance, and Sec.  
423.128(d)(1)(iii) also requires Part D sponsors to provide 
interpreters for non-English speaking and limited English proficient 
(LEP) individuals at their call centers. States also have established 
State Health Insurance Assistance Programs (SHIPs) that can assist 
enrollees in navigating their options. Enrollees can also designate a 
person to speak to plans on their behalf.
    Comment: A commenter requested that we permit Part D sponsors to 
immediately substitute a brand name drug for an authorized generic, and 
an authorized generic drug for a generic drug, including within the 
same plan year. Another commenter asked that we make clear there could 
be only one maintenance change for a reference product within a single 
plan year to avoid confusion and potential disruption of care. A few 
other commenters asked us either to clarify or make sure that Sec.  
423.120(e)(2)(i) only permitted substitution of an interchangeable 
biological product for a reference product and not substitution of an 
interchangeable biological product for another interchangeable 
biological product that has the same reference product. Another 
commenter asked that we clarify that maintenance changes would only be 
allowed for biosimilar biological products for their reference products 
and not among different biosimilar biological products that have the 
same reference product. Without identifying them all, a commenter asked 
for guidance specific to 36 different permutations of formulary change 
types it counted among branded and unbranded versions of reference 
products and biosimilar biological products. In contrast, another 
commenter asked generally how Part D sponsors should treat enrollees 
taking a biosimilar biological product that is not the biosimilar 
biological product that is covered by the plan.
    Response: We would not permit the immediate substitution of a brand 
name drug for an authorized generic (that is, applying a negative 
formulary change to an authorized generic already on the formulary and 
adding a brand name drug to the formulary). Our proposed regulation is 
not written to support that substitution. The proposed Sec.  
423.120(e)(2)(i) allows Part D sponsors to apply immediate negative 
formulary changes to a ``brand name drug. . . . within 30 days of 
adding a corresponding drug.'' The proposed definition of 
``corresponding drug'' in Sec.  423.100 refers in part to ``a generic 
or authorized generic of a brand name drug.'' Therefore, an immediate 
substitution would not allow a Part D sponsor to make a negative 
formulary change to an authorized generic within 30 days of adding a 
brand name drug. We do not support modifying our proposal in this way 
because the intent of our generic substitution policy is to encourage 
plans to make substitutions as soon as new generic drugs or authorized 
generic drugs are marketed to provide beneficiaries with access to 
lower cost therapeutically equivalent drugs. Moreover, it is unlikely 
that a brand name drug would be marketed after an authorized generic 
and, therefore, it would not fit within the structure of our proposed 
regulation, which contemplates the substitution within the plan year of 
a brand name drug to be removed or subject to a negative formulary 
change with a drug that is marketed (after CMS approves an initial 
formulary).
    Likewise, our proposed regulation would not permit Part D sponsors 
to immediately substitute a generic for an authorized generic or an 
authorized generic for a generic as an immediate substitution under 
Sec.  423.120(e)(2)(i). Nevertheless, an authorized generic and a 
generic of the same brand name drug generally are represented by the 
same RxCUI, as assigned by the National Library of Medicine's 
RxNorm.\50\ In other words, one RxCUI can represent multiple NDCs. As 
more NDCs become available and assigned to an RxCUI, to the extent 
there is not a different RxCUI to submit on the formulary file, Part D 
sponsors cannot submit NDC-specific formulary changes in the HPMS 
system. Further, we note that it is not inconsistent with CMS policy 
for Part D sponsors not to cover every NDC associated with an RxCUI for 
a generic drug. Accordingly, a Part D sponsor can adjust which NDCs for 
a generic drug and authorized generic of the same brand name reference 
drug are covered on its formulary in a manner that would not be 
considered a formulary change subject to the requirements of this final 
rule.
---------------------------------------------------------------------------

    \50\ https://www.nlm.nih.gov/research/umls/rxnorm/overview.html.
---------------------------------------------------------------------------

    With respect to interchangeable biological products, the proposed 
Sec.  423.120(e)(2)(i) likewise would not permit immediate 
substitutions among interchangeable biological products--that is, we 
would not permit Part D sponsors to immediately substitute an 
interchangeable biological product for another interchangeable 
biological product as an immediate substitution under Sec.  
423.120(e)(2)(i). This is because Sec.  423.120(e)(2)(i) would be 
limited to immediate substitutions of interchangeable biological 
products for their reference products, not for other interchangeable 
biological products that may be interchangeable with the same reference 
product. However, in contrast to generic drugs and authorized generic 
drugs of the same brand name drug sharing the same RxCUI, every 
biosimilar biological product is assigned its own distinct RxCUI. 
Therefore, a Part D sponsor cannot adjust which NDCs for 
interchangeable biological products with the same reference product are 
covered on its formulary in a manner that would not be considered a 
formulary change subject to the requirements of this rule. We believe 
this is in line with FDA's approach that approves biosimilar biological 
products in relation to reference products. For instance, our 
definition of a ``biosimilar

[[Page 30520]]

biological product'' at Sec.  423.4 cites section 351(i)(2) of the PHSA 
(42 U.S.C. 262(i)(2)), which establishes similarity of a biological 
product compared to the reference product and not with respect to other 
biosimilar biological products. Similarly, our definition of an 
``interchangeable biological product'' at Sec.  423.4 cites section 
351(k)(4) of the PHSA (42 U.S.C. 262(k)(4)), which provides that 
interchangeability is determined with respect to a reference product 
and not with respect to other interchangeable biological products.
    Our proposed definition of a maintenance change at Sec.  423.100 
would not permit substitutions among biosimilar biological products 
that share a reference product as maintenance changes, nor would our 
proposed definition of immediate substitutions at Sec.  
423.120(e)(2)(i) permit maintenance changes among interchangeable 
biological products that share a reference product. For interchangeable 
biological products, Sec.  423.100 would define a maintenance change at 
subparagraph (1) as making any negative formulary change to a drug 
within 90 days of adding a corresponding drug as specified. Section 
423.100 would define a corresponding drug to include ``an 
interchangeable biological product of a reference product''. For 
biosimilar biological products other than interchangeable biological 
products, Sec.  423.100 would define a maintenance change at 
subparagraph (2) as ``making any negative formulary changes to a 
reference product within 90 days of adding a biosimilar biological 
product other than an interchangeable biological product of that 
reference product.'' This definition does not include making negative 
formulary changes to a biosimilar biological product after adding a 
different biosimilar biological product for the same reference product.
    With respect to the commenter's question about how to treat 
enrollees taking a biosimilar biological product that is not the 
biosimilar biological product on the formulary, this situation would be 
treated the same as any other situation where an enrollee is taking a 
non-formulary drug. If the plan only has biosimilar biological product 
A on the formulary and then an enrollee who has been taking biosimilar 
biological product B enrolls in the plan, the enrollee would need a new 
prescription for the biosimilar biological product A.
    We do not prohibit multiple maintenance changes with respect to the 
same drug within the same plan year, and our review process considers 
each such request on its own merit. We think multiple maintenance 
changes within the same year would be rare given the type of changes we 
allow but not impossible. For example, a plan may add a therapeutically 
equivalent generic drug to the formulary and add a PA to the brand name 
drug. If the brand name drug then becomes subject to a long-term 
shortage, a maintenance change to remove the brand name drug from the 
formulary altogether may be appropriate.
    It is beyond the scope of this regulation to address every 
hypothetical scenario provided by the commenter, but we will take them 
into account when providing guidance in the future.
    Finally, we note that, regardless of whether Part D sponsors are 
permitted to replace an existing drug, they can always add the generic 
or authorized generic, or biosimilar biological product or unbranded 
biological product, to their formulary.
    Comment: Several commenters, including a few concerned only about 
the proposed expansion of immediate substitutions to include 
interchangeable biological products for reference products, asked that 
we require transition supplies for immediate substitutions, including 
for some generic substitutions of brand name drugs. Additionally, a few 
commenters, including commenters concerned that we would now permit as 
maintenance changes substitution of biosimilar biological products 
other than interchangeable biosimilar biological products for reference 
products, asked that we require Part D sponsors to provide transition 
supplies for midyear maintenance changes. A commenter asked that we 
explain how our rules apply to hypothetical transition scenarios.
    Response: We do not agree with the commenters asking us to apply 
the transition process to immediate substitutions or maintenance 
changes. The current Sec.  423.120(b)(3) provides that Part D sponsors 
must provide a transition process for specified enrollees. In the April 
2018 final rule, we finalized the current Sec.  423.120(b)(3)(i)(B) to 
provide that Part D sponsors do not need to provide a transition supply 
when a Part D sponsor immediately substitutes a generic drug for a 
brand name drug under Sec.  423.120(b)(5)(iv). We are not aware of 
widespread complaints regarding this policy and therefore do not see a 
reason to undo a policy that has been in place for several years or to 
apply different rules to other kinds of immediate substitutions or to 
maintenance changes permitted under this proposal.
    In the December 2022 proposed rule, we proposed to move the current 
regulation on immediate generic substitutions, Sec.  423.120(b)(5)(iv), 
to Sec.  423.120(e)(2)(i) and to expand it to include among other 
products, interchangeable biosimilar biological products. We also 
proposed in the December 2022 proposed rule to change the reference in 
Sec.  423.120(b)(3)(i)(B) to now refer to Sec.  423.120(e)(2), which 
would mean we would not require Part D sponsors to provide a transition 
supply, for instance, when replacing a reference product with an 
interchangeable biological product within the requirements of Sec.  
423.120(e)(2)(i). Similar to our decision in the April 2018 final rule 
not to provide transition supplies for immediate generic substitutions 
under Sec.  423.120(b)(5)(iv), we are not convinced there is a need to 
require transition supplies for immediate substitutions of 
interchangeable biological products, authorized generics, or unbranded 
biological products under the proposed Sec.  423.120(e)(2)(i). 
Requiring transition supplies for one type of immediate substitution 
but not others would introduce an unnecessary level of operational 
complexity for Part D sponsors and inconsistent policies.
    With respect to requiring transition supplies for maintenance 
changes, we did not propose to change the existing transition policy. 
Maintenance changes require 30 days advance notice to affected 
enrollees under Sec.  423.120(f)(1). That 30 days' advance notice 
serves the same function as the transition policy to provide affected 
enrollees time to consider a formulary alternative or pursue a 
formulary or tiering exception for the drug they are taking that will 
be subject to the negative formulary change. As a reminder, the 
transition regulation at Sec.  423.120(b)(3)(i)(B) requires 30 days' 
notice and a month's supply. Similarly, affected enrollees getting 30 
days advance notice of a maintenance change who have refills or obtain 
a new prescription can go to the pharmacy and request a refill before 
the maintenance change becomes effective.
    It is beyond the scope of this regulation to address every 
hypothetical transition scenario, but we will take them into account 
when providing guidance in the future to reflect regulatory changes.
    Comment: While many commenters generally supported greater use of 
biosimilar biological products, they were generally divided into three 
main groups regarding our specific proposals relating to biosimilar 
biological product substitutions (which we mean to describe generally 
as a formulary change in which a Part D sponsor would add a biosimilar 
biological product and either

[[Page 30521]]

remove or apply a negative formulary change to its reference product).
    The first group of commenters supported some or all of our specific 
proposals regarding biosimilar biological product substitutions, under 
which we would permit immediate substitutions of interchangeable 
biological products for their reference products under proposed Sec.  
423.120(e)(2)(i) and also permit Part D sponsors to treat as 
maintenance changes all biosimilar biological product substitutions 
under subparagraphs (1) and (2) of the definition of maintenance 
changes proposed in Sec.  423.100. They stated, for instance, that the 
proposed policies would result in more uptake of biosimilar biological 
products by switching enrollees taking reference products to biosimilar 
biological products, a move they felt could improve the overall 
affordability of the Part D program to enrollees due to the lower cost 
of biosimilar biological products as compared to reference products. 
They stated, for instance, that because a distinction is made between 
interchangeable biological products and biosimilar biological products 
other than interchangeable biological products, with respect to 
pharmacy-level substitutions, CMS had struck the right balance by 
proposing to provide 30 days' advance notice to enrollees to get a new 
prescription or to ask for an exception before a Part D sponsor 
substitutes a biosimilar biological product other than an 
interchangeable biological product for their reference product.
    The second group of commenters did not support some or all of the 
proposed flexibilities for biosimilar biological product substitutions 
to occur as immediate substitutions or maintenance changes, including 
interchangeable biological products. These commenters stated, for 
instance, that switching from biosimilar biological products to 
reference products was not the same as switching from generic drugs to 
brand name drugs and that any biosimilar biological product 
substitutions could disrupt patient treatment. They posited that 
biosimilar biological products, being complex molecules made from 
living organisms, are different than small molecule drugs that are 
chemically synthesized and that even minor differences in manufacturing 
processes could cause variations leading to clinical differences in a 
given patient's experience or reaction. They pointed out that 
biosimilar biological products are often used to treat patients with 
complex chronic conditions, whom they believe would be less well 
prepared to deal with adverse effects resulting from changes to the 
drugs they take.
    The final group of commenters did not feel CMS went far enough in 
providing flexibilities to promote greater use of biosimilar biological 
products and recommended that we permit immediate substitutions of all 
biosimilar biological products regardless of whether they are licensed 
as interchangeable biological products or not. They pointed to the fact 
that FDA had found all biosimilar biological products to be highly 
similar and to have no clinically meaningful differences from reference 
products in safety and effectiveness and pointed out that FDA's 
recently proposed labeling changes would reduce the visibility of a 
product's interchangeability status. These commenters stated that 
interchangeability is only meaningful in that it allows substitution at 
the pharmacy counter. A commenter stated that treating biosimilar 
biological products other than interchangeable biological products as 
maintenance changes would not go far enough to make a major difference 
in terms of savings because the regulation would still require 30 days' 
advance notice, time in which the product could already have been 
switched. A few of these commenters acknowledged that if we did not 
move towards more flexibility, they supported what we had proposed.
    Response: We appreciate the time all commenters took to explain 
many different points of view regarding biosimilar biological products, 
which are a relatively new category of products on the market. We 
appreciate the first group of commenters who supported our proposals to 
permit immediate substitutions of interchangeable biological products 
and maintenance changes of all biosimilar biological products. As 
explained in section III.F.2.b.(1) of the November 2023 proposed rule, 
our proposal accounts for the current PHSA delineation between 
interchangeable biological products, which may be substituted for the 
reference product without the intervention of the health care provider 
who prescribed the reference product (also called pharmacy-level 
substitution), and biosimilar biological products which do not meet the 
standards for interchangeability. However, substitution in terms of the 
conditions and requirements that must be met for a pharmacist to 
dispense a biosimilar biological product in place of its reference 
product without a new prescription is subject to state pharmacy law. 
Our review of state requirements with respect to pharmacy-level 
substitutions involving biosimilar biological products indicates that 
currently states overwhelmingly require that a biosimilar biological 
product is an interchangeable biological product for a pharmacist to 
make such a substitution for a reference product without the 
intervention of the health care provider who prescribed the reference 
product, among other conditions and requirements.51 52 53 
Our goal is to promote greater use of biosimilar biological products, 
and for that reason we expanded our original December 2022 proposal in 
the November 2023 proposed rule to include as maintenance changes 
substitutions of biosimilar biological products other than 
interchangeable biological products for their reference products. Since 
in most cases a pharmacist would not be permitted to make a pharmacy-
level substitution involving biosimilar biological products other than 
interchangeable biological products without the intervention of the 
prescriber, we maintain our decision that substitutions of biosimilar 
biological products other than interchangeable biological products 
should be maintenance changes with 30-days advance notice to provide 
enrollees with time to obtain new prescriptions for the biosimilar 
biological products other than interchangeable biological products or 
obtain formulary exceptions for the reference products.
---------------------------------------------------------------------------

    \51\ https://www.cardinalhealth.com/content/dam/corp/web/documents/publication/Cardinal-Health-Biosimilar-Interchangeability-Laws-by-State.pdf.
    \52\ https://www.mintz.com/sites/default/files/media/documents/2019-02-08/State%20Legislation%20on%20Biosimilars.pdf n.
    \53\ https://www.nacds.org/pdfs/government/2021/State-Substitution-Practices-for-Biological-Drugs-chart-July-2021.pdf.
---------------------------------------------------------------------------

    We do not agree with commenters in the second group that did not 
support permitting any formulary changes for biosimilar biological 
products. We believe that the emerging biosimilars market provides too 
great an opportunity for potential savings and that prohibiting plan 
sponsors from making such formulary changes would fail to acknowledge 
FDA determinations that such products are as safe and effective as 
their reference products and could discourage greater use of biosimilar 
biological products.
    As to the last group of commenters, we disagree that our proposals 
did not go far enough in providing plan sponsors with flexibilities to 
promote greater use of biosimilar biological products. With respect to 
the comment that treating formulary substitutions for reference 
products of biosimilar

[[Page 30522]]

biological products other than interchangeable biological products as 
maintenance changes would not make much of a difference in savings, we 
note that our proposed policy is still a significant change from our 
current sub-regulatory policy. Current policy treats biosimilar 
biological product substitutions as non-maintenance changes, and 
exempts such biosimilar biological product substitutions from applying 
to enrollees currently taking an affected drug for the remainder of the 
plan year, which limits the potential cost savings of any such 
formulary change.
    Comment: A commenter specifically supported our definition of 
``biosimilar biological product.'' A few commenters each respectively 
asked that we: (i) revise the definition of ``unbranded biological 
product'' in our proposed Sec.  423.4 to be modeled on the definition 
of ``authorized generic drug'' found in section 505(t) of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 355(t)), which includes a 
description of distribution; (ii) provide an explanation of the meaning 
of the word ``potency'' as used in our proposed definition of a 
``biosimilar biological product'' in Sec.  423.4; and (iii) revise our 
definition in Sec.  423.4 to define ``interchangeable biological 
product'' in order that it resemble the statutory definition in 42 
U.S.C. 262(i)(3). Another commenter asked that we add biological 
products to the existing definition of ``brand drug'' in Sec.  423.4 
(more precisely, ``brand name drug'') to be more like our current 
definition of ``covered Part D drug'' in Sec.  423.100 includes both 
small molecule drugs and biological products.
    Response: While we appreciate the comments, we disagree with the 
suggestions to change our proposed definitions. Specifically, we are 
not revising the proposed definition of ``unbranded biological 
product'' to conform it to a statutory definition of ``authorized 
generic drug.'' Our proposed definition is consistent with how the FDA 
considers the unbranded biological product to be the same product as 
the brand name biological product, but marketed without the brand name 
on its label.\54\ Nor do we think it is necessary for the purpose of 
CMS regulations to redefine what potency means for ``biosimilar 
biological products.''
---------------------------------------------------------------------------

    \54\ See FAQ #11: How are ``unbranded biologics'' displayed in 
the Purple Book? https://purplebooksearch.fda.gov/faqs#11.
---------------------------------------------------------------------------

    We are persuaded to revise our proposed definition of 
``interchangeable biological product'' in Sec.  423.4 to include 
language that links the standards described in 42 U.S.C. 262(k)(4) to 
the definition of interchangeability at 42 U.S.C. 262(i)(3), since this 
is more descriptive while maintaining the accuracy of the proposed 
definition. We will therefore modify our proposed definition of 
``interchangeable biological product'' in this final rule by adding the 
following language to the end: ``which in accordance with section 
351(i)(3) of the Public Health Service Act (42 U.S.C. 262(i)(3)), may 
be substituted for the reference product without the intervention of 
the health care provider who prescribed the reference product.''
    We decline to revise our definition of brand name drug given that 
we are finalizing a definition of ``brand name biological product'' in 
Sec.  423.4, as proposed.
    Comment: Several commenters who did not agree with our policy 
proposals contended that CMS was undermining the work of the FDA. For 
instance, a commenter stated that it is the role of FDA to decide what 
biosimilar biological products are interchangeable. In their opinion, 
if CMS were to permit Part D plans to substitute any biosimilar 
regardless of a determination of interchangeability, this is tantamount 
to disregarding the distinction between interchangeable biological 
products and biosimilars other than interchangeable biological products 
as set forth in the PHSA. On the other hand, several commenters that 
supported our proposed policies believed our policies were consistent 
with those of FDA. Several commenters on all sides of the issue looked 
to FDA publications and studies to support their positions, with a few 
citing the Biologics Price Competition and Innovation Act (BPCIA) or 
the PHSA. A few commenters also asked CMS to work with FDA, and one 
commenter specifically requested that the two agencies come to a 
consensus on the definitions and data surrounding biosimilarity and 
interchangeability, and the need for any more studies to support 
interchangeability determinations.
    Response: We disagree that our proposals interfere with FDA's 
review of biosimilar biological products. CMS, among other things, 
works in partnership with the entire health care community to improve 
quality, equity, and outcomes in the health care system.\55\ This 
includes regulation of Part D sponsors. FDA's mission, among other 
things, is to protect the public health by assuring the safety, 
efficacy, and security of human drugs and biological products.\56\ It 
has long been the case that both agencies have had overlap on some 
issues, and both agencies have undertaken complementary initiatives 
under the Executive Order on Promoting Competition in the American 
Economy (E.O. 14306). Examples of such initiatives include FDA's work 
to continue to clarify and improve the approval framework for generic 
drugs and biosimilar biological products to make generic drug and 
biosimilar biological product approval more transparent, efficient, and 
predictable, including improving and clarifying the standards for 
interchangeability of biological products, as well as CMS's efforts to 
prepare for Medicare and Medicaid coverage of interchangeable 
biological products, and to develop payment models to support increased 
utilization of generic drugs and biosimilar biological products. This 
work includes issuing regulations codifying definitions specific to our 
missions and authorities. The policies being finalized in this rule are 
appropriate for the needs of the Part D program.
---------------------------------------------------------------------------

    \55\ https://www.cms.gov/about-
cms#:~:text=CMS%20is%20the%20federal%20agency,in%20the%20health%20car
e%20system. ``CMS is the federal agency that provides health 
coverage to more than 160 million through Medicare, Medicaid, the 
Children's Health Insurance Program, and the Health Insurance 
Marketplace. CMS works in partnership with the entire health care 
community to improve quality, equity and outcomes in the health care 
system.''
    \56\ https://www.fda.gov/about-fda/what-we-do#mission ``The Food 
and Drug Administration is responsible for protecting the public 
health by ensuring the safety, efficacy, and security of human and 
veterinary drugs, biological products, and medical devices; and by 
ensuring the safety of our nation's food supply, cosmetics, and 
products that emit radiation.''
---------------------------------------------------------------------------

    Comment: A commenter questioned the underlying premise for our 
proposed policies, noting that, as compared to brand name drugs and 
generics, biosimilar biological products were not priced at a 
significant savings from their reference products. Another commenter 
stated that treating substitutions of reference products with 
biosimilar biological products other than interchangeable biological 
products as maintenance changes would not make a major difference in 
terms of the uptake of biosimilar biological products because it would 
not cause manufacturers of reference products to provide lower prices 
or increase rebates. Another commenter posited that providing more 
flexibilities for biosimilar biological products other than 
interchangeable biological products could dampen manufacturer 
innovation by reducing the incentive to devote additional time and 
resources to interchangeable product development.

[[Page 30523]]

Lastly, another commenter did not support our policy on the basis that 
allowing Part D sponsors to remove reference products from their 
formularies removes incentives for the biosimilar biological product to 
compete on price and could harm biologic competition, especially when 
only one or a few biosimilar biological products are currently on the 
market.
    Response: These comments highlight a variety of factors that may 
influence the biological product market, but we do not speculate on 
every potential downstream effect of our proposal to permit 
substitutions of biosimilar biological products other than 
interchangeable biological products as maintenance changes. It is up to 
Part D sponsors to negotiate with manufacturers, and section 1860D-
11(i) of the Act generally prohibits the Secretary from interfering 
with those negotiations. We believe that it is in the interest of the 
Part D program and Medicare beneficiaries to provide Part D sponsors 
with flexibilities that can be leveraged in negotiations with 
manufacturers to reduce costs to the government and Medicare 
beneficiaries. While we cannot estimate savings for our proposals with 
any certainty or predict whether fewer or more manufacturers will 
produce interchangeable biological products in the future, we clarify 
that the intent of this specific proposal has never been to affect 
decisions by manufacturers. Rather our goal is to promote greater 
access to and utilization of biosimilar biological products by 
providing more flexibility for Part D sponsors to substitute them for 
reference products than had previously been permitted. The introduction 
of biosimilar biological products to the market is relatively recent 
compared to generic small molecule drugs. We believe there is a 
potential for savings to the Medicare Trust Fund in the long term as 
acceptance of biosimilar biological products grows and increased 
competition drives down costs.
    Comment: A commenter pointed out that CMS stated in the December 
2022 proposed rule at pages 79536-7 with respect to another proposal on 
midyear benefit changes that such midyear changes violate uniformity 
and integrity of bids. A few commenters pointed out that we had stated 
in our December 2022 proposed rule that it was not appropriate to 
immediately substitute biosimilar biological products other than 
interchangeable biological products, and one commenter noted that we 
indicated in the April 2018 final rule that it could cause confusion if 
we were to define generic drugs to include biosimilar biological 
products. Pointing out that nothing had changed since that time, these 
commenters suggested we had no support to undertake what they reviewed 
as a reversal in policy.
    Response: The commenter failed to note that in the December 2022 
proposed rule, we drew a distinction 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 tier to another). That 
discussion in the December 2022 proposed rule explained that section 
1860D-4(b)(3)(E) of the Act contemplates that there will be midyear 
changes in cost sharing of individual formulary drugs. 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 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.
    We do not believe our previously finalized policies are 
inconsistent with our proposal to permit substitution of biosimilar 
biological products other than interchangeable biological products as 
maintenance changes. In the December 2022 proposed rule, we stated that 
we were not permitting the immediate substitution of biosimilar 
biological products other than interchangeable biological products as 
immediate substitutions, and our proposals in the November 2023 
proposed rule did not propose to permit such immediate substitutions. 
(See the November 2023 proposed rule at III.F.2.(b)(1) for a detailed 
discussion.) In our April 2018 final rule, we noted that, to avoid 
confusion, we were not finalizing a proposed rule regarding the similar 
treatment of biosimilar biological products and generic drugs for 
purposes of LIS cost-sharing. We do not believe a concern about 
avoiding confusion in 2018 with respect to the separate issue of LIS 
cost-sharing is relevant to the policy proposals in our December 2022 
and November 2023 proposed rules that involve the same type of products 
but in a different context.
    We do not believe that finalizing our proposals regarding formulary 
substitution of biosimilar biological products precludes us from 
revisiting these policies in the future. Of course, in such instances, 
as is the case anytime that we feel it necessary to revisit regulatory 
policy, we would carefully consider all factors and issue proposals 
through rulemaking subject to public comment and response.
    We also note we are finalizing our proposals to provide safeguards 
to mitigate potential confusion, including a requirement that Part D 
sponsors provide 30 days' advance notice requirement for substitutions 
of biosimilar biological products other than interchangeable biological 
products.
    Comment: Several commenters requested that we exempt enrollees 
currently taking a reference product if we finalize a policy that 
permits Part D sponsors to treat as maintenance changes formulary 
substitutions of biosimilar biological products other than 
interchangeable biological products for reference products.
    Response: We disagree with these commenters. As noted earlier, we 
believe the right course of action is to treat such substitutions as 
maintenance changes. These commenters appeared to support the feature 
of our current sub-regulatory policy on non-maintenance changes that 
exempts enrollees currently taking an affected product for the 
remainder of the plan year from substitution of reference products by 
biosimilar biological products other than interchangeable biological 
products. However, the non-maintenance policy also requires Part D 
sponsors to obtain explicit approval of such changes from CMS. We 
believe that to continue to require every Part D sponsor that seeks to 
substitute a biosimilar biological product other than an 
interchangeable biological product for a reference product to wait to 
obtain explicit permission before making any change and to continue to 
exempt enrollees currently taking the reference product would be 
counter to the goal of promoting the utilization of biosimilar 
biological products. Additionally, as noted previously in this section, 
the 30-day advance notice timeframe affords enrollees sufficient time 
to change to a covered alternative drug which could include biological 
products; to get a refill of the reference product to be replaced; or 
to obtain needed prior authorization or an exception for the reference 
product affected by the formulary change. Affected enrollees may still 
be able to access the reference

[[Page 30524]]

product through the plan's coverage determination and exceptions 
process.
    Comment: Many commenters opposed ``non-medical switching'' 
formulary changes that are based on payer mandated reasons other than 
strict medical necessity (such as cost and coverage reasons). They 
stated that permitting biosimilar biological product substitutions for 
enrollees who are stable on reference products would disrupt treatment 
and undermine the doctor-patient relationship and central role of 
prescribers in determining the best course of treatment, leading to 
poor health outcomes and exacerbating health care disparities. Several 
commenters opposed to the proposal noted that biosimilar biological 
product substitutions could disrupt patient care or result in 
unexpected cost sharing. One commenter suggested that rather than 
finalizing this proposal, CMS should focus on policies that empower 
physicians when partnering with their patients, such as expanded access 
to real-time benefit tool (RTBT) use. A few commenters asked us to 
require Part D sponsors to send notice of specific changes to the 
prescribers of affected enrollees. Several commenters also noted the 
importance of having a robust exceptions process.
    Response: We take seriously concerns that enrollees, especially 
those facing health challenges, may have when they are either switched 
from a drug they have been stable on or told their plan will no longer 
cover it, including for products such as biosimilar biological products 
that are relatively new to the market. However, as we discussed in our 
December 2022 proposed rule and the November 2017 proposed rule and as 
contemplated under section 1860D-4(b)(3)(E) of the Act, Part D sponsors 
may make changes to their formularies as specified during the year. As 
detailed in the November 2023 proposed rule, all biosimilar biological 
products have been determined by FDA to be safe and effective, and we 
believe that, over time, biosimilar biological products will gain more 
acceptance, as was the case with generic drugs as substitutes for brand 
name drugs. For instance, the FDA has stated:
    Both [biosimilar biological products and reference products] are 
rigorously and thoroughly evaluated by the FDA before approval. For 
[biosimilar biological products] to be approved by the FDA, 
manufacturers must show that patients taking [biosimilar biological 
products] do not have any new or worsening side effects as compared to 
people taking the [reference products].
    As it does with all medication approvals, the FDA carefully reviews 
the data provided by manufacturers and takes several steps to ensure 
that all [biosimilar biologic products] meet standards for patient use. 
The FDA's thorough evaluation makes sure that all [biosimilar 
biological products] are as safe and effective as their [reference 
products] and meet the FDA's high standards for approval. This means 
[consumers] can expect the same safety and effectiveness from the 
[biosimilar biological product] over the course of treatment as [they] 
would from the original product.\57\
---------------------------------------------------------------------------

    \57\ See FDA website entitled ``Biosimilar and Interchangeable 
Biologics: More Treatment Choices'' at: https://www.fda.gov/
consumers/consumer-updates/biosimilar-and-interchangeable-biologics-
more-treatment-
choices#:~:text=Biosimilars%20are%20a%20type%20of,macular%20degenerat
ion%2C%20and%20some%20cancers.
---------------------------------------------------------------------------

    We are not convinced that sending notices to prescriber offices, 
which serve a great many patients covered by many types of insurance 
and receive many communications, is an effective means to address 
enrollee concerns. Prescribers are more likely to respond to direct 
requests from their patients asking for a new prescription or help 
supporting an exception request. We agree with the commenter who noted 
the importance of RTBTs to provide prescribers with drug coverage and 
cost-sharing information for their patients at the point of 
prescribing. CMS does not require prescribers to use RTBTs, but 
requires at Sec.  423.160(b)(7) that Part D sponsors implement at least 
one RTBT capable of integrating with at least one prescriber's e-
prescribing system or electronic health record. See section III.L.5. of 
this final rule for a discussion of our proposals to enable more 
widespread access to RTBTs through the adoption of a standard.
    Lastly, we agree with commenters about the importance of a robust 
exceptions process being available to affected enrollees. Since the 
start of the Part D program in 2006, CMS has had such a process in 
place. Under the coverage determination and appeal processes described 
in Part 423, subpart M, Part D enrollees and their prescribers have the 
right to request an exception to a plan coverage rule, including an 
exception to the plan's tiered cost-sharing structure or formulary 
utilization management (UM) criteria. Part D plan sponsors are required 
to make coverage decisions and notify the enrollee (and the prescriber, 
as appropriate) in writing in accordance with strict regulatory 
timeframes. Under Sec.  423.578, a Part D plan must grant a tiering or 
formulary exception request (for example, provide coverage for a non-
formulary drug or an exception to the UM criteria) when it determines 
that the requested drug is medically necessary, consistent with the 
prescriber's supporting statement indicating that preferred 
alternatives(s) would not be as effective and/or would have adverse 
effects. Enrollees have a statutory right to an expedited determination 
if the prescriber indicates that applying the standard timeframe may 
jeopardize the enrollee's health, and plans must issue all coverage 
decisions, except those seeking reimbursement only, as expeditiously as 
the enrollee's health condition requires. Any initial coverage request 
that the plan expects to deny based on a lack of medical necessity must 
be reviewed by a physician. If the Part D sponsor makes an adverse 
coverage determination, the required written notice must explain the 
specific reason(s) for the denial and include a description of the 
enrollee's right to a standard or expedited redetermination by the 
plan, and the right to request independent review. We require plans to 
conduct all redeterminations (first level appeals) using a physician or 
other appropriate health care professional with sufficient medical and 
other expertise, including knowledge of Medicare criteria, if the 
initial denial was based on a lack of medical necessity. If a plan 
fails to make a coverage decision and notify the enrollee within the 
required timeframe, the request must be forwarded to the independent 
review entity to be adjudicated.
    Moreover, while we do not treat a claim transaction as a coverage 
determination, we do require Part D sponsors to arrange with network 
pharmacies to provide enrollees with a written copy of the Office of 
Management and Budget (OMB)-approved standardized pharmacy notice 
(``Notice of Denial of Medicare Prescription Drug Coverage,'' CMS-
10146) when the enrollee's prescription cannot be filled under the Part 
D benefit and the issue cannot be resolved at the point of sale. The 
notice instructs the enrollee on how to contact his or her plan and 
explains the enrollee's right to request a coverage determination. 
Thus, all beneficiaries immediately receive clear, concise instructions 
on how to pursue their appeal rights whenever a prescription cannot be 
filled. For additional information on the coverage determination, 
appeals, and grievance process, including information about the 
pharmacy notice, see 42 CFR part 423, subparts M and U, and the Parts C 
& D Enrollee Grievances, Organization/Coverage Determinations, and 
Appeals

[[Page 30525]]

Guidance.\58\ We believe these requirements are comprehensive enough to 
address issues that might arise related to any transition from a 
reference product to a biosimilar biological product.
---------------------------------------------------------------------------

    \58\ https://www.cms.gov/medicare/appeals-and-grievances/mmcag/downloads/parts-c-and-d-enrollee-grievances-organization-coverage-determinations-and-appeals-guidance.pdf.
---------------------------------------------------------------------------

    Comment: Several commenters specifically noted that requiring 30 
days' notice for maintenance changes would be sufficient time for an 
enrollee to communicate with their health care provider to get a new 
prescription for a biosimilar biological product other than an 
interchangeable biosimilar biological product. A commenter asked if 
patients taking a reference product could waive their 30 days' advance 
notice of maintenance changes and immediately switch to a substituted 
biosimilar biological product. Several commenters asked CMS to extend 
the advance direct notice period from 30 days to either 60 or 90 days. 
These commenters posited that biosimilar biological products were 
different than other drugs and that enrollees taking these drugs were 
likely to be sicker or experiencing a chronic illness. They stated that 
enrollees taking reference products would need to schedule appointments 
with their providers to discuss changing treatment to a biosimilar 
biological product and that average wait times may exceed a month. 
Another commenter suggested that given the level of concern many 
patients who have been on the same medication have regarding biosimilar 
biological products with which they may not be familiar, providing a 
longer time period would give enrollees and their prescribers more of 
an opportunity to feel comfortable making the transition. A commenter 
that opposed permitting Part D sponsors to treat the substitution of 
biosimilar biological products for their reference products as 
maintenance changes, noted that the 30-day notice period might not 
provide sufficient time for an enrollee to obtain the biosimilar 
biological product if it is subject to risk evaluation and mitigation 
strategies (REMS). In such instances, FDA may require manufacturers to 
restrict a drug's distribution or use only to patients with 
prescriptions from authorized physicians or pharmacies under specified 
conditions via one or more ``Elements to Assure Safe Use'' (ETASU).
    Response: As noted earlier, the needs of enrollees are an important 
priority for CMS. However, we have required advance direct notice of 
maintenance changes since the beginning of the Part D program and are 
not convinced that there is anything unique about biosimilar biological 
products other than interchangeable biological products that justifies 
a change to that longstanding policy. CMS has for some time permitted 
maintenance changes; since our April 2018 final rule, Part D plans have 
been required to provide 30 days' notice to these enrollees of changes. 
We are not aware of widespread complaints regarding the 30 days' 
advance direct notice, and do not believe it is necessary to create a 
special rule for individuals taking reference products subject to 
biosimilar biological product maintenance changes. We believe it would 
add unnecessary complications and set a poor precedent to establish a 
different time period of advance direct notice for biosimilar 
biological products substituted as maintenance changes (be they 
interchangeable or other than interchangeable) relative to other Part D 
drugs. We find this level of complications unmerited because, as 
discussed in section III.F of the November 2023 proposed rule, we trust 
in FDA evaluations that have determined all biosimilar biological 
products are safe and effective. See our discussion in the proposed 
rule for more on this (88 FR 78518). Additionally, affected enrollees 
may still be able to access the reference product through the plan's 
coverage determination and exceptions process.
    Section 1860D-4(b)(3)(E) of the Act requires ``appropriate notice'' 
of formulary changes; further, we view appropriate notice of change as 
an integral beneficiary right. Therefore, we disagree that we need to 
change the requirement for advance direct notice of maintenance changes 
or create more complexity by requiring plans to create a means for 
enrollees to waive formulary change notice on an individual basis. If a 
prescriber were to recommend a switch to a new biosimilar biological 
product to their patient, either they or the patient could call or 
otherwise reach out to the plan to see if the drug was available on the 
formulary ahead of receipt of any 30-day advance notice of drug change.
    We appreciate that a REMS could cause complications relative to the 
30-day notice period, for example, if the prescriber needs to enroll in 
a different REMS for a biosimilar biological product than for the 
reference product in order to be certified to prescribe the biosimilar 
biological product; however, we do not think this scenario is unique to 
biological products. The same scenario could occur under our current 
policy for maintenance changes involving generic substitutions for 
brand name drugs, because when a brand name drug has a REMS, the 
generic drug must also have a REMS and manufacturers may not have a 
shared system REMS.\59\ We are not aware of complaints indicating that 
our current policy for substitutions of generic drugs for brand name 
drugs has been complicated by REMS for drugs involved. Consequently, we 
do not see a need to change the policies we have proposed for 
substitution of biosimilar biological products.
---------------------------------------------------------------------------

    \59\ https://www.fda.gov/drugs/risk-evaluation-and-mitigation-strategies-rems/frequently-asked-questions-faqs-about-rems.
---------------------------------------------------------------------------

    Comment: A few commenters suggested that if we were to permit plans 
to require patients stable on reference products to switch to 
biosimilar biological products to reduce costs for payers, those 
savings should be shared with enrollees. A few commenters requested 
that we require biosimilar biological products to be placed on lower 
cost-sharing tiers than the reference products they replaced.
    Response: By encouraging Part D sponsors to introduce biosimilar 
biological products to their formularies more quickly, we believe 
enrollees may also be able to share in savings when negotiated prices 
for those products are lower than for the reference products, 
particularly in coinsurance-based benefit designs. CMS disagrees with 
the commenters' proposal to require biosimilar biological products to 
be placed on lower cost-sharing tiers than the reference products they 
replaced because it has been longstanding policy to require 
substitutions to apply to the same or lower tier. Moreover, most 
biological products qualify for the specialty tier, as defined at Sec.  
423.560. Unless the plan benefit structure includes two specialty tiers 
as permitted under Sec.  423.104(d)(2)(iv)(D), requiring substituted 
biosimilar biological products to be placed on a lower tier than the 
reference product would in effect prohibit Part D sponsors from placing 
biosimilar biological products on the specialty tier if the reference 
product had been on the specialty tier.
    Comment: While we received support for recognizing the role of 
education to advance uptake and acceptance of biological products, 
several commenters stressed that biosimilar biological products are a 
relatively new concept that could cause confusion and concern for 
enrollees who would prefer to continue taking drugs they are familiar 
with. They asked that we develop educational resources on biological 
products to better inform patients and

[[Page 30526]]

health care professionals and urge plan sponsors to engage in robust 
education and utilize communications best practices. A commenter 
encouraged us to update the Medicare Plan Finder tool to identify 
coverage of and savings associated with biosimilar biological products.
    Response: We plan to update our materials to reflect any regulatory 
changes regarding the provision of biosimilar biological products, as 
well as investigate options for identifying biosimilar biological 
product alternatives on Medicare Plan Finder. Likewise, we encourage 
Part D sponsors to educate their enrollees, including making sure that 
call center customer service representatives are trained to discuss 
biosimilar biological products. We note that the FDA also plays an 
important role in educating consumers on emerging drug therapies. FDA 
offers a variety of materials in multiple formats and languages to help 
promote understanding of biosimilar biological products and 
interchangeable biological products.\60\
---------------------------------------------------------------------------

    \60\ See the following FDA website on Multimedia Education 
Materials [verbar] Biosimilars: https://www.fda.gov/drugs/biosimilars/multimedia-education-materials-biosimilars.
---------------------------------------------------------------------------

    Comment: A commenter asked us to ensure enrollees receive 
appropriate notifications of midyear changes, develop such notices with 
stakeholder feedback, and hold Part D sponsors responsible if timelines 
or other standards are not met. A commenter requested that if the rule 
is finalized, that we monitor enrollee and prescriber experiences with 
biosimilar biological products to determine whether notice is 
necessary, particularly as state laws regarding substitution evolve.
    Response: We will keep this feedback in mind as we consider 
different monitoring options.
    Comment: A few commenters were concerned that permitting immediate 
substitutions of interchangeable biological products for reference 
products and maintenance changes of all biosimilar biological products 
for reference products would impose a greater administrative burden 
upon pharmacists.
    Response: While we certainly favor reducing unnecessary burdens on 
pharmacists, it is not clear to us how permitting immediate 
substitutions of interchangeable biological products under proposed 
Sec.  423.120(e)(2)(i) will increase the administrative burden placed 
on pharmacists. State laws determine the requirements for pharmacists 
to make pharmacy-level substitutions of interchangeable biological 
products for their reference products and these pharmacy-level 
substitutions can take place even when a reference product remains on 
the formulary (that is, in the absence of any immediate substitution by 
the plan). We acknowledge that permitting Part D sponsors to substitute 
biosimilar biological products for reference products as maintenance 
changes means the claim will potentially be denied at the pharmacy (if 
the negative formulary change adds restrictions or removes the 
reference product from the formulary) or the enrollee will be faced 
with higher than expected cost-sharing (if the negative formulary 
change moves the reference product to a different cost-sharing tier). 
The changes may cause enrollees to ask the pharmacist questions at the 
point of sale. In some cases, a pharmacist might reach out to the 
patient or their prescriber to obtain a new prescription if, for 
example, a refill of a reference product that a patient has been taking 
is denied by the plan. However, the advance direct notice provided to 
affected enrollees is intended to prompt the enrollee to act before the 
formulary change takes place and before the next fill of the reference 
product at the pharmacy. We decline to make further changes to our 
proposal based on these comments.
    Comment: A commenter was concerned that expanding immediate 
substitutions to include substitutions of authorized generics, 
interchangeable biological products, and unbranded biological products, 
as proposed in the December 2022 proposed rule, would allow plans to 
choose different specified products for coverage, such that facilities 
would have to stock every single product option or substitution, 
whereas currently, only one substitution needs to be stocked. 
Conversely, a few commenters were concerned that substituted drugs 
would have a different delivery form. A commenter on the November 2023 
proposed rule shared concerns that, given that all biosimilar 
biological products are not necessarily available in all delivery 
forms, our proposed rule could mean enrollees would lose access to 
their current delivery form (for instance, be able to only obtain a 
vial when they currently use a pen cartridge).
    Response: We appreciate the concern the commenter raised about the 
potential impact of our proposed policies on pharmacies that may need 
to stock multiple biosimilar biological products and the challenges 
that could create as more biosimilar biological products come to the 
market. However, that issue is not specific to Part D and is beyond the 
scope of our proposal to expand midyear substitutions. Regarding the 
concerns about changes in available delivery forms, under proposed 
Sec.  423.120(e)(2)(i), we would only allow immediate substitutions of 
an interchangeable biological product that FDA has determined to be 
interchangeable with its reference product. Our annual formulary review 
process ensures that Part D plan formularies include adequate 
representation of drugs consistent with best practices of formularies 
currently in widespread use. Part D sponsors are not required to cover 
every dosage or delivery form of a particular drug; however, Part D 
sponsors are expected to cover widely available dosage and delivery 
forms so as to not unduly limit enrollee access. If a Part D sponsor 
has multiple dosage or delivery forms of a particular drug on their 
formulary, Part D sponsors implementing immediate substitutions will be 
expected to continue to offer a similar variety of dosage and delivery 
forms to meet the needs of patients. CMS will review changes submitted 
on the HPMS formulary file and take action as appropriate if it appears 
that any immediate substitutions are inappropriate. As for maintenance 
changes defined in Sec.  423.100, these determinations are subject to 
our review on a case-by-case basis. CMS takes into consideration 
differences in available delivery forms when making decisions to 
approve or deny such negative change requests.
    Comment: A few commenters opined that our policy conflates pharmacy 
substitutions and formulary coverage, and that there is a distinction 
between the ability of a pharmacist to substitute a product without 
prescriber intervention and a plan's decisions regarding formulary 
coverage of a product.
    Response: We understand the decision by a Part D sponsor to provide 
formulary coverage of any given product is very different from the 
ability of a pharmacist to substitute a product for another drug. 
However, coverage decisions do not take place in a vacuum, and CMS 
cannot ignore practical realities despite these commenters' position 
that formulary design should not be affected by pharmacy substitutions 
policies. In contrast, CMS believes that to prevent enrollees from 
standing in line at the pharmacy counter unable to get the biosimilar 
biological product because they do not have a new prescription for it, 
our proposal to require 30 days' advance direct notice in Sec.  
423.120(f)(1) is appropriate.
    Comment: A few commenters asked us to align our proposed 
regulations

[[Page 30527]]

with policies in certain other countries. Specifically, both a 
commenter that asked us to restrict immediate substitutions to 
interchangeable biological products and a few commenters that asked us 
to permit immediate substitutions of all biosimilar biological products 
for reference products cited policies in Europe to support their 
different views.
    Response: We appreciate the comments but clarify that we are 
proposing policies on approval and notice of formulary changes for Part 
D plans in the United States independent of policies in other 
countries. As explained in detail in both the December 2022 and the 
November 2023 proposed rules, our policies are informed by another 
federal agency, FDA, which implements the statutory and regulatory 
framework for the review and approval of biosimilar biological 
products.
    After consideration of the comments received on both the December 
2022 and November 2023 proposals, and for the reasons set forth in the 
proposed rules and our responses to the comments in this final rule, we 
are finalizing the proposed regulation text changes at Sec. Sec.  
423.4, 423.100, 423.104, 423.120, and 423.128, with the minor 
modifications discussed below, in addition to other non-substantive 
organizational and editorial changes for clarity.
     In Sec.  423.4, removing the word ``biological'' from the 
term ``reference biological product.''
     In Sec.  423.4, adding the following language to the end 
of the definition of ``interchangeable biological product'': ``which in 
accordance with section 351(i)(3) of the Public Health Service Act (42 
U.S.C. 262(i)(3)), may be substituted for the reference product without 
the intervention of the health care provider who prescribed the 
reference product.''
     In Sec.  423.100, in the definition of ``maintenance 
change,'' revising and reordering language to provide more clarity by 
stating that drugs subject to removal include those ``that FDA 
determines to be withdrawn for safety or effectiveness reasons.''
     In Sec.  423.120(b)(5), finalizing the requirement that 
Part D sponsors must provide notice of changes as specified in Sec.  
423.120(f), but removing a reference to selection of a successor 
regulation to Sec.  423.120(b)(5)(iv) for purposes of section 1860D-
4(b)(3)(I)(ii) of the Act.
     In Sec.  423.120(e)(2)(ii), revising and reordering 
language on market withdrawals to provide more clarity by stating that 
drugs subject to removal include those ``that the Food and Drug 
Administration (FDA) determines to be withdrawn for safety or 
effectiveness reasons.''
     In Sec.  423.120(f)(4)(iv), revising language requiring 
Part D sponsors to include in their written notice of change a list of 
formulary alternatives to specify that the alternative drugs be ``on 
the formulary'' to make clear these alternatives are on the formulary 
and can meet the definition of a Part D drug.
     In Sec.  423.120(f)(4)(v), revising language specifying 
that Part D sponsors provide written notice of the coverage 
determinations and exceptions to make clear that an exception is a type 
of coverage determination and to correct the regulatory cross-
reference.
    Additionally, in the course of developing the final rule, it came 
to our attention that we had inadvertently omitted updating Sec.  
423.578(d) when proposing updates to the regulations to reflect the 
agency's proposals. Accordingly, we are making conforming changes in 
this final rule to the existing regulation text in Sec.  423.578(d) to 
correspond with the changes we are finalizing in this rule to require 
Part D sponsors to provide notice regarding negative formulary changes 
under Sec.  423.120(f).

O. Parallel Marketing and Enrollment Sanctions Following a Contract 
Termination (Sec. Sec.  422.510(e) and 423.509(f))

    Sections 1857(c)(2) and 1860D-12(b)(3)(B) of the Act provide CMS 
with the ability to terminate MA (including MA-PD) and PDP contracts if 
we determine that a contract(s) has met any of the following 
thresholds:
     Has failed substantially to carry out the contract
     Is carrying out the contract in a manner that is 
inconsistent with the efficient and effective administration of, 
respectively, Part C or Part D of Title XVIII of the Act (that is, the 
Medicare statute).
     No longer substantially meets the applicable conditions of 
the applicable part of the statute.
    This termination authority is codified at 42 CFR 422.510(a)(1) 
through (3) and 423.509(a)(1) through (3), respectively. In addition, 
section 1857(g)(3) of the Act (incorporated for Part D sponsors under 
section 1860D-12(b)(3)(F) of the Act) specifies that intermediate 
sanctions and civil money penalties (CMPs) can be imposed on the same 
grounds upon which a contract could be terminated (63 FR 34968 and 70 
FR 4193). CMS codified this authority at Sec. Sec.  422.752(b) and 
423.752(b) with respect to intermediate sanctions, and Sec. Sec.  
422.752(c)(1)(i) and 423.752(c)(1)(i) with respect to CMPs.
    If CMS terminates an MA organization or Part D sponsor contract(s) 
during the plan year but the termination is not effective until January 
1 of the following year, the MA organization or Part D sponsor could 
potentially continue to market and enroll eligible beneficiaries (as 
described in 422 Subpart B and 423 Subpart B) into plans under the 
terminating contract(s) unless CMS imposes separate marketing and 
enrollment sanctions on the terminating contract(s).\61\ A terminating 
contract that continues to market to and enroll eligible beneficiaries 
will cause confusion and disruption for beneficiaries who enroll in the 
period of time between when the termination action is taken and the 
January 1 effective date of the termination.
---------------------------------------------------------------------------

    \61\ Regulations in 42 CFR 422 Subpart B and 423 Subpart B 
permit enrollees to enroll in a plan mid-year during their initial 
election period or special election periods.
---------------------------------------------------------------------------

    For these reasons, we proposed to add paragraph (e) to Sec.  
422.510 and paragraph (f) to Sec.  423.509 that, effective contract 
year 2025, marketing and enrollment sanctions will automatically take 
effect after a termination is imposed. At paragraph (e)(1) of Sec.  
422.510 and paragraph (f)(1) of Sec.  423.509, we proposed to state 
that the marketing and enrollment sanctions will go into effect 15 days 
after CMS issues a contract termination notice. This timeframe is 
consistent with the number of days CMS often designates as the 
effective date for sanctions after CMS issues a sanction notice.
    At paragraph (e)(2) of Sec.  422.510 and paragraph (f)(2) of Sec.  
423.509, we proposed that MA organizations and Part D sponsors will 
continue to be afforded the same appeals rights and procedures specific 
to contract terminations under 42 CFR Subpart N of parts 422 and 423, 
however, there will not be a separate appeal for the sanction (in other 
words the appeal of the termination will include the associated 
marketing and enrollment sanctions). In addition, at paragraph (e)(3) 
of Sec.  422.510 and paragraph (f)(3) of Sec.  423.509 we proposed that 
if an MA organization or Part D sponsor appeals the contract 
termination, the marketing and enrollment sanctions will not be stayed 
pending the appeal consistent with Sec. Sec.  422.756(b)(3) and 
423.756(b)(3). Finally, at paragraph (e)(4) of Sec.  422.510 and 
paragraph (f)(4) of Sec.  423.509 we proposed that the sanction will 
remain in effect until the effective date of the termination, or if the 
termination decision is overturned on appeal, until

[[Page 30528]]

the final decision to overturn the termination is made by the hearing 
officer or Administrator.
    CMS rarely terminates MA organization and Part D sponsor contracts 
and, on average, contract terminations affect less than one MA 
organization or Part D sponsor a year. Therefore, we anticipate that 
this proposal will not result in additional costs or additional 
administrative burden for affected MA organizations and Part D 
sponsors. For example, an MA organization and Part D sponsor will not 
be required to submit a corrective action plan, and if appealed there 
will only be one appeal rather than multiple. MA organizations and Part 
D sponsors will continue to be required to comply with existing 
regulations that require public and beneficiary notice that their 
contract is being terminated under this proposal.
    Comment: Several commenters expressed support for this proposal.
    Response: CMS appreciates commenters' support.
    Final Decision: After consideration of the public comments received 
and for the reasons discussed here and in the proposed rule, we are 
finalizing this provision without modification.

P. Update to the Multi-Language Insert Regulation (Sec. Sec.  422.2267 
and 423.2267)

    Individuals with limited English proficiency (LEP) experience 
obstacles to accessing health care in the United States. Language 
barriers negatively affect the ability of patients with LEP to 
comprehend their diagnoses and understand medical instructions when 
they are delivered in English and impact their comfort with post-
discharge care regimens.\62\ We further described the language barriers 
faced by individuals with LEP in the November 2023 proposed rule at 88 
FR 78523. These barriers contribute to disparities in health outcomes 
for individuals with LEP, which likely worsened during the COVID-19 
pandemic.\63\
---------------------------------------------------------------------------

    \62\ Espinoza, J. and Derrington, S. ``How Should Clinicians 
Respond to Language Barriers that Exacerbate Health Inequity?'', AMA 
Journal of Ethics (February 2021) E109. Retrieved from https://journalofethics.ama-assn.org/sites/journalofethics.ama-assn.org/files/2021-02/cscm3-2102.pdf; Karliner, L., Perez-Stable, and E., 
Gregorich, S. ``Convenient Access to Professional Interpreters in 
the Hospital Decreases Readmission Rates and Estimated Hospital 
Expenditures for Patients with Limited English Proficiency'', Med 
Care (March 2017) 199-206. Retrieved from https://pubmed.ncbi.nlm.nih.gov/27579909/.
    \63\ Lala Tanmoy Das et al., Addressing Barriers to Care for 
Patients with Limited English Proficiency During the COVID-19 
Pandemic, Health Affairs Blog (July 29, 2020), https://www.healthaffairs.org/do/10.1377/hblog20200724.76821/full/.
---------------------------------------------------------------------------

    The multi-language insert (MLI) currently required at Sec. Sec.  
422.2267(e)(31) and 423.2267(e)(33) is a standardized communications 
material that informs enrollees and prospective enrollees that 
interpreter services are available in Spanish, Chinese, Tagalog, 
French, Vietnamese, German, Korean, Russian, Arabic, Italian, 
Portuguese, French Creole, Polish, Hindi, and Japanese. These were the 
15 most common non-English languages in the United States when we 
reinstituted the MLI in the 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 final 
rule (87 FR 27704) (hereafter referred to as the May 2022 final rule). 
Additionally, Sec. Sec.  422.2267(e)(31)(i) and 423.2267(e)(33)(i) 
require plans to provide the MLI in any non-English language that is 
the primary language of at least five percent of the individuals in a 
plan benefit package (PBP) service area but is not already included on 
the MLI. These regulations also provide that a plan may opt to include 
the MLI in any additional languages that do not meet the five percent 
threshold, where it determines that including the language would be 
appropriate. The current MLI states, ``We have free interpreter 
services to answer any questions you may have about our health or drug 
plan. To get an interpreter, just call us at [1-xxx-xxx-xxxx]. Someone 
who speaks [language] can help you. This is a free service.'' The 
issuance of the MLI is independent of the Medicare written translation 
requirements for any non-English language that meets the five percent 
threshold, as currently required under Sec. Sec.  422.2267(a)(2) and 
423.2267(a)(2), and the additional written translation requirements for 
fully integrated D-SNPs (FIDE SNPs) and highly integrated D-SNPs (HIDE 
SNPs) provided in Sec. Sec.  422.2267(a)(4) and 423.3367(a)(4).\64\ 
Additionally, we note that pursuant to CMS's authority in section 
1876(c)(3)(C) to regulate marketing and the authority in section 
1876(i)(3)(D) to specify new section 1876 contract terms, we have also 
established in Sec.  417.428 that most of the marketing and 
communication regulations in subpart V of part 422, including the MLI 
requirement in Sec.  422.2267(e)(31), also apply to section 1876 cost 
plans.
---------------------------------------------------------------------------

    \64\ This proposal pertains only to the MLI requirements in 
Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33), not Sec. Sec.  
422.2267 and 423.2267 broadly.
---------------------------------------------------------------------------

    Section 1557 of the Patient Protection and Affordable Care Act 
(ACA) \65\ provides that, except where otherwise provided in Title I of 
the ACA, an individual shall not, on the grounds prohibited under Title 
VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et seq. (race, 
color, national origin), Title IX of the Education Amendments of 1972, 
20 U.S.C. 1681 et seq. (sex), the Age Discrimination Act of 1975, 42 
U.S.C. 6101 et seq. (age), or section 504 of the Rehabilitation Act of 
1973, 29 U.S.C. 794 (disability), be excluded from participation in, be 
denied the benefits of, or be subjected to discrimination under, any 
health program or activity, any part of which is receiving Federal 
financial assistance (including credits, subsidies, or contracts of 
insurance); any program or activity administered by the Department; or 
any program or activity administered by any entity established under 
Title I of the Act. On May 18, 2016, the Office for Civil Rights (OCR) 
published a final rule (81 FR 31375; hereinafter referenced to as the 
``2016 section 1557 final rule'') implementing the requirement that all 
covered entities--any health program or activity that receives Federal 
financial assistance--include taglines with all ``significant 
communications.'' The sample tagline provided by the Department 
consisted of a sentence stating, in the 15 most common non-English 
languages in a State or States, ``ATTENTION: If you speak [insert 
language], language assistance services, free of charge, are available 
to you. Call 1-xxx-xxx-xxxx (TTY: 1-xxx-xxx-xxxx).'' On June 19, 2020, 
the Department published a new section 1557 final rule, 85 FR 37160 
(2020 section 1557 final rule), rescinding the 2016 section 1557 final 
rule's tagline requirements, 84 FR 27860. That rule is currently in 
effect, save for a few provisions enjoined or set aside by the courts 
and pending OCR's new proposed rule for section 1557 of the ACA, 
published on August 4, 2022 (87 FR 47824).
---------------------------------------------------------------------------

    \65\ 42 U.S.C 18116(c).
---------------------------------------------------------------------------

    None of the rulemaking impacting the various notifications of 
interpreter services changed the requirement that MA organizations, 
Part D sponsors, or cost plans must provide these services under 
applicable law. Plans have long been required to provide interpreters 
when necessary to ensure meaningful access to individuals with LEP, 
consistent with existing civil rights laws. In implementing and 
carrying out the Part C and D programs under

[[Page 30529]]

sections 1851(h), 1852(c), 1860-1(b)(1)(B)(vi), 1860D-4(a), and 1860D-
4(l) of the Act, 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 LEP are aware of and are 
able to access interpreter services provides a clear path for this 
portion of the population to properly understand and access their 
benefits.
    In the May 2022 final rule, we noted that we gained additional 
insight regarding the void created by the lack of any notification 
requirement associated with the availability of interpreter services 
for Medicare beneficiaries (87 FR 27821). We stated that we consider 
the materials required under Sec. Sec.  422.2267(e) and 423.2267(e) to 
be vital to the beneficiary's decision-making process. We also noted 
that we reviewed complaint tracking module (CTM) cases in the Health 
Plan Management System (HPMS) related to ``language'' and found a 
pattern of beneficiary confusion stemming from not fully understanding 
materials based on a language barrier. We noted that solely relying on 
the requirements delineated in the 2020 section 1557 final rule for 
covered entities to convey the availability of interpreter services is 
insufficient for the MA, cost plan, and Part D programs and is not in 
the best interest of Medicare beneficiaries who are evaluating whether 
to receive their Medicare benefits through these plans and who are 
enrolled in these plans. We stated that we believed that informing 
Medicare beneficiaries that interpreter services are available is 
essential to realizing the value of our regulatory requirements for 
interpreter services.
    On August 4, 2022, OCR published a new proposed rule for section 
1557 of the ACA (87 FR 47824) that proposed to require covered entities 
to notify the public of the availability of language assistance 
services and auxiliary aids and services for their health programs and 
activities at no cost using a notice of availability of language 
assistance services and auxiliary aids and services (Notice of 
Availability). Proposed 45 CFR 92.11(b) would require the Notice of 
Availability to be provided in English and at least in the 15 most 
common languages spoken by individuals with LEP in the relevant State 
or States, and in alternate formats for individuals with disabilities 
who request auxiliary aids and services to ensure effective 
communications. These proposed provisions would result in misalignment 
with the MLI requirement under Sec. Sec.  422.2267(e)(31) and 
423.2267(e)(33) which require that notice be provided in the 15 most 
common non-English languages in the United States.
    In addition, under Sec.  438.10(d)(2), States must require Medicaid 
managed care organizations (MCOs), prepaid inpatient health plans 
(PIHPs), prepaid ambulatory health plans (PAHPs), and primary care case 
management programs to include taglines in written materials that are 
critical to obtaining services for potential enrollees in the prevalent 
non-English languages in the State explaining the availability of oral 
interpretation to understand the information provided, information on 
how to request auxiliary aids and services, and the toll-free telephone 
number of the entity providing choice counseling services in the State. 
Several States that use integrated Medicare and Medicaid materials for 
D-SNPs and Medicare-Medicaid Plans have contacted CMS and requested 
that we change the MLI to be based on the 15 most common languages in 
the State rather than the 15 most common languages nationally because 
the most common languages in the State are often not the same as the 
most common 15 languages nationally.
    As a result of the MLI requirements at Sec. Sec.  422.2267(e)(31) 
and 423.2267(e)(33) and the Medicaid requirement at Sec.  438.10(d)(2), 
any applicable integrated plans (AIPs), as defined at Sec.  422.561, 
that provide integrated Medicare and Medicaid materials for enrollees 
must currently include the MLI in the 15 most common languages 
nationally as well as the Medicaid tagline in the prevalent non-English 
languages in the State to comply with both Medicare and Medicaid 
regulatory requirements. Specifically, these plans that provide 
integrated materials must comply with the MLI requirements at 
Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33) and the Medicaid 
requirement at Sec.  438.10(d)(2) to include taglines in written 
materials that are critical to obtaining services for potential 
enrollees in the prevalent non-English languages in the State. In the 
enrollee materials, this can result in a very long multi-page list of 
statements noting the availability of translations services in many 
languages. As discussed in greater detail below, we proposed to update 
Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33) to instead require that 
a Notice of Availability be provided in English and at least the 15 
languages most commonly spoken by individuals with LEP of the relevant 
State; we articulated our expectation that this proposed policy would 
better align with the Medicaid translation requirements at Sec.  
438.10(d)(2).\66\
---------------------------------------------------------------------------

    \66\ We expect the 15 most common languages for a given State to 
include any language required by the Medicaid program at Sec.  
438.10(d)(2). Therefore, our NPRM would reduce burden on fully 
integrated dual eligible special needs plans and highly integrated 
dual eligible special needs plans, as defined at Sec.  422.2, and 
applicable integrated plans, as defined at Sec.  422.561, to comply 
with regulations at Sec. Sec.  422.2267(a)(4) and 423.2267(a)(4).
---------------------------------------------------------------------------

    We believe rulemaking regarding a notice of the availability of 
language assistance services and auxiliary aids and services for 
individuals with LEP is needed to more closely reflect the actual 
languages spoken in the service area. We also believe it is in the best 
interest of enrollees for the requirements to align with the Medicaid 
translation requirements because it allows D-SNPs that are AIPs to 
provide a more applicable, concise Notice of Availability to enrollees 
that does not distract from the main purpose of the document. Further, 
alignment of Medicare and OCR rules would help to prevent confusion 
among MA organizations, Part D sponsors, and cost plans regarding which 
requirements they must comply with.
    We proposed to amend Sec. Sec.  422.2267(e)(31) and 
423.2267(e)(33). First, we proposed to replace references to the MLI 
with references to a Notice of Availability. We proposed that this 
notice be a model communication material rather than a standardized 
communication material and thus that CMS would no longer specify the 
exact text that must be used in the required notice. Second, we 
proposed to change paragraphs (e)(31) and (e)(33) to require MA 
organizations and Part D sponsors to provide enrollees a Notice of 
Availability that, at a minimum, states that MA organizations and Part 
D sponsors provide language assistance services and appropriate 
auxiliary aids and services free of charge. Third, we proposed, in new 
paragraphs (e)(31)(i) and (e)(33)(i), that the Notice of Availability 
must be provided in English and at least the 15 languages most commonly 
spoken by individuals with limited English proficiency of the relevant 
State and must be provided in alternate formats for individuals with 
disabilities who require auxiliary aids and services to ensure 
effective communication. We noted in the proposed rule that this State-
specific standard would ensure that a significant proportion of each 
State's particular LEP population receives key information in the 
appropriate languages. We cited the U.S. Census Bureau's ACS 2009-2013 
multi-year data, which show that the top languages spoken in each State 
can

[[Page 30530]]

vary significantly.\67\ We concluded that State-specific language 
translations provide for flexibility to maximize access to care for 
individuals with LEP. Fourth, we proposed that the updated notice must 
also include a statement regarding the availability of appropriate 
auxiliary aids and services to reduce barriers to access for 
individuals with disabilities.
---------------------------------------------------------------------------

    \67\ https://www2.census.gov/library/data/tables/2008/demo/language-use/2009-2013-acs-lang-tables-nation.xls.
---------------------------------------------------------------------------

    As discussed in the November 2023 proposed rule, we believe this 
proposal would make it easier for individuals 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. 
Additional benefits include mitigating the risk that Sec. Sec.  
422.2267(e)(31) and 423.2267(e)(33) could conflict with Sec.  
438.10(d)(2) and the forthcoming 1557 final rule, requiring applicable 
Medicare plans to comply with two, disparate sets of requirements. 
Further, requiring MA organizations and Part D sponsors to provide 
multiple sets of translated statements accompanying enrollee materials 
could lead to enrollee confusion and detract from the enrollee material 
message. Setting aside which specific policies are finalized in the 
forthcoming 1557 final rule, we generally continue to believe our 
proposed changes are appropriate given the benefits of a Notice of 
Availability for individuals with LEP and auxiliary aid and service 
needs more closely reflecting the actual languages spoken in the 
service area and aligning with the Medicaid translation requirements.
    Additionally, we proposed in Sec. Sec.  422.2267(e)(31)(ii) and 
423.2267(e)(33)(ii) that if there are additional languages in a 
particular service area that meet the 5 percent service area threshold, 
described in paragraph Sec. Sec.  422.2267(a)(2) and 423.2267(a)(2), 
beyond the languages described in Sec. Sec.  422.2267(e)(31)(i) and 
423.2267(e)(33)(i), the Notice of Availability must also be translated 
into those languages, similar to the current MLI requirements at 
Sec. Sec.  422.2267(e)(31)(i) and 423.2267(e)(33)(i). While Sec. Sec.  
422.2267(a)(2) and 423.2267(a)(2) apply to the Notice of Availability 
since it is a required material under Sec. Sec.  422.2267(e) and 
423.2267(e), we wanted to clarify this in the regulation text. MA 
organizations and Part D sponsors may also opt to translate the Notice 
of Availability in any additional languages that do not meet the 5 
percent service area threshold at Sec. Sec.  422.2267(a)(2) and 
423.2267(a)(2), where the MA organization or Part D sponsor determines 
that such inclusion would be appropriate, which is also included in the 
current MLI requirements at Sec. Sec.  422.2267(e)(31)(i) and 
423.2267(e)(33)(i). It is possible that there may be a subpopulation in 
the plan benefit package service area that uses a language that does 
not fall within the top 15 non-English languages or meet the 5 percent 
service area threshold that the plan determines can benefit by 
receiving the notice. We noted that pursuant to CMS's authority in 
section 1876(c)(3)(C) to regulate marketing and the authority in 
section 1876(i)(3)(D) to specify new section 1876 contract terms, and 
as established in Sec.  417.428, this proposal would also apply to 
section 1876 cost plans.
    To assist plans with fulfilling their requirements under Sec. Sec.  
422.2267(a)(2) and 423.2267(a)(2) to translate required materials into 
any non-English language that is the primary language of at least five 
percent of the population of a plan service area, since 2009 CMS has 
provided plans with a list of all languages that are spoken by 5 
percent or more of the population for every county in the U.S. Each 
fall, we release an HPMS memorandum announcing that MA organizations 
and Part D sponsors can access this list in the HPMS marketing review 
module.\68\ However, plans can also use U.S. Census Bureau ACS data to 
determine the top languages spoken in a given State or service area. 
The September 2023 Medicare Part C & D Language Data Technical Notes 
\69\ outlines our methodology for calculating the percentage of the 
population in a plan's service area speaking a language other than 
English and provides plans with instructions to make these calculations 
on their own.
---------------------------------------------------------------------------

    \68\ We released the contract year 2024 version of this HPMS 
memorandum titled, ``Corrected Contract Year 2024 Translated Model 
Materials Requirements and Language Data Analysis'' on September 25, 
2023. This memorandum can be retrieved at: https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly/hpms-memos-wk-4-september-18-22.
    \69\ Found in HPMS as described in the September 25, 2023 HPMS 
memo, ``Corrected Contract Year 2024 Translated Model Materials 
Requirements and Language Data Analysis.'' This memo can be 
retrieved at https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly/hpms-memos-wk-4-september-18-22.
---------------------------------------------------------------------------

    We received the following comments on this proposal and respond to 
them below:
    Comment: Many commenters supported CMS's plan to require MA and 
Part D plans to provide enrollees a Notice of Availability that, at a 
minimum, states that MA organizations and Part D sponsors provide 
language assistance services and appropriate auxiliary aids and 
services free of charge in English and at least the 15 languages most 
commonly spoken by individuals with LEP of the relevant State and 
languages that meet the 5 percent service area threshold. The Medicaid 
and CHIP Payment and Access Commission (MACPAC) noted that the change 
aligns with work they have underway, more closely aligns Medicare 
requirements with existing Medicaid standards, reduces administrative 
burden on health plans, and may reduce health disparities for 
beneficiaries whose primary language is not English. A commenter stated 
that integrated Medicare and Medicaid plans have been experiencing this 
conflict between Medicaid requirements and Medicare MLI requirements 
for many years. Another commenter stated that using the same standard 
as Medicaid will reduce administrative time and effort for State 
Medicaid agencies overseeing D-SNPs by enabling State Medicaid staff to 
enforce a standard consistent with their other Medicaid products.
    Response: We appreciate the widespread support for our proposal. We 
believe that requiring a Notice of Availability to be provided in 
English and in at least the 15 most commonly spoken non-English 
languages and languages that meet the 5 percent service area threshold 
free of charge is more closely tailored to the needs of the population 
where the notice will be sent and will make it easier for individuals 
to understand the full scope of available Medicare benefits (as well as 
Medicaid benefits available through a D-SNP, where applicable), 
increasing their ability to make informed health care decisions. It 
will also promote a more equitable health care system by increasing the 
likelihood that MA enrollees have access to information and necessary 
health care.
    Comment: A few commenters opposed the proposal noting that it would 
place an undue administrative burden on plans, including national 
subcontractors that work with multiple plans across multiple States. 
Some commenters raised concerns about providing a State-based notice 
for plans with multi-State service areas. A commenter stated that 
providing the Notice of Availability based on an

[[Page 30531]]

enrollee's location would require plans to implement enrollee-level 
programming for every plan communication for all 50 States. A few 
commenters reported having employer-group waiver plans that covered 
more than one State.
    Response: We thank the commenters for their thoughts. We believe 
that requiring the Notice of Availability to be provided in at least 
the 15 most common languages spoken by individuals with LEP where the 
notice will be sent will make it easier for individuals 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. Any 
subcontractors will need to work with the applicable plan to ensure 
that they are meeting this requirement.
    However, we share the concerns raised by commenters about plans 
that have a service area covering multiple States and the potential 
burden associated with determining the State of residence for enrollees 
within the plan. We also agree that requiring such plans to include the 
Notice of Availability in at least the top 15 non-English languages in 
each State in the plan's service area, potentially resulting in many 
more than 15 languages, may cause enrollee confusion and undue 
administrative and financial burden to the plan. As a result, we are 
updating the regulation to require the Notice of Availability to be 
provided in at least the top 15 languages most commonly spoken by 
individuals with LEP within the State or States associated with the 
plan benefit package service area, consistent with the section 1557 
proposed rule. This approach would allow plans to aggregate the 
populations with LEP across all States in the plan's service area to 
determine the 15 languages in which it must provide the Notice of 
Availability. For example, if a plan's service area is New York, the 
Notice of Availability must include at least the top 15 languages 
spoken by individuals with LEP in New York, based on guidance published 
by the Secretary. If the plan's service area includes Connecticut, New 
Jersey, and New York, the plan may aggregate the populations with LEP 
across Connecticut, New Jersey, and New York to determine the 15 
languages in which it must provide the Notice of Availability, based on 
guidance published by the Secretary. If the service area does not 
include an entire State, the plans should still use the top 15 
languages for the entire State. If the service area is national, the 
plan may use the top 15 languages nationally for the Notice of 
Availability, based on guidance published by the Secretary.
    Comment: Another commenter questioned whether, if CMS finalizes the 
proposal as a model communication material, plans can use each State's 
required tagline and language for the Notice of Availability.
    Response: Since D-SNPs are State-specific at the plan level this 
will still allow D-SNPs to comply with Sec.  438.10(d)(2) and use the 
State-specific tagline to satisfy the Notice of Availability 
requirements at Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33) as long 
as it states, at a minimum, in at least the 15 most common non-English 
languages and any language that meets the 5 percent service area 
threshold, that the MA organization provides language assistance 
services and appropriate auxiliary aids and services free of charge, 
since the Notice of Availability does not require standardized 
language. The D-SNP will not need to include multiple notices to meet 
these Medicaid and Medicare regulatory requirements.
    Comment: A few commenters requested that we publish annually the 15 
most common languages spoken by individuals with LEP in each State and 
nationally. Other commenters requested that we expand the list beyond 
15 languages such as to the top 20 languages most commonly spoken by 
individuals with LEP in each State. They stated that including the top 
20 languages on the list would help advocates identify languages that 
may meet the plan coverage area threshold even if they are not on the 
list of the top 15 for the State.
    Response: We appreciate commenters' requests for CMS to publish 
lists of the top languages in each State and note that HHS will provide 
a list of the top 15 non-English languages most commonly spoken by 
individuals with LEP in each State and nationally based on the U.S. 
Census Bureau's American Community Survey (ACS) data. Additionally, 
since 2009, CMS has provided plans with a list of all languages that 
are spoken by five percent or more of the population for every county 
in the U.S. Each fall, we release an HPMS memorandum announcing that MA 
organizations and Part D sponsors can access this list in the HPMS 
marketing review module.\70\ Further, the HPMS memorandum notes that 
plans can also use U.S. Census Bureau ACS data to determine the top 
languages spoken by individuals with LEP in a given State or service 
area. The September 2023 Medicare Part C & D Language Data Technical 
Notes \71\ outlines our methodology for calculating the percentage of 
the population in a plan's service area speaking a language other than 
English and provides plans with instructions to make these calculations 
on their own.
---------------------------------------------------------------------------

    \70\ We released the contract year 2024 version of this HPMS 
memorandum titled, ``Corrected Contract Year 2024 Translated Model 
Materials Requirements and Language Data Analysis'' on September 25, 
2023. This memorandum can be retrieved at: https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly/hpms-memos-wk-4-september-18-22.
    \71\ Found in HPMS as described in the September 25, 2023 HPMS 
memo, ``Corrected Contract Year 2024 Translated Model Materials 
Requirements and Language Data Analysis.'' This memo can be 
retrieved at https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-weekly/hpms-memos-wk-4-september-18-22.
---------------------------------------------------------------------------

    We also appreciate commenters asking us to publish more than the 15 
top languages spoken by individuals with LEP in each State. Plans will 
be able to identify the top 15 languages most commonly spoken by 
individuals with LEP in any State based on guidance published by the 
Secretary. Plans may opt to include additional languages, for which the 
U.S. Census Bureau's ACS data would be a helpful data source. We will 
consider expanding the list of languages provided in HPMS for MA and 
Part D plans in a future HPMS update.
    Comment: A few commenters requested that we provide our methodology 
for determining the top 15 languages spoken by individuals with LEP in 
a State.
    Response: We will provide guidance explaining our methodology for 
determining the top 15 languages spoken by individuals with LEP in each 
State and nationally based on ACS data.
    Comment: A commenter encouraged CMS to clarify that the languages 
available be based on the ``plan State'' and not the enrollee's State 
of residence.
    Response: We clarify that the requirement is based on the State or 
States associated with the plan benefit package service area rather 
than where an organization is located. To improve clarity, we are 
updating the regulation text at Sec. Sec.  422.2267(e)(31) and 
423.2267(e)(33) to, ``State or States associated with the plan's 
service area.''
    Comment: We received a few comments asking us to clarify which 
communications a Notice of Availability must accompany and the 
frequency with which the Notice of Availability is sent to enrollees. A 
commenter suggested we develop a targeted list of

[[Page 30532]]

materials with which to include the Notice of Availability while 
another commenter requested that we limit the types of documents that a 
Notice of Availability must accompany to those documents sent less 
frequently. Another commenter urged that we make the Notice of 
Availability an annual mailing instead of requiring inclusion in all 
materials and allow it to be suppressed if an enrollee has indicated a 
language of preference.
    Response: While we acknowledge the comments suggesting we reduce 
the frequency with which we require the Notice of Availability, we 
believe it is important to continually make enrollees aware of the 
availability of language assistance services in all required materials 
under Sec. Sec.  422.2267(e) and 423.2267(e). The requirement to 
include notice of available interpreter services and auxiliary aids and 
services with all required materials is an established policy that is 
already provided for in CMS regulations. CMS did not propose any 
amendments to this aspect of its policy as enrollee language and format 
preferences and needs may change over time. We also note that 
Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33) include provisions, such 
as allowing for a single copy of the requisite notice to be included in 
a mailing of multiple required documents, that ease burden and offer 
plans some flexibility, where practicable.
    Comment: Several commenters requested that we work with OCR and 
Medicaid to ensure consistency between our proposal, the OCR section 
1557 final rule, and Medicaid regulations.
    Response: We thank the commenters recommending we better align our 
regulations with other relevant regulations. We strive to achieve this 
goal by better aligning Medicare regulations at 42 CFR 422.2267(a)(2) 
and 423.2267(a)(2) with OCR regulations at 45 CFR 92.11 and Medicaid 
regulations at 42 CFR 438.10(d)(2). We note that we have continued to 
work closely with OCR, the CMS Center for Consumer Information and 
Insurance Oversight (CCIIO), and other offices throughout the drafting 
of our rule to ensure alignment of regulations and mitigate burden on 
plans.
    Comment: Several commenters opposed the use of a model notice 
instead of standardized language for the Notice of Availability. 
However, another commenter specifically noted support for the model 
communication approach and urged CMS to routinely review plans' Notices 
of Availability for compliance. A commenter requested that we work with 
States to publish a national Notice of Availability and any associated 
disclaimers, which aligns with all State requirements and accommodates 
all multi-plan materials by June of every year to reduce complexity and 
prevent enrollee confusion. Another commenter asked that we use 
specific notice language to ensure that all enrollees receive a full 
explanation of their rights while another commenter expressed concern 
that a model notice may result in more errors. Finally, another 
commenter recommended we collaborate with relevant stakeholders to 
develop a single, uniform Notice of Availability that can be used by 
health plans and providers without customization in the top 31 
languages spoken nationally to accommodate 99 percent of the LEP 
population.
    Response: We appreciate the commenters' concerns that a model 
Notice of Availability rather than standardized language may result in 
more errors and the concern with ensuring enrollees receive a full 
explanation of their rights. We also appreciate the support in making 
the Notice of Availability a model communication.
    To mitigate errors in messaging, we specified that the content of 
the Notice of Availability must include at minimum, a statement that 
the MA organization provides language assistance services and 
appropriate auxiliary aids and services free of charge. In addition, 
for the purpose of compliance with section 1557 of the Affordable Care 
Act, OCR will be providing model language translated into the 15 
languages most commonly spoken by individuals with LEP in every State 
and nationally that plans can use as a template to comply with the 
proposed CMS notice requirements. Also, allowing the use of a model 
Notice of Availability provides flexibility for D-SNPs in States that 
may require the use of a specific tagline or Notice language so that 
they do not have to include additional language in materials. We 
believe that allowing this flexibility along with the OCR model 
language outweighs the risk of errors in messaging.
    We also thank the commenter for the recommendation to develop a 
Notice of Availability list translated in the top 31 languages spoken 
nationally. However, we believe that a list of 31 languages would be 
too long. As we explained in the proposed rule (88 FR 78525), States 
with AIP D-SNPs contacted CMS concerned that compliance with Medicaid 
requirements at Sec.  438.10(d)(2) and Medicare requirements at 
Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33) would require D-SNPs to 
include a Notice with a long list of languages in the required 
materials. One State described how their current list of languages to 
comply with Medicare and Medicaid requirements for D-SNPs was over four 
pages. We noted this as a reason for updating this regulation in the 
proposed rule. As the commenter points out, lengthy notices can dilute 
the primary message, making it more difficult for enrollees to receive 
critical information. Lengthy inserts can also increase costs for 
plans.
    Comment: A commenter encouraged us to promote flexibility for plans 
to send materials digitally as nearly a quarter of the commenter's plan 
enrollees selected to receive plan materials electronically. The 
commenter suggested we require MA organizations to ask enrollees for 
email address and cell phone information as part of the enrollment 
application.
    Response: We clarify that plans may send the Notice of Availability 
digitally with required materials as described and permitted in 
proposed Sec. Sec.  422.2267(e)(31)(vii) and 423.2267(e)(33)(vii) which 
we have renumbered as Sec. Sec.  422.2267(e)(31)(ii)(G) and 
423.2267(e)(33)(ii)(G) in this final rule that the notice may be 
provided electronically when a required material is provided 
electronically as permitted under Sec. Sec.  422.2267(d)(2) and 
423.2267(d)(2). We also note that the model MA enrollment form includes 
a section where enrollees can note materials they would like to receive 
via email and the option to add their email address. Enrollees may also 
include their cell phone number in the application.
    Comment: A commenter questioned if the reference to ``auxiliary 
aids'' in the CMS proposal equates to what CMS traditionally considered 
alternate formats: audio, large print, and braille. Another commenter 
requested that braille be exempt from the requirement because plans 
know that an enrollee's preference is braille if the enrollee is 
already receiving documents in braille.
    Response: We thank the commenter for the question and clarify that, 
in alignment with OCR, we define ``auxiliary aids'' as written in 45 
CFR 92.102.\72\ As noted, plans must provide the Notice of Availability 
in alternate formats, if requested. If an enrollee indicates a 
preference for receiving materials in braille, the plan should also 
provide that enrollee with the Notice of Availability text in English 
braille, and then--not in braille--include the text in the 15 languages 
most commonly

[[Page 30533]]

spoken by individuals with LEP in the State or States associated with 
the plan benefit package service area, informing them of the 
availability of verbal translation services as well as alternate 
formats. If an enrollee requests materials in large print, then the 
plan should provide them with the Notice of Availability text in 
English in large print and in at least the 15 languages most commonly 
spoken by individuals with LEP in the State or States associated with 
the plan benefit package service area. Plans must also comply with 
section 504 of the Rehabilitation Act and section 1557 of the 
Affordable Care Act, which may include providing the Notice of 
Availability in an alternate format or providing another auxiliary aid 
or service such as braille. Thus, if an enrollee is in need of the 
Notice of Availability in an alternate format or through another 
auxiliary aid or service, the enrollee's plan would likely already be 
required to provide the Notice of Availability in the requested medium, 
to comply with section 504 and section 1557.
---------------------------------------------------------------------------

    \72\ https://www.ecfr.gov/current/title-45/section-92.102.
---------------------------------------------------------------------------

    Comment: Some commenters recommended that we delay the effective 
date or enforcement of the requirement to CY 2026 or until OCR's final 
rule is released to ensure consistency and prevent what they 
characterize as undue burden to plans. A commenter stated a concern 
with being able to include the associated costs in their 2024 MA bids 
and the time required to make the administrative updates.
    Response: We appreciate the commenters' concerns about the timing 
of our proposal and OCR's section 1557 final rule. We have worked 
closely with OCR to eliminate potential conflicts with the section 1557 
final rule.
    We also understand that MA organizations may need to make some 
administrative adjustments to comply with this requirement. CMS will 
provide a list of the top 15 languages most commonly spoken by 
individuals with LEP in each State and nationally, and OCR will provide 
translations of the model Notice of Availability in those languages. In 
addition, in this final rule we have updated Sec. Sec.  422.2267(e)(31) 
and 423.2267(e)(33) to allow plans to continue using the MLI until the 
beginning of contract year 2026 marketing on September 30, 2025. 
However, plans will also have the choice, starting at the beginning of 
marketing for contract year 2025 on September 30, 2024, of using the 
Notice of Availability described in subparagraphs 422.2267(e)(31)(ii) 
and 423.2267(e)(33)(ii) to satisfy the MLI requirement, as provided in 
Sec. Sec.  422.2267(e)(31)(i)(G) and 423.2267(e)(33)(i)(G). This 
flexibility will allow D-SNPs in States requiring a State-specific 
tagline to use the State tagline for contract year 2025 marketing and 
communications without also having to include the MLI as well. It will 
also allow those plans that want to provide a State-specific notice for 
contract year 2025 marketing and communications to do so. Per 
Sec. Sec.  422.2267(e)(31)(ii) and 423.2267(e)(33)(ii), all plans will 
be required to use the Notice of Availability for CY 2026 marketing and 
communications beginning September 30, 2025.
    Comment: A commenter requested that all levels of government adopt 
policies ensuring that individuals with LEP have adequate language 
access to their health care provider. The commenter also recommended we 
work to ensure that professional language service providers are 
adequately trained, certified, and compensated, and that opportunities 
are made available for Medicare beneficiaries, family caregivers, and 
trained interpreters to provide input on the language used in the model 
communication materials.
    Response: We appreciate the commenter's perspective that 
professional language service providers should be adequately trained, 
certified, and compensated. We agree that these are important issues, 
although matters of compensation are beyond the scope of this 
rulemaking. We note that OCR will provide model language based on 
beneficiary testing. In addition, we encourage MA organizations to 
consult with Medicare beneficiaries, family caregivers, and trained 
interpreters if they decide to include translations of the Notice of 
Availability in languages other than those provided by OCR.
    Comment: A few commenters recommended that we provide all standard 
model materials in the top 15 languages that are on the current MLI.
    Response: We appreciate the commenters' recommendation, but the 
requests for CMS to provide translations of all standard model 
materials are out of scope. Our proposal pertains to notifying 
enrollees of the availability of verbal translation services, not the 
translations of written model materials themselves. However, we note 
that in contract year 2024, CMS did translate the Annual Notice of 
Changes (ANOC), Evidence of Coverage (EOC), EOC errata, Explanation of 
Benefits (EOB), Provider Directory, Pharmacy Directory, Formulary, Low-
Income Subsidy (LIS) Rider, and Part D transition letter in Chinese, 
Korean, Spanish, and Vietnamese. We also remind commenters that OCR 
will provide translations of the model Notice of Availability in the 15 
languages most commonly spoken by individuals with LEP in each State 
and nationally. Additionally, we note that Sec. Sec.  422.2267(a)(3) 
and 423.2267(a)(3) obligate plans to provide required materials to 
enrollees on a standing basis in any of the non-English languages 
identified in Sec. Sec.  422.2267(a)(2) or (a)(4) and 423.2267(a)(2) or 
(a)(4) or in an accessible format, when an enrollee makes a request to 
receive these materials in a non-English language or accessible format.
    Comment: A few commenters stated that the 5 percent service area 
threshold is not inclusive enough and recommended that we set a 
threshold of either 5 percent or 1,000 people, whichever is lower, in a 
service area. Another commenter requested that there be an undefined 
standard to ensure that smaller language communities receive the Notice 
of Availability in their preferred language.
    Response: We appreciate the commenters' perspectives on this issue, 
but changes to the threshold for the translation requirement are beyond 
the scope of this regulation. We believe policy making on this issue 
would benefit from further study and engagement with interested 
parties, including notice to the public and the opportunity to submit 
comments on this topic.
    Comment: A commenter strongly encouraged us to minimize future 
modifications to the Notice of Availability as such fluctuations over 
the years have created administrative burden and increased costs for 
plans.
    Response: We agree with the commenter that limiting future 
modifications to regulations regarding notification of the availability 
of language assistance services and auxiliary aids and services would 
help reduce burden. We will work to limit future changes. Moreover, we 
anticipate the policy we are finalizing, which better aligns Medicare 
translation requirements with Medicaid and OCR requirements, will 
mitigate the need for future updates.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing revisions to paragraphs at Sec. Sec.  422.2267(e)(31) and 
423.2267(e)(33) as follows: We are allowing plans a choice in the 
applicability date for the updates to Sec. Sec.  422.2267(e)(31) and 
423.2267(e)(33). Plans may implement the changes for contract year 2026 
marketing and communications beginning September

[[Page 30534]]

30, 2025, or contract year 2025 marketing and communications beginning 
September 30, 2024. As a result, we are adding the heading Notice of 
availability of language assistance services and auxiliary aids and 
services (Notice of Availability) at Sec. Sec.  422.2267(e)(31) and 
423.2267(e)(33) and modifying sections Sec. Sec.  422.2267(e)(31)(i) 
and 423.2267(e)(33)(i) to read, ``Prior to contract year 2026 marketing 
on September 30, 2025, the notice is referred to as the Multi-language 
insert (MLI). This is a standardized communications material which 
states, `We have free interpreter services to answer any questions you 
may have about our health or drug plan. To get an interpreter, just 
call us at [1-xxx-xxx-xxxx]. Someone who speaks [language] can help 
you. This is a free service.' in the following languages: Spanish, 
Chinese, Tagalog, French, Vietnamese, German, Korean, Russian, Arabic, 
Italian, Portuguese, French Creole, Polish, Hindi, and Japanese.'' We 
are then inserting the former rule sections Sec. Sec.  
422.2267(e)(31)(i)-(vi) and 423.2267(e)(33)(i)-(vi) and renumbering 
them as Sec. Sec.  422.2267(e)(31)(i)(A)-(F) and 423.2267(e)(33)(i)(A)-
(F). We are also including a clarification in Sec. Sec.  
422.2267(e)(31)(i)(B) and 423.2267(e)(33)(i)(B) to incorporate the 
exception that we are finalizing in Sec. Sec.  422.2267(e)(31)(i)(G) 
and 423.2267(e)(33)(i)(G), which will allow plans to utilize the new 
model notice described in Sec. Sec.  422.2267(e)(31)(ii) and 
423.2267(e)(33)(ii) to satisfy the existing MLI requirement during 
contract year 2025. We are also adding Sec.  422.2267(e)(31)(i)(G) 
stating, ``At plan option for CY 2025 marketing and communications 
beginning September 30, 2024, the plan may use the model notice 
described in subparagraph 422.2267(e)(31)(ii) to satisfy the MLI 
requirements set forth in this subparagraph (i).'' We are adding an 
identical provision at Sec.  423.2267(e)(33)(i)(G) except with a 
reference to subparagraph 423.2267(e)(33)(ii).
    We are modifying sections Sec. Sec.  422.2267(e)(31)(ii) and 
423.2267(e)(33)(ii) to state, ``For CY 2026 marketing and 
communications beginning September 30, 2025, the required notice is 
referred to as the Notice of availability of language assistance 
services and auxiliary aids and services (Notice of Availability). This 
is a model communications material through which MA organizations must 
provide a notice of availability of language assistance services and 
auxiliary aids and services that, at a minimum, states that the MA 
organization provides language assistance services and appropriate 
auxiliary aids and services free of charge.'' We are then redesignating 
sections Sec. Sec.  422.2267(e)(31)(i)-(vi) and 423.2267(e)(33)(i)-(vi) 
as new paragraphs Sec. Sec.  422.2267(e)(31)(ii)(A)-(G) and 
423.2267(e)(33)(ii)(A)-(G). For the redesignated paragraphs 
(e)(31)(ii)(A) and (e)(33)(ii)(A) we are adding ``or States associated 
with the plan's service area'' between the proposed language ``relevant 
State'' and ``and must be provided . . .'' to reduce the burden on 
organizations with plan benefit packages that operate in more than one 
State and conform with the section 1557 proposed rule, and to clarify 
that the requirement is based on the plan benefit package service area. 
Paragraph (A) will specify that this notice of availability of language 
assistance services and auxiliary aids and services must be provided in 
English and at least the 15 languages most commonly spoken by 
individuals with limited English proficiency of the relevant State or 
States associated with the plan's service area and must be provided in 
alternate formats for individuals with disabilities who require 
auxiliary aids and services to ensure effective communication.

Q. Expanding Permissible Data Use and Data Disclosure for MA Encounter 
Data (Sec.  422.310)

    Section 1853(a) of the Act requires CMS to risk-adjust payments 
made to Medicare Advantage (MA) organizations. In order to carry out 
risk adjustment, section 1853(a)(3)(B) of the Act requires submission 
of data by MA organizations regarding the services provided to 
enrollees and other information the Secretary deems necessary. The 
implementing regulation at Sec.  422.310(b) requires that MA 
organizations submit to CMS ``the data necessary to characterize the 
context and purposes of each item and service provided to a Medicare 
enrollee by a provider, supplier, physician, or other practitioner.'' 
Currently, Sec.  422.310(d)(1) provides that MA organizations submit 
risk adjustment data equivalent to Medicare fee-for-service (FFS) data 
to CMS as specified by CMS. MA encounter data, which are comprehensive 
data equivalent to Medicare FFS data, are risk adjustment data.\73\
---------------------------------------------------------------------------

    \73\ See System of Records Notices for the CMS Encounter Data 
System (EDS), System No. 09-70-0506, published June 17, 2014 (79 FR 
34539), as amended at February 14, 2018 (83 FR 6591); and for the 
CMS Risk Adjustment Suite of Systems (RASS), System No. 09-70-0508, 
published August 17, 2015 (80 FR 49237), as amended at February 14, 
2018 (83 FR 6591).
---------------------------------------------------------------------------

    Section 1106(a)(1) of the Act authorizes the Secretary to adopt 
regulations governing release of information gathered in the course of 
administering programs under the Act. In addition, section 1856(b) of 
the Act authorizes CMS to adopt standards to carry out the MA statute, 
and section 1857(e)(1) of the Act authorizes CMS to add contract terms 
that are not inconsistent with the Part C statute and are necessary and 
appropriate for the program. The regulation at Sec.  422.310(f)(1) 
establishes permissible CMS uses of MA encounter data (referred to as 
``risk adjustment data'' in the regulation), while Sec.  422.310(f)(2) 
and (f)(3) establish rules for CMS release of data. Prior to 2008, 
Sec.  422.310(f) provided for CMS to use MA risk adjustment data to 
risk adjust MA payments and, except for any medical record data also 
collected under Sec.  422.310, for other purposes. Over time, we 
subsequently refined the regulatory language describing the scope of 
permissible uses and releases of the MA risk adjustment data, including 
MA encounter data, to (i) risk adjusting MA payments, (ii) updating 
risk adjustment models, (iii) calculating Medicare disproportionate 
share hospital percentages, (iv) conducting quality review and 
improvement activities, (v) for Medicare coverage purposes, (vi) 
conducting evaluations and other analysis to support the Medicare 
program (including demonstrations) and to support public health 
initiatives and other health care-related purposes, (vii) for 
activities to support administration of the Medicare program, (viii) 
for activities to support program integrity, and (ix) for purposes 
authorized by other applicable laws (70 FR 4588; 73 FR 48650 through 
48654; 79 FR 50325 through 50334).
    Section 422.310(f)(2) permits the release of MA encounter data to 
other HHS agencies, other Federal executive branch agencies, States, 
and external entities, and Sec.  422.310(f)(3) of our current 
regulation specifies circumstances under which we may release MA 
encounter data for the purposes described in Sec.  422.310(f)(1). 
Existing regulations allow release of the data after risk adjustment 
reconciliation for the applicable payment year has been completed, 
under certain emergency preparedness or extraordinary circumstances, 
and when CMS determines that releasing aggregated data before 
reconciliation is necessary and appropriate for activities to support 
the administration of the

[[Page 30535]]

Medicare program (finalized in the CY 2024 Payment Policies Under the 
Physician Fee Schedule and Other Changes to Part B Payment and Coverage 
Policies; Medicare Shared Savings Program Requirements; Medicare 
Advantage; Medicare and Medicaid Provider and Supplier Enrollment 
Policies; and Basic Health Program final rule (88 FR 79400)). We noted 
in the November 2023 proposed rule that further expanding MA encounter 
data sharing to include support for the Medicaid program would be 
consistent with the goals of the Federal Coordinated Health Care 
Office, as established in statute (88 FR 78527).
    MA enrollment has grown to approximately half of all Medicare 
beneficiaries; a trend also seen in the enrollment of dually eligible 
individuals. For example, 51 percent of all dually eligible individuals 
were enrolled in an MA plan in 2021 (up from 12 percent in December 
2006).74 75 Such individuals experience the health care 
system and incur health outcomes as individuals regardless of which 
health care program pays for the service, but currently, the States' 
ability to obtain MA encounter data for program analysis and 
evaluations or program administration for dually eligible individuals 
enrolled in an MA plan is limited to support of a Medicare-Medicaid 
demonstration. Our current regulation text does not specify that we may 
make MA encounter data available to States for Medicaid program 
administration or to conduct evaluations and other analyses for the 
Medicaid program, with the exception of those evaluations and analyses 
used to support demonstrations. Therefore, previous rulemaking limited 
opportunities for States to effectively perform functions such as 
coordination of care, quality measure design, and program evaluation 
and analysis by allowing them access to MA encounter data for these 
activities only for those dually eligible individuals enrolled in 
Medicare-Medicaid demonstrations.
---------------------------------------------------------------------------

    \74\ 2023 Medicare Trustees Report https://www.cms.gov/oact/tr.
    \75\ https://www.cms.gov/files/document/managedcareenrollmenttrendsdatabrief2012-2021.pdf.
---------------------------------------------------------------------------

    We proposed changes to Sec.  422.310(f) to improve States' access 
to MA encounter data, including making a specific exception to the 
timing of sharing MA encounter data. We noted that we did not intend 
for our proposals to impact the terms and conditions governing CMS 
release of MA risk adjustment data as described in Sec.  422.310(f)(2), 
in accordance with applicable Federal laws and CMS data sharing 
procedures. As discussed in the August 2014 final rule, CMS data 
sharing procedures require each recipient of data from CMS to sign and 
maintain a CMS data sharing agreement, ``which addresses privacy and 
security for the data CMS discloses'' and ``contains provisions 
regarding access to and storage of CMS data to ensure that beneficiary 
identifiable information is stored in a secure system and handled 
according to CMS's security policies,'' which encompasses the 
limitations for additional disclosure of CMS data (79 FR 50333). We 
noted that such provisions would similarly apply to States that receive 
MA encounter data under our proposed amendments to Sec.  422.310(f).
    As stated in the August 2014 final rule, the data described in 
paragraphs (a) through (d) would include those elements that constitute 
an encounter data record, including contract, plan, and provider 
identifiers, with the exception of disaggregated payment data (79 FR 
50325). In accordance with Sec.  422.310(f)(2)(iv), we aggregate 
payment data to protect commercially sensitive information.
1. Expanding and Clarifying the Programs for Which MA Encounter Data 
May Be Used for Certain Allowable Purposes
    As we stated in the Medicare Program; Hospital Inpatient 
Prospective Payment Systems for Acute Care Hospitals and the Long-Term 
Care Hospital Prospective Payment System and Fiscal Year 2015 Rates; 
Quality Reporting Requirements for Specific Providers; Reasonable 
Compensation Equivalents for Physician Services in Excluded Teaching 
Hospitals; Provider Administrative Appeals and Judicial Review; 
Enforcement Provisions for Organ Transplant Centers; and Electronic 
Health Record (EHR) Incentive Program proposed rule (hereafter referred 
to as the May 2014 proposed rule; 79 FR 27978), using MA encounter data 
enables us, our contractors, and external entities to support Medicare 
program evaluations, demonstration designs, and effective and efficient 
operational management of the Medicare program, encourages research 
into better ways to provide health care, and increases transparency in 
the administration of the Medicare program (79 FR 28281 through 28282). 
However, because States lack access to MA encounter data, States' 
ability to conduct activities for dually eligible individuals enrolled 
in MA plans is limited. As Medicare is the primary payer for dually 
eligible individuals, States generally lack comprehensive data on care 
provided to dually eligible individuals enrolled in MA. Over the years, 
various States have requested that CMS share MA encounter data for 
dually eligible individuals to better coordinate care, conduct quality 
improvement activities, support program design, conduct evaluations, 
and improve efficiency in the administration of the Medicaid program.
    Our current regulation text at Sec.  422.310(f)(1)(vi) (evaluations 
and analysis to support the Medicare program) and (vii) (activities to 
support administration of the program) specifies that, for these 
purposes, the encounter data must be used for the Medicare program. 
Therefore, though Sec.  422.310(f)(2) permits CMS to release MA 
encounter data to States for the purposes listed in paragraph (f)(1), 
Sec.  422.310(f)(1)(vi) and (vii) do not clearly permit CMS to release 
MA encounter data to States to support Medicaid program evaluations and 
analysis or to support administration of the Medicaid program.
    We proposed to add ``and Medicaid program'' to the current MA 
encounter data use purposes codified at Sec.  422.310(f)(1)(vi) and 
(vii) and explained that these additions would enable CMS to use the 
data and release it (in accordance with Sec.  422.310(f)(2) and (3)) 
for the purposes of evaluation and analysis and program administration 
for Medicare, Medicaid, or Medicare and Medicaid combined purposes. We 
stated our belief that our release of MA encounter data for data use 
purposes that support the Medicare and Medicaid programs would 
generally be to the States and would support our responsibility to 
improve the quality of health care and long-term services for dually 
eligible individuals; improve care continuity, ensuring safe and 
effective care transitions for dually eligible individuals; improve the 
quality of performance of providers of services and suppliers under the 
Medicare and Medicaid programs for dually eligible individuals; and 
support State efforts to coordinate and align acute care and long-term 
care services for dually eligible individuals with other items and 
services furnished under the Medicare program.
    We noted in the November 2023 proposed rule that, as stated above, 
CMS's usual data sharing procedures apply to the release of MA 
encounter data in accordance with Sec.  422.310(f)(2) and address 
access to and storage of CMS data to ensure that beneficiary 
identifiable information is protected. We explained that we make other 
data available to external entities, including

[[Page 30536]]

States, in accordance with CMS data sharing procedures and Federal 
laws, including but not limited to the Privacy Act of 1974. We further 
explained that we review data requests for appropriate use 
justifications, including updated or amended use justifications for 
existing data requests, and we employ data sharing agreements, such as 
a Data Use Agreement and Information Exchange Agreement, that limit 
external entities to CMS-approved data uses and disclosure of CMS data. 
For example, States that request data from CMS for care coordination 
and program integrity initiatives may disclose the data to State 
contractors, vendors, or other business associates for those 
activities. In accordance with CMS data sharing agreements, these State 
contractors, vendors, or other business associates must also follow the 
terms and conditions for use of the CMS data, including limiting use of 
the CMS-provided data only for approved purposes. We explained that 
this would mean that, under our proposal, a State receiving MA 
encounter data for care coordination may disclose MA encounter data to 
Medicaid managed care plans to coordinate services for enrolled dually 
eligible individuals. We noted that comments submitted on the August 
2014 final rule cited concerns that access to MA encounter data by 
competitors of the various MA organizations that are required to submit 
data could permit a competitor to gain an advantage by trending cost 
and utilization patterns over a number of years. We explained that 
Sec.  422.310(f)(2)(iv) provides for aggregation of dollar amounts 
reported for the associated encounter to protect commercially sensitive 
data and that any release of MA encounter data to States would comply 
with applicable statutes, regulations, and processes including those 
described above, and we expressed our belief that concern around 
potential competitive advantage would be mitigated if the risk exists 
at all. We noted that, as stated in the August 2014 final rule, we 
believe that CMS data sharing procedures and review of use 
justifications ``strikes an appropriate balance between the significant 
benefits of furthering knowledge'' and the concerns regarding the 
release of risk adjustment data, including about beneficiary privacy or 
commercially sensitive nature of encounter information submitted by MA 
plans (79 FR 50328). Consistent with what we stated in the August 2014 
final rule, CMS data sharing agreements have enforcement mechanisms, 
and data requestors acknowledge these mechanisms. For example, 
penalties under section 1106(a) of the Social Security Act [42 U.S.C. 
1306(a)], including possible fines or imprisonment, and criminal 
penalties under the Privacy Act [5 U.S.C. 552a(i)(3)] may apply, as 
well as criminal penalties that may be imposed under 18 U.S.C. 641 (79 
FR 50333). Requestors of CMS data, such as States, are responsible for 
abiding by the law, policies, and restrictions of the data sharing 
agreements--which extends to any downstream disclosures of the data to 
State contractors, vendors, or other business associates--as a 
condition of receiving the data. We noted our intent to only approve 
requests for MA encounter data that have clear written data use 
justifications and identify any downstream disclosure--such as to State 
contractors, vendors, or other business associates--for each requested 
purpose. We have not identified any issues regarding competitive harm 
or disadvantage in our current data sharing programs.
    As stated in the November 2023 proposed rule, this proposal would 
allow us to use MA encounter data and disclose it--subject to the other 
limitations and protections specified in Sec.  422.310(f) and other 
applicable laws and regulations--to States to perform evaluations and 
analysis, which would include program planning for dually eligible 
individuals. Currently, States generally only receive Medicare FFS data 
from CMS under current authorities, which results in an incomplete 
assessment of the dually eligible population. Under our proposal, we 
noted that States could request MA encounter data for all of the dually 
eligible enrollees they serve and include this growing portion of the 
dually eligible population in their data analysis and efforts to 
improve outcomes for low-income older adults and people with 
disabilities who are enrolled in the Medicaid program.
    In the August 2014 final rule, we stated that, in addition to use 
of these data for review of bid validity and MLR, we expected there 
would be additional potential uses for these data as part of the 
program administration purpose, such as the development of quality 
measures (79 FR 50326). Consistent with our expectation at that time, 
we clarified in the November 2023 proposed rule that care coordination 
would be an allowable use for these data as part of the purpose 
currently codified at Sec.  422.310(f)(1)(vii)--for activities to 
support the administration of the Medicare program--which includes 
activities that are not within the scope of the other permitted uses 
defined at Sec.  422.310(f)(1). Similar to quality measure development, 
a use we explicitly named, care coordination is critical to ensuring 
that individuals receive effective and efficient care, especially when 
services may be covered under multiple health care programs, as is the 
case for dually eligible individuals who are enrolled in Medicaid and 
an MA plan. We also stated our belief that use and release of MA 
encounter data to States to support administering the Medicaid program, 
including to coordinate care and improve quality of care for Medicaid-
covered individuals, is appropriate. We provided the example that, in 
administering the Medicaid program, a State may need MA encounter data 
to coordinate care for dually eligible individuals, which may include 
identification of individuals at high risk of institutional placement 
or other undesirable outcomes based on past service utilization; 
coordination of services from the MA plan's coverage of an inpatient 
stay to Medicaid coverage of subsequent home and community-based 
services; coordination of Medicaid-covered services in a skilled 
nursing facility for a dually eligible individual after reaching the 
limits of the individual's coverage through the MA plan; monitoring 
nursing facility quality of care, including through tracking rates of 
hospitalization and emergency room visits; and coordination of physical 
health services with behavioral health services, where Medicaid 
coverage differs from the MA plan's coverage.
2. Adding an Additional Condition Under Which MA Encounter Data May Be 
Released Prior to Reconciliation
    Section 422.310(f)(3) describes the circumstances under which we 
may release MA encounter data. Specifically, the current regulation 
provides that MA encounter data will not become available for release 
unless the risk adjustment reconciliation for the applicable payment 
year has been completed, we determine it is necessary for certain 
emergency preparedness purposes, we determine that extraordinary 
circumstances exist, or we determine that releasing aggregated data is 
necessary and appropriate to support activities and authorized uses in 
the administration of the Medicare program. Section 422.310(g) 
specifies the deadlines that we use to determine which risk adjustment 
data submissions we will use to calculate risk scores for a given 
payment year. This section also establishes a reconciliation process to 
adjust payments based on additional data from the data collection 
period

[[Page 30537]]

(meaning the year the item or service was furnished to the MA enrollee) 
so long as we receive the submissions before the established final risk 
adjustment data submission deadline for the payment year, which is no 
earlier than January 31 of the year following the payment year. This 
submission window provides MA organizations an opportunity to update or 
submit encounter data records and chart review records to be considered 
for risk adjustment and payment in the applicable payment year. Section 
422.310(b) requires MA organizations to submit data for all items and 
services provided to an MA enrollee; therefore, MA organizations must 
continue to submit encounter data records and data corrections after 
the final risk adjustment data submission deadline when timely data 
submissions are determined to be inaccurate, incomplete, or untruthful 
(see Sec.  422.310(g)(2)(ii) for limitations on which submissions after 
the final risk adjustment data submission deadline may be used for 
additional payment). We explained that the timing limitation on release 
of MA encounter data in our current regulation is tied to the 
established final risk adjustment data submission deadline for a given 
payment year, and it results in a data lag of at least 13 months after 
the end of the MA risk adjustment data collection period (that is, the 
year during which the item or service was furnished to the MA 
enrollee), before CMS may release the MA risk adjustment data for the 
purposes described in Sec.  422.310(f)(1). In the November 2023 
proposed rule, we stated our belief that there will be increased 
utility of MA encounter data for Medicaid programs if the data is 
released before final risk adjustment reconciliation for coordination 
of care under the allowable purpose in Sec.  422.310(f)(1)(vii) and 
that the reasons and concerns we identified when adopting the delay in 
release of MA encounter data can be sufficiently taken into account by 
CMS as part of evaluating a request to use the data for specific 
purposes and determining whether to release the data. Further, in many 
cases, those reasons and concerns likely do not sufficiently apply in 
the context of care coordination to require a delay in releasing the 
data, the further discussion of which we recount below.
    In order to improve utility of MA encounter data for certain 
approved purposes, we proposed to add a new paragraph (f)(3)(v) to 
Sec.  422.310 to authorize MA encounter data to be released to States 
for the purpose of coordinating care for dually eligible individuals 
when CMS determines that releasing the data to a State Medicaid agency 
before the final risk adjustment reconciliation for a relevant year is 
necessary and appropriate to support activities and uses authorized 
under paragraph (f)(1)(vii). As discussed in the November 2023 proposed 
rule, the proposed amendment to Sec.  422.310(f)(1)(vii) would expand 
the scope of that provision to include using the data to support 
administration of the Medicaid program, and in our discussion, we 
clarified that coordination of care activities are within the scope of 
activities that support administration of these health care programs. 
We specified care coordination in our discussion of the proposal for 
release of MA encounter data prior to final risk adjustment 
reconciliation, because, as we explained in the November 2023 proposed 
rule, we believe providing States access to this more timely data is 
critical to effectively coordinating care which is directly tied to our 
responsibility to support States' efforts to coordinate and align care 
and services for dually eligible individuals and furthers our goal to 
improve care continuity and ensure safe and effective care transitions 
for dually eligible individuals (see 42 U.S.C. 1315B) while 
accommodating the concerns that led us to adopt the time limits in 
Sec.  422.310(f)(3). Together, the proposed changes to Sec.  
422.310(f)(1)(vii) and (f)(3)(v) would improve the timeliness of the MA 
encounter data we make available to States for coordination of care for 
dually eligible individuals. For care coordination activities, States 
rely more on timely data about service utilization than on complete 
data. We stated our belief that improving access to timely MA encounter 
data and ensuring Medicaid programs can coordinate care for dually 
eligible individuals supports our goal of providing dually eligible 
individuals full access to the benefits to which they are entitled (42 
U.S.C. 1315B(d)).
    As discussed above, States cannot effectively coordinate care for 
individuals using data that is more than one or two years old. We 
recognize that the MA encounter data may be subject to edits before 
final risk adjustment reconciliation given the final risk adjustment 
data submission deadline for submission of risk adjustment data under 
Sec.  422.310(g)(2)(ii), which states that the final risk adjustment 
data submission deadline is a date no earlier than January 31 of the 
year following the payment year. Therefore, data from some MA 
organizations or for some enrollees may not be available as quickly as 
data from or for others. However, we explained that we believe that 
earlier release of MA encounter data to States for the purpose of care 
coordination for dually eligible individuals would be appropriate and, 
as stated above, many of the reasons and concerns to require a delay 
releasing MA encounter data likely do not sufficiently apply in the 
context of care coordination. Care coordination activities require 
States, or their contractors, to identify and contact individuals who 
have received or are in need of services from their providers. We 
explained that as States would use the MA encounter data to identify 
opportunities for care improvement such as improving transitions of 
care or promoting the use of underutilized services, we did not foresee 
any risk to individuals from States using data that may be subject to 
change in the future. States would be able to use the data to identify 
more dually eligible individuals who are potentially in need of 
Medicaid-covered services. States are not required to act on the data 
and can address potential data concerns arising from using MA encounter 
data before final risk adjustment reconciliation as States have 
experience using Medicare data that may not be final for effective care 
coordination. We noted that many States already obtain timely Medicare 
FFS claims with a lag between 14 days to 3 months, depending on the 
data file, for uses such as care coordination, quality improvement, and 
program integrity. These Medicare FFS claims may also be subject to 
change subsequent to the States' receipt of the data, yet we are not 
aware of any problems in these use cases caused by CMS sharing data 
that is still subject to change. Because the MA encounter data released 
to States would be for care coordination purposes, we do not anticipate 
any negative impacts from any potential subsequent changes to the 
encounters. MA encounter data made available to States prior to final 
risk adjustment reconciliation would not contain disaggregated payment 
information, in accordance with Sec.  422.310(f)(2)(iv). Additionally, 
States will not use the pre-reconciliation MA encounter data for plan 
payment. Under our proposal, release of the MA encounter data for care 
coordination purposes must be necessary and appropriate to support 
administration of the Medicaid program; we stated our belief that it 
would not be appropriate or necessary to use the MA data released on 
this accelerated schedule for payment purposes (88 FR 78530).

[[Page 30538]]

    As we explained in the November 2023 proposed rule, coordination of 
care is a clear situation where more timely MA encounter data is needed 
for effective intervention without invoking risks that we have cited in 
the past about sharing MA risk adjustment data before final risk 
adjustment reconciliation. The timing limits in Sec.  422.310(f)(3) 
were adopted in the August 2014 final rule in response to comments 
expressing concern about release of the MA risk adjustment data (79 FR 
50331 through 50332). In that prior rulemaking, some commenters cited 
concerns about release of MA encounter data submitted in the initial 
years due to concerns regarding systems development and submission 
challenges. We stated our belief that these concerns were mitigated by 
the subsequent years since the implementation of the August 2014 final 
rule that have resulted in accumulation of experience submitting, 
reviewing, and using MA encounter data in accordance with Sec.  
422.310(f). We noted that, in addition, CMS maintains several checks 
and edits in the encounter data system to minimize duplicate, 
incomplete, or inappropriate data stored in the encounter data system. 
In the November 2023 proposed rule, we reiterated that our proposed 
amendment to paragraph (f)(3) would only permit the release of MA 
encounter data to State Medicaid agencies for care coordination for 
dually eligible individuals.
    We also explained that we had noted in prior rulemaking that our 
approach to reviewing requests for MA encounter data from external 
entities would incorporate the Medicare Part A/B and Part D minimum 
necessary data policy, with additional restrictions to protect 
beneficiary privacy and commercially sensitive information of MA 
organizations and incorporated that limitation into paragraph (f)(2) 
(79 FR 50327). Further, we noted that this limitation would also apply 
when reviewing State requests for MA encounter data under the proposed 
expansion of Sec.  422.310(f)(1)(vi) and (vii), and to any State 
requests for MA encounter data before the reconciliation deadline to 
support coordination of care. We explained that CMS data sharing 
procedures include a review team that assesses data requests for 
minimum data necessary and appropriate use justifications for care 
coordination, and we would only approve release of MA encounter data 
for any data requests where the requestor has sufficiently demonstrated 
that the request satisfies all requirements of Sec.  422.310(f). We 
noted that other commenters on the August 2014 final rule had expressed 
concerns that MA organizations are able to delete, replace, or correct 
MA encounter data before the reconciliation deadline, which could 
potentially result in inaccurate or incomplete MA encounter data and 
that incomplete or inaccurate data should not be used or released for 
the purposes outlined in Sec.  422.310(f). Additionally, CMS makes 
available technical assistance to States to help with State use and 
understanding of Medicare data. In the November 2023 proposed rule, we 
expressed our intent to extend this technical assistance to States 
requesting MA encounter data to mitigate issues arising from non-final 
data, and to evaluate the potential concerns arising from using MA 
encounter data before final reconciliation when determining whether to 
release MA encounter data to States for care coordination activities 
for dually eligible individuals to support administration of the 
Medicare and Medicaid programs.
    Finally, we proposed that these amendments to Sec.  422.310(f) 
would be applicable upon the effective date of the final rule. As 
outlined in section I.A. of the November 2023 proposed rule, the 
majority of our proposals were proposed to be applicable beginning 
January 1, 2025. We stated that we do not believe delaying the 
applicability of these proposed amendments beyond the effective date of 
the final rule is necessary because these proposals address CMS's 
authority to use and share MA encounter data but do not impose any 
additional or new obligations on MA organizations.
    We received the following comments on these two proposals and 
respond to them below:
    Comment: Numerous commenters, including the vast majority who 
commented on these proposals, expressed support for CMS proposals to 
expand the allowable MA encounter data uses by adding ``and Medicaid'' 
to existing uses at Sec.  422.310(f)(1)(vi) and (vii) and our proposal 
to share MA encounter data with States in advance of reconciliation for 
the purpose of care coordination for dually eligible individuals. These 
commenters agreed that these changes would improve States' ability to 
understand and improve service delivery for dually eligible 
individuals. Many comments also included additional perceived benefits, 
such as: identification of unaligned dually eligible individuals (that 
is, individuals enrolled in one MA plan and a separate, unaligned 
Medicaid managed care plan); D-SNP program planning; assessing 
supplemental benefit use; facilitating development of a long term 
services and supports dashboard to inform policy and quality 
improvement efforts; ensuring proper payment for services and 
determination of third party liability with minimal disruption to 
providers; focusing outreach for service provision by Medicaid managed 
care plans; analysis for required reporting on managed care network 
adequacy and service access; eliminating potentially duplicative 
evaluations; and providing continuity within both primary and specialty 
care for dually eligible individuals.
    Response: We appreciate the comments and support.
    Comment: A commenter requested clarification on how the 
facilitation of the data exchange may occur and if this requires data 
exchange agreements, three-way contracts, business associate 
agreements, or other contractual arrangements.
    Response: To effectuate encounter data sharing with States, we 
would utilize our existing pathways for new data requests, including 
the existing data transfer mechanisms and data sharing agreements that 
we currently hold with the States for the disclosure of Medicare data. 
As stated in the proposed rule, we ``review data requests for 
appropriate use justifications, including updated or amended use 
justifications for existing data requests'' and ``employ data sharing 
agreements, such as a Data Use Agreement and Information Exchange 
Agreement, that limit external entities to CMS-approved data uses and 
disclosure of CMS data'' (88 FR 78528).
    Comment: Many commenters supported CMS's intent to provide 
technical assistance and emphasized its importance. A few of those 
commenters provided suggestions on technical assistance that we could 
provide to States for encounter data, including sharing information on 
best practices for utilizing the data; content and limitations of the 
data set; data request processes and timelines; disclosure parameters 
and suggested uses for the data; purposes not permitted; data linkage; 
and building data infrastructure for use of MA encounter data.
    Response: We thank these commenters for their suggestions. We agree 
that technical assistance to States would be an important aspect of 
sharing MA encounter data. As we noted in our proposal, we intend to 
provide technical assistance to States, such as the CCW Medicare 
Encounter Data User Guide (https://www2.ccwdata.org/web/guest/user-documentation), to help them make the most effective use of MA

[[Page 30539]]

encounter data, including ways to mitigate issues arising from non-
final data, potential concerns arising from using MA encounter data 
before final reconciliation, and what disclaimers are appropriate to 
provide to requestors, to help them understand the limitations of the 
MA encounter data (88 FR 78531). We will take these suggestions into 
consideration when developing our technical assistance approach.
    Comment: A commenter provided additional suggestions for our 
communication around sharing of MA encounter data with States. These 
suggestions included notifying plans when MA encounter data is shared 
with a State, guidance to States on how to communicate with plans and 
address anomalies, particularly when the State is analyzing and 
interpreting these data for performance evaluation and quality 
reporting, and publishing a report following 2 years of implementation 
that provides the industry with information on how the sharing of MA 
encounter data has facilitated greater coordination, integration, and 
quality measure alignment.
    Response: We thank the commenter for these suggestions. We will 
take them into consideration as we establish operational processes to 
support sharing MA encounter data with States.
    Comment: A commenter supported CMS proposals and suggested CMS 
include other data collected from or submitted by MA organizations, 
such as data obtained from chart reviews, lab results, EMR records, and 
other clinical documents, in addition to MA encounter data in the data 
that is shared with States under Sec.  422.310(f).
    Response: We note that current regulation at Sec.  422.310(f) 
specifies the purposes and procedures according to which we may use and 
release the MA risk adjustment data, which is defined in Sec.  
422.310(a) and includes encounter data and other data submitted by MA 
organizations for risk adjustment purposes (such as chart review 
records, which are reports of diagnoses, and may be sourced from chart 
reviews, lab results, EMR record or other clinical documents). However, 
aside from the chart review records, any clinical documentation that 
CMS may have access to will not be released. The regulation at Sec.  
422.310(f) excludes the use and release of the data described at Sec.  
422.310(e) for validation of risk adjustment data; this means that the 
medical records or other clinical documents that MA organizations 
submit to validate their risk adjustment submissions are not released 
under Sec.  422.310(f). CMS did not propose any changes to expand data 
sharing to include medical records or other clinical documents; 
therefore, CMS is not finalizing any regulatory changes related to 
sharing such information.
    Comment: Some commenters stressed the importance of establishing 
strong measures to ensure data privacy and security when disclosing MA 
encounter data, including limiting access to medical records to protect 
the trust and security of the physician-patient relationship and the 
safety of the patient.
    Response: We appreciate these comments underscoring the importance 
of protecting data privacy and security. In the proposed rule, we 
stated that we disclose data in accordance with applicable Federal laws 
and CMS data sharing procedures that include privacy and security 
measures for data sharing to protect individuals' PHI and PII, (88 FR 
78527). We also noted in our proposed rule the following additional CMS 
data sharing processes to protect the safety of the individual: we 
review data requests for appropriate use justifications, employ data 
sharing agreements that limit data requestors to CMS-approved data uses 
and disclosure of CMS data, and include enforcement mechanisms; and 
data requestors acknowledge these mechanisms and that they will abide 
by the law, policies, and restrictions of the data sharing agreements 
as a condition of receiving the data (88 FR 78528). We will only 
approve data requests that are within the allowable uses of MA risk 
adjustment data (generally MA encounter data) as detailed in Sec.  
422.310(f)(1). With regard to the comment about limiting access to 
medical records, as discussed in a prior response to a public comment, 
Sec.  422.310(f) does not authorize the release of medical records or 
other records submitted by an MA organization under Sec.  422.310(e) to 
validate its risk adjustment data submissions.
    Comment: Some commenters underscored the importance of data quality 
and provided recommendations to ensure data accuracy and completeness. 
These recommendations included suggesting that CMS continue to seek 
ways to improve the completeness of encounter data, including 
considering MedPAC's 2019 recommendation on MA encounter data 
completeness; considering ways to ensure that data is as accurate as 
possible when shared to avoid incorrect care planning and potential 
patient harm; and providing further clarity on how this data will be 
communicated. Additionally, a commenter recommended CMS avoid any 
changes that may impact data quality or how MA organizations currently 
report to CMS and State Medicaid programs.
    Response: We thank these commenters for the recommendations to 
ensure data quality and accuracy. We reiterate our intent to provide 
technical assistance and necessary resources for data requestors, 
including appropriate disclaimers to help requestors understand the 
limitations of the MA encounter data (88 FR 78531). We stated in the 
proposed rule that we do not foresee any potential patient harm from 
States using data that may be subject to change in the future since 
States would use the MA encounter data to identify opportunities for 
care improvement, such as improving transitions of care or to promote 
the use of underutilized services, and that States are not required to 
act on the data. We also explained that States have experience using 
Medicare data that may not be final for effective care coordination (88 
FR 78530). We appreciate MedPAC's 2019 recommendations and note that we 
have been working with MA plans to ensure that the accuracy and 
completeness of MA encounter data improve over time. We note that we 
have released the Request for Information: Medicare Advantage Data to 
solicit feedback ``on all aspects of data related to the MA program--
both data not currently collected as well as data currently 
collected,'' including ``precise detail and definitions on the data 
format, fields, and content that would facilitate comprehensive 
analyses of any publicly released MA data, including comparisons with 
existing data sets'' and ``recommendations related to operational 
considerations as part of this effort'' (89 FR 5907 through 5908).
    Additionally, we confirm that our proposal does not impact how MA 
plans submit MA encounter data to CMS. As mentioned above, we will 
utilize our existing pathways for new MA encounter data requests, 
including the existing data transfer mechanisms.
    Comment: A commenter raised the concern that in order for the 
proposed policies to be meaningful, States would need necessary 
resources and infrastructure in place to utilize MA encounter data 
effectively. The commenter also explained that it is important to 
coordinate with States to understand their current and planned capacity 
for ingesting and utilizing the MA encounter data before proceeding. 
The commenter further stressed that without sufficient IT supports and 
specific plans for how to leverage MA encounter data, providing the 
data as proposed would not achieve CMS's goals. Another commenter 
suggested

[[Page 30540]]

that MA encounter data be available at the discretion of the State, as 
with other Medicare data sharing, as not all State systems are 
sophisticated enough to use this data.
    Response: We appreciate the comments regarding States' capabilities 
for intake and analysis of the MA encounter data. Many States have 
extensive history with encounter data through their Medicaid managed 
care programs. Many also have experience working with Medicare FFS and 
MA encounter data. For example, since 2011, we have disclosed Medicare 
data to States to support the dually eligible population, and over 30 
States have requested and used, or are still using, these data. Another 
example is that numerous States currently receive and use MA encounters 
directly from MA plans in accordance with the terms of a demonstration 
or as detailed by the contract held by a D-SNP with the State. 
Additionally, our data sharing agreements require States attest to 
certain requirements regarding appropriate administrative technical and 
physical safeguards to protect the integrity, security, and 
confidentiality of the data as well as system security requirements in 
order to request data from us. Nonetheless, capacity and experience 
vary across States, and we confirm our stated intention in the proposed 
rule that MA risk adjustment data would be available, consistent with 
Sec.  422.310(f) as amended, when the State requests such data; a 
State's request for MA encounter data from CMS would be voluntary.
    Comment: A few commenters raised questions regarding duplicative 
data sharing practices and the requirements in some State Medicaid 
agency contracts (SMACs) for D-SNPs to submit MA encounter data 
directly to States. A commenter asked how the proposed change would 
impact existing SMAC requirements, which may currently require such 
data sharing between D-SNPs and the State, and whether our proposal 
would create redundancies, inefficiencies, or simply obviate the need 
for such data sharing. A commenter wished to avoid duplicating any data 
sharing practices currently in place, and suggested we collaborate with 
MA plans and States to determine if data sharing can be streamlined 
through one process. Another commenter suggested removing the 
requirement for D-SNPs to submit MA encounter data directly to States 
and, instead, CMS would create a uniform set of MA encounter data 
available from a central organization, eliminating 50 different systems 
that collect data in different ways, formats, and times.
    Response: We appreciate the interest in streamlining data sharing 
processes and will consider these comments as we implement the final 
rule. However, nothing in our final rule imposes any additional or new 
obligations on MA organizations (88 FR 78531) or creates any additional 
data sharing or data reporting burden for MA plans. These comments 
relate to MA encounter data that D-SNPs submit to States in accordance 
with SMACs established under Sec.  422.107(d)(1). Changes to SMAC 
requirements about data sharing or data access are outside the scope of 
our current proposals and are subject to negotiation between the MA 
organization (or D-SNP) and the State; our current proposals do not 
directly impact these SMAC requirements or data sharing processes.
    Comment: A commenter suggested that CMS provide additional 
resources for MA organizations on collecting encounter data, citing 
burdens associated with collecting, processing, and submitting the 
data. Another commenter suggested that CMS encourage MA plans to submit 
more timely, higher quality, and uniform MA encounter data directly to 
States to improve usability for time-sensitive care coordination.
    Response: We believe that these suggestions for additional 
resources for MA organizations to collect MA encounter data and 
encouraging MA plans to submit more timely, higher quality data 
directly to States are beyond the scope of this rule. However, as 
mentioned above, we released the Request for Information: Medicare 
Advantage Data to solicit additional feedback on all aspects of data 
related to the MA program, including ways that we could improve our 
current MA data collection and release methods (89 FR 5907).
    Comment: A commenter recommended CMS create data sharing agreements 
to exclude downstream disclosure of MA encounter data to commercial 
entities. Another commenter expressed concern that changes made by 
Congress or CMS could expand the type of information captured by MA 
encounter data in the future to include competitively sensitive 
information that should not be shared with States. This commenter said 
that CMS should create an explicit exclusion of payment and pricing 
data and other competitively sensitive information, indicating that 
only MA encounter data necessary to support coordination of care, 
quality measure design, and program evaluation and analysis be shared 
with States.
    Response: As stated in the proposed rule, we intend to only approve 
requests for MA encounter data that have clear written data use 
justifications and identify any downstream disclosure--such as to State 
contractors, vendors, or other business associates--for each requested 
purpose (88 FR 78528). Also, consistent with what we stated in the 
August 2014 final rule, CMS data sharing agreements have enforcement 
mechanisms, and data requestors acknowledge these mechanisms. For 
example, penalties under section 1106(a) of the Social Security Act [42 
U.S.C. 1306(a)], including possible fines or imprisonment, and criminal 
penalties under the Privacy Act [5 U.S.C. 552a(i)(3)] may apply, as 
well as criminal penalties may be imposed under 18 U.S.C. 641 (79 FR 
50333). Requestors of CMS data, such as States, are responsible for 
abiding by the law, policies, and restrictions of the data sharing 
agreements--which extends to any downstream disclosures of the data to 
State contractors, vendors, or other business associates--as condition 
of receiving the data. Additionally, we note that current regulation at 
Sec.  422.310(2)(iv) limits CMS release of MA encounter data 
``(s)ubject to the aggregation of dollar amounts reported for the 
associated encounter to protect commercially sensitive data.'' We 
stated in the proposed rule that--given that Sec.  422.310(f)(2)(iv) 
provides for aggregation of dollar amounts reported for the associated 
encounter to protect commercially sensitive data and that any release 
of MA encounter data to States would comply with applicable statutes, 
regulations, and processes including those described above--we believe 
that concern around potential competitive advantage is mitigated, if 
the risk exists at all. We have not identified any issues regarding 
competitive harm or disadvantage in our current data sharing programs, 
including current disclosure of MA encounter data (88 FR 78528).
    Finally, we note that in the Medicare and Medicaid Programs; 
Patient Protection and Affordable Care Act; Advancing Interoperability 
and Improving Prior Authorization Processes for Medicare Advantage 
Organizations, Medicaid Managed Care Plans, State Medicaid Agencies, 
Children's Health Insurance Program (CHIP) Agencies and CHIP Managed 
Care Entities, Issuers of Qualified Health Plans on the Federally-
Facilitated Exchanges, Merit-based Incentive Payment System (MIPS) 
Eligible Clinicians, and Eligible Hospitals and Critical Access 
Hospitals in the

[[Page 30541]]

Medicare Promoting Interoperability Program final rule (hereinafter 
referred to as the January 2024 final rule), we finalized a requirement 
for impacted payers to employ a Payer-to-Payer API by January 1, 2027 
to satisfy two requirements: first, for transfer of data from a 
previous payer to a current payer for a new enrollee, and second, for 
quarterly exchange of data between two concurrent payers. Impacted 
payers include States, Medicaid managed care plans, and MA plans, and 
therefore would apply to individuals dually enrolled in two or more of 
these payers--such as between an MA organization and a Medicaid managed 
care plan (89 FR 8759).
    Comment: We received a comment on our discussion in section XI of 
the November 2023 proposed rule (88 FR 78605), which provided examples 
where the commenter felt we inadequately justified the need for 
rulemaking. Specific to our MA encounter data use proposals in this 
section, the commenter suggested that we include the number of States 
that have requested such data and provide more specific information 
about how the wording of the current rule has harmed coordination and 
quality of care.
    Response: As described in the proposed rule, 51 percent of all 
dually eligible individuals were enrolled in an MA plan in 2021, but 
previous rulemaking limited opportunities for States to effectively 
perform functions such as coordination of care, quality measure design, 
and program evaluation and analysis by allowing them access to MA 
encounter data for these activities only for those dually eligible 
individuals enrolled in Medicare-Medicaid demonstrations (88 FR 78527). 
We also noted in the proposed rule that ``(a)s Medicare is the primary 
payer for dually eligible individuals, States generally lack 
comprehensive data on care provided to dually eligible individuals 
enrolled in MA'' and that ``(o)ver the years, various States have 
requested that CMS share MA encounter data for dually eligible 
individuals to better coordinate care, conduct quality improvement 
activities, support program design, conduct evaluations, and improve 
efficiency in the administration of the Medicaid program'' (88 FR 
78527). We further clarify here that while we do not have a definitive 
list of all the States that would have requested MA encounter data if 
it were made available, our contractor conducted an informal poll in 
2017 of the States that requested Medicare FFS data and found that 14 
out of 15 respondents were interested in requesting MA encounter data 
if made available. Additionally, during 2022, four States directly 
asked us for MA encounter data to support specific projects related to 
dually eligible individuals. In 2023, 26 States (and the District of 
Columbia) requested Medicare data for dually eligible individuals for 
care coordination, quality improvement, program planning, and program 
integrity data uses. The remaining 25 States that did not request 
Medicare data for such uses had various levels of engagement and 
interaction with our program. Over the previous decade, some of those 
25 non-participating States with high managed care penetration cited 
the lack of MA encounter data as the reason the State did not request 
Medicare FFS data via our data sharing program.
    In the proposed rule, we provided numerous examples of ways States 
could use MA encounter data. These examples included identification of 
individuals at high risk of institutional placement or other 
undesirable outcomes based on past service utilization; coordination of 
services from the MA plan's coverage of an inpatient stay to Medicaid 
coverage of subsequent home and community-based services; coordination 
of Medicaid-covered services in a skilled nursing facility for a dually 
eligible individual after reaching the limits of the individual's 
coverage through the MA plan; monitoring nursing facility quality of 
care, including through tracking rates of hospitalization and emergency 
room visits; and coordination of physical health services with 
behavioral health services, where Medicaid coverage differs from the MA 
plan's coverage (88 FR 78528). As the current regulation at Sec.  
422.310(f) does not permit CMS to disclose MA encounter data to States 
for these data uses, we believe there is harm incurred when States are 
unable to conduct these activities for dually eligible individuals. We 
note that we do not know the full extent of States that would have 
requested MA encounter data if current regulation permitted, the exact 
data uses for which the States would have used the data, or the number 
of dually eligible individuals impacted by such data-driven 
initiatives. However, based on our experience and observations, we 
believe that it is appropriate to conclude that access to MA risk 
adjustment data on an accelerated timeframe could support State efforts 
to coordinate care for dually eligible individuals who are in MA plans.
    Finally, as stated in the proposed rule, we believe disclosure for 
the purpose of improving States' ability to understand and improve care 
provided to dually eligible individuals is appropriate and consistent 
with our intention in prior rulemaking regarding uses of MA risk 
adjustment data and proposed changes to regulation to support our 
intention (88 FR 78526).
    Comment: A commenter recommended additional data sharing efforts 
for CMS to undertake to improve care coordination for dually eligible 
individuals. The commenter suggested CMS establish a database with 
Medicare data for all dually eligible individuals--including Medicare 
program and contract enrollment data, as well as their Medicare claims 
data--and disclose to States and plans for coordination across payers. 
The commenter also suggested requiring States to share standard 
elements (for example, Medicare program enrollment, Medicare contract 
number) to Medicaid managed care plans in standard benefit enrollment 
and maintenance files to facilitate coordination for dually eligible 
individuals.
    Response: We appreciate the suggestions, but they are outside of 
the scope of our proposal.
    After considering the comments received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing without modification our proposed amendment to add ``and 
Medicaid program'' to the current MA encounter data use purposes at 
Sec.  422.310(f)(1)(vi) to conduct evaluations and other analysis to 
support the Medicare program (including demonstrations) and to support 
public health initiatives and other health care-related research, and 
Sec.  422.310(f)(1)(vii) for activities to support the administration 
of the Medicare program. We are also finalizing without modification 
our proposed addition of new Sec.  422.310(f)(3)(v) to allow for MA 
encounter data to be released to States for the purpose of coordinating 
care for dually eligible individuals when CMS determines that releasing 
the data to a State Medicaid agency before reconciliation is necessary 
and appropriate to support activities and uses authorized under 
paragraph (f)(1)(vii). These amendments to Sec.  422.310(f) will be 
applicable upon the effective date of this final rule as outlined in 
section I.A. of this final rule. As explained in the proposed rule, 
delaying the applicability of these proposed amendments beyond the 
effective date of the final rule is not necessary because these 
proposals address CMS's authority to use and share MA risk adjustment 
data but do

[[Page 30542]]

not impose any additional or new obligations on MA organizations.
3. Solicitation of Comments on Use of MA Encounter Data To Support 
Required Medicaid Quality Reporting
    We requested comments on making MA encounter data available to 
States to support Child and Adult Core Set reporting as efficiently as 
possible while complying with Sec.  422.310(f) and balancing 
considerations related to the timeliness of quality reporting with 
accuracy and completeness. While States are required to include all 
Medicaid and CHIP beneficiaries in certain mandatory Child and Adult 
Core Set reporting, including dually eligible individuals, States lack 
access to the Medicare utilization data needed to report on dually 
eligible individuals enrolled in MA plans. We discussed these mandatory 
Core Set reporting requirements and the timing limitations posed by our 
current regulations in the November 2023 proposed rule (88 FR 78531).
    Several commenters supported CMS sharing MA encounter data to 
States prior to reconciliation for quality review and improvement use. 
A commenter suggesting alternative options to using MA encounter data 
prior to reconciliation. We appreciate the support and suggestions for 
our efforts to improve both the utility of MA encounter data and 
support of State requirements for quality reporting. We will consider 
comments and suggestions received as we move forward.

T. Standardize the Medicare Advantage (MA) Risk Adjustment Data 
Validation (RADV) Appeals Process

    In this final rule, we are revising certain timing issues in terms 
of when RADV medical record review determination and payment error 
calculation appeals can be requested and adjudicated. Specifically, we 
proposed that Medicare Advantage (MA) organizations must exhaust all 
levels of appeal for medical record review determinations before the 
payment error calculation appeals process can begin. We believed that 
this clarification was necessary because RADV payment error 
calculations are directly based upon the outcomes of medical record 
review determinations. We also proposed several other changes to our 
regulatory appeals process to conform with these proposed revisions.
    Section 1853(a)(1)(C) of the Act requires that CMS risk-adjust 
payments made to MA organizations. Risk adjustment strengthens the MA 
program by ensuring that accurate payments are made to MA organizations 
based on the health status and demographic characteristics of their 
enrolled beneficiaries, and that MA organizations are paid 
appropriately for their plan enrollees (that is, less for healthier 
enrollees who are expected to incur lower health care costs, and more 
for less healthy enrollees who are expected to incur higher health care 
costs). Making accurate payments to MA organizations also ensures we 
are safeguarding Federal taxpayer dollars.
    Contract-level RADV audits are CMS's main corrective action for 
overpayments made to MA organizations when there is a lack of 
documentation in the medical record to support the diagnoses reported 
for risk adjustment. CMS conducts RADV audits of MA organization-
submitted diagnosis data from a selection of MA organizations for 
specific payment years to ensure that the diagnoses they submitted are 
supported by their enrollees' medical records. CMS can collect the 
improper payments identified during CMS and Department of Health and 
Human Services Office of Inspector General (HHS-OIG) audits, including 
the extrapolated amounts calculated by the OIG. The RADV audit appeals 
process, as outlined in 42 CFR 422.311, is applicable to both CMS and 
HHS-OIG audits and is therefore referred to as the ``MA RADV audit 
appeals process.'' Additional information regarding CMS's contract 
level RADV audits was outlined in the RADV final rule, CMS-4185-F2, 
published on February 1, 2023.\76\
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1. Current MA RADV Appeals Process
    CMS previously established a process after notice and comment 
rulemaking for MA organizations to appeal RADV audit findings as 
outlined by provisions at 42 CFR 422.311(c)(6)-(c)(8). Once review of 
the medical records submitted by MA organizations to support audited 
HCCs is completed and overpayment amounts are calculated, HHS (CMS or 
HHS-OIG) issues an audit report to each audited MA organization 
contract. In accordance with Sec.  422.311(b)(1), this audit report 
includes the following:
     Detailed enrollee-level information relating to confirmed 
enrollee HCC discrepancies.
     The contract-level RADV-payment error estimate in dollars.
     The contract-level payment adjustment amount to be made in 
dollars.
     An approximate timeframe for the payment adjustment.
     A description of the MA organization's RADV audit appeal 
rights.
    The MA RADV audit appeals process begins once MA organizations are 
notified of their audit findings via a RADV audit report. MA 
organizations have 60 days from the date of issuance of a RADV audit 
report to file a written request for appeal and must follow the 
Secretary's RADV audit appeals procedures and requirements under Sec.  
422.311. MA organizations may appeal RADV medical record review 
determinations and/or the MA RADV payment error calculation and must 
specify which findings the MA organization is appealing when requesting 
an appeal of a RADV audit finding.
    Under CMS's existing RADV audit appeals regulations under 42 CFR 
422.311(c)(6)-(8), the MA RADV administrative audit appeals process 
consists of three levels: reconsideration, hearing, and CMS 
Administrator review. Below is a summary of the three levels of appeal 
for background information only. This regulation is not revising the 
basic structure of these three levels of appeal.
a. Reconsideration
    Reconsideration is the first stage of the RADV audit appeals 
process. When appealing a medical record review determination, the MA 
organization's written request must specify the audited HCC(s) that it 
wishes to appeal and provide a justification of why the audited HCC(s) 
should not have been identified as an error. When appealing a payment 
error calculation, the MA organization's written request must include 
its own RADV payment error calculation that clearly indicates where 
HHS' payment error calculation was erroneous, as well as additional 
documentary evidence pertaining to the calculation of the error that 
the MA organization wishes the reconsideration official to consider. 
For payment error calculation appeals, a third-party who was not 
involved in the initial RADV payment error calculation reviews the HHS 
and MA organization's RADV payment error calculations and recalculates, 
as appropriate, the payment error using the appropriate payment error 
calculation method for the relevant audit.
    The reconsideration official issues a written reconsideration 
decision to the MA organization, and this decision is considered final 
unless the MA organization disagrees with the reconsideration 
official's decision and submits a valid request for CMS hearing officer 
review. A new audit report is

[[Page 30543]]

subsequently issued for either a medical record review determination 
reconsideration or a payment error calculation reconsideration only if 
the reconsideration official's decision is considered final.
b. Hearing Officer Review
    An MA organization that disagrees with the reconsideration decision 
may request a hearing officer review in accordance with procedures and 
timeframes established by CMS under 42 CFR 422.311(c)(7). If the MA 
organization appeals the medical record review reconsideration 
determination, the written request for RADV hearing must include a copy 
of the written decision of the reconsideration official, specify the 
audited HCC(s) that the reconsideration official confirmed as being in 
error, and explain why the MA organization disputes the reconsideration 
official's determination. If the MA organization appeals a RADV payment 
error calculation, the written request for RADV hearing must include a 
copy of the written decision of the reconsideration official and the MA 
organization's RADV payment error calculation that clearly specifies 
where the MA organization believes the Secretary's payment error 
calculation was erroneous.
    The hearing officer has the authority to decide whether to uphold 
or overturn the reconsideration official's decision and, pursuant to 
this decision, sends a written determination to CMS and the MA 
organization explaining the basis for the decision. If necessary, a 
third party who was not involved in the initial RADV payment error 
calculation recalculates the RADV payment error and issues a new RADV 
audit report to the MA organization. For MA organizations appealing the 
RADV payment error calculation only, a third party not involved in the 
initial RADV payment error calculation recalculates the MA 
organization's RADV payment error and issues a new RADV audit report to 
the appellant MA organization and CMS. The hearing officer's decision 
is final unless the decision is reversed or modified by the CMS 
Administrator.
c. CMS Administrator Review
    Under the existing RADV audit appeals regulation at 42 CFR 
422.311(c)(8), a request for CMS Administrator review must be made in 
writing and filed with the CMS Administrator within 60 days of receipt 
of the hearing officer's decision. After receiving a request for 
review, the CMS Administrator has the discretion to elect to review the 
hearing officer's decision or decline to review the hearing officer's 
decision. If the CMS Administrator elects to review the hearing 
decision, the CMS Administrator then will acknowledge the decision to 
review the hearing officer's decision in writing and notify CMS and the 
MA organization of their right to submit comments within 15 days of the 
date of the notification. The CMS Administrator renders his or her 
final decision in writing to the parties within 60 days of 
acknowledging his or her decision to review the hearing officer's 
decision. The decision of the hearing officer becomes final if the CMS 
Administrator declines to review the hearing officer's decision or does 
not render a decision within 60 days.
2. Proposed Policies
    In this final rule, we are revising the timing of when a medical 
record review determination and a payment error calculation appeal can 
be requested and adjudicated. Specifically, we proposed that MA 
organizations must exhaust all levels of appeal for medical record 
review determinations before beginning the payment error calculation 
appeals process. We believed that this change was necessary because 
RADV payment error calculations are based upon the outcomes of medical 
record review determinations and the current regulatory language is 
somewhat ambiguous regarding this point. Adjudicating medical record 
review determination appeals prior to payment error calculation appeals 
alleviates operational concerns for CMS and burden on MA organizations 
by preventing unnecessary appeals of payment error calculations that 
will be moot if revisions must be made to payment error calculations 
based on medical record review determination appeal decisions.
    Section 422.311(c)(5)(iii) states that, ``for [MA organizations] 
that appeal both medical record review determination appeal and RADV 
payment error calculation appeal [,] (A) the Secretary adjudicates the 
request for the RADV payment error calculation following conclusion of 
reconsideration of the MA organization's request for medical record 
review determination appeal.'' The regulations also state that, for 
cases in which an MA organization requests both a medical record review 
determination appeal and payment error calculation appeal, ``. . . (B) 
an [MA organization's] request for appeal of its RADV payment error 
calculation will not be adjudicated until appeals of RADV medical 
record review determinations filed by the MA organization have been 
completed and the decisions are final for that stage of appeal'' 
[emphasis added]. This language arguably addresses both those cases in 
which the final adjudication is reached during the reconsideration 
phase, as well as those that proceed to the second and third level of 
appeal. We proposed to delete Sec.  422.311(c)(5)(ii)(C), which 
requires MA organizations requesting both a medical record review 
determination appeal and payment error calculation appeal to file their 
written requests for both appeals within 60 days of the issuance of the 
RADV audit report before the reconsideration level of administrative 
appeal. Instead, we proposed that MA organizations may request only a 
medical record review determination appeal or payment error calculation 
appeal for purposes of reconsideration, and not both at the same time. 
We proposed to amend Sec.  422.311(c)(5)(iii) by providing that MA 
organizations who request a medical record review determination appeal 
may only request a payment error calculation appeal after the 
completion of the medical record review determination administrative 
RADV appeal process.
    An MA organization may also choose to only appeal the payment error 
calculation, and therefore, no preceding medical record review 
determination appeal will occur. MA organizations choosing to only file 
a payment error calculation appeal will not be able to file a medical 
record review determination appeal after the adjudication of payment 
error calculation appeal. At Sec.  422.311(c)(5)(ii)(B), we proposed to 
specify that MA organizations will forgo their medical record review 
determination appeal if they choose to only file a payment error 
calculation appeal, because medical record review appeals decisions 
need to be final prior to adjudicating a payment error calculation 
appeal.
    At Sec.  422.311(c)(5)(iii)(A) and (B), we proposed to specify that 
this process is complete when the medical record review determination 
appeals process has been exhausted through the three levels of appeal, 
or when the MA organization does not timely request a medical record 
review determination appeal at the hearing officer or CMS Administrator 
review stage. At proposed Sec.  422.311(c)(5)(iii)(B), we proposed that 
an MA organization whose medical record review determination appeal has 
been completed has 60 days from the issuance of a revised RADV audit 
report to file a written request for payment error calculation appeal, 
which specifies the issues with which the MA organization disagrees and 
the reasons for the disagreements. If, as a result of the medical 
record review determination appeals process, no

[[Page 30544]]

original determinations are reversed or changed, then the original 
audit report will be reissued, and the MA organization will have 60 
days from the date of issuance to submit a payment error calculation 
appeal if it so chooses.
    We also proposed to revise Sec.  422.311(c)(6)(i)(A) to clarify 
that an MA organization's request for medical record review 
determination reconsideration must specify any and all audited HCCs 
from an audit report that the MA organization wishes to dispute. The 
intent of this revision is to permit an MA organization to submit only 
one medical record review determination reconsideration request per 
audited contract, which includes all disputed audited HCCs, given that 
the results of all audited HCCs for a given audited contract are 
communicated as part of a single audit report.
    We also proposed to revise Sec.  422.311(c)(6)(iv)(B) to clarify 
that the reconsideration official's decision is final unless it is 
reversed or modified by a final decision of the hearing officer as 
defined at Sec.  422.311(c)(7)(x).
    We also proposed to add Sec.  422.311(c)(6)(v) to clarify that the 
reconsideration official's written decision will not lead to the 
issuance of a revised audit report until the decision is considered 
final in accordance with Sec.  422.311(c)(6)(iv)(B). If the 
reconsideration official's decision is considered final in accordance 
with Sec.  422.311(c)(6)(iv)(B), the Secretary will recalculate the MA 
organization's RADV payment error and issue a revised RADV audit report 
superseding all prior RADV audit reports to the appellant MA 
organization.
    We also proposed to revise Sec.  422.311(c)(7)(ix) to clarify that 
if the hearing officer's decision is considered final in accordance 
with Sec.  422.311(c)(7)(x), the Secretary will recalculate the MA 
organization's RADV payment error and issue a revised RADV audit report 
superseding all prior RADV audit reports for the specific MA contract 
audit. Once the medical record review determination decision of the 
adjudicator is final, we believe the same entity that issued the audit 
report will be able to revise the audit report by applying any medical 
record review determination findings that may have changed through the 
medical record review determination appeal process and issue a revised 
audit report in the most efficient and streamlined manner. Issuing a 
revised audit report is a standard process and neutrally applies the 
final adjudicator's medical record review determination findings. This 
process is consistent with other long standing CMS appeals program, 
such as the Provider Reimbursement Review Board (PRRB), where post-
adjudication revised determinations are issued by the same entity 
(e.g., the Medicare Administrative Contractor for PRRB cases) that 
issued the original determination.
     We also proposed the following to provide clarity to the 
Administrator's level of appeal: To revise Sec.  422.311(c)(8)(iii) to 
add a requirement that if the CMS Administrator does not decline to 
review or does not elect to review within 90 days of receipt of either 
the MA organization or CMS's timely request for review (whichever is 
later), the hearing officer's decision becomes final.
     To revise Sec.  422.311(c)(8)(iv)(A) to clarify that CMS 
and the MA organization may submit comments within 15 days of the date 
of the issuance of the notification that the Administrator has elected 
to review the hearing decision.
     To revise Sec.  422.311(c)(8)(v) to clarify that the 
requirement of the Administrator to render a final decision in writing 
within 60 days of the issuance of the notice acknowledging the decision 
to elect to review the hearing officer's decision and the 60-day time 
period is determined by the date of the final decision being made by 
the Administrator, not by the date it is delivered to the parties.
     To revise Sec.  422.311(c)(8)(vi) to clarify the scenarios 
in which the hearing officer's decision becomes final after a request 
for Administrator review has been made.
     To add new Sec.  422.311(c)(8)(vii) that states once the 
Administrator's decision is considered final in accordance with Sec.  
422.311(c)(8)(vi), the Secretary will recalculate the MA organization's 
RADV payment error and issue a revised RADV audit report superseding 
all prior RADV audit reports to the appellant MA organization.
    We also proposed to add new Sec.  422.311(c)(9) to specify what 
actions related to the RADV audit appeals process constitute final 
agency action. Specifically, in cases when an MA organization appeals a 
payment error calculation subsequent to an MRRD appeal that has 
completed the administrative appeals process, the MRRD final decision 
and the payment error calculation final decision will not be considered 
a final agency action until the related payment error calculation 
appeal has completed the administrative appeals process and a final 
revised audit report has been issued.
    We also proposed to revise Sec.  422.311(a) to remove the word 
``annually'' for clarity, as the Secretary may conduct RADV audits on 
differing cadences between the CMS and HHS-OIG RADV audits.
3. Summary of Public Comments
    We invited public comment on these proposals and received several 
comments. Specifically, we received numerous comments regarding our 
proposals related to the timing of requesting and adjudication of MRRD 
and PEC appeals. We did not receive any comments specifically 
addressing our proposals related to the finality of decisions at each 
level of appeal of appeal, nor the requirements for revised or reissued 
audit reports. We did not receive any comments specifically addressing 
our proposals related to the requirements affecting the elective 
Administrator review process. We did not receive any comments 
specifically related to our proposal concerning the definition of final 
agency action. A discussion of these comments, along with our responses 
follows.
    Comment: Commenters generally expressed support for our proposed 
policies regarding the timing of MRRD and PEC appeals. Commenters 
stated that these proposals will provide needed clarity in the RADV 
audit appeals process and that by disallowing MRRD appeals and PEC 
appeals from being adjudicated concurrently, we will avoid potential 
administrative complications. Commenters generally agreed that these 
changes will create uniformity and consistency in the appeals process. 
One commenter, in addition to supporting our proposed appeals policies, 
encouraged CMS to consider larger scale reforms to reduce substantial 
overpayments to MA organizations and recover improper payments.
    Response: We thank these commenters for their support of our RADV 
audit program and our appeals proposals. We agree that the proposals 
will create uniformity and consistency, as well as avoid administrative 
complications in the appeals process.
    Comment: A commenter requested clarification regarding whether 
completion of the MRRD appeals process is distinct if an MA 
organization does not have a medical record to review.
    Response: Any valid medical record that is reviewed as part of a 
RADV audit and found to not substantiate the audited diagnosis may be 
appealed if the MA organization disagrees with the audit finding. If an 
MA organization does not wish to appeal any of the medical record 
review determinations or does not request an appeal by the deadline, 
the MA organization may

[[Page 30545]]

proceed with a PEC appeal. If the commenter is asking whether there are 
MRRD appeal rights when an MA organization does not submit a medical 
record to substantiate a diagnosis during an audit, pursuant to Sec.  
422.311(c)(3)(iv) MA organizations may not appeal RADV errors that 
result from failure to submit a valid medical record.
    Comment: A commenter requested that we alter the proposal to 
support uniformity between the RADV appeals process and the OIG audit 
process.
    Response: The RADV audit appeals provisions being finalized in this 
rule are applicable to appeals of RADV audit findings resulting from 
both CMS and OIG audits. As stated in Sec.  422.311(a), RADV audits are 
conducted by the Secretary and the results of any such audit by CMS or 
OIG are appealable pursuant to Sec.  422.311(c). Appeal rights to audit 
findings based on either CMS or OIG RADV audits begin with the issuance 
of an audit report that details audit findings.
4. Comments Out of Scope of the Proposed Policies
    We received several comments that were beyond the scope of the 
proposed rule. Commenters sought additional clarification and made 
recommendations related to the underlying risk adjustment payment 
model, aspects of the RADV audit methodology related to sampling and 
extrapolation, and the need for monetary penalties to be applied to 
providers or other actors that contributed to a negative RADV finding.
    We thank commenters for making broad recommendations for changes to 
the risk adjustment payment model and for the application of monetary 
penalties; however, the scope of this rule is limited to the RADV audit 
appeals process.
    Regarding the use of extrapolation and other aspects of RADV audit 
methodology, the RADV audit appeals process is limited to medical 
record review determinations and payment error calculations 
communicated to MA organizations in an audit report. Pursuant to Sec.  
422.311(c)(3)(iii), the Secretary's medical record review determination 
methodology and payment error calculation methodology are ineligible 
for appeal under this process. While MA organizations may appeal 
individual medical record review determinations and the resulting 
payment error calculation, they may not appeal the underlying audit 
methodology.
5. Final Policy
    After consideration of the public comments received, we are 
finalizing these policies as proposed. As noted above, we did not 
receive comments on some proposals and are finalizing those policies as 
proposed.

IV. Benefits for Medicare Advantage and Medicare Prescription Drug 
Benefit Programs

A. Part C and Part D Midyear Benefit Changes (Sec. Sec.  422.254, 
423.265)

1. Overview and Summary
    In our proposed rule titled ``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,'' 
(87 FR 79452) which appeared in the December 27, 2022 issue of the 
Federal Register (hereinafter referred to as the ``December 2022 
proposed rule''), we proposed two provisions that, if finalized, would 
restrict changes to the benefits offered by plans (inclusive of MA, MA-
PD, and Part D) within the contract year.
    We proposed these provisions to codify our longstanding policy 
prohibiting midyear benefit changes (MYBCs), previously referred to as 
midyear benefit enhancements (MYBEs), for MA and Part D plans. 
Specifically, we proposed to prohibit changes to non-drug benefits, 
premiums, and cost sharing by an MA organization 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 proposed to codify 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. 
This prohibition applies 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.
2. Medicare Advantage Prohibition on Midyear Benefit Changes (Sec.  
422.254)
    In a 2008 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,'' we 
prohibited MA organizations from making any midyear changes in 
benefits, premiums, or cost sharing, even under the circumstances in 
which these types of changes had been permitted previously.\77\ We have 
enforced this policy to the present day. It is necessary to prohibit 
benefit changes after bids are submitted and after marketing is 
permitted to begin in order to maintain the integrity of the bidding 
process. MA organizations are still allowed to make changes during the 
bidding process when permitted by CMS to remain in compliance with the 
requirements set forth at Sec.  422.254 and when permitted by Sec.  
422.256. 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. However, allowing MYBCs 
undermines the integrity of the bidding process because it would allow 
MA organizations to alter their benefit packages after the bidding 
process is complete. Finally, 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).
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    \77\ HHS Secretary Xavier Becerra Statement on End of the COVID-
19 Public Health Emergency, https://www.hhs.gov/about/news/2023/05/11/hhs-secretary-xavier-becerra-statement-on-end-of-the-covid-19-public-health-emergency.html.
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    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 enrolling newly age-eligible enrollees 
is attractive to MA organizations because of their relatively low 
health care utilization, as these individuals tend to be healthier 
compared to older beneficiaries (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

[[Page 30546]]

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 
July 2008 final rule, we have continued to receive inquiries from MA 
organizations requesting changes to PBPs after the contract year has 
begun.
    We also noted in the December 2022 proposed rule that CMS has 
interpreted MYBCs after the start of the contract year to violate the 
uniformity requirements set forth at Sec.  422.100(d)(ii), which 
require that an MA organization must offer a 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, because some enrollees would 
have paid for such benefits, premiums, or cost sharing already, and 
might 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 plan enrollees who paid depending 
on when the MYBC was put in effect.
    Furthermore, we noted in the December 2022 proposed rule that 
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. We stated that these EGWPs are not currently subject to this 
prohibition on MYBCs under existing CMS waivers for EGWPs and will not 
be subject to the new regulation prohibiting MYBCs. However, we stated, 
an MA organization is subject to the prohibition on MYBCs if the MA 
organization offers an MA plan 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.)
    We proposed to add new paragraph Sec.  422.254(a)(5) explicitly 
prohibiting MYBCs and specifying when this prohibition applies. 
Specifically, we proposed 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, except for modifications in 
benefits required by law.
3. Part D Prohibition on Midyear Benefit Changes (Sec.  423.265)
    In the December 2022 proposed rule (87 FR 79452), we proposed to 
add new paragraph Sec.  423.265(b)(5), which states 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)), it may not 
change the benefits described in its CMS-approved plan benefit package 
(PBP) (as defined at Sec.  423.182(a)) for the contract year, except 
where a modification in benefits is required by law.
    In part, section 1860D-11(e)(2)(C) of the Act, codified at Sec.  
423.272(b)(1), requires that CMS may only approve a bid if it 
determines that the portions of the bid attributable to basic and 
supplemental prescription drug coverage are supported by the actuarial 
bases provided and reasonably and equitably reflect the revenue 
requirements (as used for purposes of section 1302(8)(C) of the Public 
Health Service Act) for benefits provided under that plan. MYBCs 
indicate that the plan bid was overstated and render the bid 
meaningless, while 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. In our final rule titled ``Medicare Program; Medicare 
Prescription Drug Benefit'' (70 FR 4194), which appeared in the January 
28, 2005 issue of the Federal Register (hereinafter referred to as the 
``January 2005 Part D final rule''), we stated in the preamble 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 changes, as these 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). In other words, waiving or reducing the premiums and/or cost 
sharing that are reflected in the approved bid would indicate that the 
amounts provided in the bid do not reasonably and equitably reflect the 
revenue requirements of the expected population for the plans' benefits 
as required.
    In the December 2022 proposed rule, we drew a distinction 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). Section 1860D-4(b)(3)(E) of the Act, as codified 
at Sec.  423.120(b)(5), 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). 
However, CMS has 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 associated with an entire tier 
of drugs), or cost sharing (for all or individual enrollees) once plans 
are permitted to market for the following contract year (on October 1, 
now reflected in Sec.  423.2263(a)) on the grounds that such activities 
would be inconsistent with the CMS-approved bid.
    As we noted 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''), a Part D sponsor's 
waiver of cost sharing midyear violates the uniform benefit 
requirements because such a waiver results in plans not providing the 
same coverage to all eligible beneficiaries

[[Page 30547]]

within their service area (74 FR 54690). The CMS-approved benefit 
cannot be varied for some or all of the plan's enrollees at midyear 
because that would violate the uniform benefit provisions set forth in 
Sec.  423.104(b). Even if the plan changed the benefit midyear for all 
of the plan's enrollees, this would still violate the uniform benefit 
provision because some of the plan's enrollees would still have paid 
for benefits prior to the change. For example, because drug costs are 
often not evenly distributed over the course of a year, a midyear 
reduction in cost sharing could provide unequal benefit to enrollees 
who had the same drug costs but in different phases of their Part D 
benefit.
    We received the following comments on the proposed Medicare 
Advantage and Part D prohibitions on midyear changes to be added at 
Sec. Sec.  422.254 and 423.265, and our responses follow:
    Comment: Most of the comments received discussed midyear benefit 
changes broadly, without specific reference to the MA or Part D 
provisions. Most commenters took a positive or neutral stance on the 
two proposals, but a few were opposed to them. A commenter asked that 
CMS allow midyear benefit changes when plans attempt to improve their 
benefit packages. Another commenter stated that CMS should make an 
exception when new products are released to market, particularly 
pointing to new drugs that receive FDA approval.
    Response: As discussed in the proposed rule, changes in bid-level 
cost sharing or benefits after bids have been submitted could undermine 
the integrity of the bidding system, disincentivize plans from 
submitting complete and accurate bids on time, provide competitive 
advantages to plans that make such changes, undermine CMS's ability to 
provide accurate comparative information to beneficiaries about plan 
benefits and costs, and potentially violate the uniform benefit 
requirements. Both the MA and Part D bid submissions rely on applying a 
consistent set of criteria for evaluating the suitability and 
reasonableness of an MA organization or Part D sponsor's estimated 
costs for the contract year. Allowing plans to make benefit changes 
after the bid submission deadline would compromise the integrity of 
that process by introducing new variation between the costs estimated 
at the bid submission deadline and the actual costs incurred. A 
sophisticated MA organization or Part D sponsor may attempt to analyze 
their population during the contract year and determine which benefit 
changes could improve their overall costs, causing their bid 
projections to be distorted relative to a different organization or 
plan sponsor's bids and costs. Similarly, an organization or plan 
sponsor that sees lower than expected membership could try to adjust 
their benefits within the year to be more enticing. They may decide, 
with the availability of the contract year emerging experience, to 
change their competitive position by adjusting benefits. This would be 
inconsistent with the standardized bidding process set forth in statute 
and regulation, which requires plans to bid using only the information 
available to them at that time. The bid process ensures that MA 
organizations and Part D sponsors are assuming the risk for the 
contract year on an equitable basis and receiving fair reimbursement 
for that risk.
    In addition, the potential distortion between the bid amounts and 
the actual costs after a mid-year benefit change could reduce the 
accuracy of information based on the bids that is released by CMS. For 
example, if Part D sponsors are making changes during the contract year 
that would have resulted in higher bids, that would mean that the 
release of the national average monthly bid amount is artificially low. 
This, in turn, would mean that all downstream payments relying on the 
national average would be inaccurate as well.
    The proposed regulatory provisions would restrict changes to the 
fundamental aspects of plan benefit package design. Under our proposal, 
MA plans would not be prohibited from making adjustments to their own 
rules on such matters as prior authorization or referral policies, or 
from making changes to their provider network, so long as these 
adjustments or network changes remain within the bounds of existing 
regulatory requirements and are consistent with the approved plan 
benefit package. See, for example, Sec.  422.111(d) and (e). Likewise, 
Part D plans would continue to be allowed to make midyear formulary 
changes that result in cost sharing changes for individual drugs, but 
they would not be allowed to change cost sharing for entire tiers of 
drugs or adjust premiums.
    In addition, we clarify that the prohibition on MYBCs, which has 
been longstanding CMS policy, does not and will not prohibit Part D 
plans (including MA-PD plans) from enhancing their formularies to add 
coverage of new FDA-approved products. Section 1860D-4(b)(3)(C)(iii) of 
the Act (echoed in regulation at Sec.  423.120(b)(4)) specifically 
allows an exception to the rules prohibiting changes to the therapeutic 
classes and categories of a formulary in order ``to take into account 
new therapeutic uses and newly approved covered Part D drugs.'' Nothing 
in our proposed policy overrides the statutory requirement or the 
equivalent language in existing regulation. In addition, because MA 
plans must cover all Part A and Part B benefits (subject to limited 
exclusions as outlined at Sec.  422.100(c)), changes in items and 
services covered under Parts A and B due to changes in the law, new or 
changed NCDs, and advances in medical technology or new healthcare 
services that are newly covered by Traditional Medicare under existing 
benefit rules must be covered for MA enrollees as well. See Sec.  
422.109 for more information on how NCD and legislative changes in 
benefits are incorporated into the coverage for MA enrollees.
    Comment: Some commenters indicated that they appreciated a number 
of the waivers and flexibilities pertinent to midyear changes that CMS 
implemented during the COVID-19 public health emergency. One commenter 
highlighted several of the pharmacy access and cost-sharing 
flexibilities as particularly helpful in the midst of the emergency. 
The commenters who expressed appreciation for the COVID-19 waivers and 
flexibilities also requested that CMS extend those flexibilities 
through the end of 2023 to allow plans time to transition.
    Response: We thank the commenters for providing their input. The 
waivers and flexibilities for which these commenters requested 
extensions ended with the conclusion of the Public Health Emergency on 
May 11, 2023.\78\ We do not believe it is necessary or appropriate to 
continue those flexibilities outside of the context of the PHE. As 
discussed in the proposed rule (87 FR 79514 through 79517) and in the 
prior response, there are important policy considerations and statutory 
compliance issues served by the prohibition on MYBCs.
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    \78\ HHS Secretary Xavier Becerra Statement on End of the COVID-
19 Public Health Emergency, https://www.hhs.gov/about/news/2023/05/11/hhs-secretary-xavier-becerra-statement-on-end-of-the-covid-19-public-health-emergency.html.
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    After consideration of the comments and for the reasons set forth 
in the proposed rule and our responses to the related comments, we are 
finalizing the proposed new provisions at Sec. Sec.  422.254(a)(5) and 
423.265(b)(5) without substantive modification. We have made minor 
modifications to clarify the text.

[[Page 30548]]

AA. Failure To Collect and Incorrect Collections of Part D Premiums and 
Cost Sharing Amounts (Sec. Sec.  423.293 and 423.294)

    In the December 2022 proposed rule (87 FR 79452), we proposed 
requirements for Part D sponsors to: (1) refund incorrect collections 
of premiums and cost sharing, and (2) recover underpayments of premiums 
and cost sharing. We also proposed to establish both a lookback period 
and timeframe to complete overpayments and underpayment notices, as 
well as a de minimis threshold for associated refunds and recoveries. 
We solicited comments regarding the addition of similar requirements in 
MA, specifically regarding establishing a lookback period and de 
minimis threshold for refunding incorrect collections.
    Part D sponsors' failure to attempt to collect cost sharing or 
premiums is a violation of statutory and regulatory requirements. Part 
D sponsors' incorrectly high or low collections of cost sharing and 
premiums would have the effect of making the benefit non-uniform and 
would violate the uniform premium and benefit requirements of section 
1860D-2(a) of the Act and Sec.  423.104(b). Existing 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. Similarly, whether done in 
a small number of instances or to all members enrolled of a plan, the 
excess collection of premiums is the basis for intermediate sanctions, 
as stated in section 1857(g)(1)(B) of the Act, covering Medicare 
Advantage organizations, and 1860-12(b)(3)(E), for Part D sponsors. 
However, although CMS adopted a regulation for the MA program at Sec.  
422.270 to address incorrect collections of premiums and cost sharing 
in the final rule titled ``Medicare Program; Establishment of the 
Medicare Advantage Program'' (70 FR 4640), which appeared in the 
Federal Register on January 28, 2005, the regulations in Part 423 have 
not previously addressed Part D sponsor requirements regarding 
incorrect collections of premiums and cost sharing. In the December 
2022 proposed rule, we proposed to add a new regulation at Sec.  
423.294 to establish new Part D requirements that generally align with 
the existing MA requirements in Sec.  422.270 for incorrect collections 
and to establish new Part D requirements regarding failure to collect 
premiums and cost sharing amounts.
    Specifically, in order to align Part D with the existing MA 
requirements in Sec.  422.270 we proposed to add a new regulation at 
Sec.  423.294, which at paragraph (c) 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 same 
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. We also proposed to add new Sec.  423.294(b)(2) to require a 
Part D sponsor to 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).
    In addition, we proposed new Part D requirements for the management 
of incorrect collections. First, we proposed 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. Part D sponsors have been required 
to process retroactive claims adjustments within 45 days of receiving 
complete information, per Sec.  423.466(a), but there has been no 
requirement for the timing of retroactive premium adjustments. Although 
Sec.  423.466(b) allows 3 years for coordination of benefits, there was 
no limit in the regulation for how far back a Part D sponsor must look 
to determine whether 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 
incorrect cost sharing from 2015 to 2020, the current regulation might 
require them to refund and/or recover amounts for prescriptions 
beneficiaries received as far back as seven years ago. This is not only 
inconsistent with our coordination of benefits requirements, which only 
require adjustments for the past 3 years, but is potentially confusing 
to beneficiaries. By establishing 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. This 3-year period coincides 
with the timeframe established in Sec.  423.466(b) for coordination of 
benefits with State Pharmaceutical Assistance Programs (SPAPs), other 
entities providing prescription drug coverage, beneficiaries, and 
others paying on the beneficiaries' behalf. A Part D sponsor would not 
be required to make a premium or claims payment adjustment if more than 
3 years have passed from the date of service, just as a Part D sponsor 
is required to coordinate benefits for a period of 3 years.
    Second, we proposed in Sec. Sec.  423.294(b)(2) and (4) and 
423.294(c)(2), respectively, 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 the timeframes 
for claims adjustments, 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 and/or cost 
sharing, or recovery of underpayments of premiums and/or cost sharing, 
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.
    Finally, we proposed to apply a de minimis amount, calculated per 
Prescription Drug Event (PDE) transaction for cost sharing or, for 
premium adjustments, per month, for these refunds and recoveries. 
Specifically, we proposed in Sec.  423.294(b) and (c)(1) that if a 
refund or recovery amount falls below the de minimis amount set for 
purposes of Sec.  423.34(c)(2) for the low-income subsidy (currently 
set at $2), the Part D sponsor would not be required to issue a refund 
or recovery notice. For example, if a plan sponsor in 2025 discovered 
that it had charged incorrect premiums amounts to certain beneficiaries 
for a 12-month period from

[[Page 30549]]

January through December of 2022 and the de minimis amount for 2025 is 
$2, the sponsor would not have to issue recovery notices to any 
beneficiary who owed $24 or less for the 12-month period.
    The proposed rule preamble also noted that we are not making 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 are treated as revenue and are included 
in the MLR denominator.
    In addition, the proposed rule noted that current MA regulations 
set forth at Sec.  422.270 do not contain allowances for de minimis 
amounts or limits to the lookback periods for MA organizations to 
refund or recover incorrect collections of cost sharing or premiums. 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) provides that an enrollee may make payments in equal 
monthly installments 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. In 
the proposed rule, we solicited comments on adding requirements 
regarding a de minimis amount and lookback periods for recovering or 
refunding incorrect collections in MA that would mirror the proposed 
requirements in Part D.
    We also proposed to implement a technical change to existing 
regulation text related to the Part D retroactive collection of monthly 
beneficiary premiums. Specifically, we proposed 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 received comments in response to the proposed new regulatory 
text at Sec. Sec.  423.293 and 423.294. A summary of the comments 
received and our responses follow.
    Comment: A commenter stated that the collection of cost sharing is 
materially different from premium collection and stated that CMS should 
not proceed with the proposal to codify the collection of cost sharing 
and premiums together under Sec.  423.294. They noted that premiums are 
collected by the plans, but collection of cost sharing is managed by 
pharmacies and should not be described as the plans' responsibility. 
This commenter believed it was inappropriate for the proposal codifying 
our interpretation of the uniform benefit requirement to include cost 
sharing because plans are not the parties that fail to collect 
beneficiary cost sharing. The commenter stated that plans would only 
have control over cost sharing in the case of retroactive adjustments 
and asked that the provision be revised to either explicitly state that 
the requirement only applies to plans in the case of retroactive 
adjustments, or to exclude language regarding cost sharing.
    Response: We recognize that there is a fundamental difference 
between the collection of Part D cost sharing and premiums under normal 
circumstances. Pharmacies, not plans, collect cost sharing at the point 
of sale, and therefore plan oversight of cost sharing is more resource 
intensive in the case of retroactive adjustments. Pharmacies may also 
have certain autonomy when it comes to the collection of cost sharing. 
Pharmacies, as outlined at Sec.  1001.952(k)(3), may choose to waive 
cost sharing under specific, but limited, circumstances (for example, 
in the circumstances outlined at 42 CFR Sec.  1001.952(k)(3)). With 
those limitations in mind, the preamble of the December 2022 proposed 
rule (87 FR 79517) makes clear that we anticipate retroactive 
adjustments to be the primary circumstance in which plans will handle 
cost sharing directly.
    However, the uniform benefit requirement at Sec.  423.104(b)(2) 
requires Part D plan sponsors to offer ``a uniform premium, with 
uniform benefits and level of cost sharing throughout the plan's 
service area.'' As noted in the October 2009 proposed rule (74 FR 
54690), CMS has consistently interpreted the uniform benefit 
requirement to prohibit Part D sponsors from varying cost sharing and 
premiums within its service area. While plan sponsors will primarily 
manage cost sharing directly in the case of retroactive adjustments, 
our existing regulations have placed significant responsibility for the 
correct collection of cost sharing on plan sponsors. For example, plans 
may exercise authority through their network participation agreements 
to define pharmacies' responsibility to collect cost sharing, per 
regulations at Sec.  423.104(g). The proposed regulation merely 
codifies a portion of the obligations that plans have already been 
required to uphold.
    Comment: A commenter stated that the proposed 3-year lookback 
period for incorrect collections does not align with the six-year 
overpayment lookback period. They proposed that CMS should revise the 
proposed provision to clarify that it would only require plan sponsors 
to refund or collect cost sharing created through retroactive 
adjustments. Alternatively, they asked CMS to clarify whether CMS would 
adjust its payments to plans outside of the 3-year lookback period but 
refuse to allow plans to initiate reimbursements or recoveries in that 
same period.
    Response: While the commenter is correct that the proposed lookback 
period for incorrect collections would not align with the six-year 
overpayment lookback period (defined in regulation at Sec.  
423.360(f)), it was not our intention to align these lookback periods. 
It was our stated goal to clarify that the lookback period for Part D 
incorrect collections should be understood as covered by the lookback 
period outlined in regulation for coordination of benefits (at Sec.  
423.466(b)). While the overpayment lookback period in Sec.  423.360(f) 
pertains to the reporting and returning of CMS overpayments by plans, 
our proposed incorrect collections provision better aligns with other 
aspects of coordination of benefits that are relevant to beneficiary or 
third-party payments to plans and pharmacies. For example, CMS payments 
to plans and the associated plan payment reconciliation processes are 
not closely related to the repayment to, or recovery of funds from, 
individuals. The incorrect collection of cost sharing and the 
adjustments that can be made in the coordination of benefits process, 
however, are inherently related. Furthermore, while the provision does 
not require plans to provide adjustments beyond the 3-year lookback 
window, there is nothing that would prohibit plans from voluntarily 
issuing refunds for premium or cost sharing overpayments, so long as 
they did so in a uniform manner.
    Comment: A commenter stated that they were opposed to the 45-day 
timeframe for processing refunds and recoveries for premium adjustments 
proposed at Sec.  423.294(b)(2). Because the adjustment process can be 
complicated, they indicated that a 90-day timeframe would be preferable 
instead.
    Response: First, we note that the 45-day timeframe is meant for the 
beneficiary's benefit and is not related to record keeping. 
Furthermore, as stated in the December 2022 proposed rule (87 FR 
79517), we are aligning the adjustment of retroactive premium 
adjustments with the timeline for processing retroactive claims 
adjustments. Part D sponsors are already required to process 
retroactive claims adjustments within 45 days of receiving

[[Page 30550]]

complete information, per Sec.  423.466(a), and the proposal would 
simply impose a similar requirement for premium adjustments. While the 
process for refunding or recovering premiums may be complicated, we do 
not consider it to be substantially more complicated than final 
processing of retroactive claims adjustments. Furthermore, as noted 
earlier in this section, plan sponsors are already required to make 
claims adjustments for refunds and recoveries related to the low-income 
subsidy program within a 45-day window (per Sec.  423.800(e)). Finally, 
we also believe it to be in the beneficiary's interest to resolve 
refunds and recoveries in a timely manner. As explained, the 45-day 
window has been used for adjustments in the past, and we consider it to 
be still most appropriate in this circumstance.
    Comment: Commenters were divided in their opinions of the proposed 
de minimis amount for incorrect collections of Part D premiums and cost 
sharing. While some commenters were supportive, others expressed 
opposition to the proposal. A commenter suggested that the proposed de 
minimis regulation could be interpreted to be optional, but they argued 
that it should be made mandatory across all plans in order to prevent 
enrollee confusion. Another commenter suggested that the proposal, 
which they understood to be mandatory, would deprive plans of existing 
flexibility to determine on their own the financial thresholds that are 
appropriate for collection.
    Response: We clarify that CMS has not previously provided Part D 
sponsors with flexibility to pursue or return incorrect collections 
only when they deem the funds sufficient to be worth the time and 
effort. As noted in the October 2009 proposed rule (74 FR 54690), CMS 
has interpreted a failure to attempt to collect premiums and cost-
sharing as a violation of the uniform benefit requirement. Plans are 
already required to ensure correct payment of premiums and cost-
sharing, consistent with current regulations and guidance, which do not 
define a minimum amount below which the obligation to provide a refund 
to enrollees (or to collect from enrollees) does not apply. We proposed 
and are finalizing at Sec.  423.294(b) and (c)(1) that it is not 
mandatory for Part D sponsors to collect or refund amounts below the de 
minimis threshold established in the regulation.
    Furthermore, there will be little financial difference to enrollees 
whether plans adopt the de minimis requirement or continue to refund or 
recover all incorrectly collected amounts. For instance, the de minimis 
amount for premium adjustments for 2024 will amount to $2 per month. 
Thus, under the proposed rule, plans would only be permitted to forego 
premium adjustments less than or equal to $24 for a calendar year. In 
the case of one-time errors or errors that took place over a small 
number of instances, the amounts involved may be less than the postage 
required to send a refund or recovery notice to a beneficiary. In 
combination with the 3-year lookback period, we believe that our 
proposed de minimis amount provision would enable plans to minimize 
their own burden while also limiting beneficiary confusion over minor 
adjustments to previously paid premiums and cost-sharing.
    Comment: A commenter requested clarification regarding whether 
recoupment of underpayments will apply to dually eligible 
beneficiaries, noting that the dually eligible population often faces 
obstacles that limit their ability to make unexpected payments. The 
commenter also stated their belief that CMS had not previously required 
Part D sponsors to attempt to recover underpayments of premiums and 
cost-sharing and refund overpayments.
    Response: Under current regulations and guidance, plan sponsors are 
already required to recover underpayments and refund overpayments, 
regardless of the amount. Our proposal elaborated on existing 
regulations applying to incorrect collections of premiums and cost 
sharing. As explained in the October 2009 proposed rule (74 FR 54690) 
and reiterated here, we have interpreted failure to attempt to collect 
premiums and cost sharing as a violation of the existing uniform 
benefit requirement at Sec.  423.104(b). In addition, there is at 
present no clear limit to the lookback period for premium and cost-
sharing adjustments. While our proposed policy would apply to dually 
eligible enrollees, the abbreviation of the lookback period and 
inclusion of de minimis amount regulation may serve to decrease the 
frequency with which plans attempt to recover incorrect collections 
from dually eligible enrollees. Existing regulation and guidance 
provide further protections for dually eligible enrollees. In the case 
of retroactive premium collections in which the enrollee is without 
fault, Sec.  423.293(a)(4) instructs sponsors to offer the enrollee the 
opportunity to make payment by lump sum, by equal monthly installments 
spread out over at least the same period over which the payments were 
due, or through other arrangements mutually acceptable to the enrollee 
and the sponsor Similar recommendations can be found in section 70.3.1 
of Chapter 13 of the Prescription Drug Benefit Manual, which covers 
refunds and recoupments for the premium and cost-sharing subsidies for 
low-income individuals and would apply to all full dually eligible 
enrollees and individuals eligible for a Medicare Savings Program as a 
Qualified Medicare Beneficiary, Specified Low Income Medicare 
Beneficiary, or a Qualifying Individual.
    Comment: A commenter responded to CMS's request for feedback about 
aligning elements of the process for MA incorrect collections with 
those in the December 2022 proposed rule (87 FR 79517) for Part D. The 
commenter believed that the process for collecting cost sharing is more 
complex for MA plans than for Part D plans. The lag in payments and 
collections involved in, for example, clinical and hospital visits 
necessitates substantial differences between the incorrect collections 
policies of the two programs.
    Response: We appreciate the commenter's feedback. We decline to 
revise Sec.  422.270 at this time to: (1) apply a threshold for a de 
minimis amount below which refunds of excess MA cost sharing or excess 
MA premiums are not required, or (2) adopt lookback periods to limit 
the obligation for MA organizations to recover or refund incorrect 
collections of such payments. We may revisit these policies for the MA 
program at a later date.
    After consideration of the comments received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing the changes to Sec. Sec.  423.293 and 423.294 as proposed 
with minor grammatical and formatting changes.

B. Definition of ``Basic Benefits'' (Sec.  422.2)

    Section 1852(a)(1)(B)(i) of the Act defines the term ``benefits 
under the original Medicare Fee-for-Service program option'' for 
purposes of the requirement in subparagraph (a)(1)(A) that each MA 
organization provide enrollees such benefits. Section 17006(c)(1) of 
the 21st Century Cures Act (Pub. L. 114-255) (hereafter referred to as 
``the Cures Act'') amended section 1852(a)(1)(B)(i) of the Act by 
inserting ``or coverage for organ acquisitions for kidney transplants, 
including as covered under section 1881(d)'' after ``hospice care.'' 
Per section 17006(c)(3) of the Cures Act, this amendment applies with 
respect to plan years beginning on or after January 1, 2021. Thus, 
effective January 1, 2021, MA plans no longer cover organ acquisitions 
for kidney transplants, including the costs for

[[Page 30551]]

living donors covered by Medicare pursuant to section 1881(d) of the 
Act.
    In the April 2019 final rule \79\ and the January 2021 final rule, 
we amended the definition of ``basic benefits'' at Sec.  422.100(c)(1) 
to exclude coverage for organ acquisitions for kidney transplants, 
effective beginning in 2021, in addition to the existing exclusion for 
hospice care. In the June 2020 final rule, we also amended several 
regulations to address coverage of organ acquisition for kidney 
transplants for MA enrollees, with amendments to Sec. Sec.  422.258, 
422.322, and 422.306. However, we inadvertently omitted making the same 
type of revision to the ``basic benefits'' definition at Sec.  422.2. 
We proposed to correct the definition of basic benefits at Sec.  422.2 
to add the exclusion of coverage for organ acquisitions for kidney 
transplants to Sec.  422.2.
---------------------------------------------------------------------------

    \79\ ``Medicare and Medicaid Programs; Policy and Technical 
Changes to the Medicare Advantage, Medicare Prescription Drug 
Benefit, Programs of All-Inclusive Care for the Elderly (PACE), 
Medicaid Fee-For-Service, and Medicaid Managed Care Programs for 
Years 2020 and 2021,'' final rule (84 FR 15680).
---------------------------------------------------------------------------

    Specifically, we proposed to revise the ``basic benefits'' 
definition at Sec.  422.2 to change the phrase ``all Medicare-covered 
benefits'' to ``Part A and Part B benefits'' and correct the phrase 
``(except hospice services)'' to include, beginning in 2021, organ 
acquisitions for kidney transplants (which includes costs covered under 
section 1881(d) of the Act).
    This provision is a technical change to align the definition of 
basic benefits with existing law; therefore, neither an economic impact 
beyond current operating expenses nor an associated paperwork burden 
are expected.
    We invited public comment on this proposal and received a comment 
in support of our proposal and an out-of-scope comment. We thank the 
commenter for their support.
    For the reasons outlined in the proposed rule and summarized in 
this rule, we finalize the revisions to the definition of basic 
benefits at Sec.  422.2 as proposed.

C. Standards for Determining Whether Special Supplemental Benefits for 
the Chronically Ill (SSBCI) Have a Reasonable Expectation of Improving 
the Health or Overall Function of an Enrollee

    The Balanced Budget Act (BBA) of 2018 included new authorities 
concerning supplemental benefits that may be offered to chronically ill 
enrollees in Medicare Advantage (MA) plans. We addressed these new 
supplemental benefits extensively 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 (hereafter referred to as ``June 2020 final rule'') (85 FR 
33796, 33800-05), where we referred to them as Special Supplemental 
Benefits for the Chronically Ill (SSBCI).
    As we summarized in the June 2020 final rule, we interpreted the 
intent of this new category of supplemental benefits as enabling MA 
plans to better tailor benefit offerings, address gaps in care, and 
improve health outcomes for chronically ill enrollees who meet the 
definition established by the statute. Section 1852(a)(3)(D)(ii)(II) of 
the Act authorizes the Secretary to waive the uniformity requirements 
generally applicable to the benefits covered by MA plans with respect 
to SSBCI. Therefore, CMS may allow MA plans to offer SSBCI that are not 
uniform across the entire population of chronically ill enrollees in 
the plans but that are tailored and covered for an individual 
enrollee's specific medical condition and needs (83 FR 16481-82).
    In addition to limiting the eligibility of enrollees who can 
receive SSBCI to chronically ill enrollees, section 
1852(a)(3)(D)(ii)(I) of the Act requires that an item or service 
offered as an SSBCI have a reasonable expectation of improving or 
maintaining the health or overall function of the chronically ill 
enrollee. We codified this statutory requirement as part of the 
definition of SSBCI at Sec.  422.102(f)(1)(ii).
    As we provided in a Health Plan Management System (HPMS) memorandum 
dated April 24, 2019 \80\ (``2019 HPMS memo'' hereafter), SSBCI can be 
in the form of:
---------------------------------------------------------------------------

    \80\ ``Implementing Supplemental Benefits for Chronically Ill 
Enrollees'' https://www.cms.gov/medicare/health-plans/healthplansgeninfo/downloads/supplemental_benefits_chronically_ill_hpms_042419.pdf (April 24, 
2019).
---------------------------------------------------------------------------

     Reduced cost sharing for Medicare-covered benefits;
     Reduced cost sharing for primarily health-related 
supplemental benefits;
     Additional primarily health-related supplemental benefits; 
and/or
     Non-primarily health-related supplemental benefits.
    As we described in the November 2023 proposed rule, to offer an 
item or service as an SSBCI to an enrollee, an MA plan must make at 
least two separate determinations with respect to that enrollee in 
order to satisfy the statutory and regulatory requirements for these 
benefits. First, the MA plan must determine that an enrollee meets the 
definition of ``chronically ill enrollee.'' Section 1852(a)(3)(D)(iii) 
of the Act defines ``chronically ill enrollee'' as an individual 
enrolled in the MA plan who meets all of the following: (I) has one or 
more comorbid and medically complex chronic conditions that is life-
threatening or significantly limits the overall health or function of 
the enrollee; (II) has a high risk of hospitalization or other adverse 
health outcomes; and (III) requires intensive care coordination. Per 
Sec.  422.102(f)(1)(i)(B), CMS may publish a non-exhaustive list of 
conditions that are medically complex chronic conditions that are life-
threatening or significantly limit the overall health or function of an 
individual. This list is currently the same as the list of chronic 
conditions for which MA organizations may offer chronic condition 
special needs plans, which can be found in section 20.1.2 of Chapter 
16b of the Medicare Managed Care Manual. We require, currently at Sec.  
422.102(f)(3)(i), the MA plan to have written policies for making this 
determination and to document each determination that an enrollee is a 
chronically ill enrollee. Documentation of this determination must be 
available to CMS upon request according to Sec.  422.102(f)(3)(ii) (to 
be redesignated to Sec.  422.102(f)(4)(ii)).
    Second, the MA plan must determine that the SSBCI has a reasonable 
expectation of improving or maintaining the health or overall function 
of the enrollee. Currently Sec.  422.102(f)(3)(iii) provides that the 
MA plan ``must have written policies based on objective criteria for 
determining a chronically ill enrollee's eligibility to receive a 
particular SSBCI and must document these criteria.'' We also require 
the MA plan to document ``each determination that an enrollee is 
eligible to receive an SSBCI and make this information available to CMS 
upon request'' at Sec.  422.102(f)(3)(iv). (See later in this section 
for how paragraph (f)(3) of Sec.  422.102 is redesignated and revised 
in this final rule.)
    We noted in the November 2023 proposed rule that we do not define 
or definitively interpret the phrase ``has a reasonable expectation of 
improving or maintaining the health or overall function of the 
enrollee'' in regulation or policy guidance. Rather, in the 2019 HPMS 
memo, we provided MA plans with ``broad discretion in determining what 
may be considered `a reasonable expectation' when choosing to offer 
specific items and services as SSBCI.'' We stated that we granted MA 
plans this discretion so that they might effectively tailor their SSBCI 
offerings and the eligibility standards for those offerings to the 
specific chronically ill population upon which the plan is focusing.

[[Page 30552]]

    We further indicated that ``CMS will provide supporting evidence or 
data to an MA organization if CMS determines that an MA plan may not 
offer a specific item or service as an SSBCI because it does not have a 
reasonable expectation of improving or maintaining the health or 
overall function of a chronically ill enrollee.'' In other words, we 
placed the burden on CMS, and not the MA plan, to generate evidence 
demonstrating whether the ``reasonable expectation'' standard--a 
standard that we granted broad discretion for an MA plan to determine--
has been met (or not met) when offering items or services as SSBCI.
    As we described in the November 2023 proposed rule, supplemental 
benefits, including SSBCI, are generally funded using MA plan rebate 
dollars.\81\ When submitting an annual bid to participate in the MA 
program, an MA organization includes in its bid a Plan Benefit Package 
(PBP) and Bid Pricing Tool for each of its plans, where the MA 
organization provides information to CMS on the premiums, cost sharing, 
and supplemental benefits (including SSBCI) it proposes to offer. Since 
issuing the 2019 HPMS memo, the number of MA plans that offer SSBCI--
and the number and scope of SSBCI offered by an individual plan--has 
significantly increased. We have observed these trends in reviewing 
PBPs from MA plans submitted in the past few years.
---------------------------------------------------------------------------

    \81\ MA plan rebates are a portion of the amount by which the 
bidding benchmark or maximum MA capitation rate for a service area 
exceeds the plan's bid; MA plans are obligated to use the MA rebates 
for the purposes specified in 42 CFR 422.266: payment of 
supplemental benefits (including reductions in cost sharing) or 
reductions in Part B or Part D premiums.
---------------------------------------------------------------------------

    In the November 2023 proposed rule, we noted that based on our 
internal data, 101 MA plans offered a food and produce benefit in 
contract year 2020, while 929 MA plans were offering this as an SSBCI 
in contract year 2023.\82\ Similarly, 88 MA plans offered 
transportation for non-medical needs as an SSBCI in contract year 2020. 
In contract year 2023, 478 MA plans were offering this as an SSBCI.\83\ 
MA plans are also continuing to identify items or services as SSBCI 
that were not included as examples in the 2019 HPMS memo. When an MA 
plan is offering such a benefit, the plan indicates it in the PBP \84\ 
that is submitted with its bid. The MA plan categorizes the benefit 
within our PBP submission system as an ``other'' SSBCI (a benefit 
designation within the PBP submission system) and describes the 
proposed new benefit in a ``free text'' field. While 51 MA plans 
offered an ``other'' non-primarily health-related supplemental benefit 
in contract year 2020, 440 plans are offering at least one ``other'' 
non-primarily health related SSBCI in contract year 2023--and 226 plans 
are offering at least two.\85\
---------------------------------------------------------------------------

    \82\ Taken from CMS internal data.
    \83\ Taken from CMS internal data.
    \84\ A PBP is a set of benefits for a defined MA (or 
Prescription Drug Plan) service area. The PBP is submitted by MA 
organizations and PDP sponsors to CMS for benefit analysis, 
marketing, and beneficiary communication purposes.
    \85\ Taken from internal data.
---------------------------------------------------------------------------

    Through SSBCI, MA organizations can design and implement benefits, 
including non-primarily health-related benefits, that may be able to 
holistically address various needs of chronically ill enrollees. We 
provided in the November 2023 proposed rule that, as these benefits 
become a more significant part of the MA program, we believe it is 
important to update our processes for reviewing and approving SSBCI to 
manage the growth and development of new SSBCI offerings, as well as to 
ensure compliance with the statutory requirements at section 
1852(a)(3)(D). Additionally, section 1854(b)(1)(C) of the Act requires 
that MA plans offer the value of MA rebates back to enrollees in the 
form of payment for supplemental benefits, cost sharing reductions, or 
payment of Part B or D premiums. As an increasing share of Medicare 
dollars is going toward MA rebates that plans are using to offer SSBCI, 
we believe that revising the regulation to adopt greater review and 
scrutiny of these benefits is important for CMS to maintain good 
stewardship of Medicare dollars, including the MA rebates used to pay 
for these benefits, and for ensuring that the SSBCI offered are 
consistent with applicable law and those most likely to improve or 
maintain the health or overall function of chronically ill enrollees. 
Therefore, we proposed to update our rules and processes to 
simultaneously ensure effective program administration and oversight, 
while enabling MA organizations to offer SSBCI and improve health 
outcomes for chronically ill enrollees.
    Currently, the burden is on CMS to review SSBCI included in an MA 
organization's bid and determine whether sufficient evidence or data 
exists to demonstrate that it has a reasonable expectation of improving 
or maintaining the health or overall function of a chronically ill 
enrollee. Given the growth in the quantity and type of SSBCI offerings 
and given the associated burden increase on CMS in reviewing and 
approving bids that include SSBCI, we believe that it would be more 
efficient for the MA organization, rather than CMS, to demonstrate that 
the reasonable expectation standard has been met.
    When CMS provides MA organizations with broad latitude in offering 
items or services as SSBCI and in establishing what a ``reasonable 
expectation'' means for a given SSBCI, we believe that it is 
appropriate for the MA organization, rather than CMS, to identify 
supporting evidence or data to support an SSBCI and to establish 
compliance with the applicable law.
    We proposed that an MA organization that includes an item or 
service as SSBCI in its bid must be able to demonstrate through 
relevant acceptable evidence that the item or service has a reasonable 
expectation of improving or maintaining the health or overall function 
of a chronically ill enrollee. As part of shifting responsibility this 
way, we proposed, as relevant to an MA organization that includes SSBCI 
in its bid, to: (1) require the MA organization to establish, by the 
date on which it submits its bid, a bibliography of ``relevant 
acceptable evidence'' related to the item or service the MA 
organization would offer as an SSBCI during the applicable coverage 
year; (2) require that an MA plan follow its written policies (that 
must be based on objective criteria) for determining eligibility for an 
SSBCI when making such determinations; (3) require the MA plan to 
document denials of SSBCI eligibility rather than approvals; and (4) 
codify CMS's authority to decline to accept a bid due to the SSBCI the 
MA organization includes in its bid and to review SSBCI offerings 
annually for compliance, taking into account the evidence available at 
the time. In addition, we proposed to make a technical edit to Sec.  
422.102(f)(1)(i)(A)(2) to correct a typographical error. We describe 
each proposal in greater detail below.
    First, we proposed to redesignate what is currently Sec.  
422.102(f)(3) to (f)(4), and to address, at new Sec.  422.102(f)(3), 
new requirements for each MA plan that includes an item or service as 
SSBCI in its bid. The MA organization must be able to demonstrate, 
through relevant acceptable evidence, that the item or service to be 
offered as SSBCI has a reasonable expectation of improving or 
maintaining the health or overall function of a chronically ill 
enrollee and must, by the date on which it submits its bid to CMS, 
establish a bibliography of all ``relevant acceptable evidence'' 
concerning the impact that the item or service has on the health or 
overall function of its recipient. The bibliography must be made 
available to CMS upon request. As part of this

[[Page 30553]]

proposal, an MA organization would be required to include, for each 
citation in its written bibliography, a working hyperlink to or a 
document containing the entire source cited. This proposal would apply 
only to SSBCI offered in the form of additional primarily health-
related supplemental benefits or SSBCI offered in the form of non-
primarily health-related supplemental benefits. It would not apply to 
an SSBCI offered in the form of reduced cost sharing, regardless of the 
benefit for which it is offered. We stated that we intended to exclude 
from this policy supplemental benefits offered under the Value-Based 
Insurance Design (VBID) Model administered by the Center for Medicare 
and Medicaid Innovation (CMMI), unless CMMI incorporates this policy 
within the VBID Model.
    We also proposed, in new paragraph (f)(3)(iv), that the MA 
organization must make its bibliography of relevant acceptable evidence 
available to CMS upon request. CMS may request and use this 
bibliography, without limitation, during bid review to assess whether 
SSBCI offerings comply with regulatory requirements, or during the 
contract year as part of CMS's oversight activities. We noted that CMS 
does not intend at this time to require MA organizations to submit 
these bibliographies as a matter of course in submitting bids.
    We proposed that the term ``relevant acceptable evidence'' would 
include large, randomized controlled trials or prospective cohort 
studies with clear results, published in a peer-reviewed journal, and 
specifically designed to investigate whether the item or service (that 
is proposed to be covered as an SSBCI) impacts the health or overall 
function of a population, or large systematic reviews or meta-analyses 
summarizing the literature of the same. We further proposed that the MA 
plan would need to include in its bibliography all relevant acceptable 
evidence published within the 10 years preceding the month in which the 
MA plan submits its bid. Ideally, relevant acceptable evidence should 
include studies and other investigations specific to the chronic 
conditions for which the MA organization intends to target the SSBCI, 
but we are not proposing to make this a requirement at this time. We 
are concerned that relevant acceptable evidence applicable to many 
SSBCI will already be limited, and that requiring a bibliography be 
limited to only studies concerning certain chronic conditions would 
discourage the development of new SSBCI. Similarly, to the extent there 
exists sufficient relevant acceptable evidence that the item or service 
meets the reasonable expectation standard for a sample of a population, 
an MA organization may still offer an SSBCI to enrollees with a 
specific chronic condition even in the absence of any studies 
addressing the connection between an item or service and its effect on 
the health or overall function of individuals with that condition.
    We proposed that, in the absence of publications that meet these 
standards, ``relevant acceptable evidence'' for purposes of the MA 
plan's bibliography could include case studies, federal policies or 
reports, and internal analyses or any other investigation of the impact 
that the item or service has on the health or overall function of its 
recipient. By ``bibliography,'' we mean a list, and not a description, 
of scholarly publications or other works, as we describe below.
    In our April 2023 final rule, we discussed what constituted 
sufficiently high-quality clinical literature in the context of an MA 
organization establishing internal clinical criteria for certain 
Medicare basic benefits (88 FR 22189, 22197). We believe that those 
standards are also applicable for identifying ``relevant acceptable 
evidence'' in the context of supporting whether an item or service 
offered as SSBCI has a reasonable expectation of improving or 
maintaining the health or overall function of a chronically ill 
enrollee. Therefore, our proposal for Sec.  422.102(f)(3)(ii) largely 
tracked the language in Sec.  422.101(b)(6) describing acceptable 
clinical literature for purposes of establishing internal coverage 
criteria, but with revisions to be specific to the context of SSBCI and 
the reasonable expectation standard.
    As we noted in the November 2023 proposed rule, literature that CMS 
considers to be ``relevant acceptable evidence'' for supporting an 
SSBCI offering 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 a question 
relevant to the requirements for offering and covering SSBCI and how 
the MA plan will implement the coverage--such as the impact of 
structural home modifications on health or overall function. Literature 
might also include that which involves large systematic reviews or 
meta-analyses summarizing the literature specifically related to the 
subject of the SSBCI--such as meal delivery, availability of certain 
food or produce, or access to pest control--published in a peer-
reviewed journal with clear and consistent results. Under this 
proposal, an MA organization would be required to cite all such 
available evidence in its bibliography, and not just studies that 
present findings that are favorable to its SSBCI offering.
    We also proposed that, in the absence of literature that conforms 
to these standards for relevant acceptable evidence, an MA organization 
would be required to include in its bibliography any other 
investigations of the impact of the item or service which may include 
evidence that is unpublished, is a case series or report, or derived 
solely from internal analyses within the MA organization. In this way, 
our proposed policy would deviate from the standard we established for 
the type of evidence necessary to support an MA organization's internal 
coverage criteria for Medicare basic benefits. We noted in our proposal 
that we believe this deviation is appropriate as there is relatively 
less research into the impact of the provision on items or services 
commonly offered as SSBCI on health or overall function of chronically 
ill individuals.
    We did not propose that relevant acceptable evidence must directly 
address whether there is a reasonable expectation of improving or 
maintaining the health or overall function of a chronically ill 
enrollee with a specific chronic illness or condition (conditions that 
the MA plan would have identified in its PBP submission), but such 
materials may be more persuasive than materials that only describe the 
impact of certain items and services--particularly non-primarily 
health-related items and services--on healthier individuals or 
populations. Further, our proposal was limited to SSBCI offered as 
additional primarily health-related supplemental benefits and non-
primarily health-related supplemental benefits. We did not propose to 
require a bibliography for SSBCI that are exclusively cost sharing 
reductions for Medicare-covered benefits or primarily health-related 
supplemental benefits, so the regulation text was limited to SSBCI that 
are items or services. Although we did not propose to apply this new 
documentation requirement to cost sharing reductions offered as SSBCI, 
that type of SSBCI must also meet the reasonable expectation standard 
to be offered as SSBCI.
    We believe that this proposal for new paragraph (f)(3) (which we 
are finalizing without modification, as discussed in the responses to 
public comments in the following pages) will serve our goal of ensuring 
that SSBCI regulatory standards are met--specifically, that an item or 
service covered as an SSBCI has a reasonable expectation of improving 
or maintaining the health or overall

[[Page 30554]]

function of a chronically ill enrollee. As we explained in the November 
2023 proposed rule, we expect that rigorous research like that we 
describe above might be limited, and that some studies may not produce 
results favorable to the offering of an SSBCI. However, when there are 
also favorable studies, the existence of such unfavorable studies does 
not necessarily mean that there could not be a ``reasonable 
expectation'' that the SSBCI would improve or maintain the health or 
overall function of a chronically ill enrollee. And it is not our goal 
that mixed results in current literature--or the lack of rigorous 
research at all--would reduce innovation in SSBCI offerings. We wish to 
continue to see MA organizations identify new ways to deliver helpful 
benefits to chronically ill enrollees that can address their social 
needs while also improving or maintain the health or overall function 
of these chronically ill enrollees. Our goal is to ensure that SSBCI 
innovation occurs in a manner that is grounded to the extent possible 
in research, and that MA organizations and CMS alike are tracking to 
the most current research relevant to SSBCI offerings. We believe this 
policy will continue to promote SSBCI innovation while helping to 
ensure that when Medicare funds are used to offer SSBCI, such offerings 
meet statutory requirements.
    We solicited comments on our proposed requirement that an MA 
organization that includes an item or service as SSBCI in its bid must, 
by the date on which it submits its bid to CMS, establish in writing a 
bibliography of all relevant acceptable evidence concerning the impact 
that the item or service has on the health or overall function of its 
recipient. We also solicited comments on our definition of ``relevant 
acceptable evidence,'' including the specific parameters or features of 
studies or other resources that would be most appropriate to include in 
our definition. We also solicited comments on our proposal that, for 
each citation in the written bibliography, the MA organization would be 
required to include a working hyperlink to or a document containing the 
entire source cited. Additionally, we solicited comments on whether we 
should apply this requirement to all items or services offered as 
SSBCI, or whether there are certain types or categories of SSBCI for 
which this requirement should not apply. We address comments received 
and our responses at the end of this section.
    Second, for clarity, we proposed to explicitly require at 
redesignated Sec.  422.102(f)(4)(iii) that an MA plan apply its written 
policies, which must be based on objective criteria, that it 
establishes for determining whether an enrollee is eligible to receive 
an SSBCI. The regulation currently requires MA organizations to have 
written policies based on objective criteria for determining a 
chronically ill enrollee's eligibility to receive a particular SSBCI 
and must document these criteria. While we anticipate that MA plans are 
already applying their written policies that identify the eligibility 
criteria when making these determinations, we proposed to make clear 
that an MA plan must apply its written policies when making SSBCI 
eligibility determinations.
    We stated that we were considering whether to exclude the policies 
required by current Sec.  422.102(f)(3) (that is, the requirements we 
are proposing to redesignate to new paragraph (f)(4)) from the general 
rule reflected in Sec.  422.111(d) that MA plans may change plan rules 
during the year so long as notice is provided to enrollees. We 
solicited comments on whether CMS should permit changes in SSBCI 
eligibility policies during the coverage year, and, if so, the 
limitations or flexibilities that CMS should implement that would still 
allow CMS to provide effective oversight over SSBCI offerings. As we 
explained in our proposal, the ability to change plan rules during the 
year does not permit changes in benefit coverage but would include 
policies like utilization management requirements, evidentiary 
standards for a specific enrollee to be determined eligible for a 
particular SSBCI, or the specific objective criteria used by a plan as 
part of SSBCI eligibility determinations.
    Third, we proposed to amend redesignated paragraph (f)(4)(iv) to 
require that an MA plan document each instance wherein the plan 
determines that an enrollee is ineligible to receive an SSBCI. Denials 
of coverage when an enrollee requests an SSBCI are organization 
determinations subject to the rules in Subpart M, including the 
requirements related to the timing and content of denial notices in 
Sec.  422.568. By fully documenting denials as required by this 
proposal, MA organizations should be better placed to address any 
appeals, including when an adverse reconsideration must be sent to the 
independent review entity for review. Similarly, requiring robust 
documentation of denials of SSBCI by MA organizations will make 
oversight and monitoring by CMS easier and more productive, should CMS 
request documentation.
    We solicited comments on our proposal to require an MA plan to 
document its findings that a chronically ill enrollee is ineligible, 
rather than eligible, for an SSBCI.
    Fourth, we proposed to add Sec.  422.102(f)(5) to codify CMS's 
authority to decline to approve an MA organization's bid, if CMS 
determines that the MA organization has not demonstrated, through 
relevant acceptable evidence, that an SSBCI has a reasonable 
expectation of improving or maintaining the health or overall function 
of the chronically ill enrollees that the MA organization is targeting. 
We clarified that while this proposal would establish a specific basis 
on which CMS may decline to approve an MA organization's bid, our 
authority to enforce compliance with other regulations and to negotiate 
bids (see section 1854(a) of the Act and Subpart F) would not be 
limited by this provision. As described in section 1854(a)(5)(C) of the 
Act, CMS is not obligated to accept any or every bid submitted by an MA 
organization, and CMS may reject bids that propose significant 
increases in cost sharing or decreases in benefits offered under the 
plan. Similarly, CMS's authority to review benefits to ensure non-
discrimination is not limited or affected under this proposal. Our 
proposal was intended to clarify and establish that CMS's review of 
bids that include SSBCI could include specific evaluation of SSBCI and 
that CMS may decline to approve bids based on a lack of relevant 
acceptable evidence in support of the SSBCI offering the MA 
organization includes in its bid.
    We also proposed to codify that, regardless of whether an SSBCI 
offering was approved in the past, CMS may annually review the items or 
services that an MA organization includes as SSBCI in its bid for 
compliance with all applicable requirements, considering the relevant 
acceptable evidence applicable to each item or service at the time the 
bid is submitted. Under this proposal, CMS would have clear authority 
to evaluate an SSBCI included in a bid each year based on the evidence 
available at that time. CMS would not be bound to approve a bid that 
contains a certain SSBCI only because CMS approved a bid with the same 
SSBCI in the past. We believe this provision, if finalized, would help 
ensure sound use of Medicare dollars by establishing a clear connection 
between an SSBCI and the most current evidence addressing whether there 
is a reasonable expectation that the SSBCI will improve or maintain the 
health or overall function of a chronically ill enrollee.
    We believe that codifying that CMS may decline to approve a bid for 
an MA

[[Page 30555]]

organization to offer certain SSBCI is appropriate to support CMS's 
programmatic oversight function. CMS already possesses the authority to 
negotiate and reject bids under Section 1854 of the Act, and to 
establish certain minimum requirements related to SSBCI under Section 
1852 of the Act. We can rely on these bases as well as the requirements 
for SSBCI in the statute and regulations to decline to approve bids 
that include SSBCI that lack evidence to support the MA organization's 
expectations related to the SSBCI, but, as we noted in the November 
2023 proposed rule, we believe it prudent to establish clearly how our 
evaluation of individual SSBCI offerings and the evidence supporting 
these offerings fit within our bid negotiation and approval authority. 
We believe that SSBCI provide a critical source of innovation, and we 
wish to see MA organizations continue to develop impactful benefits 
tailored to their chronically ill enrollees. However, we must also 
ensure that benefits offered within the MA program comply with all 
applicable statutory and regulatory standards. We believe it is 
critical for effective program administration that CMS be able to 
obtain, upon request, relevant acceptable evidence from an MA 
organization to support CMS's review of SSBCI each year considering the 
information and evidence available at that point in time.
    We solicited comment on this proposal to codify CMS's authority to 
decline to approve an MA organization's bid if the MA organization 
fails to demonstrate, through relevant acceptable evidence, that an 
SSBCI included in the bid has a reasonable expectation of improving or 
maintaining the health or overall function of the chronically ill 
enrollees that the MA organization is targeting.
    The policies proposed in this section, which we are finalizing with 
modifications detailed further below, will work together to place the 
burden of showing whether an item or service offered as SSBCI has a 
reasonable expectation of improving the health or overall function of a 
chronically ill enrollee onto the MA organization. Implementing these 
proposals changes the policy set forth in the 2019 HPMS memo requiring 
CMS to provide supporting evidence or data to an MA organization if CMS 
determines that an MA plan may not offer a specific item or service as 
an SSBCI because it has not met the reasonable expectation standard. 
Under these proposals, the MA organization must, in advance of 
including an SSBCI in its bid, have already conducted research on the 
evidence establishing a reasonable expectation that the item or service 
would improve or maintain the health or overall function of the 
recipient of the item or service. By the time the MA organization 
submits its bid, it must be able to show CMS, upon request, the 
relevant applicable evidence that supports the reasonable expectation 
that the item or service would improve or maintain the health or 
overall function of the chronically ill enrollees it is targeting. We 
expect that MA plans are already proactively conducting similar 
research and establishing written policies for implementing SSBCI based 
on this research when designing them. Additionally, MA plans may seek 
guidance from CMS regarding SSBCI items or services not defined in the 
PBP or in previous CMS guidance prior to bid submission. However, plans 
should note that such guidance provided in advance of the bid 
submission process is not a guarantee that CMS will approve the bid. As 
such, we believe this proposal, if implemented, would create efficiency 
while imposing relatively little burden on MA plans.
    In addition, we proposed at Sec.  422.102(f)(3)(iv) that MA plans 
will be required to document and submit to CMS upon request each 
determination that an enrollee is not eligible to receive an SSBCI. We 
believe that requiring an MA organization to support its SSBCI 
offerings with a written bibliography of relevant acceptable evidence 
and an MA plan to document denials of SSBCI work together to ensure 
that SSBCI are being implemented in an evidence-based, non-
discriminatory, and fair manner. The evidence base established by an MA 
organization could serve to inform an MA plan's objective criteria for 
determining eligibility. By requiring an MA plan to document instances 
of SSBCI denials, we believe this proposal will improve the experience 
of MA plans, enrollees, and CMS in managing and oversight of appeals of 
such denials. Further, it will help ensure that MA plans are not 
denying access to SSBCI based on factors that are biased or 
discriminatory or unrelated to the basis on which the SSBCI are 
reasonably expected to improve or maintain the health or overall 
function of the chronically ill enrollees. For example, researchers 
have identified that certain algorithms that have been used to decide 
who gets access to additional services can have clear racial bias, when 
factors such as expected future cost or expected future utilization are 
incorporated into the algorithm.\86\ By codifying CMS' authority to 
decline to approve a bid that includes an SSBCI not supported by 
evidence, this proposal also serves to ensure appropriate program 
administration and oversight.
---------------------------------------------------------------------------

    \86\ See, e.g., Ziad Obermeyer et al., Dissecting racial bias in 
an algorithm used to manage the health of populations. Science 366, 
447-453 (2019). DOI:10.1126/science.aax2342.
---------------------------------------------------------------------------

    Finally, we proposed to make a technical edit to Sec.  
422.102(f)(1)(i)(A)(2) to correct a typographical error. In our June 
2020 final rule, we noted that section 1852(a)(3)(D)(ii) of the Act, as 
amended, defines a chronically ill enrollee as an individual who, among 
other requirements, ``[h]as a high risk of hospitalization or other 
adverse health outcomes[.]'' We then indicated that ``we propose to 
codify this definition of a chronically ill enrollee'' at Sec.  
422.102(f)(1)(i). However, our regulation at Sec.  
422.102(f)(1)(i)(A)(2) currently reads: ``Has a high risk of 
hospitalization of other adverse outcomes[.]'' We proposed to 
substitute ``or'' for the second ``of'' in this provision, such that it 
aligns with the statutory language that we intended to codify in our 
regulation.
    We invited public comment on this proposal and received several 
comments. A discussion of these comments, along with our responses 
follows.
    Comment: Commenters were overall very supportive of our efforts to 
improve SSBCI offerings and ensure that these benefits provided value 
to enrollees. Commenters expressed support for our stated goals of 
ensuring that SSBCI were supported by evidence, and that MA rebate 
dollars were used to benefit enrollees.
    Response: We appreciate the support of our proposal.
    Comment: Some commenters expressed support for the degree of 
flexibility CMS proposed to include as part of its relevant acceptable 
evidence standard. However, several commenters sought clarification 
regarding aspects of our proposal. Specifically, several commenters 
sought clarification about whether CMS would request bibliographies as 
part of the bidding process, expressing concern that plans would have 
very little time to address any deficiencies.
    Response: We appreciate commenter's support and reassert that we 
did not propose to require plans to submit their bibliographies with 
their bids. The provision proposed and finalized at Sec.  
422.102(f)(3)(iv) gives CMS the necessary flexibility to request to see

[[Page 30556]]

plans' bibliographies at any time during the bidding process or during 
the contract year; this may be helpful or even necessary to ensure 
compliance with the statutory and regulatory requirements for SSBCI. 
Our oversight of the MA program is enhanced by having access to 
bibliographies upon request and will lead to more effective and useful 
SSBCI offerings for Medicare beneficiaries. We will also provide time 
for plans to respond to any concerns CMS raises about SSBCI evidence 
bases during the bid process to allow plans to address any concerns 
expressed about submitted bibliographies and the associated benefits 
and make modifications to their bids as needed.
    Comment: We received some comments which expressed opposition to 
our proposed SSBCI evidentiary standard, specifically the requirement 
that plans provide ``all relevant acceptable evidence.'' Commenters 
were largely in agreement that the proposed requirement would be too 
burdensome. Some commenters were concerned that the requirement would 
stifle innovation, especially for SSBCI benefits, which may not have a 
large evidence base. Some commenters felt that the standard should be 
limited to a certain minimum number of sources or to information from 
specific sources. Additionally, some commenters asked that CMS 
recognize a good faith effort in collecting ``all relevant acceptable 
evidence.'' They proposed that instead of ``all'' evidence, CMS accept 
a ``comprehensive'' or ``reasonable'' bibliography. A commenter 
suggested, to limit burden on plans, that CMS identify a singular 
research resource from which plans would be required to source 
published literature.
    Response: We appreciate these comments, and we share this desire to 
foster continued innovation in benefits that are reasonably expected to 
maintain or improve the health or overall function of chronically ill 
enrollees. While we anticipate that plans have been identifying or 
developing evidence to support their SSBCI each year, toward ensuring 
compliance with the reasonable expectation standard and further 
ensuring that administering the SSBCI offerings makes business sense, 
we do not wish to have the unintended effect of limiting SSBCI 
offerings or stifling innovation. We recognize that for some benefits, 
which are more commonly offered or generally agreed upon to have a 
positive impact on the health of an individual, there may be a large 
number of studies, reports, and other sources of evidence available. 
Collecting and listing all such evidence produced within the last 10 
years with assurances that no relevant citations were missed may be 
unrealistic.
    To this end, we are modifying our proposed language at Sec.  
422.102 (f)(3)(ii) to require plans to include in their bibliographies 
``a comprehensive list'' of relevant acceptable evidence published 
within the 10 years prior to the June immediately preceding the 
coverage year during which the SSBCI will be offered. We proposed 
requiring plans to include ``all relevant acceptable evidence'' in 
these bibliographies. We intend that this change to the final rule will 
allow plans, especially those offered by smaller MA organizations or 
organizations with more limited resources, to meet the requirements 
without exhaustive efforts to find evidence from every available 
source. However, we note that plans must demonstrate genuine efforts to 
be thorough and inclusive of evidence related to the SSBCI offered. We 
also reiterate that plans must provide any available negative evidence 
and literature, which means including studies beyond those which 
present findings favorable to its SSBCI offering. Plans must 
demonstrate best efforts in including all evidence which adheres to the 
requirements proposed at Sec.  422.102 (f)(3).
    We are not limiting the sources from which plans may pull their 
evidence base as suggested by a commenter as we wish to provide 
flexibility for plans to cull from sources they deem acceptable to 
comply with the standards proposed. Additionally, we are not imposing a 
minimum number of bibliographic citations for a certain SSBCI. However, 
we expect that for more established items or services, plans are 
accordingly including a greater number of citations as there are likely 
to be a greater number of studies and investigations into the impact 
such items or services have on the studied sample group. Further, 
instituting such a minimum number of citations may be limiting for 
plans offering SSBCI which are less established and may not be able to 
meet such an arbitrary requirement. We note, however, that CMS may 
propose such a requirement in future rulemaking if it becomes evident 
that plans are not making a good faith effort in complying with the 
requirements or are allowing for SSBCI items or services with little to 
no evidence which do not meet the ``reasonable expectation'' standard.
    While, as modified in this final rule, requirements about the 
standards for the evidence used to support SSBCI, creation of a 
bibliography, and making the bibliography available to CMS may require 
plans to conduct further research than they currently do, we anticipate 
that the new burden will be manageable to the extent that the plans are 
building on existing efforts to ensure that their SSBCI offerings meet 
the ``reasonable expectation'' standard in the statute and currently at 
Sec.  422.102(f)(1)(ii). As noted in the preamble, we expect that MA 
plans are already proactively conducting similar research and 
establishing written policies for implementing SSBCI based on this 
research when designing them. Additionally, MA plans may seek guidance 
from CMS regarding SSBCI items or services not defined in the PBP or in 
previous CMS guidance prior to bid submission. However, plans should 
note that such guidance provided in advance of the bid submission 
process is not a guarantee that CMS will approve the bid. To the extent 
that plans must conduct research anew to support novel, innovative 
SSBCI, we note that plans must only do so in the absence of large, 
randomized controlled trials or prospective cohort studies with clear 
results, published in a peer-reviewed journal, or large systematic 
reviews or meta-analyses summarizing the literature of the same (as 
proposed at Sec.  422.102(f)(3)(i)), as well as any other evidence 
including case studies, federal policies or reports (as proposed at 
Sec.  422.102(f)(3)(iii)).
    Comment: Several commenters expressed concern about the timing of 
implementation for this proposal and requested that CMS delay 
implementation of proposed Sec.  422.102(f)(3) until calendar year 
2026, or until bidding for CY2026.
    Response: While we appreciate that MA organizations may wish for 
additional time to collect evidence which adheres to the requirement, 
as noted in this preamble, plans should already have an evidence base 
to support their current benefit offerings. The reasonable expectation 
standard is not changing under this final rule and MA plans have been 
submitting bids for and offering SSBCI on the basis that the items and 
services are reasonably expected to improve or maintain the health or 
overall function of chronically ill enrollees for several years. 
Therefore, it is not necessary to delay implementation of the 
requirements about the standards for the evidence used to support 
SSBCI, creation of a bibliography, and making the bibliography 
available to CMS. We believe that plans should already have evidence to 
show their benefit offerings have a reasonable expectation of improving 
or maintaining the health or overall function of their chronically ill 
enrollees, and therefore collating information sufficient to comply 
with

[[Page 30557]]

our standard as proposed will not be an undue burden that warrants a 
delay in implementation. Therefore, we are finalizing these changes to 
Sec.  422.102(f)(3) for coverage beginning on and after January 1, 
2025, and will apply these standards in evaluating bids for 2025.
    Comment: Several commenters expressed concerns that CMS' proposed 
standards for bibliographies are too strict, and that CMS should accept 
alternative research or studies beyond those explicitly mentioned. Some 
commenters expressed concern that the proposed standard would be 
particularly burdensome on MA Special Needs Plans (SNPs) that serve a 
wide variety of chronic conditions. Some commenters also identified 
certain types of services, such as home-based services, or services for 
certain enrollees, such as those receiving residential treatment, which 
they felt would be more challenging to fit into our proposed standard.
    Response: Our proposed requirements were purposefully broad and 
flexible in what evidence would be acceptable to support a given SSBCI. 
As we are finalizing in this final rule, plans must first present a 
comprehensive list of literature published in a peer-reviewed journal, 
including large, randomized controlled trials or prospective cohort 
studies with clear results, systematic reviews, and meta-analyses--the 
evidence we described in proposed (and finalized) Sec.  
422.102(f)(3)(i). Per the finalized language at Sec.  
422.102(f)(3)(ii), the bibliography must include a comprehensive list 
of relevant acceptable evidence published within the 10 years prior to 
June preceding the start of the contract year, including any available 
negative evidence and literature. Requiring a broad scope of relevant 
acceptable evidence is necessary so that CMS may be apprised of both 
positive and negative research related to a specific item or service 
that an MA plan proposes to cover as an SSBCI. When studies are not 
available, an MA plan may include in its bibliography such items as 
case studies, Federal policies or reports, and internal analyses that 
investigate the impact that the item or service has on the health or 
overall function of its recipient--the evidence we described in 
proposed 42 CFR 422.102(f)(3)(iii). As proposed and finalized, 
paragraph (f)(3)(iii) does not require an MA plan to include evidence 
in these other types of case studies, federal policies or reports, 
internal analyses, or other investigation about the item or service 
that the MA plan proposes to cover as an SSBCI; the standard to provide 
a comprehensive list of relevant evidence is limited to the specific, 
more reliable materials described in paragraph (f)(3)(i). In the 
absence of studies described in paragraphs (f)(3)(i) and (ii), plans 
must include in their bibliographies the types of evidence described in 
Sec.  422.102(f)(3)(iii), as proposed and finalized.
    It is not necessary for CMS to be overly prescriptive in listing 
every type of acceptable evidence that a plan may collect and submit. 
As noted in this preamble, CMS does not wish to hamper innovation in 
offering new benefits. At the same time, we are concerned that any 
further broadening of this standard may make the requirement 
meaningless when keeping in mind that this proposal is meant to ensure 
quality care for chronically ill individuals. We will consider in 
future rulemaking whether it should refine this standard, including but 
not limited to being more prescriptive regarding the acceptable sources 
of evidence. For now, we believe it appropriate to promote flexibility 
in demonstrating that a given SSBCI offering complies with the 
reasonable expectation standard.
    To that end, while we recognize that providing ``a comprehensive 
list of relevant acceptable evidence'' may sometimes mean a large 
number of studies are collected for a single benefit, gathering this 
evidence base is critical for greater review and scrutiny of these 
benefits in order for CMS to maintain good stewardship of Medicare 
dollars, and for ensuring that the SSBCI offered are consistent with 
applicable law and those most likely to improve or maintain the health 
or overall function of chronically ill enrollees. Requiring a broad 
scope of relevant acceptable evidence over a specified period of time 
is necessary so that CMS may be apprised of both positive and negative 
research related to a specific item or service that an MA plan proposes 
to cover as an SSBCI.
    Additionally, we reassert that the relevant acceptable evidence 
need not necessarily relate to a specific chronic condition. We note 
there are some conditions for which there is little evidence relating 
to non-medical services which may benefit an individual. As we noted in 
this preamble, while ideally the evidence would include the specific 
chronic condition used by the MA plan in its SSBCI eligibility criteria 
and how the specific item or service would address that specific 
chronic condition, we are not making this a requirement at this time. 
We also note that relevant acceptable evidence does not necessarily 
have to be related to Medicare eligible populations. Acceptable studies 
or other sources of evidence may focus on other groups, including 
individuals in specific geographies or underserved communities. Since 
plans may consider social determinants of health (SDOH) as a factor to 
help identify chronically ill enrollees whose health or overall 
function could be improved or maintained with SSBCI (42 CFR 
422.102(f)(2)(iii)), we recognize that some relevant acceptable 
evidence may also be focused on certain communities that share a 
characteristic other than Medicare eligibility status. We therefore do 
not agree that specific types of MA plans, like SNPs, or services like 
residential treatment noted by the commenter would have difficulty 
meeting the requirement for the above reasoning.
    Comment: Several commenters noted that some SSBCI services are 
generally accepted as regular supplemental benefits as well and 
recommended that such services be exempt from the requirement. 
Alternatively, some commenters suggested CMS make a list of specific 
items or services that may be offered as SSBCI and associated 
supporting bibliographies publicly available, such that plans could 
access them when choosing to provide those services. Many commenters 
recommended that CMS identify SSBCI that are supported by a robust 
evidence base and exempting those items or services from these 
requirements.
    Response: While we agree there are some SSBCI which are offered by 
a large number of plans, and for which a large evidence base exists, we 
are not finalizing such a list at this time. Additionally, while we 
requested comment on specific items or services for which this 
requirement should not apply, commenters did not provide specific 
examples beyond a suggestion that CMS develop a ``core list'' of 
approved-and therefore exempt-SSBCI services. Therefore, we are 
finalizing this proposal that the MA plan develop a bibliography of 
specific types of evidence related to the proposed SSBCI without 
modification. CMS may consider developing and publishing a core list of 
SSBCI which are exempt from the requirement in future rulemaking should 
we determine that some services have a sufficiently robust evidence 
base. In addition, even for items and services that meet the standard 
of being primarily health related in Sec.  422.100(c)(2), when an MA 
plan offers those benefits as SSBCI, the MA plan is necessarily 
limiting the coverage to specific chronically ill enrollees; it is 
appropriate to ensure that

[[Page 30558]]

the basis for that limitation is grounded in relevant acceptable 
evidence.
    Comment: Some commenters suggested that, in the absence of any 
relevant acceptable evidence, CMS accept a rationale statement or allow 
plans to offer services for 1-2 years while the plan gathers internal 
data to support the continued offering of the benefit.
    Response: While we reiterate our wish that MA plans continue to 
innovate and offer solutions to enrollees in the form of SSBCI, MA 
plans must use appropriate resources to test these benefits. Offering 
SSBCI where there is not a sufficient basis to conclude that the 
statutory and regulatory standards for such benefits under section 
1852(a)(3)(D) of the Act and Sec.  422.102(f) have been met is not 
appropriate. We decline to create an exception in our final rule for 
items and services which do not meet the ``relevant acceptable 
evidence'' criteria, a standard which CMS believes is sufficiently 
broad and flexible to accommodate less established SSBCI. Indeed, CMS 
proposed to allow plans to support SSBCI offerings through internal 
analyses in the absence of other established evidence. We note, 
however, that in addition to providing at least an internal analysis 
for an SSBCI for a current plan year, plans may leverage their 
experience in offering SSBCI to refine internal analyses for future 
plan years.
    Comment: Some commenters were concerned that plans would not wish 
to devote the necessary resources to establish the bibliography at the 
time the bid is submitted and would instead pass this responsibility on 
to the businesses or organizations that provide the specific SSBCI 
benefits. These commenters expressed concern that these entities may 
not have the resources to do so or would be overburdened by the 
requirement. A few commenters requested clarification regarding the use 
of hyperlinks in the bibliography, including how to address internal 
analyses or when research is behind a ``paywall.''
    Response: As with certain other programmatic requirements, MA plans 
may delegate functions to first tier, related, or downstream entities, 
subject to MA program rules such as Sec.  422.504(i), and these 
requirements are no exception. MA plans are ultimately responsible for 
ensuring compliance with all federal law, including these new 
requirements, regardless of whether plans gather studies or conduct 
research directly or outsource those functions first tier, related or 
downstream entities. As it relates to our hyperlink requirement, plans 
must ensure that CMS can access completely each resource cited in the 
bibliography for an SSBCI. If the study is behind a ``paywall,'' is an 
internal analysis, or is otherwise not accessible through a hyperlink, 
the plan must provide such evidence directly to CMS upon request.
    Comment: We received mixed comments regarding exclusion from the 
new requirements proposed and finalized in Sec.  422.102(f)(3) (that 
is, the requirements about the standards for the evidence used to 
support SSBCI, creation of a bibliography, and making the bibliography 
available to CMS) of SSBCI that are reductions in cost-sharing for 
Parts A and/or B benefits, or reductions in cost sharing for other 
supplemental benefits which are not SSBCI. Some commenters were 
supportive of this exclusion while others felt that excluding cost-
sharing benefits would mean plans offer fewer benefits which are not 
reductions in cost-sharing. Additionally, a commenter requested that 
CMS exclude from the requirement primarily-health related SSBCI that 
are substantially similar to mandatory supplemental benefits.
    Response: We appreciate this feedback. At this time we are not 
extending the requirements about the standards for the evidence used to 
support SSBCI, creation of a bibliography, and making the bibliography 
available to CMS to apply as well to SSBCI that are reductions in cost-
sharing, as we intend for this proposal to focus on the evidence base 
for SSBCI that are additional primarily health-related supplemental 
items and services and non-primarily health-related supplemental items 
and services, and not the level of cost borne by enrollees in accessing 
other covered benefits. We may consider in future rulemaking whether to 
subject SSBCI offered as cost sharing to these evidentiary 
requirements. However, we note that MA plans must still be able to 
explain how the SSBCI reduction in cost sharing meets the applicable 
statutory and regulatory standards, including the reasonable 
expectation standard.
    We are also not exempting any particular SSBCI beyond those which 
are cost-sharing reductions. While some plans may choose to cover 
services which are substantially similar to already approved mandatory 
supplemental benefits, at this time, we are not making a distinction 
between services which are ``substantially'' similar to mandatory 
supplemental benefits, which vary by plan, and those which are not 
``substantially'' similar.
    Comment: We received several comments regarding our request for 
feedback on whether to codify a requirement that plans must follow 
their written policies for determining SSBCI eligibility. These 
comments were overwhelmingly supportive and additionally suggested that 
CMS require plans publish their written requirements for SSBCI 
eligibility on a public-facing website.
    Response: We appreciate this feedback and support. We noted in this 
preamble that we anticipated plans were already following their written 
policies for determining SSBCI eligibility, policies which are a 
current regulatory requirement. We therefore believe amending the 
regulation to more clearly require compliance with the written policies 
is a logical next step and should not present a change in practice for 
plans. We are finalizing this aspect of the proposal without 
modification by finalizing the changes to redesignated paragraph 
(f)(4)(iii) as proposed.
    We also appreciate the suggestion that plans publish their written 
SSBCI eligibility requirements, and while we are not finalizing such a 
requirement at this time, we may consider this in future rulemaking. We 
note that currently plans are expected to include SSBCI eligibility 
criteria in their Evidence of Coverage (EOC) and Annual Notice of 
Change (ANOC) documents. We stated in the June 2020 final rule ``[. . 
.]It is our expectation that plans communicate information on SSBCI to 
enrollees in a clear manner about the scope of SSBCI that the MA plan 
covers and who is eligible for those benefits.''
    Comment: Some commenters supported our proposed change that plans 
must document SSBCI eligibility denials rather than approvals. Many 
commenters further suggested CMS require documentation of approvals as 
well as denials, rather than the CMS proposal to document only denials. 
A commenter also suggested CMS require additional data collection such 
as demographic information about the enrollee when a plan collects 
information for approval or denial of eligibility for an SSBCI benefit. 
Further, a commenter noted that by capturing both approvals and 
denials, CMS may be able to compare statistics of approvals and denials 
across plans.
    Response: We appreciate this feedback and are finalizing paragraph 
(f)(4)(iv) (redesignated from existing paragraph (f)(3)(iv) with 
changes) with changes to require MA plans to document both approvals 
and denials of SSBCI eligibility. We agree that documenting both 
approvals and denials will give a more complete and comprehensive 
understanding of how plans are implementing coverage of SSBCI. In 
addition, this information

[[Page 30559]]

may assist us in evaluating how MA plans are marketing their benefits 
and exercising necessary oversight of their offerings. Since plans are 
already required to document approvals at current Sec.  
422.102(f)(3)(iv), we do not feel that this change should present a 
significant alteration of burden for plans from what we proposed in the 
November 2023 proposed rule.
    We originally proposed documenting denials of SSBCI eligibility not 
only to increase ease of monitoring and oversight by CMS of whether 
benefits are being furnished consistent with how MA plans describe them 
but also to better position plans should enrollees appeal their SSBCI 
eligibility denials. However, commenters rightly pointed out that 
without the full picture of both approvals and denials, CMS may not be 
able to fully understand how plans are using their resources as it 
relates to SSBCI. If, for example, there are many denials as compared 
to approvals, it may alert the plan and CMS to an improper marketing of 
the benefit, or of overly broad recommendations of the benefit by a 
physician. Further, we agree with the commenter that by capturing both 
approvals and denials, CMS may be able to compare statistics of 
approvals and denials across MA plans, which, over time, may allow CMS 
to better determine if plans are improperly denying or approving SSBCI 
eligibility for plan enrollees. These additional capabilities and 
insights, which will be possible when there is adequate documentation 
of both approvals and denials, may allow for CMS to further refine 
SSBCI policy in future rulemaking to improve the enrollee experience 
and improve CMS's stewardship over Medicare dollars.
    For these reasons, we are finalizing the proposal to require that 
MA plans document its eligibility determinations with a modification to 
require MA organizations to document both approvals and denials of 
eligibility for an enrollee to receive a particular SSBCI in Sec.  
422.102(f)(4)(iv).
    Additionally, we are not requiring plans to report to CMS 
documentation regarding the approvals or denials on a regular basis at 
this time. However, CMS may request this data on a case by case or ad 
hoc basis or may incorporate this into regular reporting by MA 
organizations under Sec. Sec.  422.504(f)(2) or 422.516(a). We also 
acknowledge concerns about equity and equitable treatment of enrollees, 
concerns which we share. It is our belief, through the modification of 
this proposal to include documentation of both approvals and denials, 
that MA plans will be additionally mindful of these concerns when 
making determinations. We note that plans may choose to include 
additional information, including demographic information about the 
enrollee, when documenting approvals and denials; however, CMS is not 
requiring plans to collect or submit this information as part of Sec.  
422.102(f). We may consider implementing such requirements in future 
rulemaking. We note that CMS has addressed some concerns regarding 
health equity and social risk factors elsewhere in this final rule. In 
the section titled ``Annual Health Equity Analysis of Utilization 
Management Policies and Procedures'' CMS sets forth additional 
requirements related to prior authorization determinations and their 
impact on health equity for MA organizations.
    Comment: We solicited feedback on whether to exempt SSBCI from the 
general rule reflected in Sec.  422.111(d) that MA plans may change 
certain plan rules during the year so long as notice is provided to 
enrollees. Some commenters urged that plans should not be allowed to 
change the eligibility requirements at all, while others suggested that 
the requirements should only be changed if eligibility were expanded to 
allow for more enrollees to benefit from services offered. A few 
commenters expressed concern about prohibiting changes in SSBCI 
eligibility policies during the coverage year as it may limit plan 
flexibility.
    Response: We appreciate this feedback and the desire of commenters 
to preserve benefits available to enrollees and reduce confusion 
regarding plan requirements. This is a desire we share. We agree with 
commenters who expressed concern that changes during the coverage year 
to evidentiary standards or the objective criteria applied when 
determining eligibility for an SSBCI may disrupt or undermine a 
chronically ill enrollee's access to SSBCI. As commenters noted, 
changes in eligibility criteria and standards during the coverage year 
may be used to limit chronically ill enrollees' access to benefits. 
Most comments received on this topic urged us to exempt SSBCI from our 
general rule permitting changes in plan rules during the coverage year 
so long as notice is provided to enrollees. While some commenters 
suggested allowing changes only if such changes would expand access to 
the SSBCI, we believe that prohibiting changes to eligibility criteria 
and evidentiary standards for SSBCI altogether would minimize the 
potential for confusion and disagreement regarding whether a change 
does in fact expand access to a benefit. Moreover, this policy is 
consistent with another policy we are finalizing related to SSBCI 
eligibility disclaimers; ensuring that the disclaimers on marketing 
during the annual enrollment period are as accurate later in the 
coverage year as when beneficiaries are making enrollment decisions 
will improve the usefulness and applicability of the disclaimer. Taken 
together, these policies serve our goal of minimizing enrollee 
confusion regarding eligibility for certain SSBCI.
    For these reasons, we are also adding new paragraph (f)(4)(v) as 
part of the changes we are finalizing to Sec.  422.102(f) in this rule. 
New paragraph (f)(4)(v) requires that an MA plan offering SSBCI must 
maintain without modification for the full coverage year for the SSBCI 
offered, evidentiary standards for a specific enrollee to be determined 
eligible for a particular SSBCI, and the specific objective criteria 
used by an MA plan as part of SSBCI eligibility determinations.
    While CMS considered additionally prohibiting plans from making 
changes to their utilization management policies related to SSBCI 
during the coverage year, we are not finalizing such a prohibition at 
this time. It is important that plans have the flexibility to relax 
utilization management criteria and policies in the event of 
extraordinary circumstances. For example, during the COVID-19 public 
health emergency, CMS encouraged plans in the HPMS memo titled 
``Information Related to Coronavirus Disease 2019--COVID-19'' to waive 
or relax prior authorization policies in order to facilitate enrollees' 
access to services with less burden on beneficiaries, plans and 
providers. We wish to allow plans continued flexibility to address such 
extraordinary circumstances, including disasters, declarations of state 
of emergency or public health emergencies, through changes made to 
utilization management policies as appropriate.
    Comment: A commenter requested CMS not allow plans to change 
eligibility criteria for SSBCI during the plan year. However, the 
commenter requested that if CMS permitted plans to change eligibility 
criteria, or utilization management policies during the plan year, CMS 
should create a Special Enrollment Period (SEP) that allows enrollees 
to disenroll from the MA plan based on changes to plan rules.
    Response: We appreciate this comment. We agree that changing 
eligibility criteria policies for SSBCI, benefits which may be heavily 
marketed to potential enrollees, could cause difficulties for 
chronically ill enrollees, especially if they relied on information 
about the availability of SSBCI benefits

[[Page 30560]]

in making a plan election. We do not wish these enrollees to come to 
rely on such services, only to be unable to access them during the plan 
year, or to be surprised by service denials or unexpected high service 
costs. In this final rule, CMS is prohibiting plans from making changes 
to eligibility requirements for SSBCI by requiring that plans offering 
SSBCI maintain without modification for the full coverage year, 
evidentiary standards for a specific enrollee to be determined eligible 
for a particular SSBCI and the specific objective criteria used by an 
MA plan as part of SSBCI eligibility determinations. Due to this 
change, an SEP is not necessary.
    Comment: A commenter requested additional clarity about the 
bibliography review process, suggesting that CMS codify its process for 
reviewing bibliographies.
    Response: While we appreciate the commenter's concerns regarding 
the timeline and review process CMS will use in reviewing the 
bibliographies prepared by MA organizations, we are not finalizing any 
formal process at this time. We believe that plans which offer SSBCI 
should already have strong evidence to support that such benefits will 
provide value to the enrollees by improving or maintaining the health 
or overall function of the enrollees. Therefore, we do not feel it is 
necessary to codify a formal review process which may be overly 
burdensome for plans, and overly restrictive on CMS. However, after 
initial years of implementation of this requirement, we may reevaluate 
this position about when and the extent to which CMS should request and 
review the bibliographies that this final rule requires. If there are 
indications that plans have not been responsibly offering benefits and 
generally adhering to requirements or if we determine that a more pro-
active or formal approach to SSBCI review is necessary, we may consider 
future changes.
    Comment: A commenter recommended CMS allow studies older than 10 
years old, as they believed that some services would not be the subject 
of more current research such that there would be sufficient evidence 
to support the benefit.
    Response: Under our proposal, MA plans are permitted to include 
studies published over 10 years ago in their bibliography. We are 
finalizing that MA plans are required to include a comprehensive list 
of studies constituting relevant acceptable evidence published within 
the past 10 years, including any available negative evidence and 
literature.
    Comment: A commenter noted that the lack of clinical codes for 
these benefits made tracking outcomes difficult as enrollees may use 
different ``variations'' of a service, and it is difficult to prove 
that a specific SSBCI makes an impact without a reliable control group.
    Response: We appreciate that measuring the impact of non-primarily 
health related benefits may be challenging in the absence of standard 
clinical codes. That said, our proposal does not require plans to prove 
that their specific SSBCI improved or maintained the health or overall 
function of the specific chronically ill enrollees who received the 
benefit. Instead, we are further implementing the existing statutory 
standard, under which an SSBCI must have a reasonable expectation of 
improving or maintaining the health or overall functioning of a 
chronically ill enrollee, and establishing requirements to ensure that 
the statutory requirements are met when SSBCI are included in MA bids. 
While evidence regarding the impact of a specific SSBCI on a specific 
sample of chronically ill enrollees might be valuable in demonstrating 
compliance with the reasonable expectation standard, this is not a 
requirement we are imposing as part of this final rule.
    Comment: Some commenters recommended changes to the relevant 
acceptable evidence aspect of the proposal as it relates to SNPs. A 
commenter recommended that CMS change the policy for D-SNPs 
specifically. They recommend that, in instances where an SSBCI benefit 
overlaps with a Medicaid benefit, the plan should provide additional 
evidence to show that the benefit has a reasonable expectation of 
improving the health outcome of the D-SNP enrollees. Another commenter 
recommended that CMS require D-SNP plans to provide evidence that their 
SSBCI provides unique value to a substantial portion of their expected 
enrollee population eligible for SSBCI and will not be duplicative of 
other benefits they would already receive.
    Response: We appreciate these comments. While we share the 
commenter's concern for D-SNP enrollees, specifically that these 
enrollees be able to access both Medicare and Medicaid benefits as 
necessary, we did not propose and are not adopting specific Medicare-
Medicaid benefit coordination rules for SSBCI. The requirements we 
proposed and are finalizing in Sec.  422.102(f)(3) are intended to 
ensure that there is relevant acceptable evidence on which to conclude 
that specific items and services that an MA plan intends to cover as 
SSBCI have a reasonable expectation of improving or maintaining the 
health or overall function of the enrollee. We note that CMS already 
expects that D-SNPs use flexibility to design their benefits in a way 
that adds value for the enrollee by augmenting and/or bridging a gap 
between Medicare and Medicaid covered services and are therefore not 
modifying our requirements regarding SSBCI bibliographies to reflect 
any additional burden or requirement on D-SNPs specifically.
    Comment: A commenter recommended CMS allow plans to include studies 
that focus on ``different sites of care'' or ``methods of 
implementation'' from those proposed for the plan benefit.
    Response: Under our proposal, plans may cite studies that concern 
different sites of care or methods of implementation compared to how 
plans intend to implement their specific SSBCI. While ideally, relevant 
acceptable evidence will include studies that align with how plans will 
implement their SSBCI, and to whom the plans target their SSBCI, we 
recognize that most relevant studies will vary in the exact benefit and 
population studied. We believe studies that consider a benefit design 
and implementation similar to but not precisely the same as that 
proposed by the plan is still relevant for demonstrating compliance 
with our reasonable expectation standard.
    After consideration of the comments, and for the reasons provided 
in our November 2023 proposed rule, we are finalizing our proposed 
revisions to Sec.  422.102(f) with three modifications. First, we are 
finalizing our proposals to redesignate current paragraph Sec.  
422.102(f)(3) to Sec.  422.102(f)(4). We are finalizing at Sec.  
422.102(f)(3) our proposed policy requiring the MA organization to be 
able to demonstrate through relevant acceptable evidence that the item 
or service to be offered as SSBCI has a reasonable expectation of 
improving or maintaining the health or overall function of a 
chronically ill enrollee and must, by the date on which it submits its 
bid to CMS, establish a bibliography of ``relevant acceptable 
evidence'' concerning the impact that the item or service has on the 
health or overall function of its recipient.
    We are further finalizing our proposal, at paragraph (f)(3)(i) that 
relevant acceptable evidence includes large, randomized controlled 
trials or prospective cohort studies with clear results, published in a 
peer-reviewed journal, and specifically designed to

[[Page 30561]]

investigate whether the item or service impacts the health or overall 
function of a population, or large systematic reviews or meta-analyses 
summarizing the literature of the same.
    We are modifying our proposal at Sec.  422.102(f)(3)(ii) that an MA 
organization must include in its bibliography ``all relevant acceptable 
evidence'' published within the 10 years prior to the June immediately 
preceding the coverage year during which the SSBCI will be offered. 
Instead, in response to comments received, we are finalizing that an MA 
organization must include in its bibliography ``a comprehensive list of 
relevant acceptable evidence [. . .] including any available negative 
evidence and literature.''
    We are finalizing at Sec.  422.102(f)(3)(iii) that, if no evidence 
of the type described in paragraphs (f)(3)(i) and (ii) of this section 
exists for a given item or service, then MA organization may cite case 
studies, Federal policies or reports, internal analyses, or any other 
investigation of the impact that the item or service has on the health 
or overall function of its recipient as relevant acceptable evidence in 
the MA organization's bibliography.
    Second, we are also finalizing our proposal to explicitly require 
at Sec.  422.102(f)(4)(iii) that MA plans must apply their written 
policies based on objective criteria for determining a chronically ill 
enrollee's eligibility to receive a particular SSBCI. We are 
effectuating this policy by adding ``and apply'' to redesignated 
paragraph (f)(4)(iii)(A) as we proposed. Further, based on comments 
received, we are finalizing an exemption to the general rule reflected 
at Sec.  422.111(d) that MA plans may change plan rules for SSBCI 
during the coverage year. Specifically, we are finalizing at new Sec.  
422.102(f)(3)(v) that an MA plan offering SSBCI must maintain without 
modification for the full coverage year evidentiary standards for a 
specific enrollee to be determined eligible for a particular SSBCI, and 
the specific objective criteria used by an MA plan as part of SSBCI 
eligibility determinations.
    Third, after considering comments received, we are modifying our 
proposal that MA plans would need to document denials of SSBCI 
eligibility instead of approvals. Instead, we are adopting a 
requirement that MA plans must document both approvals and denials of 
SSBCI eligibility. Specifically, we are modifying proposed Sec.  
422.102(f)((4)(iv) to say ``Document each SSBCI eligibility 
determination, whether eligible or ineligible, to receive a specific 
SSBCI and make this information available to CMS upon request.''
    Fourth, we are finalizing our proposal without modification to add 
Sec.  422.102(f)(5) to codify CMS's authority to decline to approve an 
MA organization's bid, if CMS determines that the MA organization has 
not demonstrated, through relevant acceptable evidence, that an SSBCI 
has a reasonable expectation of improving or maintaining the health or 
overall function of the chronically ill enrollees that the MA 
organization is targeting. We are additionally finalizing our proposal 
that CMS may annually review the items or services that an MA 
organization includes as SSBCI in its bid for compliance with all 
applicable requirements, taking into account updates to the relevant 
acceptable evidence applicable to each item or service. We are further 
finalizing our clarification that this provision does not limit CMS's 
authority to review and negotiate bids or to reject bids under section 
1854(a) of the Act and subpart F of this part nor does it limit CMS's 
authority to review plan benefits and bids for compliance with all 
applicable requirements.
    Finally, we are finalizing our technical edit proposed at Sec.  
422.102(f)(1)(i)(A)(2) to correct a typographical error. Specifically, 
we are substituting ``or'' for the second ``of'' in Sec.  
422.102(f)(1)(i)(A)(2), such that it reads ``Has a high risk of 
hospitalization or other adverse health outcomes.''

D. Mid-Year Notice of Unused Supplemental Benefits (Sec. Sec.  
422.111(l) and 422.2267(e)(42))

    Per CMS regulations at Sec.  422.101, MA organizations are 
permitted to offer mandatory supplemental benefits, optional 
supplemental benefits, and special supplemental benefits for the 
chronically ill (SSBCI). When submitting an annual bid to participate 
in the MA program, an MA organization includes a Plan Benefit Package 
(PBP) (OMB 0938-0763) and Bid Pricing Tool (BPT) (OMB 0938-0944) for 
each of its plans where the MA organization provides information to CMS 
on the premiums, cost sharing, and supplemental benefits (including 
SSBCI) it proposes to offer. The number of supplemental benefit 
offerings has risen significantly in recent years, as observed through 
trends identified in CMS's annual PBP reviews as well as external 
reports. The 2023 Medicare Trustees Report showed that in the last 
decade, MA rebates quintupled from $12 billion in 2014 to $67 billion 
estimated for 2024, resulting in a total of over $337 billion going 
towards MA rebates over that time period. This increase, which was due 
to both the increase in MA enrollment and per MA beneficiary rebate 
growth, which included 27%-30% jumps each year from 2019 to 2023.\87\ 
At the same time, CMS has received reports that MA organizations have 
observed low utilization of these benefits by their enrollees, and it 
is unclear whether plans are actively encouraging utilization of these 
benefits by their enrollees, which could be an important part of a 
plan's overall care coordination efforts.
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    \87\ https://www.cms.gov/oact/tr/2023.
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    CMS remains concerned that utilization of these benefits is low and 
has taken multiple steps to obtain more complete data in this area. For 
example, in the May 2022 final rule, we finalized expanded Medical Loss 
Ratio (MLR) reporting requirements, requiring MA organizations to 
report expenditures on popular supplemental benefit categories such as 
dental, vision, hearing, transportation, and the fitness benefit (87 FR 
27704, 27826-28).\88\ In addition, in March 2023, as a part of our Part 
C reporting requirements, we announced our intent to collect data to 
better understand the utilization of supplemental benefits, which was 
finalized, and beginning CY2024 requires MA plans to report utilization 
and cost data for all supplemental benefit offerings.\89\ This data is 
collected in the information collection request Part C Medicare 
Advantage Reporting OMB 0938-1054.\90\ Currently, there is no specific 
requirement for MA organizations, beyond more general care coordination 
requirements, to conduct outreach to enrollees to encourage utilization 
of supplemental benefits.
---------------------------------------------------------------------------

    \88\ Available at https://www.federalregister.gov/documents/2022/05/09/2022-09375/medicare-program-contract-year-2023-policy-and-technical-changes-to-the-medicare-advantage-and.
    \89\ Available at: https://www.cms.gov/medicare/enrollment-renewal/health-plans/part-c and https://www.cms.gov/files/document/cy2024-part-c-technical-specifications-01092024.pdf.
    \90\ https://www.cms.gov/regulations-and-guidance/legislation/paperworkreductionactof1995/pra-listing-items/cms-10261.
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    CMS understands that projected supplemental benefit utilization, 
that is, the extent to which an MA organization expects a particular 
supplemental benefit to be accessed during a plan year, is estimated by 
an MA organization in part by the type and extent of outreach conducted 
for the benefit.91 92 We are concerned that

[[Page 30562]]

beneficiaries may make enrollment decisions based on the allure of 
supplemental benefits that are extensively marketed by a given MA plan 
during the annual election period (AEP) only to not fully utilize, or 
utilize at all, those supplemental benefits during the plan year. This 
underutilization may be due to a lack of effort by the plan to help the 
beneficiary access the benefits or a lack of easy ability to know what 
benefits have not been accessed and are still available to the enrollee 
throughout the year. Such underutilization of supplemental benefits may 
nullify any potential health value offered by these extra benefits.
---------------------------------------------------------------------------

    \91\ U.S. Government Accountability Office (GAO). ``MEDICARE 
ADVANTAGE Plans Generally Offered Some Supplemental Benefits, but 
CMS Has Limited Data on Utilization.'' Report to Congressional 
Committee, 31 Jan. 2023, p. 20, www.gao.gov/products/gao-23-105527.
    \92\ U.S. Government Accountability Office (GAO). ``MEDICARE 
ADVANTAGE Plans Generally Offered Some Supplemental Benefits, but 
CMS Has Limited Data on Utilization.'' Report to Congressional 
Committee, 31 Jan. 2023, p. 20, www.gao.gov/products/gao-23-105527.
---------------------------------------------------------------------------

    Additionally, section 1854(b)(1)(C) of the Act requires that MA 
plans offer the value of MA rebates back to enrollees in the form of 
payment for supplemental benefits, cost sharing reductions, or payment 
of Part B or D premiums. Therefore, CMS has an interest in ensuring 
that MA rebates are provided to enrollees in a way that they can 
benefit from the value of these rebate dollars. For example, analysis 
indicates that while supplemental dental benefits are one of the most 
widely offered supplemental benefits in MA plans, enrollees in these 
plans are no more likely to access these services than Traditional 
Medicare enrollees.\93\
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    \93\ https://www.cms.gov/research-statistics-data-and-systems/research/mcbs/data-briefs/dental-coverage-status-and-utilization-preventive-dental-services-medicare-beneficiaries-poster.
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    As discussed, MA organizations are given the choice of how to 
provide MA rebates to their enrollees. Organizations may, instead of 
offering supplemental benefits in the form of covering additional items 
and services, use rebate dollars to further reduce Part B and Part D 
premiums, reduce cost sharing for basic benefits compared to cost 
sharing in Traditional Medicare, and reduce cost sharing in other ways, 
such as reducing maximum out-of-pocket (MOOP) amounts.
    Over the last several years, CMS has observed an increase in (1) 
the number and variety of supplemental benefits offered by MA plans, 
(2) plan marketing activities by MA organizations, and (3) overall MA 
enrollment; we presume that an enrollee's plan choice is influenced, at 
least in part, by the supplemental benefits an MA plan offers because 
the absence or presence of a particular supplemental benefit represents 
a distinguishable and easily understood difference between one plan and 
another. We are also concerned that some MA plans may be using these 
supplemental benefits primarily as a marketing tool to steer enrollment 
towards their plan and are not taking steps to ensure that their 
enrollees are using the benefits being offered or tracking if these 
benefits are improving health or quality of care outcomes or addressing 
social determinants of health. We believe targeted communications 
specific to the utilization of supplemental benefits may further ensure 
that covered benefits (including those that are heavily marketed) are 
accessed and used by plan enrollees during the plan year. This 
outreach, in conjunction with the improved collection of utilization 
data for these supplemental benefits through MLR and through Part C 
reporting requirements, should help inform whether future rulemaking is 
warranted.
    Finally, CMS is also 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. Several studies have pointed to 
disparities in health care utilization. For example, a Kaiser Family 
Foundation (KFF) study \94\ found that there are significant racial and 
ethnic disparities in utilization of care among individuals with health 
insurance. Additionally, underserved populations tend to have a 
disproportionate prevalence of unmet social determinants of health 
needs, which can adversely affect health. We believe that the ability 
to offer supplemental benefits provides MA plans the unique opportunity 
to use Medicare Trust Fund dollars (in the form of MA rebates) to fill 
in coverage gaps in Traditional Medicare, by offering additional health 
care benefits or SSBCI that address unmet social determinants of health 
needs, and as such, all eligible MA enrollees should benefit from these 
offerings. Targeted outreach to enrollees that is specific to the 
utilization of supplemental benefits may also serve to further ensure 
more equitable utilization of these benefits.
---------------------------------------------------------------------------

    \94\ https://www.kff.org/report-section/racial-and-ethnic-disparities-in-access-to-and-utilization-of-care-among-insured-adults-issue-brief/.
---------------------------------------------------------------------------

    The establishment of a minimum requirement for targeted outreach to 
enrollees with respect to supplemental benefits that have not been 
accessed by enrollees would standardize a process to ensure all 
enrollees served under MA are aware of and utilizing, as appropriate, 
the supplemental benefits available to them. Section 1852(c)(1) of the 
Act requires, in part, that MA organizations disclose detailed 
descriptions of plan provisions, including supplemental benefits, in a 
clear, accurate, and standardized form to each enrollee of a plan at 
the time of enrollment and at least annually thereafter. We proposed to 
use our authority to establish standards under Part C in section 
1856(b)(1) of the Act to ensure adequate notice is provided to 
enrollees regarding supplemental benefits coverage. This proposal will 
further implement the disclosure requirement in section 1852(c)(1)(F) 
of the Act. Specifically, we proposed that MA organizations must 
provide a model notification to enrollees of supplemental benefits they 
have not yet accessed. We proposed to implement this by adding new 
provisions at Sec. Sec.  422.111(l) and 422.2267(e)(42) to establish 
this new disclosure requirement and the details of the required notice, 
respectively.
    This proposed requirement will ensure that a minimum outreach 
effort is conducted by MA organizations to inform enrollees of 
supplemental benefits available under their plan that the enrollee has 
not yet accessed. We proposed that, beginning January 1, 2026, MA 
organizations must mail a mid-year notice annually, but not sooner than 
June 30 and not later than July 31 of the plan year, to each enrollee 
with information pertaining to each supplemental benefit available 
during that plan year that the enrollee has not begun to use. We 
understand that there may be a lag between the time when a benefit is 
accessed and when a claim is processed, so we would require that the 
information used to identify recipients of this notice be as up to date 
as possible at the time of mailing. MA organizations are not required 
to include supplemental benefits that have been accessed, but are not 
yet exhausted, in this proposed mid-year notice.
    Understanding that not all Medicare beneficiaries enroll in an MA 
plan during the AEP, we specifically sought comment on how CMS should 
address the timing of the notice for beneficiaries that have an 
enrollment effective date after January 1. One possible approach we 
described as under consideration was requiring the notice to be sent 
six months after the effective date of the enrollment for the first 
year of enrollment, and then for subsequent years, revert to mailing 
the notice between the proposed delivery dates of June 30 and July 31. 
Another option was to not require the notice to be mailed for

[[Page 30563]]

the first year of enrollment for those beneficiaries with an effective 
date of May 1 or later, as they would be receiving their Evidence of 
Coverage (EOC) around this same timeframe but may not have had 
sufficient time to access these benefits. Those enrollees who would be 
exempt from the mailing, based on their enrollment effective date, 
would then receive the notice (if applicable because one or more 
supplemental benefits have not been accessed by the enrollee) between 
June 30 and July 31 in subsequent enrollment years.
    For each covered mandatory supplemental benefit and optional 
supplemental benefit (if the enrollee has elected) for which enrollee 
is eligible, but has not accessed, the MA organization must list in the 
notice the information about each such benefit that appears in EOC. For 
SSBCI, MA organizations must include an explanation of the SSBCI 
covered under the plan (including eligibility criteria and limitations 
and scope of the covered items and services) and must also provide 
point-of-contact information for eligibility assessment (which can be 
the customer service line or a separate dedicated line), with trained 
staff that enrollees can contact to inquire about or begin the SSBCI 
eligibility determination process and to address any other questions 
the enrollee may have about the availability of SSBCI under their plan. 
When an enrollee has been determined by the plan to be eligible for one 
or more specific SSBCI benefit but has not accessed the SSBCI benefit 
by June 30 of the plan year, the notice must also include a description 
of the SSBCI benefit to which the enrollee is entitled and must 
describe any limitations on the benefit. In the proposed rule, we noted 
the proposal to amend Sec.  422.2267(e)(34) (discussed in section VI.B 
of this final rule), if finalized, would require specific SSBCI 
disclaimers for marketing and communications materials that discuss the 
limitations of the SSBCI benefit being offered; we also proposed that 
this mid-year notice must include the SSBCI disclaimer to ensure that 
the necessary information provided in the disclaimer is also provided 
to the enrollee in the notice.
    Furthermore, we proposed that each notice must include the scope of 
the supplemental benefit(s), applicable cost sharing, instructions on 
how to access the benefit(s), applicable information on the use of 
network providers for each available benefit, list the benefits 
consistent with the format of the EOC, and a toll-free customer service 
number including, as required, a corresponding TTY number, to call if 
additional help is needed. We solicited public comment on the required 
content of the mid-year notice.
    We also requested public comment on our proposal to require MA 
plans to provide enrollees with mid-year notification of covered 
mandatory and optional supplemental benefits (if elected) that have not 
been at least partially accessed by that enrollee, particularly the 
appropriate timing (if any) of the notice for MA enrollees who enroll 
in the plan mid-year. A discussion of these comments, along with our 
responses follows.
    Comment: Some supporters of this provision expressed a belief that 
the Mid-Year Notice is not strong enough to support the needs of 
enrollees or should be amended for other reasons. A commenter suggested 
that an annual cycle was insufficient, and that the notice should be 
mailed monthly. Several commenters suggested the notice be sent 
quarterly. A commenter suggested the notice be sent three months after 
enrollment for anyone with an effective date before September 1st, and 
for the enrollee to receive it during the annually established 
timeframe in subsequent years. A commenter suggested the notice be sent 
after the first quarter of the plan year. Another commenter suggested 
that the notice should be mailed soon after an enrollee's coverage is 
effectuated, regardless of whether the effectuation date is January 1st 
or after, and should include all supplemental benefits available under 
the plan. Another commenter stated that partially utilized benefits 
should be included in the notice.
    Response: We thank these commenters for their support and attention 
to detail. We are finalizing Sec.  422.111(l) (requiring the Mid-year 
Notice to be sent and the timing) and Sec.  422.2267(e)(42) (the 
content requirements for the Mid-Year Notice) as proposed. The purpose 
of the notice is to inform those enrolled in an MA plan about 
supplemental benefits that have not been accessed, rather than to 
inform them of all available supplemental benefits. We believe the EOC 
is the appropriate communication for informing beneficiaries of all 
supplemental benefits offered under a particular plan. We also note 
that it is important to give beneficiaries ample time to access the 
benefits before providing notice of unused supplemental benefits. We 
believe the timeframes set forth in this rule provide sufficient time. 
In addition, monthly or quarterly reminders may be burdensome or lose 
their effectiveness in providing a reminder to enrollees about the 
benefits available to them. However, after assessing the efficacy of 
this provision over time, we may make amendments to the Mid-Year Notice 
and its requirements in future rulemaking.
    Comment: We received many comments that expressed concern about 
burden and complexity, specifically regarding the proposed annual 
deadline (July 31) and cost of providing personalized information to 
each enrollee. With respect to the annual deadline a commenter asked 
CMS to extend the deadline to August 15, and another believed they 
would need up to 8 weeks following June 30 to complete the process of 
printing and mailing. For various reasons, some commenters believed CMS 
underestimated the costs associated with printing and mailing documents 
that consist of personalized information; for example, a commenter 
stated their printing costs were always higher for personalized 
materials; some commenters estimated average document lengths would be 
much higher than the CMS estimate, from 18 to over 20 pages.
    Response: The Mid-Year Notice of Unused Supplemental Benefits is 
intended to be a concise and user-friendly document, and we are 
committed to the formulation of a model design that is both informative 
and succinct. The length of the document will ultimately vary from 
enrollee to enrollee, depending on the number of supplemental benefits 
offered under the plan, the number and scope of supplemental benefits 
each enrollee may be eligible to receive, and individual utilization. 
As proposed and finalized, the notice must only include information 
about supplemental benefits that the enrollee has not yet begun to use 
by June 30.
    Further, MA organizations have their own unique processes in place 
for compiling, printing, and disseminating information, and this may 
lead to variations in cost. Stakeholders will have further opportunity 
to comment directly on the model notice during the Paperwork Reduction 
Act process. We also believe that the notice will create an incentive 
for MA organizations to improve their education and outreach efforts 
regarding supplemental benefit access and utilization through their 
marketing and communication materials, during the enrollment process, 
and into the plan year. We believe that as supplemental benefits are 
better understood and utilized by enrollees in the first half of the 
year, the shorter the Mid-Year Notice will become.

[[Page 30564]]

    Further, the requirement to notify enrollees about their unused 
supplemental benefits can provide MA organizations with the opportunity 
to glean useful information to further tailor their PBPs. CMS believes 
MA organizations could gain valuable insights into their enrollees' 
healthcare needs and preferences based on the data needed to send these 
individualized notifications, if MA organizations choose to analyze 
this data. This notice can benefit MA organizations by encouraging them 
to thoughtfully reassess which supplemental benefits they choose to 
offer so they can steer away from unpopular types of supplemental 
benefits in the future, leading to a more impactful use of resources, 
including Medicare dollars.
    Comment: Some commenters stated that our proposal lacks scope. A 
commenter believed that CMS should have defined ``supplemental 
benefits'' for the purpose of determining inclusion in the Notice. 
Another commenter stated the requirements of SSBCI and information 
needed were not clear. Another commenter asked CMS to clarify whether 
quarterly allowance benefits should be included in the Notice.
    Response: To clarify, supplemental benefits include reductions in 
cost sharing and additional items and services that are not covered 
under Medicare Parts A, B and D. Per Sec.  422.100(c), supplemental 
benefits must meet specific requirements in addition to not being 
covered by Medicare Parts A, B or D. The terms ``mandatory supplemental 
benefits'' and ``optional supplemental benefits'' are defined in Sec.  
422. SSBCI are supplemental benefits that are offered only to eligible 
enrollees with chronic conditions and are defined at Sec.  422.102(f). 
Certain limitations on how and when MA plans may offer supplemental 
benefits are addressed in Sec. Sec.  422.100(c) and 422.102 that we do 
not summarize in depth here.
    For purposes of the Mid-Year Notice requirement, all unused 
supplemental benefits that are offered by the MA plan must appear in 
the Mid-Year Notice regardless of whether the benefits are categorized 
on the PBP as mandatory, optional, or SSBCI. The only supplemental 
benefit that does not need to be included in the notice is cost-sharing 
reduction, and this change has been reflected in the final regulation 
text for clarification.
    The regulation we proposed and are finalizing at Sec.  
422.2267(e)(42) lists the information that is required about the unused 
supplemental benefits. For each mandatory supplemental benefit an 
enrollee has not used, the MA organization must include the same 
information about the benefit that is provided in the Evidence of 
Coverage. For each optional supplemental benefit an enrollee has not 
used, the MA organization must include the same information about the 
benefit that is provided in the Evidence of Coverage.
    For SSBCI, the Mid-Year Notice must include the SSBCI disclaimer 
specified at Sec.  422.2267(e)(34) and additional information about the 
SSBCI. When an enrollee has not been deemed eligible, MA organizations 
must include an explanation of the SSBCI covered under the plan 
consistent with the format of other unused supplemental benefits, 
eligibility criteria for the SSBCI, and point-of-contact information 
for eligibility assessments, such as a customer service line or a 
separate dedicated line, to reach trained staff that can answer 
questions and initiate the SSBCI eligibility determination process. 
When an enrollee has been determined by the plan to be eligible for one 
or more specific SSBCI--but has not accessed the SSBCI benefit by June 
30 of the plan year--the Mid-Year Notice for that enrollee must also 
include a description of the SSBCI to which the enrollee is entitled 
and must describe any limitations on the benefit, consistent with the 
format of other unused supplemental benefits.
    In addition, as specified in Sec.  422.2267(e)(42)(ii)(D), the Mid-
Year Notice must include the following about each unused supplemental 
benefit listed in the Notice to each enrollee:
    (1) Scope of benefit.
    (2) Applicable cost-sharing.
    (3) Instructions on how to access the benefit.
    (4) Any applicable network information.
    (E) Supplemental benefits listed consistent with the format of the 
EOC.
    (F) A customer service number, and required TTY number, to call for 
additional help.
    We believe that the regulation is sufficiently clear as to the 
scope and required content of the notice.
    Comment: Some commenters believed CMS could meet the stated goal of 
increasing supplemental benefit utilization through non-regulatory 
means by encouraging MA organizations to use their existing resources 
to promote supplemental benefit usage. Examples included the 
incorporation of supplemental-benefit-focused abstracts into MA 
organizations' newsletters, reminders to enrollees to read their EOCs, 
and the addition of articles and reminders on plan websites.
    Response: We encourage MA organizations to use other outlets 
available to them to inform enrollees of their supplemental benefits. 
This Notice provision represents a required minimum effort on the part 
of each MA organization and should not be understood to preclude other 
forms of outreach.
    Comment: Several commenters believed there is much potential for 
enrollees to become confused, frustrated, and ultimately dissatisfied 
with their plans because they are ineligible to use a particular 
benefit. An example provided was meal delivery being available only 
post-surgery.
    Response: As discussed in the proposal, MA organizations are 
required to provide descriptions of supplemental benefits clearly and 
accurately. Here, MA organizations must describe the scope of and 
include instructions on how to access each listed supplemental benefit, 
similar to how these benefits are described in the EOC. If the benefit 
is only made available under limited circumstances, this must be 
evident in the Mid-Year Notice. Moreover, we feel strongly that the 
risk of confusion or frustration is far outweighed by the benefits of 
informing enrollees of supplemental benefits that can be useful to 
improving or maintaining their health.
    Comment: Some commenters suggested CMS adopt a non-personalized 
format that summarizes all supplemental benefits available under a plan 
regardless of whether the enrollee has used them. Reasons for this 
suggestion commonly included burden reduction for MA organizations and 
decreased likelihood of confusion for enrollees.
    Response: We believe that a non-personalized summary of all 
supplemental benefits available under a plan could confuse enrollees 
and add unnecessary length to the Mid-Year Notice. Further, as 
discussed above, the purpose of the notice is to inform those enrolled 
in an MA plan about supplemental benefits that they have not accessed, 
rather than to inform them of all supplemental benefits available. 
Providing information on supplemental benefits that the enrollee has 
not used will focus the enrollee on the items and services that are 
covered by the plan that the enrollee has not accessed, but may still 
have time to access, during the remainder of the year. We believe the 
EOC is the appropriate communication for informing beneficiaries of all 
supplemental benefits offered under a particular plan.
    Comment: Many commenters believed this provision will drive an 
uptick in

[[Page 30565]]

the utilization of supplemental benefits. A commenter expressed concern 
that the Mid-Year Notice may impact expected utilization in uncertain 
ways, threatening the integrity of what MA organizations project in 
their bids. Another commenter stated that MA organizations generally 
have an expectation that not all enrollees will use every benefit, 
including supplemental benefits. This commenter expressed concern that 
promoting use of supplemental benefits could result in unanticipated 
expenses for an MA organization and result in higher premiums.
    Response: We believe that the Mid-Year Notice will generate an 
increase in the use of supplemental benefits. However, MA organizations 
should not presume enrollees are overutilizing or will over utilize 
benefits as we believe most enrollees will use their benefits only when 
they need them. We expect organizations to establish reasonable 
safeguards that ensure enrollees are appropriately directed to 
care.\95\ Further, MA organizations regularly make determinations to 
manage utilization as is the case with SSBCI where they must have 
written policies for determining enrollee eligibility and must document 
its determination whether an enrollee is chronically ill (42 CFR 
422.102). Section IV.C. of this final rule includes discussion of new 
SSBCI rules that could help to mitigate unnecessary utilization.
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    \95\ https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/hpms%2520memo%2520primarily%2520health%2520related%25204-27-18_194.pdf.
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    Comment: Some commenters stated the proposal does not strike an 
appropriate balance between administrative burden and enrollee impact--
that the proposal adds confusion, complexity, and cost without any 
clear value or benefit; further, some believed the proposal is based on 
assumptions rather than data. For example, a commenter stated that the 
proposal indicates that utilization of supplemental benefits is low but 
does not specify the basis for that position. The commenter requested 
that CMS provide further evidence and explanation to support the claim 
that there is low supplemental benefit utilization, and that the cause 
is lack of enrollee awareness of benefits as opposed to the enrollee 
not needing or wanting to use the benefit. In addition, the commenter 
asked that CMS demonstrate that a Mid-Year Notice is the most suitable 
means to address low supplemental benefit utilization under the 
rulemaking framework of the Administrative Procedure Act.
    Response: In the proposed rule, we did not claim that the only 
cause of low supplemental benefit utilization was lack of enrollee 
awareness of benefits as the commenter suggested. Rather, we noted that 
it is unclear whether plans are actively encouraging utilization of 
these benefits by their enrollees, including as part of a plan's 
efforts in care coordination or otherwise. In addition, while we cited 
reports of low supplemental benefit utilization, we also noted that 
more complete data is needed in this area and provided examples of how 
CMS has taken multiple steps to obtain such data through both MLR and 
Part C reporting requirements. We stated that we will use findings 
obtained from this outreach requirement, in conjunction with the 
improved collection of supplemental benefit utilization data, to inform 
whether additional future rulemaking is warranted. Identifying and 
addressing potential underutilization of benefits funded in large part 
by the government through MA rebates is appropriate for us to ensure 
appropriate use of Medicare Trust Fund dollars. Further, to the extent 
that underutilization of supplemental benefits is not an issue and 
these benefits are widely accessed by enrollees, the number of Mid-Year 
Notices would decrease as proposed and finalized, our rule only 
requires a notice to individual enrollees about supplemental benefits 
that enrollees have not accessed.
    As discussed in the proposal, the recent significant increase in 
the number and variety of supplemental benefit offerings combined with 
marketing activities and an increase in overall MA enrollment has led 
CMS to believe that an enrollee's plan choice is influenced, at least 
in part, by the supplemental benefits an MA plan offers. One purpose of 
the Mid-Year Notice is to address concerns that some MA plans may be 
using supplemental benefits primarily as marketing tools to steer 
enrollment; our policy as described here will help to ensure that 
covered benefits are accessed and used by plan enrollees during the 
plan year by ensuring that enrollees are aware about supplemental 
benefits that they have not yet used by June 30 of the applicable year. 
Any potential underutilization of benefits could be due to a lack of 
effort by the plan to help the beneficiary access the benefits, or a 
lack of easy ability to know what benefits have not been accessed and 
are still available to the enrollee throughout the year. This new 
notice is intended to address both.
    Another purpose of the Mid-Year Notice is to address disparities in 
health care utilization, aligning with our goal to advance health 
equity in the MA program and pursue a comprehensive approach to 
advancing health equity for all by encouraging more equitable 
utilization of these benefits.
    Finally, the Mid-Year Notice will further ensure that MA 
organizations fulfill their obligation to adequately disclose details 
and notice of supplemental benefit coverage.
    Comment: Some commenters expressed concern about the ability to 
offer ``real-time'' information on the Mid-Year Notice. For example, 
one commenter mentioned that MA organizations use a wide variety of 
providers to furnish supplemental benefits, and that these providers 
have varying degrees of capability; some are community-based 
organizations with limited resources, and such providers may not be 
able to transmit utilization and claim information with the speed of 
more conventional provider types.
    Response: We understand that supplemental benefits are often 
available through community-based providers that often do not have the 
budget for sophisticated software systems that transmit information in 
``real-time.'' With respect to timeliness, we consider information that 
is up to date as of June 30 of the plan year to satisfy the requirement 
for accuracy.
    Comment: Many commenters were satisfied with a provision start date 
of January 2026, but some asked for an extension to January 2027.
    Response: We believe a start date of January 2026 gives MA 
organizations sufficient time to plan and implement processes for the 
Mid-Year Notice. After careful consideration of all comments received, 
and for the reasons set forth in the proposed rule and in our responses 
to the related comments, we are finalizing Sec. Sec.  422.111(l) as 
proposed and 422.2267(e)(42) with a modification to clarify that 
supplemental benefits in the form of cost-sharing reductions are 
excluded from the notice.

E. Annual Health Equity Analysis of Utilization Management Policies and 
Procedures

    In recent years, CMS has received feedback from interested parties, 
including people with Medicare, patient groups, consumer advocates, and 
providers that utilization management (UM) practices in Medicare 
Advantage (MA), especially the use of prior authorization, can 
sometimes create a barrier for patients in accessing medically 
necessary care. Further, some research has indicated that the use of

[[Page 30566]]

prior authorization may disproportionately impact individuals who have 
been historically underserved, marginalized, and adversely affected by 
persistent poverty and inequality,\96\ due to several factors, 
including; the administrative burden associated with processing prior 
authorization requests (for example, providers and administrative staff 
serving historically underserved populations, in particular, may not 
have the time or resources to complete the prior authorization process, 
including navigating the appeals process \97\), a reduction in 
medication adherence, and overall worse medical outcomes due to delayed 
or denied care. Research has also shown that dual eligibility for 
Medicare and Medicaid is one of the most influential predictors of poor 
health outcomes, and that disability is also an important risk factor 
linked to health outcomes.\98\
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    \96\ https://www.hmpgloballearningnetwork.com/site/frmc/commentary/addressing-health-inequities-prior-authorization; and 
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10024078/
    \97\ http://abcardio.org/wp-content/uploads/2019/03/AB-20190227-PA-White-Paper-Survey-Results-final.pdf,
    \98\ 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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    On January 20, 2021, President Biden issued Executive Order 13985: 
``Advancing Racial Equity and Support for Underserved Communities 
Through the Federal Government,'' (E.O. 13985).\99\ 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. Consistent with this Executive 
Order, CMS announced ``Advance Equity'' as the first pillar of its 2022 
Strategic Plan.\100\ This pillar emphasizes the importance of advancing 
health equity by addressing the health disparities that impact our 
health care 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.'' \101\
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    \99\ https://www.federalregister.gov/d/2022-26956/p-227.
    \100\ https://www.federalregister.gov/d/2022-26956/p-228.
    \101\ https://www.cms.gov/pillar/health-equity.
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    The April 2023 final rule \102\ included several policy changes to 
advance health equity, as well as changes to address concerns from 
interested parties about the use of utilization management policies and 
procedures, including prior authorization, by MA plans. CMS understands 
that utilization management is an important means to coordinate care, 
reduce inappropriate utilization, and promote cost-efficient care. The 
April 2023 final rule adopted several important guardrails to ensure 
that utilization management policies and procedures are used, and 
associated coverage decisions are made, in ways that ensure timely and 
appropriate access to covered items and services for people enrolled in 
MA plans. CMS also continues to work to identify regulatory actions 
that can help support CMS's goal to advance health equity and improve 
access to covered benefits for enrollees.
---------------------------------------------------------------------------

    \102\ ``Medicare Program; Contract Year 2024 Policy and 
Technical Changes to the Medicare Advantage Program, Medicare 
Prescription Drug Benefit Program, Medicare Cost Plan Program, and 
Programs of All-Inclusive Care for the Elderly'' final rule, which 
appeared in the Federal Register on April 12, 2023 (88 FR 22120).
---------------------------------------------------------------------------

    Authority for MA organizations to use utilization management 
policies and procedures regarding 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 statutory provisions. In 
addition, the MA statute and MA contracts cover both the basic and 
supplemental benefits covered under MA plans, so additional contract 
terms added by CMS pursuant to section 1857(e)(1) of the Act may also 
address supplemental benefits. Additionally, per section 1852(b) of the 
Act and Sec.  422.100(f)(2), plan designs and benefits may not 
discriminate against beneficiaries, promote discrimination, discourage 
enrollment, encourage disenrollment, steer subsets of Medicare 
beneficiaries to particular MA plans, or inhibit access to services. 
These requirements apply to both basic and supplemental benefits. We 
consider utilization management policies and procedures to be part of 
the plan benefit design, and therefore they cannot be used to 
discriminate or direct enrollees away from certain types of services.
    In the April 2023 final rule, CMS finalized a new regulation at 
Sec.  422.137, which requires all MA organizations that use UM policies 
and procedures to establish a Utilization Management Committee to 
review and approve all UM policies and procedures at least annually and 
ensure consistency with Traditional Medicare's national and local 
coverage decisions and relevant Medicare statutes and regulations. Per 
Sec.  422.137, 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. While this requirement will ensure that all UM policies and 
procedures are kept up to date, we believe that reviewing and analyzing 
these policies from a health equity perspective is an important 
beneficiary protection. In addition, such an analysis may assist in 
ensuring that MA plan designs do not deny, limit, or condition the 
coverage or provision of benefits on a prohibited basis (such as a 
disability) and are not likely to substantially discourage enrollment 
by certain MA eligible individuals with the organization. For these 
reasons, we proposed to add health equity-related requirements to Sec.  
422.137. First, we proposed at Sec.  422.137(c)(5) to require that 
beginning January 1, 2025, the UM committee must include at least one 
member with expertise in health equity. We proposed that health equity 
expertise includes, but is not limited to, educational degrees or 
credentials with an emphasis on health equity, experience conducting 
studies identifying disparities amongst different population groups, 
experience leading organization-wide policies, programs, or services to 
achieve health equity, or experience leading advocacy efforts to 
achieve health equity. Since there is no universally accepted 
definition of expertise in health equity, we referred to materials from 
the Council on Linkages Between Academia and Public Health Practice 
\103\ and the National Board of Public Health Examiners,\104\ to 
describe ``expertise in health equity'' in the context of MA and prior 
authorization.
---------------------------------------------------------------------------

    \103\ https://www.phf.org/resourcestools/Documents/Core_Competencies_for_Public_Health_Professionals_2021October.pdf
    \104\ https://www.nbphe.org/cph-content-outline/
---------------------------------------------------------------------------

    We also proposed to add a requirement at Sec.  422.137(d)(6) that 
the UM committee must conduct an annual health equity analysis of the 
use of prior authorization. We proposed that the member of the UM 
committee, who has health equity expertise, as required at proposed 
Sec.  422.137(c)(5), must approve the final report of the analysis 
before it is posted on the plan's publicly available website. The 
proposed analysis will examine the impact of prior authorization at the 
plan level, on

[[Page 30567]]

enrollees with one or more of the following social risk factors (SRF): 
(1) receipt of the low-income subsidy or being dually eligible for 
Medicare and Medicaid (LIS/DE); or (2) having a disability. Disability 
status is determined using the variable original reason for entitlement 
code (OREC) for Medicare using the information from the Social Security 
Administration and Railroad Retirement Board record systems. CMS chose 
these SRFs because they mirror the SRFs that will be used to measure 
the Heath Equity Index reward for the 2027 Star Ratings (see Sec.  
422.166(f)(3)), and we believe it is important to align expectations 
and metrics across the program. Moreover, CMS is requiring this 
analysis to take place at the MA plan level because the relevant 
information regarding enrollees with the specified SRFs is available at 
the plan level, and we believe this level of analysis is important to 
discern the actual impact of the use of utilization management on 
enrollees that may be particularly subject to health disparities.
    To gain a deeper understanding of the impact of prior authorization 
practices on enrollees with the specified SRFs, the analysis, as 
proposed, must compare metrics related to the use of prior 
authorization for enrollees with the specified SRFs to enrollees 
without the specified SRFs. Doing so, allows the MA plan and CMS to 
begin to identify whether the use of prior authorization causes any 
persistent disparities among enrollees with the specified SRFs. We 
proposed that the analysis must use the following metrics, calculated 
for enrollees with the specified SRFS, and for enrollees without the 
specified SRFs, from the prior contract year, to conduct the analysis:
     The percentage of standard prior authorization requests 
that were approved, aggregated for all items and services.
     The percentage of standard prior authorization requests 
that were denied, aggregated for all items and services.
     The percentage of standard prior authorization requests 
that were approved after appeal, aggregated for all items and services.
     The percentage of prior authorization requests for which 
the timeframe for review was extended, and the request was approved, 
aggregated for all items and services.
     The percentage of expedited prior authorization requests 
that were approved, aggregated for all items and services.
     The percentage of expedited prior authorization requests 
that were denied, aggregated for all items and services.
     The average and median time that elapsed between the 
submission of a request and a determination by the MA plan, for 
standard prior authorizations, aggregated for all items and services.
     The average and median time that elapsed between the 
submission of a request and a decision by the MA plan for expedited 
prior authorizations, aggregated for all items and services.
    Next, we proposed to add at Sec.  422.137(d)(7) that by July 1, 
2025, and annually thereafter, the health equity analysis be posted on 
the plan's publicly available website in a prominent manner and clearly 
identified in the footer of the website. We proposed that the health 
equity analysis must be easily accessible to the general public, 
without barriers, including but not limited to ensuring the information 
is available: free of charge; without having to establish a user 
account or password; without having to submit personal identifying 
information (PII); in a machine-readable format with the data contained 
within that file being digitally searchable and downloadable from a 
link in the footer of the plan's publicly available website, and 
include a .txt file in the root directory of the website domain that 
includes a direct link to the machine-readable file, in a format 
described by CMS (which CMS will provide in guidance), to establish and 
maintain automated access. We believe that by making this information 
more easily accessible to automated searches and data pulls, it will 
help third parties develop tools and researchers conduct studies that 
further aid the public in understanding the information and capturing 
it in a meaningful way across MA plans.
    Finally, we welcomed comment on the proposal and sought comment on 
the following:
     Additional populations CMS should consider including in 
the health equity analysis, including but not limited to: Members of 
racial and ethnic communities, members of the lesbian, gay, bisexual, 
transgender, and queer (LGBTQ+) community; individuals with limited 
English proficiency; members of rural communities; and persons 
otherwise adversely affected by persistent poverty or inequality.
     If there should be further definition for what constitutes 
``expertise in health equity,'' and if so, what other qualifications to 
include in a definition of ``expertise in health equity.''
     The proposed requirements for publicly posting the results 
on the plan's website under Sec.  422.137(d)(7) to ensure the data will 
be easily accessible to both the public and researchers.
     Alternatives to the July 1, 2025, deadline for the initial 
analysis to be posted to the plan's publicly available website.
     Whether to add an additional requirement that the UM 
committee submit to CMS the link to the analysis report. This would 
allow CMS to post every link in one centralized location, which would 
increase accessibility and transparency.
    In addition, we requested comment on any specific items or 
services, or groups of items or services, subject to prior 
authorization that CMS should consider also disaggregating in the 
analysis to consider for future rulemaking. If further disaggregation 
of a group of items or services is requested, CMS solicited comment on 
what specific items or services would be included within the group. For 
example, if CMS should consider disaggregating a group of items or 
services related to behavioral health treatment in the health equity 
analysis, what items or services should CMS consider a part of 
behavioral health treatment.
    We invited public comment on this proposal and received over 140 
comments. A summary of the comments received, and CMS's responses are 
below.
    Comment: Nearly all commenters supported the proposal to add a 
member to the utilization management committee with expertise in health 
equity. A majority of commenters also supported the proposed definition 
of expertise in health equity. Commenters expressed gratitude for CMS's 
recognition that there is not currently a widely accepted definition of 
what qualifies as ``expertise in health equity,'' and that the proposed 
non-exhaustive list provides adequate flexibility and acknowledges the 
varied experiences and qualifications that could comprise health equity 
expertise.
    Response: CMS appreciates the suggestions and support for this 
proposal. As outlined in the November 2023 rule, we do not believe 
there is a universally accepted definition of expertise in health 
equity. Therefore, CMS believes there is value at this stage in 
providing a non-exhaustive list of examples of what constitutes such 
expertise to avoid inadvertently excluding qualified individuals by 
being overly restrictive. The proposed and finalized regulation text 
lists examples to illustrate what constitutes expertise in health 
equity includes to guide MA organizations in identifying individuals 
with the necessary expertise and experience to fulfill this new role on 
the UM committee. We are finalizing that list without the phrase ``but 
is not

[[Page 30568]]

limited to'' because that phrase is repetitive; the term ``includes'' 
means that the list that follows is a non-exhaustive list of examples.
    Comment: Some commenters suggested that CMS include additional 
specificity in the definition of expertise in health expertise, such as 
clinical experience practicing in underserved and marginalized 
communities, as well as lived, community, and professional experience 
in addition to academic training. Other commenters suggested that the 
individual be a physician. A commenter suggested CMS include in 
expertise in health equity include, ``experience serving on Health 
Equity Technical Expert Panels convened by CMS contractors.'' A 
commenter proposed that CMS require two members with expertise in 
health equity. A commenter suggested the health equity expert be 
required to undergo bias training. A commenter suggested that CMS 
clarify that the individual with expertise in health equity can be a 
nonphysician clinician, data analyst, or researcher. A commenter 
suggested CMS define expertise in terms of time, i.e., five years of 
experience.
    Response: CMS appreciates the suggestions for additional 
credentials and qualifications for the member of the UM committee with 
expertise in health equity. At this time, we do not believe adding the 
additional examples suggested by commenters of expertise in health 
equity to the non-exhaustive list in the regulation would necessarily 
add clarity, and we believe there is value in leaving some flexibility 
for MA organizations to determine what qualifies as expertise in health 
equity. Furthermore, CMS clarifies that the individual with expertise 
in health equity may include but not be limited to a nonphysician 
clinician, data analyst, or researcher. We are not adopting the 
recommendation to require bias training for the committee member with 
expertise in health equity because we did not propose additional 
requirements for specific committee members and do not feel it is 
necessary at this time. We also decline to adopt the recommendation to 
require the UM committee to have two members with expertise in health 
equity at this time because we believe that one member is sufficient to 
ensure utilization management policies and procedures are reviewed from 
a health equity perspective. However, we will continue to monitor 
implementation and compliance to determine if additional requirements, 
including adding additional members to the committee or specific 
training requirements, are necessary for future rulemaking.
    Comment: Some commenters requested that MA organizations be 
permitted to use existing committee members, or employees of the MA 
organization, who have relevant qualifications to fulfil the role or 
leverage existing committees, if appropriate. A commenter asked CMS to 
clarify that plans can meet the requirement by recruiting a new member.
    Response: As finalized, Sec.  422.137(c)(5) requires MA 
organizations to include at least one member on the UM committee with 
expertise in health equity. The regulation does not set a minimum or 
maximum number of UM committee members so long as the composition 
requirements in Sec.  422.137(c) are met; therefore, an MA organization 
leverage existing committee members or recruit a new member for the UM 
committee, as long as all regulatory requirements are met for the UM 
committee to include at least one member with expertise in health 
equity beginning January 1, 2025.
    Comment: A few commenters recommended the member with expertise in 
health equity not be affiliated with the MA plan.
    Response: At this time, CMS declines to require that the UM 
committee member with expertise in health equity not be affiliated with 
the MA organization (or the various MA plans offered by the MA 
organization). The regulation at Sec.  422.137(c)(2) already requires 
that the UM committee include at least one practicing physician who is 
independent and free of conflict relative to the MA organization and MA 
plan. CMS believes there is value in allowing flexibility at this stage 
and will monitor how this requirement is implemented to determine if 
additional requirements may be necessary in the future.
    Comment: A commenter requested CMS delay the addition of a member 
with expertise in health equity.
    Response: Given the flexibilities afforded plans regarding the 
ability to recruit a member with expertise in health equity, CMS does 
not believe an adjustment in the timeline is needed. We continue to 
believe that reviewing and analyzing UM policies from a health equity 
perspective serves as an important beneficiary protection and will 
evaluate the impact of this rule and consider all suggestions for 
future rulemaking. At the time that this final rule is issued, there 
are at least 6 months for an MA organization to ensure that its UM 
committee(s) include at least one member with health equity expertise 
to meet the January 1, 2025, deadline.
    Comment: A commenter questioned whether there is sufficient 
evidence that adding such a role to this process will indeed improve 
health equity.
    Response: CMS does not believe that a body of research or other 
formal evidence is necessary to justify the requirement that at least 
one UM committee member have expertise in health equity. The purpose of 
this requirement is to help ensure that all utilization management 
policies and procedures are reviewed from a health equity lens, and 
that the member of the committee with expertise in health equity 
provides final approval of the health equity analysis.
    Comment: A commenter urged CMS to issue clear explanatory 
guidelines to ensure plan compliance.
    Response: CMS believes that the requirements laid out in the 
regulation are sufficiently clear regarding what is necessary for 
compliance with this rule, including what constitutes expertise in 
health equity. However, CMS will monitor compliance and may issue 
additional guidance as necessary.
    Comment: A commenter expressed that the entire UM committee, not 
just the member with health equity expertise, should be responsible for 
ensuring the analysis is comprehensive and complete.
    Response: CMS expects that every member of the UM committee will 
participate in the production, review, and analysis of the health 
equity analysis, just as every member of the UM committee is 
responsible for reviewing all UM policies and procedures to ensure that 
they are kept up to date. However, just as the medical director is 
responsible for the overall actions of the UM committee itself, CMS 
believes it is important that the member of the UM committee with 
expertise in health equity will provide the final approval of the 
report in order to ensure the report is specifically reviewed from a 
health equity perspective.
    Comment: Regarding the proposal to require the UM committee to 
conduct an annual health equity analysis of the use of prior 
authorization, commenters generally expressed support for the goal to 
advance health equity, increase transparency around the use of prior 
authorization, and ensure enrollees have timely access to medically 
necessary and clinically appropriate care. Some commenters did not 
support the proposal but did not elaborate as to their specific reasons 
for not supporting it. Some commenters encouraged CMS to continue 
advancing broader policy efforts to advance health equity goals

[[Page 30569]]

and expressed concern that the proposed analysis will not actually 
advance health equity or help identify gaps in health equity. A few 
commenters indicated the analysis could be helpful in assisting 
researchers to develop tools and conduct studies to further inform the 
public. Some commenters indicated that the UM committee may not be the 
best entity to conduct this analysis.
    Response: CMS appreciates the feedback provided, as well as the 
support for the intent of the proposal. We also understand and agree 
with the sentiment that CMS should continue broader efforts to advance 
health equity. The goal of this proposal is to ensure that all 
utilization management policies and procedures are reviewed from a 
health equity perspective, and to establish baseline data by beginning 
to identify whether the use of prior authorization causes any 
persistent disparities among enrollees with the specified social risk 
factors. Because Sec.  422.137 requires the UM committee to review any 
UM policies and procedures (including prior authorization) before an MA 
organization may use them beginning January 1, 2024, the UM committee 
is uniquely positioned to have access to data about when and how prior 
authorization policies and procedures are used by each MA plan offered 
by the MA organization in order to perform the health equity analysis 
and to use and report on the metrics we proposed and are finalizing at 
Sec.  422.137(d)(iii).
    This policy for the UM committee to perform and publicly post a 
health equity analysis with the information on specific prior 
authorization metrics, calculated using specific social risk factors, 
is just one piece of a much larger comprehensive approach to advancing 
equity for all, and we will continue to work to advance health equity. 
We will also consider all feedback received while working to develop 
future policy.
    Comment: Some commenters indicated that prior authorization denial 
rates are not necessarily attributable to or correlated with an 
enrollee's social risk factor status. Commenters expressed concern 
about the proposed methodology and the practical utility of the data in 
its proposed form, and concerns about the potential for this 
information to mischaracterize plan activities or inadvertently mislead 
enrollees. Other commenters stated that comparing prior authorization 
metrics across MA plans cannot be done accurately given variation in 
how plans code and track prior authorizations. Therefore, the analysis 
should include explanatory info or methodological adjustments to 
account for varying conditions across populations.
    A commenter requested that plans should automatically be required 
to explain their rates of denials for services that meet coverage 
rules. Some commenters requested general prior authorization 
utilization management reforms. Some commenters suggested that rather 
than create new data flows, CMS expand current part C data reporting 
requirements to include data elements specific to enrollees with the 
specified SRFs. Some commenters expressed concern that the number of 
enrollees with the SRFs enrolled in an MA plan (either too high or too 
low) could cause a comparison to be inaccurate. Several commenters 
expressed concern over ensuring that appropriate context for results of 
the analysis is available and not confusing or misleading for the 
public. Commenters also expressed concern that while making these 
results publicly available could increase accountability of MA 
organizations, CMS should also recognize that the amount of information 
enrollees must process, and that this data may not be useful or easy 
for a layperson to understand; therefore, commenters suggested that MA 
plans be required to include an executive summary posted with the 
report. A few commenters pointed out that for MA organizations that 
serve 100 percent limited-income subsidy/dual-eligible populations, 
these MA plans could be asked to publicly report the same metrics 
twice, since the ``Advancing Interoperability and Improving Prior 
Authorization Processes for Medicare Advantage Organizations, Medicaid 
Managed Care Plans, State Medicaid Agencies, Children's Health 
Insurance Program (CHIP) Agencies and CHIP Managed Care Entities, 
Issuers of Qualified Health Plans on the Federally-Facilitated 
Exchanges, Merit-based Incentive Payment System (MIPS) Eligible 
Clinicians, and Eligible Hospitals and Critical Access Hospitals in the 
Medicare Promoting Interoperability Program'' (CMS-0057-F) rule has 
been finalized to require reporting of certain information about prior 
authorization metrics.
    Response: CMS understands the concern about appropriate 
interpretation of the data. The regulation we are finalizing in this 
rule requires the health equity analysis for informational purposes 
only, to help gain a deeper understanding of the impact of prior 
authorization practices on enrollees with the specified SRFs and allow 
MA plans and CMS to begin to identify whether the use of prior 
authorization causes any persistent disparities among enrollees with 
the specified SRFs. CMS believes this required analysis may assist in 
ensuring that MA plan designs do not deny, limit, or condition the 
coverage or provision of benefits on a prohibited basis (such as a 
disability) and are not likely to substantially discourage enrollment 
by certain MA eligible individuals with the organization. Since we 
currently do not have any information that compares data for enrollees 
with the specified SRFs to those without the specified SRFs, CMS 
continues to believe that this analysis is an important first step in 
looking deeper into the use of prior authorization and its potential 
effects on enrollees.
    CMS appreciates the concern that enrollees already must process 
ample information when making plan decisions and that, as proposed, the 
information may not be easily comprehended or put into full context by 
a layperson, and will take these suggestions into account when issuing 
operational guidance for the format of the report. Further, we believe 
that by making this information easily accessible to automated searches 
and data pulls, it will help third parties develop tools and 
researchers conduct studies that further aid the public in 
understanding the information and capturing it in a meaningful way 
across MA plans. We also believe that since the required data must be 
aggregated for all items and services at the plan level, the resulting 
analysis, while comprehensive, will not be overwhelming to the public. 
While CMS is not requiring the health equity report for each MA plan to 
include an explanatory statement or executive summary with the analysis 
at this time, if MA organizations wish to provide additional context 
for the results of the analysis of their MA plans, they may provide 
clarifying information in the report, provided that any such 
accompanying language is not misleading.
    Regarding concerns that comparing prior authorization metrics 
across MA plans cannot be done accurately given variation in how plans 
code and track prior authorizations, CMS does not believe this presents 
a significant issue, since there is not a requirement in this rule for 
comparison across plans. The ``Advancing Interoperability and Improving 
Prior Authorization Processes for Medicare Advantage Organizations, 
Medicaid Managed Care Plans, State Medicaid Agencies, Children's Health 
Insurance Program (CHIP) Agencies and CHIP Managed Care Entities, 
Issuers of Qualified Health

[[Page 30570]]

Plans on the Federally-Facilitated Exchanges, Merit-based Incentive 
Payment System (MIPS) Eligible Clinicians, and Eligible Hospitals and 
Critical Access Hospitals in the Medicare Promoting Interoperability 
Program'' (CMS-0057-F) final rule (hereinafter referred to as the 
``2024 Interoperability Final Rule''), which appeared in the Federal 
Register on February 8, 2024 (89 FR 8758), adopted, among other 
provisions related to exchanges of certain health information and prior 
authorization processes, requirements for MA organizations and certain 
other payers (State Medicaid agencies, State CHIP agencies, Medicaid 
managed care plans, CHIP managed care plans, and QHPs on Federally 
facilitated Exchanges) to report certain metrics about prior 
authorization beginning in 2026.\105\ The 2024 Interoperability Final 
Rule requires reporting of this information:
---------------------------------------------------------------------------

    \105\ The 2024 Interoperability Final Rule is available online 
here: govinfo.gov/content/pkg/FR-2024-02-08/pdf/2024-00895.pdf. The 
regulations requiring reports of prior authorization performance 
metrics are 42 CFR 422.122(c), 440.230(e)(3), 438.210(f), 
457.732(c), and 457.1230(d) and 45 CFR 156.223(c).
---------------------------------------------------------------------------

     A list of all items and services that require prior 
authorization.
     The percentage of standard prior authorization requests 
that were approved, aggregated for all items and services.
     The percentage of standard prior authorization requests 
that were denied, aggregated for all items and services.
     The percentage of standard prior authorization requests 
that were approved after appeal, aggregated for all items and services.
     The percentage of prior authorization requests for which 
the timeframe for review was extended, and the request was approved, 
aggregated for all items and services.
     The percentage of expedited prior authorization requests 
that were approved, aggregated for all items and services.
     The percentage of expedited prior authorization requests 
that were denied, aggregated for all items and services.
     The average and median time that elapsed between the 
submission of a request and a determination by the payer, plan, or 
issuer, for standard prior authorizations, aggregated for all items and 
services.
     The average and median time that elapsed between the 
submission of a request and a decision by the payer, plan, or issuer, 
for expedited prior authorizations, aggregated for all items and 
services.
    The performance metrics for the reporting under Sec.  422.122(c), 
as adopted in the 2024 Interoperability Final Rule, and the reporting 
metrics adopted in this final rule at Sec.  422.137(d)(6) use the same 
general categories, except that the 2024 Interoperability Final Rule 
requires that the information be aggregated for all enrollees, reported 
at the contract level, and excluding any drug coverage, while this 
final rule requires the reported information to be by groups with and 
without the specified social risk factors, reported at the plan level, 
and for all covered benefits (also excluding Part B drugs and OTC drugs 
covered by the MA plan and Part D drugs covered under the Part D 
benefit). The specified social risk factors are (i) receipt of the Part 
D low-income subsidy or being dually eligible for Medicare and Medicaid 
and (ii) having a disability, determined using information specified in 
Sec.  422.137(d)(6)(ii)(B). Because the reporting is not for identical 
populations, these two separate regulatory reports will not be 
duplicative, and we believe that they will be complementary by 
providing information about the same prior authorization metrics for 
different populations. In addition, excluding drugs--Part B drugs, OTC 
drugs covered by the MA plan, and Part D drugs--for both lists should 
help address concerns about burden. To clarify this aspect of the scope 
of Sec.  422.137(d)(6), we are finalizing additional language to 
exclude drugs from the scope of the new reporting and health equity 
analysis metrics; as finalized, Sec.  422.137(d)(6)(iii) provides that 
the data used for this analysis and reporting excludes data on drugs as 
defined in Sec.  422.119(b)(1)(v). Further, because MA organizations 
should already be collecting the data at the plan level, they should be 
able to report it with the stratification by SRFs for the requirements 
of Sec.  422.137(d)(6), and then can aggregate that data up to the 
contract level for the reporting required by the 2024 Interoperability 
Final Rule. Therefore, having the specific metrics be the same (but 
reported for different populations) should ease the burden on MA 
organizations in gathering, validating, and formatting the data.
    Comment: CMS solicited comment on additional populations to 
consider including in the health equity analysis. Several commenters 
indicated that the populations proposed in the analysis should be 
expanded, and many commenters suggested additional populations for CMS 
to consider, including: Members of economically marginalized 
communities; Original Reason for Entitlement Code for ESRD; individuals 
who receive SSBCI; individuals who have visited the ER in the past 
year; individuals who were hospitalized and sought post-acute care; 
individuals with limited English proficiency; individuals with mental 
health conditions, including depression, anxiety, and substance use 
disorder; individuals with chronic diseases such as asthma, COPD, 
cancer, obesity, cardiovascular disease, and diabetes; individuals with 
a combination of chronic conditions/diseases; individuals with a rare 
disease; members of racial and ethnic communities; members of the 
lesbian, gay, bisexual, transgender, and queer (LGBTQ+) community; 
members of rural communities; persons otherwise adversely affected by 
persistent poverty or inequality; formerly incarcerated individuals; 
veterans; and individuals experiencing homelessness. A commenter 
suggested CMS take an intersectional approach--considering how multiple 
identities intersect and manifest experiences. A commenter asked CMS to 
consider using the publicly available Vizient Vulnerability 
IndexTM, which identifies social needs and obstacles to care 
that may influence a person's overall health. A few commenters 
suggested the enrollee data should be separated into full/partial 
dually eligible for Medicare and Medicaid. A commenter suggested that 
CMS align its approach with the NCQA from a population health 
management approach.
    Some commenters acknowledged that adding populations to the 
analysis is not feasible at this time, because neither MA plans nor CMS 
has access to this data. Further, several commenters pointed out that 
reporting on many of the additional populations suggested would present 
issues because this type of demographic information would have to be 
self-reported, which could lead to incomplete and skewed data 
collection. Some commenters suggested that plans could collect this 
data upon enrollment. Generally, plans indicated that CMS should not 
add populations to the annual health equity analysis until data 
collection and methods for collecting demographic information have been 
piloted, tested, and found to be reliable in the context of the MA 
population. A commenter requested that CMS assist plans in gathering 
this information.
    Response: CMS appreciates the feedback and input regarding 
additional populations to consider including in the health equity 
analysis. We acknowledge that there are challenges associated with 
collecting data in a consistent manner, and that not all populations 
can be

[[Page 30571]]

reliably identified using available data elements due to a lack of 
standardization in collection methods. Since much of this information 
would have to be self-reported, we agree this could lead to a 
potentially inconsistent or misleading analysis. For that reason, we 
are not adding additional populations at this time. We will take all 
suggestions into consideration for future rulemaking and continue to 
explore ways to expand the populations included in the health equity 
analysis. We also urge MA plans to consider how data on some of the 
proposed populations could be collected and analyzed.
    Comment: Some commenters pointed out that CMS's proposed method of 
determining disability status could leave out enrollees who are over 
the age of 65 and have a disability but did not originally qualify for 
Medicare on that basis.
    Response: The variable original reason for entitlement code (OREC) 
for Medicare using the information from the Social Security 
Administration and Railroad Retirement Board record systems is the 
method used to determine disability status for the Health Equity Index 
and Categorical Adjustment Index. At this time, CMS believes that it is 
necessary to maintain consistency in identifying MA enrollment 
populations by this social risk factor for the Star Ratings and the UM 
committee's health equity analysis. However, we also understand the 
concern raised by commenters and will continue to evaluate how we could 
expand the ways we identify individuals who have a disability.
    Comment: CMS requested comment on any specific items or services, 
or groups of items or services, subject to prior authorization that we 
should consider disaggregating in future rulemaking. Many commenters 
provided suggestions and feedback. Several commenters asserted that 
because the proposed analysis would consist of prior authorization 
metrics aggregated for all items and services, it will not provide 
enough detail for true accountability and could allow plans to hide 
disparities. Commenters recommended that CMS require a further level of 
granularity to ensure that potential disparities could be identified. 
Specifically, commenters suggested that CMS require disaggregation by 
item and service to ensure that CMS can identify specific services that 
may be disproportionately denied.
    Commenters also provided suggestions for specific items and 
services for CMS to consider for disaggregation, including: Additional 
modalities beyond drugs/services that require prior authorization such 
as diagnostic tests, durable medical equipment, and skilled nursing 
facility care; substance use disorder and mental health services so 
these can be compared to medical services; prescription drugs; service 
category for rehabilitative services; physical therapist services; 
kidney care services, including dialysis treatments and transplant; 
prosthetics, orthotics and supplies; cellular and/or tissue-based 
products (CTPs, or skin substitute) services, in-office injections, in-
office medically necessary imaging, ankle-foot orthoses (AFOs) for 
traumatic conditions, surgical dressings, and biopsy of suspicious 
lesions; disaggregated data on access to medically necessary post-acute 
care which should include LTCHs, IRFs, SNFs, and HHAs. A commenter 
suggested that CMS require MA plans to submit the data underlying the 
report, disaggregated with demographic and other health equity 
indicators that would allow CMS to conduct more flexible analysis and 
compare subpopulations within plans. CMS could then aggregate and 
provide searchable results across MA plans, including by original 
reason for entitlement code and by age group. A commenter requested 
that MA plans should have discretion to determine when disaggregating 
will provide meaningful information and not compromise the privacy of 
its members.
    Response: CMS thanks commenters for their suggestions and feedback. 
We agree that disaggregation of the reported metrics by specific 
benefit could assist in increasing transparency and ensuring the most 
accurate data regarding prior authorization is available. As of now, it 
is our intent to require some level of disaggregation in the coming 
years, and we will consider all suggestions for any future rulemaking. 
We also believe there is significant value in establishing baseline 
data, since there is currently very little publicly available 
information regarding the use of prior authorization and its potential 
impact on specific populations. We believe that at least during the 
initial year, the analysis as proposed strikes a balance between 
providing information that may be useful to CMS, MA plans, and the 
public, and not providing an overwhelming amount of information.
    Comment: Some commenters suggested that disenrollment data be 
included among the required metrics for the health equity analysis. 
Commenters relayed that this is important since prior authorization can 
lead individuals with complex health conditions and disabilities to 
disenroll from a plan after receiving a prior authorization decision. A 
commenter suggested that, in an effort to further identify disparities 
and advance health equity through conducting this analysis, CMS also 
include one or more of the following four criteria recognized by the 
National Committee for Quality Assurance as baseline to begin 
accounting for equitable outcomes: Select indicators of social 
determinants of health; Select a reference group (a ``standard'' 
comparison group independent of the data vs. the data informing the 
comparison group); Select health care quality metrics. These could 
include composites (e.g., vaccination rates, quality measures, infant 
mortality rates); Use benchmarks (e.g., compare results to national 
estimates). Another commenter suggested that CMS analyze if and how 
often providers decline to prescribe a treatment because they do not 
have the resources to engage in a prior authorization process. Several 
commenters suggested the analysis include the reason for which a prior 
authorization request was denied. A commenter suggested that MA plans 
report prior authorizations as a part of encounter data so that CMS and 
independent researchers can conduct unbiased analyses of the equity 
impacts of utilization management. Another commenter suggested MA plans 
target specific service types that are frequently subjected to 
inappropriate utilization review practices. A commenter proposed 
requiring plans to report whenever end-of-life status is the reason for 
denying a prior authorization. A commenter recommended comparing sub-
populations enrolled in D-SNPs versus those enrolled in non-SNP MA 
plans. Another commenter recommended comparing appeal rates and 
outcomes on denied PA requests between populations. A commenter 
suggested that such analytics should include a side-by-side comparison 
of all data points by MA plan and compare them to traditional Medicare 
and Medicaid coverage; and that the MA plan should be required to 
provide criteria used to determine medical necessity and authorizations 
and include post-payment audit data in addition to prepayment 
authorization outcomes in the posted information and health equity 
analysis.
    Response: CMS appreciates the feedback, and while we are not adding 
additional metrics to the analysis at this time, we will consider doing 
so in future rulemaking. We would also direct commenters to the 2024 
Interoperability

[[Page 30572]]

Final Rule, which adopts certain procedural and timing requirements for 
prior authorizations and several API requirements for MA organizations 
and other impacted payers, including implementation of a Prior 
Authorization API, new reporting to CMS, and new requirements to 
provide to the applicable provider a specific reason for the denial of 
a request for prior authorization.
    Comment: CMS requested comment on requiring MA plans to submit a 
link to their health equity analysis directly to CMS. Many commenters 
supported the addition of this requirement. Commenters further 
suggested that CMS make the specified metrics to be used in the 
analysis publicly available on the CMS website and to require MA plans 
to publish the results of the analysis in plain, easy to understand 
language that can be understood by the average enrollee. A commenter 
requested the results of the analysis be accessible on the Medicare 
Plan Finder on www.medicare.gov so that beneficiaries can evaluate the 
ease with which they may access services when determining which health 
plan to choose.
    Additionally, several commenters also suggested that plans only 
submit a link to CMS, and not post the report publicly. These 
commenters generally stated that proposed requirement to post the 
report publicly on plan sponsors' websites could cause unnecessary 
confusion to providers and beneficiaries who can easily misinterpret 
publicly available prior authorization metrics. Further, because 
providers and enrollees are not consistent across MA plans, commenters 
pointed out that it may be challenging to compare metrics across plans. 
Some commenters suggested using Part C reporting requirements instead 
of the proposed analysis to collect the data.
    Some commenters suggested that CMS should establish a unified 
portal where stakeholders can view all MA plans' health equity analyses 
and require certain standardized reporting to improve stakeholders' 
ability to compare health equity impacts across MA plans.
    Several commenters requested that CMS first create a standard 
system of reporting before requiring a publicly reported analysis.
    Response: At this time, we will not require plans to submit a 
weblink to their health equity analysis to CMS. However, we will 
continue to evaluate whether this is necessary, and may add such a 
requirement in future rulemaking. We disagree that requiring the health 
equity analysis be published directly on the MA plan's website could be 
confusing for enrollees. We believe that many individuals use the MA 
plan's website as a primary resource for information on that specific 
plan and would therefore be more inclined to visit the MA plan's 
website to learn about that plan. We are finalizing as proposed the 
requirements in Sec.  422.137(d)(7) that the MA organization must 
publish the results of the health equity analysis (which must use the 
metrics specified in Sec.  422.137(d)(6)) on the plan's website meeting 
requirements for public access listed in paragraphs (d)(7)(i) through 
(iv). Regarding the concern that metrics cannot be compared across MA 
plans, we are not requiring a comparison of metrics across MA plans at 
this time. Rather, the goal of the analysis and public reporting is to 
begin to identify whether the use of prior authorization causes any 
persistent disparities among enrollees with the specified SRFs within 
individual MA plans. However, the accessibility of these reports in 
.txt file in the root directory of the website domain that includes a 
direct link to the machine-readable file and with the data contained 
within that file being digitally searchable and downloadable are 
intended to ensure automated access to the data. This may facilitate 
comparisons of the data across plans.
    Comment: Several commenters requested CMS clarify that the data 
elements reporting the average and median time elapsed should be 
calculated beginning with the time the MA plan has received all the 
necessary information to complete the prior authorization request. 
Commenters indicated that, often, prior authorization requests are 
initially denied, or may be delayed, because information necessary to 
complete the request is missing. Some commenters also expressed concern 
over whether and how to count enrollees who have not been enrolled in 
the MA plan for a full year, and one commenter asked how to account for 
enrollees whose social risk factors may change over time.
    Response: The average and median time that elapsed between the 
submission of a request and a determination by the MA plan should be 
calculated based on when the initial request is made. Since the goal of 
this analysis is to collect baseline data and gain a clearer picture of 
the impact of prior authorization on enrollees with the specified 
social risk factors, it is pertinent for CMS and the public to 
understand how long the entire process takes. This includes when MA 
plans need additional information from providers to make decisions. 
Regarding counting enrollees who have been enrolled for less than a 
full year, MA plans must count these enrollees--the point of the 
analysis is to analyze the use of prior authorization, therefore an 
enrollee's time in the plan when the prior authorization request is 
processed is not relevant. Further, CMS does not believe that enrollees 
whose SRF status may change over time is an issue since again, the 
point of the analysis is to analyze the use of prior authorization and 
begin to understand any correlation between the use of prior 
authorization and the presence of the social risk factors. If an 
enrollee's SRF status changes throughout the plan year, that should not 
have an impact on how the analysis is conducted, because CMS expects 
the plan to use the enrollee's status at the time the prior 
authorization is processed for calculating the specified metrics.
    Comment: Several commenters asked that CMS explain how it plans to 
use the information included in these health equity analyses, including 
how it may be used to help inform future policies and whether CMS will 
take enforcement action based on the results of the analysis. Some 
commenters expressed concern that the health equity analysis would be 
used as a mechanism to penalize MA plans. A commenter requested that 
plans be permitted to create solutions should inequalities be 
identified. A few commenters suggested that CMS factor the data 
produced by the analysis into determinations for 2027 Star Rating 
Health Equity Index rewards.
    Response: At this time, CMS plans to use the health equity analysis 
for informational purposes, to allow MA plans and CMS to begin to 
identify whether the use of prior authorization correlates to any 
persistent disparities among enrollees with the specified SRFs. CMS is 
not imposing additional requirements currently, and will take all 
comments received, as well as the results of the initial health equity 
analysis, into account when considering future policymaking and 
guidance. This analysis is just one step in continued and ongoing 
efforts to ensure all enrollees have safe and equitable access to 
medically necessary services.
    Comment: CMS solicited comment on alternatives to the July 1, 2025, 
deadline for the initial health equity analysis to be posted to an MA 
plan's publicly available website. Several commenters suggested that 
CMS adopt an alternative timeline for publication of the initial 
report. Some commenters suggested that CMS first work with MA plans to 
standardize data collection and reporting, or that CMS develop a 
standard template for MA plans to use.

[[Page 30573]]

Other commenters indicated that issuing the initial report in July 2025 
could present challenges for plans' IT resources, especially for 
smaller plans. Some commenters requested that MA plans submit their 
reports to CMS in 2025, and that CMS provide confidential feedback 
during the initial year and use that time to determine whether the 
results of the report are useful. Then in 2026, MA plans report results 
publicly. Further, commenters indicated that a 2026 date for 
publication of the initial report would allow plans to collect a full 
year of data. A commenter suggested CMS extend data back over several 
contract years. A commenter expressed that for plans to publish a 
health equity analysis that is in a machine-readable format (MRF) with 
the data contained within that file being digitally searchable and 
downloadable, it will require CMS to develop an industry wide MRF 
schema, which will likely take longer than is provided for in the 
proposed rule.
    Response: CMS understands the processes and resources required to 
produce a new reporting requirement, however since MA plans should 
already have the relevant data available, as they are currently 
conducting the prior authorization process. Therefore, CMS declines to 
adapt an alternative timeline for the report. Since the goal of this 
analysis is to begin to understand the potential impact of prior 
authorization on enrollees with the specified social risk factors, any 
level of information that is made publicly available will be useful at 
this stage. Regarding CMS's production of an MRF schema, CMS does not 
believe that this will require extending the timeline for the initial 
report due date, since as outlined in the preamble, CMS plans to issue 
guidance describing the format to be used by MA plans. CMS declines to 
extend the data collection back over several contract years.
    Comment: Several commenters suggested that the health equity 
analysis be extended to cover step therapy and Part B drugs.
    Response: CMS thanks commenters for this suggestion and will 
consider it for future policymaking.
    Comment: Some commenters suggested that CMS extend the analysis to 
include all types of utilization management, not just prior 
authorization.
    Response: CMS thanks commenters for this suggestion and will 
consider for future rulemaking.
    Comment: Several commenters suggested the CMS establish a parallel 
health equity structure for Part D plans, including similar health 
equity related requirements for the composition and consideration of 
Pharmacy & Therapeutic (P&T) Committee, and make regulatory changes to 
the part D provisions.
    Response: While this comment is out of scope for the current 
rulemaking, CMS thanks commenters for their feedback and will take it 
under consideration for future rulemaking.
    Comment: A commenter requested that CMS provide a uniform 
definition for the specified social risk factors.
    Response: As outlined in the preamble and provided in Sec.  
422.137(d)(6)(ii) (as proposed and finalized), the specified social 
risk factors are defined as follows: (1) receipt of the low-income 
subsidy or being dually eligible for Medicare and Medicaid (LIS/DE); or 
(2) having a disability. Disability status is determined using the 
variable original reason for entitlement code (OREC) for Medicare using 
the information from the Social Security Administration and Railroad 
Retirement Board record systems. CMS chose these SRFs because they 
mirror the SRFs that will be used to measure the Heath Equity Index 
reward for the 2027 Star Ratings (see Sec.  422.166(f)(3)), and we 
believe it is important to align expectations and metrics across the 
program.
    MA plans can access the relevant information through the 
Beneficiary Eligibility Query (BEQ), which is a pre-enrollment query MA 
plans use to check eligibility prior to enrolling an individual. The 
BEQ provides enrollee information including demographics, entitlement/
eligibility, Part D employer subsidy, and Low-Income Subsidy. MA plans 
can submit a BEQ query by submitting their requests in a batch file via 
CMS Enterprise File Transfer (EFT). MA plans can also perform the query 
online using the MARx, which provides real time information regarding 
eligibility. MARx provides MA plans with data related to enrollees and 
their subsidies.
    Comment: A commenter cautioned that some of the information 
gathered as part of a health equity analysis may be confidential or 
proprietary to the MA plan and, therefore encouraged CMS to permit the 
plan to withhold confidential and proprietary information included in 
these analyses from publication.
    Response: CMS declines this suggestion. Given the nature of the 
report, and that all information must be aggregated, CMS does not 
believe there is a risk for proprietary information to be disclosed. 
However, CMS will permit MA organizations to suppress information for 
small cell sizes in instances where the MA plan's service area is so 
small, that even in the aggregate, the presentation of the data in the 
analysis could disclose confidential data about covered individuals.
    Comment: A commenter requested clarification that the intent is for 
the link in the footer of the website to go directly to the analysis 
file, or, if would it be acceptable for the link to direct to a landing 
page that may contain multiple health equity related reports so long as 
the analysis remains easily accessible.
    Response: It would be acceptable for the link in the footer of the 
website to direct to a landing page, so long as the analysis remains 
easily accessible. This means that the report for each MA plan must be 
clearly labeled, and readily accessible to interested parties and other 
members of the public.
    Comment: A commenter recommended regulatory language to include 
requirements for the standard exchange of the data among payers, 
providers or healthcare community such as USCDI version 3.
    Response: CMS thanks the commenter for the suggestion but declines 
to incorporate such a standard at this time.
    We thank all commenters for their comments. After careful 
consideration of all comments received, and for the reasons set forth 
in the proposed rule and in our responses to the related comments, as 
previously summarized, we are finalizing the modifications to Sec.  
422.137 substantively as proposed but with two revisions. First, we are 
not finalizing use of the repetitive phrase ``but is not limited to'' 
in the sentence that provides the non-exhaustive list of examples of 
expertise in health equity. Second, we are finalizing a clarification 
in Sec.  422.137(d)(6)(iii) that the data used for the health equity 
analysis and reporting excludes data on drugs as defined in Sec.  
422.119(b)(1)(v).

V. Enrollment and Appeals

A. 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 ``special needs 
individuals,'' as defined at section 1859(b)(6)(B) of the Act, and 
which includes institutionalized individuals, dually eligible 
individuals, and individuals with severe or disabling chronic 
conditions. Only those

[[Page 30574]]

individuals who qualify as special needs individuals may enroll, and 
remain enrolled, in an SNP. In the January 2005 MA final rule, we 
established at Sec.  422.52 that individuals were eligible to enroll in 
an SNP if they: (1) met the definition of a special needs individual, 
(2) met the eligibility requirements for that specific SNP, and (3) 
were 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 SNP, 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 enrollees are given adequate 
notice prior to being disenrolled from an SNP and provided an 
opportunity to prove that they are eligible to remain enrolled in the 
plan, if applicable. Providing these enrollees 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 enrollees 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 interested 
parties, we proposed to codify current policy for MA plan notices prior 
to disenrollment for loss of special needs status, as well as a final 
disenrollment notice. We intend that interested parties will be able to 
rely on these regulations, establishing the procedures that an MA 
organization must follow in the event that an SNP enrollee loses 
special needs status and is disenrolled from the SNP on that basis. 
Specifically, we proposed to revise Sec.  422.74(d) by redesignating 
paragraph (d)(8) as paragraph (d)(9) and adding a new paragraph (d)(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 such 
enrollee 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. Such 
disenrollment effective date 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. Additionally, the 
final notice of involuntary disenrollment must be sent before 
submission of the disenrollment to CMS. Lastly, we proposed in new 
paragraph (8)(iv), that the final notice of involuntary disenrollment 
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.
    These proposed changes would codify longstanding guidance. 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 Fund.
    We received the following comments, and our responses follow.
    Comment: A commenter expressed support for this provision.
    Response: We thank the commenter for their support of our proposal.
    After consideration of all public comments and for the reasons 
outlined in the proposed rule and here, we are finalizing our proposal 
without substantive changes, but with minor changes for clarity.

B. Involuntary Disenrollment for Individuals Enrolled in an 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 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 an 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'' which appeared in the Federal Register on 
June 26, 1998 (63 FR 34968), we established the conditions for MA 
organizations to enroll individuals in an 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 an 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 MMA, 
which lifted the time and enrollment limits on MSA plans imposed by the 
BBA of 1997. However, section 233 of

[[Page 30575]]

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 proposed 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 
such enrollee 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 also proposed 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)(3). 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 proposed 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.
    We did not receive comments related to this proposal. For the 
reasons outlined here and in the proposed rule, we are finalizing this 
proposal without modification.

C. 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 a 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 
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.\106\ 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 sets forth that MA and PDP plans are 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.
---------------------------------------------------------------------------

    \106\ This guidance can be 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.
---------------------------------------------------------------------------

    To provide transparency and stability for interested parties, we 
proposed 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 proposed that the

[[Page 30576]]

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 concluded that the 
requirements have been previously implemented and are currently being 
followed by plans. There is also no impact to the Medicare Trust Fund.
    We received the following comments, and our responses follow.
    Comment: A commenter requested that CMS provide a model letter for 
this required notice.
    Response: We thank the commenter for the suggestion. We have 
longstanding model reinstatement notices that have been displayed in 
Chapter 2 of the Medicare Managed Care Manual and Chapter 3 of the 
Medicare Prescription Drug Benefit Manual.
    Comment: A commenter expressed that they currently send 
reinstatement letters and recommended this process continues. The 
commenter also noted that beneficiary history in MARx is typically 
removed when reinstatement situations occur and is concerned about how 
plans will know when the enrollment issue has happened.
    Response: We appreciate the commenter's feedback. This proposal 
does not change the existing sub-regulatory guidance for plans to 
provide notification of enrollment reinstatement based on a 
beneficiary's cancellation of a new enrollment in a different plan. The 
plan can continue to send reinstatement letters to beneficiaries. We 
also note that the new plan receives a transaction reply code (TRC) 15 
in MARx--which describes CMS's response to the enrollment transaction--
when the enrollment is removed from a beneficiary's record. The plan in 
which the beneficiary's enrollment is being reinstated receives a TRC 
287 if there are no changes to the beneficiary's profile from the time 
of the disenrollment to the time of the cancellation.
    Comment: A commenter expressed support for this proposal.
    Response: We thank the commenter for their support of this 
proposal.
    After consideration of all public comments, and for the reasons 
outlined here and in the proposed rule, we are finalizing our proposal 
with minor modifications to clarify the regulation text proposed at 
Sec.  423.32(h).

D. 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 set forth 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 
35074). This requirement was codified at Sec.  422.66(b)(4) and has 
remained in place for MA organizations.
    Current Part D regulations, however, do not impose requirements for 
Part D sponsors that fail to submit the transaction notice to CMS in a 
timely manner. 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 interested parties, and 
to align the Part D regulation with the requirements for MA 
organizations, we proposed 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 concluded 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).
    We did not receive comments related to this proposal. For the 
reasons outlined here and in the proposed rule, we are finalizing this 
proposal with one minor modification. We are making a technical 
correction to the regulation text proposed at Sec.  423.36(f) to update 
a cross-reference that is inaccurate, changing ``paragraph (c)(1)'' to 
``paragraph (b)(1)''.

E. 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 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

[[Page 30577]]

Sec.  422.66(b)(2), the regulations 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, as 
well as send a copy to the enrollee which informs the enrollee of any 
lock-in requirements of the plan that apply until the effective date of 
disenrollment. This process is codified at Sec.  422.66(b)(3), 
including the requirement that the MA plan must file and retain the 
disenrollment request for the period 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 (70 FR 4211). 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, at 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, the procedural steps for 
plans to address incomplete disenrollment requests. These steps include 
providing that when the disenrollment request is incomplete, plans must 
document 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 interested parties about 
the MA and Part D programs and about the requirements applicable to 
requests for voluntary disenrollment from MA and Part D plans, we 
proposed to codify CMS's longstanding policies 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 at new paragraphs Sec. Sec.  422.66(b)(6) and 
423.36(d). The specified timeframes are described at proposed 
Sec. Sec.  422.66(b)(3)(v)(C) and 423.36(b)(4)(iii). We also proposed, 
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 proposed that 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 proposed 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 proposed that if any additional information needed to make 
the disenrollment request complete is not received within these 
timeframes, the disenrollment request must be denied.
    This proposal codifies longstanding guidance. 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 
concluded that these updates do not add to the existing disenrollment 
process and we do not believe there is any additional paperwork burden.
    We received the following comment, and our response follows.
    Comment: A commenter expressed support for this provision.
    Response: We thank the commenter for their support of our proposal.
    After consideration of all public comments, and for the reasons 
outlined here and in the proposed rule, we are finalizing our proposal 
without modification.

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

    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 grace 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 21432) 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 22072), we 
extended the policy of reinstatement for

[[Page 30578]]

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. Sec.  417.460(c)(3), 422.74(d)(1)(v), and 
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.
    To provide transparency to interested parties, we proposed 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 proposed 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 concluded 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.
    We received the following comment, and our response follows.
    Comment: A commenter expressed concern about requiring disenrolled 
individuals to request reinstatement within the 60-calendar day period 
following the date they are disenrolled from the plan. The commenter 
states that contacting the plan within the 60-day period to request 
reinstatement will be challenging for people with a mental health or 
substance use disorder (MH/SUD), adding that people with a MH/SUD often 
do not complain when they face administrative difficulties.
    Response: While we agree that taking action to request 
reinstatement following disenrollment may be more challenging for some 
than it is for others, we believe that 60 days is a sufficient amount 
of time and that it is not unreasonable to ask someone who has been 
disenrolled from their plan and, as such, is no longer being covered, 
to reach out to the plan and request reinstatement within the 60-day 
period following disenrollment. We require that all MA and Part D plans 
offer a minimum two-month grace period prior to disenrolling someone 
who has not paid their plan premium; many plans offer a longer grace 
period. This minimum two-month period prior to disenrollment, combined 
with the 60-day period following disenrollment to request reinstatement 
for good cause, provides a reasonable amount of time for someone who 
wishes to continue their enrollment in the plan to take action to 
resolve the premium delinquency and, if disenrolled, make a 
reinstatement request.
    After consideration of all public comments, and for the reasons 
outlined here and in the proposed rule, we are finalizing our proposal 
with minor modifications to reorganize and clarify the regulation text 
proposed at Sec. Sec.  417.460(c)(3), 422.74(d)(1)(v), and 
423.44(d)(1)(vi).

G. 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 who 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). (For this section and throughout 42 CFR 417, CMP 
is used to mean competitive medical plan, not civil monetary 
penalties.) In implementing regulations which appeared in the Federal 
Register on September 1, 1995 (60 FR 45679), 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 34968), 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 enrollee 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 at 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 ``abusive.'' 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

[[Page 30579]]

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 
enrollees 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 enrollee'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 notices that an MA organization, Part D sponsor, and cost 
plans must send before requesting permission from CMS to involuntarily 
disenroll the individual.
    To provide transparency to interested parties and stability as to 
the operation of the program, we proposed to codify current policy for 
MA, Part D, and cost plan notices during the disenrollment for 
disruptive behavior process. These notices provide the enrollee with a 
warning of the potential consequences of continued disruptive behavior. 
In a new proposed paragraph at Sec.  422.74(d)(2)(vii), we proposed to 
codify existing policy currently set out in sub-regulatory guidance 
regarding MA plan notices prior to 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 enrollee 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 
individual, sent at least 30 days after the advance notice to give the 
enrollee an opportunity to cease the behavior. These notices are in 
addition to the disenrollment submission notice currently required 
under Sec.  422.74(c). We also proposed 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 addition to 
Sec.  422.74(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 new paragraph Sec.  423.44(d)(2)(viii), we proposed to codify 
existing policy currently set out in sub-regulatory guidance regarding 
PDP sponsor notices prior to 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 enrollee that continued disruptive behavior 
could lead to involuntary disenrollment; (2) a notice of intent to 
request CMS permission to disenroll the individual, sent at least 30 
days after the advance notice to give the enrollee an opportunity to 
cease the behavior. These notices are in addition to the disenrollment 
submission notice currently required under Sec.  423.44(c). We also 
proposed 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 
(d)(2)(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 proposed to codify existing policy 
guidance currently set out in sub-regulatory 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 enrollee 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 also proposed 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 
proposed in Sec.  417.460(e)(2) that, as part of its efforts to resolve 
the problem presented by the enrollee, an 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.
    This proposal codifies longstanding guidance. 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 concluded that these updates do not add to the existing 
disenrollment process and we do not believe there is any additional 
paperwork burden.
    We did not receive comments related to this proposal. For the 
reasons outlined here and in the proposed rule, we are finalizing this 
proposal with slight modifications to reorganize the regulation text 
for additional clarity.

H. 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 who 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 ground for termination 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

[[Page 30580]]

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 who 
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 proposed 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 was to codify the current 
policy, as reflected in section 50.3.3 of Chapter 3 of the Medicare 
Prescription Drug Benefit Manual.
    We proposed 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 Sec.  423.44(d)(9), the Part D plan has the option to 
involuntarily disenroll the individual. Further, we proposed to 
establish at such new paragraph Sec.  423.44(d)(9) the process for 
optional disenrollment for an individual who commits fraud or permits 
abuse of their enrollment card. We proposed 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, 
to be provided at Sec. Sec.  423.44(d)(9)(i)(A) and 423.44(d)(9)(i)(B), 
respectively. We proposed to establish at 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 proposed 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 further proposed to add a new Sec.  423.44(d)(9)(ii) to 
establish that a Part D plan that 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 
also proposed 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 the Part D optional involuntary disenrollment for 
fraud and abuse regulations at Sec.  423.44(d)(9)(i), 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. Since 2012, there have been 
only five disenrollments for fraud and abuse. Three of those 
disenrollments were from MA/MA-PD 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 these data, we do not 
expect any future impact to the Medicare Trust Fund.
    We further proposed 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 proposed 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 written notice to the member and notifying 
CMS of the disenrollment have already been accounted for under OMB 
control numbers 0938-0964 (CMS-10141).
    We received no comments on our proposal. For the reasons outlined 
here and in the proposed rule, we are finalizing this proposal without 
modification.

I. 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

[[Page 30581]]

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 regulations (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 proposed 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 at section 50.3.1 of 
Chapter 3 of the Medicare Prescription Drug Benefit Manual, and Part D 
plan sponsors have previously implemented and are currently following 
such policy. We proposed, 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 proposed 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. 
This proposal is a codification of longstanding Part D sub-regulatory 
guidance and there is no impact to the Medicare Trust Fund. These 
updates do not add to the existing disenrollment process, so we do not 
believe there is any additional paperwork burden.
    We did not receive comments related to this proposal. For the 
reasons outlined here and in the proposed rule, we are finalizing our 
proposal without substantive changes but with minor organizational and 
editorial changes in Sec.  423.44(d)(1) for clarity.

J. 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 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, 85 FR 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 proposed to revise 
the end date(s) for the SEP for Government Entity-Declared Disaster or 
Other Emergency specified within Sec. Sec.  422.62(b)(18) and 
423.38(c)(23). As part of this proposal, we proposed to create a new 
Sec.  422.62(b)(18)(i), and redesignate what is currently in Sec.  
422.62(b)(18)(i)-(iii) as (b)(18)(ii)-(iv); likewise, we proposed to 
create a new Sec.  423.38(c)(23)(i) and redesignate what is currently 
in Sec.  423.38(c)(23)(i)-(iii) as (c)(23)(ii)-(iv).
    First, we proposed 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 ordinances or codes regarding the 
automatic expiration date of state or local emergency/disaster 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 proposed 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 sought 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 proposed 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 interested parties to 
more easily calculate SEP length and determine beneficiary eligibility 
for the SEP.

[[Page 30582]]

    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 Fund.
    We received the following comments, and our responses follow.
    Comment: Multiple commenters expressed support for this provision.
    Response: We thank the commenters for their support of our 
proposal.
    Comment: Multiple commenters suggested that we extend this SEP 
eligibility period to six months after the end of the incident period, 
to align with the timeframe of the Parts A and B SEP for disasters or 
emergencies, instead of the two months currently codified in 
regulations.
    Response: We thank the commenters for their suggestion; however, 
these proposed changes were aimed to provide clarity on incident end 
dates in cases where automatic expirations were relied upon, or when no 
end date was identified. We believe that the two full calendar months 
after the end of the incident period, as currently codified, provides 
ample opportunity for beneficiaries to select and enroll in a new plan. 
Though the timeframe for the Parts A and B SEP for disasters or 
emergencies is six months, two months is appropriate for making a Parts 
C/D election, given the procedural differences in enrolling in Medicare 
for the first time and making a new C/D plan election. The two-month 
period is also consistent with our other Parts C/D SEPs. We also note 
that beneficiaries who are unable to make an election during this SEP 
because of continued impacts of the disaster or emergency may be 
eligible for the SEP for Other Exceptional Circumstances and should 
contact 1-800-MEDICARE to explain their unique situation.
    Comment: A commenter expressed concern that individuals who use the 
Medicare Parts A and B Disaster/Emergency SEP to enroll in Premium Part 
A or Part B may not be able to use the MA or Part D Disaster/Emergency 
SEP given the different eligibility timelines between the A/B SEP and 
C/D SEP.
    Response: In order to use the MA and Part D SEP for Government 
Entity-Declared Disaster or Other Emergency, the individual must have 
been eligible for another valid election period but was unable to 
utilize it because they were affected by a disaster or other emergency. 
Newly MA-eligible individuals, because of their A/B SEP election, do 
not meet this eligibility criteria and are thus not impacted by the 
different eligibility timelines between the A/B and C/D SEPs. Because 
their MA eligibility is as a result of using the A/B SEP, these 
individuals would not be eligible to use the MA and Part D SEP for 
Government Entity-Declared Disaster or Other Emergency because they 
were not eligible for another MA or Part D election period that they 
were unable to use due to the disaster or other emergency. We also note 
that individuals who do utilize the A/B Emergency SEP are eligible to 
use the SEPs newly codified at 42 CFR 422.62(b)(26) and 423.38(c)(34), 
and thus would have the ability to make a Part C/D election after 
taking advantage of their A/B SEP.
    After consideration of all public comments, and for the reasons 
outlined here and in the proposed rule, we are finalizing our proposal 
with minor edits at Sec. Sec.  422.62(b)(18) and 423.38(c)(23) for 
grammar and clarity, as well as modifications to correctly redesignate 
existing paragraphs.

K. 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 an M+C, later known as 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 that in the continuation area 
enrollees have access to the full range of basic benefits under the 
original Medicare fee-for-service program option. In addition, section 
1860D-1(b)(1)(B)(i) of the Act generally directs CMS to use rules for 
enrollment, disenrollment, and termination relating to residence 
requirements for Part D sponsors that are similar to those established 
for MA organizations under section 1851(b)(1)(A) of the Act.
    In the June 1998 Interim Final Rule with Comment Period (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.
    In January 2005, we published a final rule (70 FR 4194) to 
establish at Sec.  423.30(a)(2)(ii) 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)(i) that a Part D plan sponsor is required to 
disenroll an 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. Further, section 1860D-1(b)(1)(B)(iii) of 
the Act directs CMS to generally use rules related to coverage election 
periods that are similar to those established for MA organizations 
under section 1851(e) of the Act. In the June 1998 IFC (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) are reflected in section 
30.4.1 of Chapter 2 of the Medicare Managed Care Manual

[[Page 30583]]

for MA and in section 30.3.1 of Chapter 3 of the Medicare Prescription 
Drug Benefit Manual. This guidance provides 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 proposed 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 was to codify current policy as 
reflected in CMS's existing sub-regulatory 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 interested parties 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 
consecutive months.
    If 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 U.S. Postal Service, 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 proposed to align the Part D regulation 
with the 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 
proposed 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), respectively, if provided by mail, is returned to the 
plan sponsor by the U.S. 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 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 interested 
parties about the MA and Part D programs and about plan service area

[[Page 30584]]

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.
    We received no comments on our proposal. Except for a minor change 
to the organization of the regulation text for 423.38(c)(7), we are 
finalizing the proposal without modification for the reasons outlined 
here and in the proposed rule.

L. 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 an 
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. 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 sub-regulatory 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 
proposed 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.
    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 MA organizations and Part D sponsors, we 
believe that plans are complying with this guidance, and we did not 
propose any 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.
    We received no comments on our proposal. For the reasons outlined 
here and in the proposed rule, we are finalizing this proposal without 
modification.

M. 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 of such absence. 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/

[[Page 30585]]

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 of such absence. 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 
proposed 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 proposed 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 disenrollments 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 proposed 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 proposed 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, respectively, must document the basis for involuntary 
disenrollment actions that are based on the residency requirements.
    The intent of our proposal was 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 
documentation policy that is 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 already being carried out by MA 
organizations and Part D plan sponsors. Codifying these policies 
regarding notification of disenrollment and document retention will 
provide transparency and stability for interested parties 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.
    We received no comments on our proposal. For the reasons outlined 
here and in the proposed rule, we are finalizing this proposal without 
modification.

N. 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 
35071). These requirements were codified in the Part C regulations but 
were not codified in the Part D regulations.
    We proposed to codify this existing policy to provide transparency 
and ensure consistency between the Part C and Part D programs. 
Specifically, we proposed 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

[[Page 30586]]

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 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 concluded 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.
    We did not receive comments related to this proposal. For the 
reasons outlined here and in the proposed rule, we are finalizing this 
proposal without modification.

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

    We proposed a technical change at Sec.  423.562(a)(1)(v) to 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 eliminates discretionary language 
and improves consistency with Sec.  423.153(f), which requires each 
Part D plan sponsor to establish and maintain a DMP and include appeal 
procedures that meet the requirements of subpart M for issues involving 
at-risk determinations. This is strictly a technical change to the 
wording at Sec.  423.562(a)(1)(v) and does not impact the underlying 
burden related to processing appeals of at-risk beneficiaries. This 
change 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 did not receive comments on this proposal. For the reasons 
outlined here and in the proposed rule, we are finalizing the proposal 
as proposed.

P. Revise Initial Coverage Election Period Timeframe To Coordinate With 
A/B Enrollment (Sec.  422.62)

    Section 4001 of the Balanced Budget Act of 1997 (Pub. L. 105-33) 
added sections 1851 through 1859 to the Social Security Act (the Act), 
establishing Part C of the Medicare program known originally as M+C and 
later as Medicare Advantage (MA). As enacted, section 1851(e) of the 
Act establishes specific parameters in which elections can be made and/
or changed during enrollment and disenrollment periods under the MA 
program. Specifically, section 1851(e)(1) of the Act requires that the 
Secretary specify an initial coverage election period (ICEP) during 
which an individual who first becomes entitled to Part A benefits and 
enrolled in Part B may elect an MA plan. The statute further stipulates 
that if an individual elects an MA plan during that period, coverage 
under the plan will become effective as of the first day on which the 
individual may receive that coverage. Consistent with this section of 
the Act, in the ``Medicare Program; Establishment of the 
Medicare+Choice Program'' interim final rule with comment period which 
appeared in the Federal Register on June 26, 1998, (herein referred to 
as the June 1998 interim final rule), CMS codified this policy at Sec.  
422.62(a)(1) (63 FR 35072).
    In order for an individual to have coverage under an MA plan, 
effective as of the first day on which the individual may receive such 
coverage, the individual must elect an MA plan before he or she is 
actually entitled to Part A and enrolled in Part B coverage. Therefore, 
in the June 1998 interim final rule CMS codified the ICEP to begin 3 
months prior to the month the individual is first entitled to both Part 
A and enrolled in Part B and ends the last day of the month preceding 
the month of entitlement (63 FR 35072).
    Section 102 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173) revised section 
1851(e)(1) of the Act to provide for an ICEP for MA that ends on the 
later of, the day it would end under pre-MMA rules as described above, 
or the last day of an individual's Medicare Part B Initial Enrollment 
Period (IEP). This approach extended an individual's ICEP which helped 
to ensure that an individual who uses their IEP to enroll in Medicare 
Part A and B has the opportunity to elect an MA or MA prescription drug 
(MA-PD) plan following their first entitlement to Part A and enrollment 
in Part B. Consistent with the revised provisions of section 1851(e)(1) 
of the Act, CMS codified this policy at Sec.  422.62(a)(1) in the 
Medicare Program; Establishment of the Medicare Advantage Program final 
rule which appeared in the Federal Register on January 28, 2005 (70 FR 
4717).
    As described in Sec.  422.50(a)(1), eligibility for MA or MA-PD 
enrollment generally requires that an individual first have Medicare 
Parts A and B and meet all other eligibility requirements to do so. The 
ICEP is the period during which an individual newly eligible for MA may 
make an initial enrollment request to enroll in an MA or MA-PD plan. 
Currently, once an individual first has both Parts A and B, their ICEP 
begins 3 months immediately before the individual's first entitlement 
to Medicare Part A and enrollment in Part B and ends on the later of:
    1. The last day of the month preceding entitlement to Part A and 
enrollment in Part B; or
    2. The last day of the individual's Part B IEP.
    Individuals who want to enroll in premium-Part A, Part B, or both, 
must submit a timely enrollment request during their IEP, the General 
Enrollment Period (GEP), or an existing special enrollment period (SEP) 
for which they are eligible. Eligible individuals may choose to enroll 
in both Part A and B during their first opportunity, that is, during 
their IEP. These individuals have an ICEP as described in Sec.  
422.62(a)(1)(ii), that is, they can choose to enroll in an MA plan 
(with or without drug coverage) at the time of, or after, they have 
both Part A and B, up until the last day of their IEP. However, not all 
individuals enroll in both Part A and B during their IEP. Other 
individuals, such as those who are working past age 65, may not have 
both Part A and B for the first time until after their IEP. These 
individuals may only have Part A and/or B for the first time when they 
use an SEP or a future GEP to enroll. To note, prior to January 1, 
2023, individuals who enrolled in Part A and/or Part B during the GEP 
had a universal effective date of July 1st. These individuals had an 
ICEP as described in Sec.  462.22(a)(1)(i), that is, the ICEP started 
April 1st and ended June 30th. Although these individuals had to decide 
whether to enroll in an MA or MA-PD plan prior to their July 1st 
effective date, they did have time to consider their options, as the 
GEP is January 1st-March 31st annually, and their enrollment in Part B, 
(and Part A if applicable), was not effective until July 1st. However, 
the Consolidated Appropriations Act, 2021, (CAA) (Pub. L. 116-260), 
revised sections 1838(a)(2)(D)(ii) and 1838(a)(3)(B)(ii) of the Act to 
provide that for individuals who enroll during the GEP in a month 
beginning on or after January 1, 2023, their entitlement would begin 
with the first day of the month following the month in which they 
enroll. For

[[Page 30587]]

example, if an individual has Part A, but enrolls in Part B in March, 
during the GEP, they would first have both Part A and Part B effective 
April 1st. Although this provides for an earlier Medicare effective 
date, the individual's ICEP would occur prior to that Medicare 
effective date, that is, as described in Sec.  422.62(a)(1)(i) above, 
and they no longer have that additional time to consider their options.
    Currently, the individuals described above have an ICEP as 
described in Sec.  422.62(a)(1)(i) and can only enroll in an MA plan 
(with or without drug coverage) prior to the effective date of their 
Part A and B coverage. For example, an individual's 65th birthday is 
April 20, 2022, and they are eligible for Medicare Part A and Part B 
beginning April 1, 2022. They have premium-free Part A; however, the 
individual is still working, and has employer health insurance, so they 
decide not to enroll in Part B during their IEP. The individual retires 
in April 2023, and enrolls in Part B effective May 1, 2023 (using a 
Part B SEP). The individual's ICEP would be February 1st through April 
30, 2023. These individuals need to decide if they want to receive 
their Medicare coverage through an MA plan prior to the effective date 
of their enrollment in both Part A and B. In this example, the 
individual would have to enroll in an MA plan using the ICEP by April 
30, 2023.
    Section 422.62(a)(1) was intended to provide beneficiaries who 
enroll in both Part A and Part B for the first time with the 
opportunity to elect an MA plan at the time that both their Part A and 
B coverage were effective. However, in practice, individuals described 
above, who do not enroll in Part B during their IEP, do not have an 
opportunity to elect to receive their coverage through an MA plan after 
their Part A and B coverage goes into effect. When an individual 
enrolls in both Part A and B for the first time using an SEP or the 
GEP, they have to determine, prior to the start of their coverage, if 
they want to receive their coverage through Original Medicare or an MA 
plan prior to the effective date of their Part A and B coverage. If 
they do not use their ICEP to enroll in an MA plan prior to when their 
Part A and B coverage becomes effective, they lose the opportunity to 
enroll in an MA plan to receive their Medicare coverage and will 
generally have to wait until the next enrollment period that is 
available to them to choose an MA plan.
    To provide more flexibility, we proposed to revise the end date for 
the ICEP for those who cannot use their ICEP during their IEP. That is, 
we proposed in Sec.  422.62(a)(1)(i) that an individual would have an 
opportunity to enroll in an MA plan (with or without drug coverage) 
using their ICEP until the last day of the second month after the month 
in which they are first entitled to Part A and enrolled in Part B. 
Under proposed Sec.  422.62(a)(1)(i), the individual's ICEP would begin 
3 months prior to the month the individual is first entitled to Part A 
and enrolled in Part B and would end on the last day of the second 
month after the month in which the individual is first entitled to Part 
A and enrolled in Part B. Using the example above, we are proposing 
that the individual's ICEP would be February 1st through June 30, 2023, 
instead of February 1st to April 30th. As described in Sec.  
422.68(a)(1), if an election is made prior to the month of entitlement 
in both Part A and Part B, the MA election would be effective as of the 
first date of the month that the individual is entitled to both Part A 
and Part B.
    We believed that extending the timeframe for the ICEP under Sec.  
422.62(a)(1)(i) would provide beneficiaries that are new to Medicare 
additional time to decide if they want to receive their coverage 
through an MA plan. We believed that extending this timeframe would 
help those new to Medicare to explore their options and select coverage 
that best suits their needs and reduce the number of instances where an 
individual inadvertently missed their ICEP and has to wait until the 
next open enrollment period to enroll in MA or MA-PD plan. This also 
supports President Biden's April 5, 2022 Executive Order on Continuing 
to Strengthen Americans' Access to Affordable, Quality Health 
Coverage,107 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 health care providers.
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    This proposed change in the ICEP timeframe aligned with the SEP 
timeframe that we have established in Sec.  422.62(b)(10), for 
individuals to enroll in an MA or MA-PD plan when their Medicare 
entitlement determination is made for a retroactive effective date, and 
the individual has not been provided the opportunity to elect an MA or 
MA-PD plan during their ICEP. It also aligned with the timeframe we 
have established in Sec.  422.62(b)(26), effective January 1, 2024, for 
an individual to enroll in an MA plan when they enroll in Part A and/or 
Part B using an exceptional condition SEP, as described in Sec. Sec.  
406.27 and 407.23.
    This final rule would extend the timeframe of an existing 
enrollment period, but we noted it would not result in a new or 
additional paperwork burden since MA organizations are currently 
assessing applicants' eligibility for election periods as part of 
existing enrollment processes. All burden impacts of these provisions 
have already been accounted for under OMB control number 0938-1378 
(CMS-10718). Similarly, we did not believe the proposed changes would 
have any impact to the Medicare Trust Fund.
    We received the following comments, and our responses follow.
    Comment: All commenters supported our proposed policy to extend the 
ICEP for those individuals who are first entitled to Part A and 
enrolled in Part B and did not enroll in Part A and B during their IEP. 
Many commenters stated this extended timeframe would provide 
beneficiaries more time to evaluate their options for coverage. Another 
commenter said this additional enrollment allowance will be welcome by 
many beneficiaries who are still learning and adjusting to the Medicare 
program. A commenter added that this additional time would allow 
beneficiaries to consider the benefits of MA enrollment, including care 
coordination services and the availability of supplemental benefits. A 
commenter added that expanding the opportunity for beneficiaries to 
choose the appropriate plan ensures that they will more likely be 
satisfied with their plan choice and coverage options. Another 
commenter added that this additional time will also provide Medicare 
Advantage Organizations (MAOs) with additional opportunity to further 
educate individuals on what options are available to them.
    Response: We agree and thank the commenters for their support.
    Comment: A commenter asked CMS to explain how the new proposed ICEP 
timeframe is different from the SEP that provides individuals with 2 
months to elect a stand-alone Part D Plan or MA plan once their retiree 
or current employer group health plan ends.
    Response: An SEP exists for individuals disenrolling from employer 
sponsored coverage (including COBRA coverage) to elect an MA plan (with 
or without drug coverage) or a Part D plan (Sec. Sec.  422.62(b)(4) and 
423.38(c)(11)). This SEP is only for use in accordance with

[[Page 30588]]

an individual's change in employer coverage and ends 2 months after the 
month the employer or union coverage ends. The ICEP is not limited for 
use based on the gain or loss of employer or union sponsored coverage. 
It is a universal election period available to all individuals to elect 
an MA plan (with or without prescription drug coverage) starting 3 
months immediately before the individual's first entitlement to both 
Medicare Part A and Part B and will end, as proposed, the last day of 
the second month after the month in which the individual is first 
entitled to Part A and enrolled in Part B or the last day of the 
individual's Part B IEP, whichever is later.
    Comment: Although they support our proposal to extend the timeframe 
for the ICEP, several commenters recommended alternate timeframes for 
the end of the ICEP. The commenters encouraged CMS to consider 
extending the proposed ICEP timeframe to end 3 full months after the 
month the individual is first entitled to Part A and enrolled in Part 
B. This timeframe would mirror the current IEP, wherein an individual 
would have a total of 7 months (prior to, at the time of, and after 
their first entitlement to Part A and enrollment in Part B) to consider 
their enrollment choice. The commenters stated that, due to the complex 
decision- making that must take place during these initial coverage 
situations, individuals newly eligible for Medicare would benefit 
greatly from additional time and that this timeframe would simplify 
policy since it would mirror the current IEP. A commenter suggested 
that CMS consider extending the ICEP timeframe to mirror the Medicare 
Advantage Open Enrollment Period (MA OEP), that is, to end on the last 
day of the third month that the individual is first entitled to Part A 
and enrolled in Part B, which would be a total of 6 months.
    Response: We thank the commenters for their suggestions. We 
considered various ending dates when we proposed to extend the ICEP 
timeframe. As stated in the proposed rule, the proposed change in the 
ICEP timeframe aligns with the SEP timeframe that we established in 
Sec.  422.62(b)(10) for individuals to enroll in an MA or MA-PD plan 
when their Medicare entitlement determination is made for a retroactive 
effective date and the individual has not been provided the opportunity 
to elect an MA or MA-PD plan during their ICEP. It also aligns with the 
timeframe we established in Sec.  422.62(b)(26) for an individual to 
enroll in an MA or MA-PD plan when they enroll in Part A and/or Part B 
using an exceptional condition SEP which was recently codified in the 
April 2023 final rule (88 FR 22328).
    The proposed timeframe to extend the ICEP will provide individuals 
a total of 5 months to consider how they want to receive their Medicare 
coverage. We believe this timeframe is adequate for beneficiaries to 
decide if they want to receive their coverage through Original Medicare 
or an MA plan and to select a plan that meets their needs. To note, 
individuals also have ample opportunities to change plans outside of 
the ICEP, including the MA OEP, the Annual Coordinated Election Period, 
or any SEP for which they are eligible.
    Comment: Several commenters expressed support for the proposed 
changes to the ICEP timeframe, but provided feedback on areas that were 
not addressed in the proposed rule. A commenter stated that 
beneficiaries in traditional Medicare should have an opportunity to 
change stand-alone Part D plans during the first 3 months of the year--
an option that is available to people who wish to change MA plans 
through the MA OEP. The commenter also stated that federal Medigap 
rights should be expanded to allow individuals to purchase such plans 
on at least an annual basis. Another commenter asked CMS to simplify 
the enrollment and plan selection processes--including by modernizing 
consumer tools, notifying people approaching Medicare eligibility about 
enrollment rules and timelines, and ensuring agency communications 
clearly explain the trade-offs between Original Medicare and MA.
    Response: We thank the commenters for their support of the change 
to the ICEP timeframe, but we note that these recommendations are 
outside of the scope of this rulemaking.
    After consideration of all public comments, we are finalizing our 
proposal to revise Sec.  422.62(a)(1)(i) without modification.

Q. Enhance Enrollees' Right To Appeal an MA Plan's Decision To 
Terminate Coverage for Non-Hospital Provider Services (Sec.  422.626)

    Medicare Advantage (MA) enrollees have the right to a fast-track 
appeal by an Independent Review Entity (IRE) when their covered skilled 
nursing facility (SNF), home health, or comprehensive outpatient 
rehabilitation facility (CORF) services are being terminated. The 
regulations for these reviews at the request of an MA enrollee are 
located at 42 CFR 422.624 and 422.626. Section 422.624 requires these 
providers of services to deliver a standardized written notice to the 
enrollee of the MA organization's decision to terminate the provider's 
services for the enrollee. This notice, called the Notice of Medicare 
Non-Coverage (NOMNC), must be furnished to the enrollee before services 
from the providers are terminated. The NOMNC informs enrollees of their 
right to a fast-track appeal of the termination of these provider 
services and how to appeal to the IRE. CMS currently contracts with 
certain Quality Improvement Organizations (QIOs) that have contracts 
under Title XI, Part B and section 1862(g) of the Act to perform as the 
IRE for these specific reviews. Specifically, the Beneficiary and 
Family Centered Care QIOs (BFCC QIOs) are the type of QIO that 
currently performs these reviews. There is a parallel appeal process in 
effect for Medicare beneficiaries in Original Medicare (42 CFR Part 
Sec. Sec.  405.1200 and 405.1202).
    Presently, if an MA enrollee misses the deadline to appeal as 
stated on the NOMNC, the appeal is considered untimely, and the 
enrollee loses their right to a fast-track appeal to the QIO. Enrollees 
may, instead, request an expedited reconsideration by their MA plan, as 
described in Sec.  422.584. The QIO is unable to accept untimely 
requests from MA enrollees but does perform appeals for untimely 
requests from Medicare beneficiaries in Original Medicare as described 
at Sec.  405.1202(b)(4).
    Further, MA enrollees forfeit their right to appeal to the QIO if 
they leave a facility or otherwise end services from one of these 
providers before the termination date listed on the NOMNC, even if 
their appeal requests to the QIO are timely. (The MA enrollee retains 
the right to appeal to their MA plan in such cases because the decision 
to terminate the services is an appealable organization determination 
per Sec.  422.566(b)(3).) Beneficiaries in Original Medicare retain 
their right to appeal to the QIO, regardless of whether they end 
services before the termination date on the NOMNC.
    We proposed to modify the existing regulations regarding fast-track 
appeals for enrollees when they untimely request an appeal to the QIO, 
or still wish to appeal after they end services on or before the 
planned termination date. As noted in the proposed rule, these changes 
would bring the MA program further into alignment with Original 
Medicare regulations and procedures for the parallel appeals process. 
Finally, these changes were recommended by interested parties in 
comments to a previous rulemaking (CMS-4201-P, February 27, 2022).

[[Page 30589]]

    Specifically, the changes would (1) require the QIO, instead of the 
MA plan, to review untimely fast-track appeals of an MA plan's decision 
to terminate services in an HHA, CORF, or SNF; and (2) allow enrollees 
the right to appeal the decision to terminate services after leaving a 
SNF or otherwise ending covered care before the planned termination 
date. The proposed changes are modeled after the parallel process in 
effect for Original Medicare at 42 CFR 405.1200 through 405.1202.
    To implement these changes, we proposed to revise Sec.  
422.626(a)(2) to specify that if an enrollee makes an untimely request 
for a fast-track appeal, the QIO will accept the request and perform 
the appeal. We also specified that the IRE decision timeframe in Sec.  
422.626(d)(5) and the financial liability provision in Sec.  422.626(b) 
would not apply.
    Secondly, we proposed removing the provision at Sec.  422.626(a)(3) 
that prevents enrollees from appealing to the QIO if they end their 
covered services on or before the date on their termination notice, 
even in instances of timely requests for fast-track appeals. Removal of 
this provision preserves the appeal rights of MA enrollees who receive 
a termination notice, regardless of whether they decide to leave a 
provider or stop receiving their services.
    This proposed expedited coverage appeals process would afford 
enrollees in MA plans access to similar procedures for fast-track 
appeals as for beneficiaries in Original Medicare in the parallel 
process. Untimely enrollee fast-track appeals would be absorbed into 
the existing process for timely appeals at Sec.  422.626, and thus, 
would not necessitate additional changes to the existing fast-track 
process. The burden on MA plans would be minimal and would only require 
that MA plans provide notices as required at Sec.  422.626(d)(1) for 
these appeals. Further, MA plans would no longer have to perform the 
untimely appeals as currently required at Sec.  422.626(a)(2). 
Beneficiary advocacy organizations, in comments to previous rulemakings 
on this topic, supported changes that would afford enrollees more time 
to appeal and afford access to IRE appeals even for untimely requests.
    We noted that the burden of conducting these reviews is currently 
approved under OMB collection 0938-0953. The proposed changes would 
require that untimely fast-track appeals would be performed by the QIO, 
rather than the enrollee's health plan; thus, any burden related to 
this proposal would result in a shift in fast-track appeals from health 
plans to QIOs.
    We received the following comments, and our responses follow.
    Comment: We received numerous comments on our proposal to require 
the BFCC-QIO, instead of the plan, to review untimely fast-track 
appeals of a plan's decision to terminate services in an HHA, CORF, or 
SNF and to fully eliminate the provision requiring the forfeiture of an 
enrollee's right to appeal a termination of services decision when they 
leave a SNF or CORF. Nearly all interested parties commenting on this 
provision supported these policies. A commenter stated that permitting 
enrollees to maintain access to a BFCC-QIO review beyond this timeframe 
is important and, as noted in the proposed rule, provides parity with 
Original Medicare. Another commenter commended CMS for seeking uniform 
appeal rights between MA and Original Medicare and addressing access 
disparities, particularly in post-acute care.
    Response: We appreciate the widespread support we received for this 
proposal and share the commenters' goal of parallel QIO appeals 
processes, whenever possible, for MA and Original Medicare. We intend 
to continue the current policy of having the BFCC-QIOs perform these 
appeals.
    Comment: Several commenters suggested that CMS make parallel 
changes to Sec.  422.622(a)(5), which pertains to late appeal requests 
for expedited appeals for inpatient hospital discharges. Additionally, 
a commenter wanted to extend the scope of the fast-track appeals 
process to include outpatient services.
    Response: We appreciate these suggestions from the commenters and 
will take them into consideration for future rulemaking. We believe 
that such a change should be adopted only after notice and an 
opportunity for the public to comment on such a revision to the 
hospital discharge process.
    Comment: A few commenters asked that we reflect these new policies 
in related beneficiary appeals notices as well as plan materials such 
as EOCs, manuals, and other guidance. Another commenter suggested that 
CMS engage in efforts to educate enrollees of their appeal rights.
    Response: We thank the commenters for their suggestions related to 
necessary changes to notices and plan materials resulting from this 
provision. We will update manuals and other guidance as well as 
beneficiary materials pertaining to appeal rights, as appropriate. In 
addition, we will make necessary revisions to the standardized notice, 
required under Sec.  422.624, which informs beneficiaries of their 
right to a fast-track appeal by an BFCC-QIO. This standardized notice, 
the NOMNC, is subject to the Paperwork Reduction Act (PRA) process and 
approval by the Office of Management and Budget (OMB), and as such, any 
changes made to the NOMNC will be subject to public notice and comment.
    Comment: A few commenters asked for clarification on the deadline 
to request an untimely appeal and whether the intent is for these MA 
provisions to precisely mirror procedures for Original Medicare. 
Another commenter recommended that CMS adopt a 60-day deadline for 
untimely enrollee appeals to plans.
    Response: As finalized in this rule, per Sec.  422.626(a)(2), a QIO 
will accept untimely requests for review of the termination of CORF, 
HHA or SNF services from enrollees. There is no deadline in this 
provision, and this is consistent with the parallel provision for 
Original Medicare at Sec.  405.1204(b)(4). Our intent is to conform the 
QIO appeal processes for terminations of these provider services for 
Original Medicare and MA and to bring the MA appeals process in line 
with the parallel reviews for beneficiaries in Original Medicare. To 
that end, this provision, by design, mirrors the process for Original 
Medicare appeals of this type, set forth at Sec.  405.1204(b)(4), 
rather than the process for enrollees set forth at Sec.  422.584, which 
has a 60-day deadline to for an enrollee to file an appeal with the MA 
plan of an organization determination.
    Comment: A commenter requested clarification on BFCC-QIO processing 
time for untimely requests. This commenter also asked if an enrollee 
could appeal to the plan if the BFCC-QIO decision is unfavorable. If 
so, the commenter requested clarification on the applicable processing 
timeframes.
    Response: We appreciate the request for clarification on QIO 
processing timeframes and the interrelationship between QIO and plan 
appeals. Under the provisions we are finalizing at Sec.  422.626(a)(2), 
a QIO will accept untimely requests from enrollees but the timeframes 
under (d)(5) of this section will not apply, as those timeframes 
pertain to timely requests. Consistent with the parallel regulations at 
Sec.  405.1202(b)(4) for untimely Original Medicare appeals, the QIO 
will make its determination as soon as possible. We note that the 
provision we are finalizing in this rule has no effect on existing 
policy with respect to the MA plan appeals process set forth at 
Sec. Sec.  422.582 and 422.584. As per current policy, an enrollee may 
appeal to the QIO and the

[[Page 30590]]

plan, but plan appeals deadlines continue as set forth at Sec.  
422.582(b).
    Comment: A commenter was concerned about perceived implementation 
barriers health plans might encounter from these provisions. The 
commenter stated that there could be challenges with the availability 
of SNF beds and SNF readmissions for patients in rural areas should 
they request and receive a favorable BFCC-QIO appeal decision.
    Response: We appreciate the commenter's concerns about perceived 
access issues particular to rural areas. However, as noted in the 
proposed rule, we expect only a very small increase in appeals to the 
overall existing appeals volume as a result of this provision. We also 
note that the acceptance of untimely appeals is a longstanding policy 
of the parallel appeals process for Original Medicare, with no known 
challenges regarding access particular to rural providers.
    Comment: A commenter asked that we include language to state to 
which non-hospital providers these provisions would apply.
    Response: As stated in the preamble, the relevant provisions for 
these reviews are found at Sec. Sec.  422.624 and 422.626. Section 
422.624(a)(1) specifies that providers included in this provision are 
skilled nursing facilities, home health agencies, and comprehensive 
outpatient rehabilitation facilities. The untimely appeals affected by 
the provisions in this final rule are the reviews of the terminations 
of services from the providers specified at Sec.  422.624(a)(1). 
Section 422.626, which we are amending in this final rule, establishes 
the fast appeals for an MA plan's decision to terminate the services 
specified in Sec.  422.624. As the non-hospital provider types 
applicable to these reviews are already specified, we do not believe 
further regulatory revisions are necessary to address this comment.
    Comment: A commenter expressed concern that the proposal will 
interfere with value based contracting relationships. The commenter 
indicated MA plans are familiar with value-based arrangements, 
supplemental benefits, and graduated care programs, and thus expressed 
concern with removing appeals to the plans from the appeal processes 
for terminations of CORF, HHA and SNF services. The commenter also 
raised concerns that adding the BFCC-QIO into the process for untimely 
fast track appeals adds another party and additional complexity to 
conversations requiring high levels of scrutiny and understanding of 
the needs of an enrollee. The commenter also maintained there could be 
a significant administrative burden created if providers encourage or 
``coach'' enrollees to take a default position of appealing termination 
decisions. Finally, the commenter indicated these provisions could 
expose the patients to longer lengths of inappropriate care and 
significant personal liability.
    Response: We thank the commenter for their perspective. However, we 
do not believe this provision will interfere with value-based 
contracting relationships or result in inappropriate care, nor do we 
anticipate any changes with respect to the providers' role, including 
creation of any incentives to improperly influence an enrollee's 
decision on whether to request a fast-track appeal. As we have stated, 
this provision solely addresses the allowance for untimely appeals by 
enrollees in the current, longstanding process for MA fast-track 
appeals of terminations of CORF, HHA and SNF services. These 
additional, untimely appeals will be processed under current appeals 
procedures. This process, currently applicable to timely fast-track 
appeals, already includes QIOs as the entity conducting these 
independent reviews. Finally, as stated in the proposed rule, we 
estimate a minimal increase of less than 3 percent in the total appeals 
volume for this existing appeals process. Thus, we expect no 
significant change in the administrative burden in any aspect of the 
process or any significant change to overall lengths of stay in the 
provider types covered by this provision.
    Comment: We received a few comments pertaining to the denial of 
care by plans. A commenter requested that we take measures to ensure 
that enrollees receive care equivalent to beneficiaries in Original 
Medicare with a particular interest in post-acute care. A few 
commenters expressed concerns with plans' use of utilization management 
guidelines rather than appropriate Medicare coverage criteria. Another 
commenter recommended not allowing care to be terminated at all, but 
acknowledged this may not be possible within existing statutory or 
regulatory frameworks, and supported the enhancement of enrollee's 
rights, in the meantime.
    Response: We thank the commenters for their thoughts but note that 
these issues are outside the scope of this proposal. At the same time, 
we do wish to acknowledge that many of the recommendations related to 
patient care and prior authorization processes have been recently 
addressed in other regulation issued by CMS. See ``Medicare and 
Medicaid Programs; Patient Protection and Affordable Care Act; 
Advancing Interoperability and Improving Prior Authorization Processes 
for Medicare Advantage Organizations, Medicaid Managed Care Plans, 
State Medicaid Agencies, Children's Health Insurance Program (CHIP) 
Agencies and CHIP Managed Care Entities, Issuers of Qualified Health 
Plans on the Federally-Facilitated Exchanges, Merit-Based Incentive 
Payment System (MIPS) Eligible Clinicians, and Eligible Hospitals and 
Critical Access Hospitals in the Medicare Promoting Interoperability 
Program,'' which appeared in the Federal Register on February 8, 2024 
(89 FR 8758) that established new requirements for MA organizations 
that will enhance the electronic exchange of health care data and 
streamline processes related to prior authorization while reducing 
overall payer and provider burden and ``Medicare Program; Contract Year 
2024 Policy and Technical Changes to the Medicare Advantage Program, 
Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, 
and Programs of All-Inclusive Care for the Elderly.'' which appeared in 
the Federal Register on April 12, 2023 (88 FR 22120) that finalized 
regulatory changes clarifying when MA organizations may utilize prior 
authorization processes, the effect and duration of prior authorization 
approvals, and the circumstances under which MA organizations may 
utilize internal or proprietary coverage criteria.
    Comment: A commenter expressed concern regarding overutilization of 
services (specifically reaching or exceeding the 100 days benefit limit 
for SNF stays) if this provision is finalized.
    Response: We appreciate the concern of the commenter, but do not 
agree that finalizing this provision will result in the overutilization 
of services. First, if an enrollee requests an untimely appeal of the 
termination of SNF coverage and receives a favorable decision by the 
QIO, any resulting additional benefits days would demonstrate that the 
services meet medical necessity as well as coverage requirements. 
Second, favorable QIO decisions do not override any existing Part A SNF 
benefit limitations.
    Comment: Two commenters requested clarification on plan and 
provider responsibilities for appeals affected by this provision. 
Specifically, the commenters asked for more information regarding 
whether health plans or providers are responsible for producing medical 
records for untimely appeals. The commenter also asked whether a plan 
would be responsible for days of

[[Page 30591]]

coverage, should the BFCC-QIO rule in favor of the enrollee in the 
appeal, and if this would also be true if the enrollee appeals after 
leaving a skilled nursing home.
    Response: We note that plan and provider responsibilities for these 
untimely QIO appeals of terminations of CORF, HHA and SNF services will 
be the same as for timely appeals in the current process as set forth 
at Sec. Sec.  422.624 through 422.626. Specifically, Sec.  
422.626(e)(3) states a plan is responsible for supplying all necessary 
medical records to the QIO, once the plan is notified of the appeal. 
Should plans wish to delegate this responsibility to contracted 
providers, that would be a contracting arrangement and outside the 
purview of CMS. However, MA plans remain ultimately responsible for 
compliance with this requirement. Plans' financial responsibilities 
will continue to be as set forth at Sec.  422.626(b). Among other 
requirements, this section requires that coverage of provider services 
continues until the date and time designated on the NOMNC, unless the 
enrollee appeals and the IRE reverses the plan's decision. If the IRE 
reverses the plan's termination decision, coverage of provider services 
shall resume or apply in accordance with the QIO's decision, and the 
provider must provide the enrollee with a new notice consistent with 
Sec.  422.626(b) when the enrollee is still present in the facility.
    Comment: A commenter suggested that instruction was needed for 
situations where an untimely fast-track appeal request was incorrectly 
submitted to the MA plan, rather than to the BFCC-QIO.
    Response: We appreciate the commenter's suggestion to revise plan 
level guidance related to this provision. Currently, Section 50.2.2 of 
the Parts C & D Enrollee Grievances, Organization/Coverage 
Determinations, and Appeals Guidance \108\ instructs plans to maintain 
a process to distinguish between misdirected requests that should go to 
the QIO and valid requests to the plan. We will update the guidance in 
this manual section to reflect that untimely requests intended for the 
QIO must be included in those appeals that are to be redirected to the 
QIO.
---------------------------------------------------------------------------

    \108\ https://www.cms.gov/Medicare/Appeals-and-Grievances/MMCAG/
Downloads/Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-
Determinations-and-Appeals-Guidance.pdf.
---------------------------------------------------------------------------

    Comment: A commenter recommended additional language to protect 
provider contracts and that guidance to require such language be posted 
in facilities and included in admission documentation.
    Response: We thank the commenter for their comment. However, 
without further specifics on which contracts and language to which the 
commenter is referring, we are unable to address these recommendations. 
We note that we will update the related standardized appeals notice and 
Notice of Medicare Non-Coverage (NOMNC) required under Sec.  422.624 as 
well as other materials, as appropriate to reflect the changes adopted 
in this final rule In addition, Sec.  422.504(i)(4) provides that MA 
organizations must ensure that their agreements with related, first 
tier, downstream entities, which include providers under contract with 
the MA organization to furnish services, clearly identify any delegated 
responsibilities. We anticipate that MA organizations will comply with 
these requirements to the extent that the changes we are finalizing to 
Sec.  422.626 affect the scope of provider duties under their contracts 
with MA plans.
    Comment: A commenter expressed concerns about whether the BFCC-QIOs 
could absorb the potential increase in appeals that may result from 
this provision. The commenter suggested that we assess the capacity of 
BFCC-QIOs prior to implementation of this provision.
    Response: We appreciate the commenter's concerns. We do not 
anticipate an appreciable increase in the appeals volume as a result of 
this provision. Additionally, we plan to further assess and mitigate as 
possible and appropriate any workload impacts of transitioning these 
appeals prior to the implementation date.
    Comment: A commenter expressed their perception that BFCC-QIOs 
uphold nearly all fast-track appeals. The commenter recommended that we 
publish BFCC-QIO appeals data and use these metrics for evaluating 
BFCC-QIO contracts.
    Response: We thank the commenter for sharing their concerns and 
recommendations but note that these issues are outside the scope of 
this rulemaking.
    After consideration of all public comments and for the reasons 
outlined in the proposed rule and our response to public comments, we 
are finalizing without modification our proposals to amend Sec.  
422.626(a)(2) and to remove Sec.  422.626(a)(3).

R. Amendments to Part C and Part D Reporting Requirements (Sec. Sec.  
422.516 and 423.514)

    CMS has authority under sections 1857(e)(1) and 1860D-12(b)(3)(D) 
of the Act to require MA organizations and Part D plan sponsors to 
provide CMS ``with such information . . . as the Secretary may find 
necessary and appropriate.'' CMS also has authority, in section 1856(b) 
of the Act, to establish standards to carry out the MA program.
    Likewise, existing CMS regulations cover a broad range of topics 
and data to be submitted to CMS. Under these authorities, CMS 
established reporting requirements at Sec. Sec.  422.516(a) (Validation 
of Part C reporting requirements) and 423.514(a) (Validation of Part D 
reporting requirements), respectively. Pursuant to Sec. Sec.  
422.516(a) and 423.514(a), each MA organization and Part D plan sponsor 
must have an effective procedure to develop, compile, evaluate, and 
report information to CMS at the times and in the manner that CMS 
requires. In addition, Sec. Sec.  422.504(f)(2) and 423.505(f)(2) 
require MA organizations and Part D plan sponsors, respectively, to 
submit to CMS all information that is necessary for CMS ``to administer 
and evaluate'' the MA and Part D programs and to facilitate informed 
enrollment decisions by beneficiaries. Part D plan sponsors are also 
required to report all data elements included in all its drug claims by 
Sec.  423.505(f)(3). Sections 422.504(f)(2), 422.516(a), 423.505(f)(2), 
and 423.514(a) each list general topics of information and data to be 
provided to CMS, including benefits, enrollee costs, quality and 
performance, cost of operations, information demonstrating that the 
plan is fiscally sound, patterns of utilization, information about 
beneficiary appeals, and information regarding actions, reviews, 
findings, or other similar actions by States, other regulatory bodies, 
or any other certifying or accrediting organization.
    For many years, CMS has used this authority to collect 
retrospective information from MA organizations and Part D plan 
sponsors according to the Parts C and D Reporting Requirements that we 
issue each year, which can be accessed on CMS's website.\109\ In 
addition to the data elements, reporting frequency and timelines, and 
levels of reporting found in the Reporting Requirements information 
collection documents, CMS also issues Technical Specifications, which 
supplement the Reporting Requirements and serve to further clarify data 
elements and outline CMS's planned data analyses. The reporting 
timelines and required levels

[[Page 30592]]

of reporting may vary by reporting section. While many of the current 
data elements are collected in aggregate at the contract level, such as 
grievances, enrollment/disenrollment, rewards and incentives, and 
payments to providers, the collection of more granular data is also 
supported by the regulations. CMS has the ability to collect more 
granular data, per the Part C and D Reporting Requirements as set forth 
in Sec. Sec.  422.516(a) and 423.514(a), or to collect more timely data 
with greater frequency or closer in real-time than we have historically 
done. We proposed revisions to update Sec. Sec.  422.516(a) and 
423.514(a). Section 422.516 currently provides, ``Each MA organization 
must have an effective procedure to develop, compile, evaluate, and 
report to CMS, to its enrollees, and to the general public, at the 
times and in the manner that CMS requires, and while safeguarding the 
confidentiality of the doctor-patient relationship, statistics and 
other information.'' We proposed to strike the term ``statistics,'' as 
well as the words ``and other,'' with the understanding that the 
broader term ``information'' which is already at Sec.  422.516(a), 
includes statistics, Part C data, and information on plan 
administration. In a conforming proposal to amend Sec.  423.514(a), we 
proposed to strike the term ``statistics'' and add ``information.'' CMS 
does not interpret the current regulations to limit data collection to 
statistical or aggregated data and we used the notice of proposed 
rulemaking as an opportunity to discuss our interpretation of these 
rules and amend the regulations consistent with our interpretation.
---------------------------------------------------------------------------

    \109\ Part C Reporting Requirements are at https://www.cms.gov/medicare/health-plans/healthplansgeninfo/reportingrequirements and 
Part D Reporting Requirements are at https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/rxcontracting_reportingoversight.
---------------------------------------------------------------------------

    Additionally, we proposed to amend Sec. Sec.  422.516(a)(2) and 
423.514(a)(2) to make an affirmative change regarding CMS's collection 
of information related to what occurs from beginning to end when 
beneficiaries seek to get coverage from their Medicare health and drug 
plans for specific services. Both Sec. Sec.  422.516(a)(2) and 
423.514(a)(2) currently require plans to report ``[t]he patterns of 
utilization of services.'' We proposed to amend both sections to read, 
``The procedures related to and utilization of its services and items'' 
to clarify that these regulations authorize reporting and data 
collection about MA organizations and Part D plan sponsor procedures 
related to coverage, utilization in the aggregate, and beneficiary-
level utilization, including the steps beneficiaries may need to take 
to access covered benefits. Such information will ensure that CMS may 
better understand under what circumstances plans choose whether to 
provide or pay for a service or item.
    CMS did not propose to change specific current data collection 
efforts through this rulemaking. While Sec. Sec.  422.516(a) and 
423.514(a) provide CMS extensive flexibility in the time and manner in 
which we can collect data from MA organizations and Part D plan 
sponsors, we will continue to address future standardized information 
collection of the Parts C and D reporting requirements, as necessary, 
through the Office of Management and Budget (OMB) Paperwork Reduction 
Act (PRA) process, which would provide advance notice to interested 
parties and provides both a 60 and 30 day public comment period on 
drafts of the proposed collection.
    We do not believe the proposed changes to Sec. Sec.  422.516(a) and 
423.514(a) have either paperwork burden or impact on the Medicare Trust 
Fund at this time. These proposed changes allow CMS, in the future, to 
add new burden to plans in collection efforts; however, any such new 
burden associated with a new data collection would be estimated through 
the PRA process, as applicable.
    We received the following comments, and our responses follow.
    Comment: We received several comments in support of the reassertion 
of our authority to engage in new or more frequent data collection, 
including collection of more granular data from MA organizations and 
Part D plan sponsors. The majority of commenters expressed general 
support for our proposal to affirm CMS's authority to collect detailed 
data from MA organizations and Part D plan sponsors under the Part C 
and D reporting requirements. We did not receive any comments objecting 
to the reassertion of authority to collect data that we included in the 
proposed rule.
    Response: We appreciate the comments in support of our proposal.
    Comment: In further support of the proposal, many commenters 
recommended CMS collect data elements for specific areas of interest, 
including data related to enrollee's cost-sharing for Part D 
medications, disease modification trends, multiple sclerosis diagnoses 
and enrollee demographics, plan referrals to specialists (e.g., 
neurologists), End-Stage Renal Disease (ESRD) services, social 
determinants of health (e.g., access to transportation, food 
insecurity, need for rental/utility assistance), plan use of prior 
authorization in specific settings, length of stays in post-acute care 
facilities, rehospitalization rates, qualifications of plan 
organization determination and appeal reviewers, plan use of algorithm 
and artificial intelligence when making coverage determinations, 
Medicaid coverage, pharmacy benefit managers, point-of-sale coverage 
decisions, service-level initial determinations, and initial 
determination denial rationale. Some commenters also requested we 
collect aggregate data elements that are already collected by CMS 
through the Parts C and D Reporting Requirements, including initial 
determination denials and appeal overturns made by the plan and 
Independent Review Entities.
    Response: We thank the commenters for the data collection 
suggestions. We did not propose to implement changes to specific 
current data collection efforts in this rulemaking and would like to 
reiterate that any future information collection would be addressed 
through the OMB PRA process, as applicable, which would provide advance 
notice to interested parties and provides both a 60- and 30-day public 
comment period on drafts of the proposed collection.
    Comment: Several commenters noted the positive benefit that robust 
data collection may generally have on strengthening CMS oversight of MA 
organizations and Part D plan sponsors, identifying and reducing 
potential gaps in health coverage policy, and ensuring enrollees have 
meaningful access to care. Some commenters suggested CMS incorporate 
collected data into plan audits and enforcement actions. A number of 
commentors also suggested CMS publish collected data on consumer-facing 
websites to improve transparency and plan accountability by allowing 
beneficiaries to compare plans' performance data.
    Response: We appreciate the commenters' support and agree with the 
significance of CMS's role in overseeing MA organizations and Part D 
plan sponsors to ensure enrollees have continued access to care. We 
also agree the collection of more detailed standardized information 
from MA organizations and Part D plan sponsors is a necessary step in 
improving transparency and data in the MA and Part D programs. We will 
take these comments related to increasing oversight and transparency of 
the MA and Part D programs into consideration when developing future 
processes related to the public sharing of collected plan data.
    Comment: A few commenters recommended that CMS consider a further 
revision to the proposed language in Sec.  422.516(a), specifically the 
term ``doctor-patient relationship.'' A commenter noted that health 
care is increasingly delivered by a wider range of roles than just 
physicians and recommended that we replace the term

[[Page 30593]]

``doctor-patient'' with ``clinician-patient'' to better reflect the 
need for confidentiality between patients and their entire healthcare 
team.
    Response: We appreciate the commenters' suggestion to modify the 
regulation text in Sec.  422.516(a) to reflect the diverse team of 
health care professionals who provide care to MA enrollees. While we 
did not specifically propose to replace the term ``doctor'' with a more 
inclusive term in the introductory text at Sec.  422.516(a), we agree 
with this suggestion. Accordingly, we are modifying Sec.  422.516(a) in 
this final rule and replacing the term ``doctor-patient relationship'' 
with ``provider-patient relationship.'' Although commenters suggested 
the term ``doctor'' be replaced with ``clinician,'' the term 
``provider'' is defined in Sec.  422.2 and used throughout 42 CFR part 
422 when describing health care professionals and entities that furnish 
health care services to MA enrollees. For example, the regulation text 
at Sec.  422.200 explains, in part, that the provisions in Subpart E 
govern MA organizations' relationships with providers by setting forth 
``requirements and standards for the MA organization's relationships 
with providers including physicians, other health care professionals, 
institutional providers and suppliers, under contracts or arrangements 
or deemed contracts under MA private fee-for-service plans.'' 
Therefore, replacing ``doctor-patient'' with ``provider-patient'' in 
Sec.  422.516(a) will enhance clarity and consistency across regulation 
text in Part 422.
    Comment: One commenter suggested that for future data collection 
efforts CMS utilize notice-and-comment rulemaking instead of the PRA 
process to provide stakeholders a greater opportunity to comment on the 
future proposal.
    Response: We appreciate the commenter's concern that stakeholders 
should have opportunity to comment on changes to the MA and Part D 
reporting requirements. When applicable, CMS uses notice-and-comment 
rulemaking to solicit public comments on proposed information 
collection requirements. CMS must also comply with the implementing 
regulations of the PRA at 5 CFR 1320.10 (clearance of collections of 
information, other than those contained in proposed rules or in current 
rules), 1320.11 (clearance of collections of information in proposed 
rules), and 1320.12 (clearance of collections of information in current 
rules). CMS's compliance with the PRA, when required, allows interested 
parties to review and comment on future information collection request 
changes via two required public notice and comment periods; that is, 
the 60-day and 30-day notice and comment periods.
    While 42 CFR 422.516(a) and 423.514(a) \110\ provide CMS extensive 
flexibility in the time and manner in which we can require reporting by 
(and/or collect data from) MA organizations and Part D plan sponsors, 
as explained above, CMS must adhere to the implementing regulations of 
the OMB PRA process, when required, including circumstances when CMS 
collects data in a standardized format from 10 or more respondents. For 
any future information collection applicable to all MA organizations 
and Part D plan sponsors or groups larger than 9, we will, as 
necessary, use the OMB PRA process when proposing future Parts C and D 
reporting requirement changes. The PRA process provides the opportunity 
for interested parties to have notice of and comment on future data 
collection changes. As we stated in our proposal, the OMB PRA process 
provides advance notice to interested parties and provides both a 60- 
and 30-day public comment period on drafts of the proposed collection. 
Therefore, we believe the PRA process is appropriate and sufficient to 
use when establishing any future data collection subject to its terms.
---------------------------------------------------------------------------

    \110\ CMS also possesses considerable authority to collect data 
and other specific information from MA organizations and Part D plan 
sponsors through Sec. Sec.  422.504(f) and 423.505(f).
---------------------------------------------------------------------------

    Comment: While indicating overall support for CMS's position, a 
commenter requested more clarification on the purpose of increasing 
CMS's data collection from MA organizations and Part D plan sponsors 
and requested CMS work with the industry to minimize and reduce 
reporting burdens. Specifically, the commenter suggested CMS establish 
guidelines for its proposal and implement the Part C and D plan 
reporting requirements before proposing new collections.
    Response: As we explained in the proposed rule, an increase in 
detailed data collection would increase transparency as well as CMS's 
access to data in the MA and Part D programs. The data currently 
acquired through the Parts C and D reporting requirements are often 
used for monitoring an MA organization's or Part D plan sponsor's 
continued compliance with MA and Part D requirements as well as 
evaluating the success of these programs. At times, we may use an 
outlier analysis to determine a plan or sponsor's performance relative 
to industry standards established by the performance of all other 
organizations and sponsors. See Sec. Sec.  422.504(m) and 423.505(n). 
Increasing the quality of the data CMS has to support these practices 
would enhance our ongoing monitoring and enforcement responsibility for 
the MA and Part D programs. Additionally, a comprehensive, high-quality 
database of MA and Part D programmatic data will promote more program 
transparency and assist our efforts to identify and close potential 
gaps in access to care for Medicare beneficiaries enrolled in these 
programs.
    When creating any new data collection initiative, we will consider 
and account for the impact the initiative would have on plans and 
sponsoring organizations and will make an effort to avoid creating 
excessive burdens, both when necessary to comply with the PRA and as 
part of our administration of the programs even if the PRA is not 
applicable. Further, in developing additional meaningful future data 
collection changes, we are committed to obtaining input from all 
interested parties as necessary. As we stated in our proposal, the OMB 
PRA process provides advance notice to interested parties and provides 
both a 60- and 30-day public comment period on drafts of the proposed 
collection. Interested parties will have an opportunity to comment on 
specific guidelines for reporting requirements under consideration.
    After consideration of all public comments and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing this provision as proposed, with a minor modification at 
Sec.  422.516(a) to replace the term ``doctor-patient relationship'' 
with ``provider-patient relationship''.

S. Amendments To Establish Consistency in Part C and Part D Timeframes 
for Filing an Appeal Based on Receipt of the Written Decision 
(Sec. Sec.  422.582, 422.584, 422.633, 423.582, 423.584, and 423.600)

    We proposed to amend the Parts C and D regulations at Sec. Sec.  
422.582(b), 422.584(b), 422.633(d)(1), 423.582(b), 423.584(b) and 
423.600(a) with respect to how long an enrollee has to file an appeal 
with a plan or the Part D Independent Review Entity (IRE). These 
amendments were proposed to ensure consistency with the regulations at 
Sec. Sec.  422.602(b)(2), 423.2002(d), 422.608, and 423.2102(a)(3), 
applicable to Administrative Law Judge (ALJ) and Medicare Appeals 
Council (Council) reviews. These ALJ and Council regulations state or 
cross-reference the Medicare FFS regulations at 42 CFR part 405 that 
prescribe that the date of

[[Page 30594]]

receipt of the notice of decision or dismissal is presumed to be 5 
calendar days after the date of the notice unless there is evidence to 
the contrary. We also proposed that these changes apply to integrated 
organization determinations and reconsiderations. In addition, because 
cost plans are required to comply with the MA appeal regulations 
pursuant to Sec. Sec.  417.600 and 417.840, these proposed changes will 
also apply to cost plan appeals.
    Pursuant to our authority under section 1856(b) and 1860D-12 of the 
Act to adopt standards to carry out the Part C and Part D programs, and 
in order to implement sections 1852(g)(2) and 1860D-4(g) and (h) of the 
Act regarding coverage decisions and appeals, CMS established 
procedures and minimum standards for an enrollee to file an appeal 
regarding benefits with an MA organization, Part D plan sponsor, and 
IREs. These requirements are codified in regulation at 42 CFR parts 422 
and 423, subpart M. See also section 1876(c)(5) of the Act regarding 
cost plans' obligations to have appeal processes.
    Specifically, section 1852(g)(2)(A) of the Act requires that an MA 
organization shall provide for reconsideration of a determination upon 
request by the enrollee involved. The reconsideration shall be made not 
later than 60 days after the date of the receipt of the request for 
reconsideration. Section 1860D-4(g)(1) of the Act requires that a Part 
D plan sponsor shall meet the requirements of paragraph (2)(A) of 
section 1852(g) with respect to providing for reconsideration of a 
determination upon request by the enrollee involved.
    While section 1852 of the Act does not specify the timeframe in 
which an enrollee must request an appeal of an unfavorable organization 
determination, integrated organization determination or coverage 
determination, the timeframe for filing an appeal in the Part C and 
Part D programs is established in regulations. Sections 422.582(b), 
422.633(d)(1), and 423.582(b) state that an appeal must be filed within 
60 calendar days from the date of the notice issued as a result of the 
organization determination, integrated organization determination, 
coverage determination, or at-risk determination. Plans are permitted 
to extend this filing deadline for good cause.
    As noted in the proposed rule, we continue to believe that a 60 
calendar day filing timeframe strikes an appropriate balance between 
due process rights and the goal of administrative finality in the 
administrative appeals process. However, to establish consistency with 
the regulations applicable to ALJ and Council reviews with respect to 
receipt of the notice of decision or dismissal and how that relates to 
the timeframe for requesting an appeal, we proposed to account for a 
presumption that it will generally take 5 calendar days for a notice to 
be received by an enrollee or other appropriate party. Therefore, we 
proposed to revise Sec. Sec.  422.582(b), 422.633(d)(1)(i), 423.582(b), 
and 423.600(a) to state that a request for a Part C reconsideration, 
Part D redetermination, Part D at-risk redeterminations and Part D IRE 
reconsiderations must be filed within 60 calendar days after receipt of 
the written determination notice. We also proposed to add new 
Sec. Sec.  422.582(b)(1), 422.633(d)(1)(i), and 423.582(b)(1), to 
provide that the date of receipt of the organization determination, 
integrated organization determination, coverage determination, or at-
risk determination is presumed to be 5 calendar days after the date of 
the written organization determination, integrated organization 
determination, coverage determination or at-risk determination, unless 
there is evidence to the contrary. Based on CMS's experience with 
audits and other similar review of plan documents, we realized that it 
was standard practice that the date of the written decision notice is 
the date the plan sends the notice. The presumption that the notice is 
received 5 calendar days after the date of the decision is a long-
standing policy with respect to IRE appeals and has been codified in 
regulation at Sec. Sec.  422.602(b)(2), 423.2002(d), and 423.2102(a)(3) 
regarding hearings before an ALJ and Council; further, Sec.  422.608 
regarding MA appeals to the Medicare Appeals Council provides that the 
regulations under part 405 regarding Council review apply to such MA 
appeals, which would include the provision at Sec.  405.1102(a)(2) that 
applies the same 5 calendar day rule. To ensure consistency throughout 
the administrative appeals process, we proposed to adopt this approach 
for plan and Part D IRE appeals in Sec. Sec.  422.582(b), 
422.633(d)(1), 423.582(b), 423.584 and 423.600(a).
    In addition to the aforementioned proposals related to when an 
organization determination, integrated organization determination, 
coverage determination, or at-risk determination is presumed to be 
received by an enrollee of other appropriate party, we also proposed 
adding language to Sec. Sec.  422.582, 422.633, 423.582 and 423.600(a) 
that specifies when an appeal is considered filed with a plan and the 
Part D IRE. Specifically, we proposed to add new Sec. Sec.  
422.582(b)(2), 422.633(d)(1)(ii), 423.582(b)(2) and 423.600(a) to 
provide that for purposes of meeting the 60 calendar day filing 
deadline, the appeal request is considered filed on the date it is 
received by the plan, plan-delegated entity or Part D IRE specified in 
the written organization determination, integrated organization 
determination, coverage determination, at-risk determination, or 
redetermination. As stated in the proposed rule, inclusion of when a 
request is considered filed would codify what currently exists in CMS's 
sub-regulatory guidance and the Part D IRE procedures manual. CMS's 
sub-regulatory guidance indicates that a standard request is considered 
filed when any unit in the plan or delegated entity receives the 
request. An expedited request is considered filed when it is received 
by the department responsible for processing it. Pursuant to existing 
manual guidance, plan material should clearly state where requests 
should be sent, and plan policy and procedures should clearly indicate 
how to route requests that are received in an incorrect location to the 
correct location as expeditiously as possible.
    These proposed revisions related to when a notice is presumed to 
have been received would ensure that the time to request an appeal is 
not truncated by the time it takes for a coverage decision notice to 
reach an enrollee by mail or other delivery method. We noted that if 
the proposals were finalized, corresponding changes would be made to 
the Part C and Part D standardized denial notices so that enrollees are 
accurately informed of the timeframe for requesting an appeal.
    We also proposed clarifications to Sec. Sec.  422.584(b) and 
423.584(b) to explicitly state the timeframe in which an enrollee must 
file an expedited plan appeal for it to be timely. The current text of 
Sec. Sec.  422.584 and 423.584 does not include the 60 calendar day 
timeframe for filing an expedited appeal request, but as noted in the 
proposed rule, CMS manual guidance for Part C and Part D appeals has 
long reflected this 60 calendar day timeframe. We also noted that this 
timeframe for filing an appeal is consistent with the current 
regulations at Sec. Sec.  422.582(b) and 423.582(b) for filing a 
request for a standard appeal. Neither sections 1852 and 1860D-4 of the 
Act, nor Sec. Sec.  422.584 and 423.584 specify the timeframe in which 
an enrollee must request an expedited appeal of an unfavorable 
organization determination, coverage determination or at-risk 
determination in the Part C and Part D programs. This provision would 
codify existing

[[Page 30595]]

guidance. We are certain that plans already comply as this long-
standing policy is reflected in CMS's sub-regulatory guidance \111\ and 
standardized denial notices \112\ that explain an enrollee's right to 
appeal. Additionally, we had not received any complaints on this 
matter. In proposing new Sec. Sec.  422.584(b)(3) and (4) and 
423.584(b)(3) and (4), we also proposed to add the procedure and 
timeframe for filing expedited organization determinations and coverage 
determinations consistent with proposed requirements at Sec. Sec.  
422.582(b)(1) and (2) and 423.582(b)(1) and (2).
---------------------------------------------------------------------------

    \111\ https://www.cms.gov/medicare/appeals-and-grievances/mmcag/downloads/parts-c-and-d-enrollee-grievances-organization-coverage-determinations-and-appeals-guidance.pdf.
    \112\ https://www.cms.gov/medicare/medicare-general-information/bni/madenialnotices.
---------------------------------------------------------------------------

    If finalized, we believe these proposals will enhance consistency 
in the administrative appeals process and provide greater clarity on 
the timeframe for requesting an appeal and when an appeal request is 
considered received by the plan. Theoretically, the proposed amendments 
may result in a small increase in the number of appeals from allowing 
65 versus 60 days to appeal an organization determination, integrated 
organization determination, coverage determination or at-risk 
determination. However, based on the low level of dismissals at the 
plan level due to untimely filing, we believe most enrollees who wish 
to appeal a denial do so immediately, thereby mitigating the impact of 
5 additional days for a plan to accept an appeal request if this 
proposal is finalized. Consequently, we do not believe there is an 
impact to the Medicare Trust Fund. We solicited interested party input 
on the accuracy of this assumption.
    We received the following comments, and our responses follow.
    Comment: We received several comments in support of extending the 
current 60-day timeframe to file an appeal with an MA or Part D plan to 
include 5 additional calendar days as proof of receipt of the written 
determination notice believing that it expanded beneficiary access to 
the appeals process. Commenters appreciated that the additional time 
period would also apply to expedited appeal requests, expedited 
organization determinations, and coverage determinations, while a few 
of the commenters noted that the proposal was consistent with appeals 
timeframes in Social Security, SSI, and Medicare more generally, and 
provides needed clarity for enrollees and their representatives. A few 
commenters also expressed support and stated the proposal reflected the 
reality of slower post office delivery times in recent years, as well 
extra time needed to forward mail for individuals who have changed 
their addresses.
    Response: We appreciate the comments in support of our proposal.
    Comment: A commenter stated agreement with establishing consistency 
in Part C and Part D appeals timeframes, but suggested that instead of 
specifying that an appeal request be filed within in 60 calendar days 
after receipt of the written determination notice, CMS should instead 
require that appeal requests be filed within in 65 calendar days of the 
letter date.
    Response: We thank the commenter for this recommendation; however, 
we decline to revise our proposal because CMS proposed these amendments 
to ensure consistency with the regulations at Sec. Sec.  422.602(b)(2), 
423.2002(d), 422.608, and 423.2102(a)(3), applicable to Administrative 
Law Judge (ALJ) and Medicare Appeals Council (Council) reviews, that 
either state or cross-reference the Medicare FFS regulations at 42 CFR 
part 405 that prescribe that the date of receipt of the notice of 
decision or dismissal is presumed to be 5 calendar days after the date 
of the notice, unless there is evidence to the contrary. The commenters 
recommendation would not accomplish this consistency.
    After consideration of the public comments, and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing the revisions to Sec. Sec.  422.582, 422.584, 422.633, 
423.582, 423.584, and 423.600 as proposed.

T. Authorized Representatives for Parts C/D Elections (Sec. Sec.  
422.60 and 423.32)

    Section 1851(c)(1) of the Act gives the Secretary the authority to 
establish a process through which MA elections, that is, enrollments 
and disenrollments, are made and changed. This authority includes 
establishing the form and manner in which elections are made. Section 
1860D-1(b)(1)(A) of the Act gives the Secretary the authority to 
establish a process for enrollment, disenrollment, termination, and 
change of enrollments in Part D prescription drug plans. Likewise, 
section 1860D-1(b)(1)(B)(ii) of the Act directs CMS to use rules 
similar to those established in the MA context pursuant to 1851(c) for 
purposes of establishing rules for enrollment, disenrollment, 
termination, and change of enrollment with an MA-PD plan.
    Consistent with these sections of the Act, Parts C and D 
regulations set forth our election processes under Sec. Sec.  422.60 
and 423.32. These enrollment processes require that Part C/D eligible 
individuals wishing to make an election must file an appropriate 
enrollment form, or other approved mechanism, with the plan. The 
regulations also provide information for plans on the process for 
accepting election requests, notice that must be provided, and other 
ways in which the plan may receive an election on behalf of the 
beneficiary.
    Though the term ``authorized representative'' is not used in the 
context of the statutory provisions within the Act governing MA and 
Part D enrollment and eligibility (e.g., sections 1851 and 1860D-1), 
``authorized representative''--and other similar terms--are used in 
other contexts throughout the Act. Section 1866(f)(3) of the Act 
defines the term ``advance directive,'' deferring to applicable state 
law to recognize written instructions such as a living will or durable 
power of attorney for health care. Section 1862(b)(2)(B)(vii)(IV) of 
the Act recognizes that an individual may be represented by an 
``authorized representative'' in secondary payer disputes. Section 
1864(a) of the Act allows a patient's ``legal representative'' to stand 
in the place of the patient and give consent regarding use of the 
patient's medical records.
    In the June 1998 interim final rule that first established the M+C 
program, now the MA program (63 FR 34985), we acknowledged in Part C 
enrollment regulations at Sec.  422.60(c) that there are situations 
where an individual may assist a beneficiary in completing an 
enrollment request and required the individual to indicate their 
relationship to the beneficiary. In the Medicare Program; Medicare 
Prescription Drug Benefit final rule which appeared in the Federal 
Register on January 28, 2005, (70 FR 4193), we first recognized in 
Sec.  423.32(b)(i) that an authorized representative may assist a 
beneficiary in completing an enrollment request, and required 
authorized representatives to indicate that they provided assistance. 
In response to public comments about the term ``authorized 
representative'' in that rule, we indicated that CMS would recognize 
and rely on State laws that authorize a person to effect an enrollment 
on behalf of a Medicare beneficiary for purposes of this provision (42 
FR 4204). We also stated that the authorized representative would 
constitute the ``individual'' for purposes of making the enrollment or 
disenrollment request.

[[Page 30596]]

    Historically, we have provided the definition and policies related 
to authorized representatives in our sub-regulatory manuals.\113\ We 
proposed in the November 2023 proposed rule to add new paragraphs 
Sec. Sec.  422.60(h) and 423.32(h) to codify our longstanding guidance 
on authorized representatives making Parts C and D elections on behalf 
of beneficiaries.
---------------------------------------------------------------------------

    \113\ This guidance can be found in Chapter 2, Sections 10 and 
40.2.1 of the Medicare Managed Care Manual and Chapter 3, Sections 
10 and 40.2.1 of the Prescription Drug Benefit Manual.
---------------------------------------------------------------------------

    Current regulation in Sec.  423.32(b)(i) acknowledges that an 
``authorized representative'' may assist a beneficiary in completing an 
enrollment form, but it does not define who an ``authorized 
representative'' is. A similar term, ``representative,'' is currently 
defined under Sec. Sec.  422.561 and 423.560; however, that definition 
is used only in the appeals context and applies only to subpart M of 
the MA and Part D regulations. Therefore, we proposed to define the 
term ``authorized representative'' for subpart B (eligibility, 
election, and enrollment).
    Our proposal deferred to the law of the state in which the 
beneficiary resides to determine who is a legal representative. 
Deference to state law on these matters is consistent with other 
similar practices within CMS, including in the MA appeals definition of 
``representative'' (Sec.  422.561) and Medicaid's definition of 
``authorized representative'' (Sec. Sec.  435.923; 438.402), as well as 
in the HIPAA Privacy Rule description of ``personal representative'' 
(45 CFR 164.502(g)).
    For those with state legal authority to act and make health care 
decisions on behalf of a beneficiary, we proposed to codify at 
paragraph (h)(1) of Sec.  422.60 and (h)(1) of Sec.  423.32 that 
authorized representatives will constitute the ``beneficiary'' or the 
``enrollee'' for the purposes of making an election, meaning that CMS, 
MA organizations, and Part D sponsors will consider the authorized 
representative to be the beneficiary/enrollee during the election 
process. Any mention of beneficiary/enrollee in our enrollment and 
eligibility regulations would be considered to also include 
``authorized representative,'' where applicable. Our proposal at 
paragraph (h)(2) of Sec.  422.60 and (h)(2) of Sec.  423.32 clarified 
that authorized representatives under state law may include court-
appointed legal guardians, durable powers of attorney for health care 
decisions and state surrogate consent laws as examples of those state 
law concepts that allow the authorized representative to make health 
care decisions on behalf of the individual. This is not a complete 
list; we would defer to applicable state law granting authority to act 
and make health care decisions on behalf of the beneficiary.
    Codifying this longstanding guidance provides plans, beneficiaries 
and their caregivers, and other interested parties clarity and 
transparency on the requirements when those purporting to be the 
representatives of the beneficiary attempt to make election decisions 
on their behalf. We have not received negative public feedback on this 
longstanding policy. However, we have recently answered questions on 
plan procedures when dealing with authorized representatives. We 
proposed to codify this longstanding guidance in order to clarify our 
policy regarding the role of authorized representatives in the MA and 
Part D enrollment process, including the applicability of state law in 
this context.
    This proposal codifies longstanding MA and Part D sub-regulatory 
guidance. Based on questions from plans and beneficiaries related to 
current guidance, we concluded that the guidance had been previously 
implemented and is currently being followed by plans. Therefore, we 
concluded there was no additional paperwork burden associated with 
codifying this longstanding sub-regulatory policy, and there would also 
be no impact to the Medicare Trust Fund. All information impacts 
related to the current process for determining a beneficiary's 
eligibility for an election period and processing election requests 
have already been accounted for under OMB control numbers 0938-0753 
(CMS-R-267), 0938-1378 (CMS-10718), and 0938-0964 (CMS-10141).
    We received the following comments, and our responses follow.
    Comment: Several commenters expressed general support for this 
proposal, with one commenter noting that the term ``authorized 
representative'' can be ambiguous and, thus, it was good for CMS to 
codify the existing policy.
    Response: We appreciate the comments in support of our proposal.
    Comment: One commenter requested that CMS establish a form, outside 
of state law requirements, that individuals can use to appoint an 
authorized representative to act on their behalf for MA/Part D 
enrollment purposes.
    Response: We thank the commenter for their proposal. We decline to 
revise our proposal because it is CMS's standard practice to defer to 
state law on similar matters of legally authorized representation. We 
believe that compliance with state law requirements for establishing 
authorized representation serves as an important form of beneficiary 
protection. We believe that states are better positioned to determine 
these requirements and resolve any disputes over representative 
appointment and scope.
    Comment: One commenter suggested the removal of ``as the law of the 
State in which the beneficiary resides may allow,'' from our proposed 
regulatory text. The commenter was concerned that, as proposed, the 
regulatory text required state law to specifically address the 
appointment of a representative for Medicare enrollment purposes. The 
commenter also requested clarification on the difference between an 
authorized representative and those who provide information during, or 
otherwise assist the individual in, the enrollment process.
    Response: We disagree with this interpretation. As stated above, we 
defer to applicable state law granting a representative the authority 
to act and make health care decisions on behalf of the beneficiary. 
States would not need to specifically address the power to make 
Medicare enrollment decisions on behalf of an individual. Authorized 
representatives may include court-appointed legal guardians, persons 
having durable powers of attorney, or individuals authorized to make 
health care decisions under state surrogate consent agreements, 
provided that the specific state law mechanism for establishing legal 
representation would allow the representative to make health care 
decisions on the individual's behalf.
    We also clarify that assisting a beneficiary in the enrollment 
process is different from representing that beneficiary in a legal 
capacity. For example, a family member might help an individual read 
and fill out an enrollment application, but they are not completing the 
application on behalf of the individual. Assisting a family member is 
different from attesting that they are acting on their behalf as an 
authorized representative. If an individual is merely receiving 
assistance with the application, they would still complete and sign 
their own application. Whereas an authorized representative provides 
their signature and an attestation that they are authorized by law to 
act on the individual's behalf.
    Comment: Several commenters requested that ``authorized 
representatives'' be excluded from the 48-hour waiting period between a 
Scope of Appointment and a personal

[[Page 30597]]

marketing appointment with an agent/broker.
    Response: We thank the commenters for this recommendation, but 
these requests are related to existing marketing regulations and are, 
thus, outside the scope of the proposal.
    After consideration of all public comments and for the reasons 
discussed here and in the proposed rule, we are finalizing our proposal 
with a technical change to add the language as new paragraphs 
Sec. Sec.  422.60(i) and 423.32(j) instead of Sec. Sec.  422.60(h) and 
423.32(h).

U. Open Enrollment Period for Institutionalized Individuals (OEPI) End 
Date (Sec.  422.62(a)(4))

    Section 1851(e) of the Act establishes the coverage election 
periods for making or changing elections in the M+C, later known as MA, 
program. Section 501(b) of the Balanced Budget Refinement Act of 1999 
(BBRA) (Pub. L. 106-113) amended Section 1851(e)(2) of the Act by 
adding a new subparagraph (D), which provides for continuous open 
enrollment for institutionalized individuals after 2001. CMS published 
a final rule with comment period (65 FR 40317) in June 2000 
implementing section 1851(e)(2)(D) by establishing a new continuous 
open enrollment period for institutionalized individuals (OEPI) at then 
Sec.  422.62(a)(6). In subsequent rulemaking (83 FR 16722), the OEPI 
regulations were further updated to reflect conforming changes related 
to implementation of Title II of The Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) (70 
FR 4717) and to redesignate this provision from Sec.  422.62(a)(6) to 
(a)(4).
    As noted above, the OEPI is continuous. Individuals may use the 
OEPI to enroll in, change, or disenroll from a plan. Individuals are 
eligible for the OEPI if they move into, reside in, or move out of an 
institution. Longstanding sub-regulatory guidance has stated that the 
OEPI ends 2 months after an individual moves out of an institution, but 
this has not been articulated in regulations.\114\
---------------------------------------------------------------------------

    \114\ This guidance can be found in Chapter 2, Section 30.3 of 
the Medicare Managed Care Manual.
---------------------------------------------------------------------------

    To provide transparency and stability for plans, beneficiaries and 
their caregivers, and other interested parties about this aspect of MA 
enrollment, we proposed in the November 2023 proposed rule to codify 
current sub-regulatory guidance that defines when the OEPI ends. 
Specifically, we proposed to codify at new subparagraph Sec.  
422.62(a)(4)(ii) that the OEPI ends on the last day of the second month 
after the month the individual ceases to reside in one of the long-term 
care facility settings described in the definition of 
``institutionalized'' at Sec.  422.2.
    This proposal defined when the OEPI ends and would not result in a 
new or additional paperwork burden since MA organizations are currently 
implementing the policy related to the OEPI end date as part of 
existing enrollment processes. All burden impacts related to an 
applicant's eligibility for an election period have already been 
accounted for under OMB control number 0938-0753 (CMS-R-267). 
Similarly, we stated in the proposed rule that we did not believe the 
proposed changes would have any impact to the Medicare Trust Fund.
    We received the following comments, and our responses follow.
    Comment: A commenter supported the proposal to codify the 
definition of when the OEPI ends.
    Response: We thank the commenter for the support.
    Comment: A commenter supported the proposal and encouraged CMS to 
further clarify that the OEPI also permits institutionalized 
individuals to enroll in a special needs plan (SNP) or Program of All-
Inclusive Care for the Elderly (PACE) plan, in addition to an MA plan 
or Original Medicare.
    Response: We appreciate the feedback and acknowledge that the OEPI 
allows institutionalized individuals to enroll in an MA plan, an SNP 
(which is a type of MA plan), or discontinue enrollment in an MA plan 
and enroll in Original Medicare. PACE is addressed under separate 
regulations and we note that individuals enrolling in the PACE program 
do not require an election period.
    Comment: A commenter suggested that we include institutionalized-
equivalent for purposes of OEPI.
    Response: We appreciate the feedback but note that the proposed 
change pertained to the period of time in which an individual is 
eligible for the OEPI and able to make an election, not to the election 
period eligibility criteria. As such, this recommendation is outside of 
the scope of the proposed rulemaking.
    After consideration of all public comments and for the reasons 
described here and in the November 2023 proposed rule, we are 
finalizing our proposal to amend Sec.  422.62(a)(4) without 
modification.

V. Beneficiary Choice of C/D Effective Date if Eligible for More Than 
One Election Period (Sec. Sec.  422.68 and 423.40)

    Section 1851(f) of the Act establishes the effective dates of 
elections and changes of elections for MA plans. In the June 1998 
interim final rule, we specified the effective dates for elections and 
changes of elections of M+C (now MA) plan coverage made during various 
specified enrollment periods (63 FR 34968). The effective date 
requirements for the initial coverage election period (ICEP), annual 
election period (AEP), MA open enrollment period (MA-OEP), open 
enrollment period for institutionalized individuals (OEPI), and special 
election periods (SEP) are codified in regulation at Sec.  422.68. For 
Part D plans, section 1860D-1(b)(1)(B)(iv) of the Act directs us to 
establish similar rules for effective dates of elections and changes of 
elections to those provided under the MA program statute at section 
1851(f). In the January 2005 Part D final rule, we specified the 
effective dates for elections and changes of elections of Part D 
coverage made during various specified enrollment periods (70 FR 4193). 
The effective date requirements for the initial enrollment period (IEP) 
for Part D, AEP, and SEPs are codified in regulation at Sec.  423.40.
    Existing regulations at Sec. Sec.  422.68 and 423.40 do not address 
what the MA organization or Part D plan sponsor should do when a 
beneficiary is eligible for more than one election period, thus 
resulting in more than one possible effective date for their election 
choice. For example, the beneficiary is eligible to make a change in 
their election choice during the MA-OEP, but they are also eligible for 
an SEP due to changes in the individual's circumstances. Current sub-
regulatory guidance provides that the MA organization or Part D plan 
sponsor determine the proper effective date based on the election 
period for which the beneficiary is eligible before the enrollment or 
disenrollment may be transmitted to CMS.\115\ Because the election 
period determines the effective date of the election in most instances, 
with the exception of some SEPs or when election periods overlap, 
beneficiaries may not request their election effective date. The MA 
organization or Part D plan sponsor determines the effective date once 
the election period is identified. If a beneficiary is eligible for 
more than one election period, which results in more than one possible 
effective date, CMS's sub-regulatory guidance \116\ directs the

[[Page 30598]]

MA organization or Part D plan sponsor to allow the beneficiary to 
choose the election period that results in the desired effective date. 
To determine the beneficiary's choice of election period, MA 
organizations and Part D plan sponsors are instructed to attempt to 
contact the beneficiary, and to document their attempt(s). However, 
sub-regulatory guidance \117\ states that this does not apply to 
beneficiary requests for enrollment into an employer or union group 
health plan (EGHP) using the group enrollment mechanism. Beneficiaries 
who make an election via the employer or union election process will be 
assigned an effective date according to the SEP EGHP, unless the 
beneficiary requests a different effective date that is allowed by one 
of the other election periods for which they are eligible.
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    \115\ This guidance can be found in Chapter 2, Section 30.6 and 
30.7 of the Medicare Managed Care Manual and Chapter 3, Section 30.4 
and 30.5 of the Prescription Drug Benefit Manual.
    \116\ This guidance can be found in Chapter 2, Section 30.6 of 
the Medicare Managed Care Manual and Chapter 3, Section 30.4 of the 
Prescription Drug Benefit Manual.
    \117\ This guidance can be found in Chapter 2, Section 30.6 of 
the Medicare Managed Care Manual and Chapter 3, Section 30.4 of the 
Prescription Drug Benefit Manual.
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    Because a beneficiary must be entitled to Medicare Part A and 
enrolled in Medicare Part B in order to be eligible to receive coverage 
under an MA or MA-PD plan, CMS's sub-regulatory guidance \118\ explains 
that if one of the election periods for which the beneficiary is 
eligible is the ICEP, the beneficiary may not choose an effective date 
any earlier than the month of entitlement to Part A and enrollment in 
Part B. Likewise, because a beneficiary must be entitled to Part A or 
enrolled in Part B in order to be eligible for coverage under a Part D 
plan, sub-regulatory guidance explains that if one of the election 
periods for which the beneficiary is eligible is the Part D IEP, the 
beneficiary may not choose an effective date any earlier than the month 
of entitlement to Part A and/or enrollment in Part B.\119\
---------------------------------------------------------------------------

    \118\ This guidance on effective dates of elections is currently 
outlined in section 30.6 of Chapter 2 of the Medicare Managed Care 
Manual.
    \119\ This guidance on effective dates of elections is currently 
outlined in section 30.4 of Chapter 3 of the Medicare Prescription 
Drug Benefit Manual.
---------------------------------------------------------------------------

    Furthermore, sub-regulatory guidance \120\ provides that if a 
beneficiary is eligible for more than one election period and does not 
choose which election period to use, and the MA organization or Part D 
plan sponsor is unable to contact the beneficiary, the MA organization 
or Part D plan sponsor assigns an election period for the beneficiary 
using the following ranking of election periods (1 = Highest, 5 = 
Lowest): (1) ICEP/Part D IEP, (2) MA-OEP, (3) SEP, (4) AEP, and (5) 
OEPI. The election period with the highest rank generally determines 
the effective date of enrollment. In addition, if an MA organization or 
Part D sponsor receives a disenrollment request when more than one 
election period applies, the plan is instructed to allow the 
beneficiary to choose which election period to use. If the beneficiary 
does not make a choice, then the plan is directed to assign the 
election period that results in the earliest disenrollment.
---------------------------------------------------------------------------

    \120\ This guidance can be found in sections 30.6 and 30.7 of 
Chapter 2 of the Medicare Managed Care Manual and sections 30.4 and 
30.5 of Chapter 3 of the Medicare Prescription Drug Benefit Manual.
---------------------------------------------------------------------------

    To provide transparency and stability about the MA and Part D 
program for plans, beneficiaries, and other interested parties, we 
proposed at new Sec. Sec.  422.68(g) and 423.40(f) that if the MA 
organization or Part D plan sponsor receives an enrollment or 
disenrollment request, determines the beneficiary is eligible for more 
than one election period and the election periods allow for more than 
one effective date, the MA organization or Part D plan sponsor must 
allow the beneficiary to choose the election period that results in the 
desired effective date. We also proposed at Sec. Sec.  422.68(g)(1) and 
423.40(f)(1) that the MA organization or Part D plan sponsor must 
attempt to contact the beneficiary and must document its attempt(s) to 
determine the beneficiary's choice. The plan may contact the 
beneficiary by phone, in writing, or any other communication mechanism. 
Plans would annotate the outcome of the contact(s) and retain the 
record as part of the individual's enrollment or disenrollment request. 
In addition, we proposed at Sec. Sec.  422.68(g)(2) and 423.40(f)(2) to 
require that the MA organization or Part D plan sponsor must use the 
proposed ranking of election periods to assign an election period if 
the beneficiary does not make a choice. With the exception of the SEP 
EGHP noted earlier, if a beneficiary is simultaneously eligible for 
more than one SEP and they do not make a choice, and the MA 
organization or PDP sponsor is unable to obtain the beneficiary's 
desired enrollment effective date, the MA organization or PDP sponsor 
should assign the SEP that results in an effective date of the first of 
the month after the enrollment request is received by the plan. 
Finally, we proposed at Sec. Sec.  422.68(g)(3) and 423.40(f)(3) to 
require that if the MA organization or Part D plan sponsor is unable to 
obtain the beneficiary's desired disenrollment effective date, they 
must assign an election period that results in the earliest 
disenrollment.
    This proposal represented the codification of longstanding MA and 
Part D sub-regulatory guidance. Based on infrequent complaints and 
questions from plans and beneficiaries related to current guidance, we 
concluded that the guidance has been previously implemented and is 
currently being followed by plans. We concluded that there was no 
additional paperwork burden associated with codifying this longstanding 
sub-regulatory policy, and there was also no impact to the Medicare 
Trust Fund. All information impacts related to the current process for 
determining a beneficiary's eligibility for an election period and 
processing election requests have already been accounted for under OMB 
control number 0938-0753 (CMS-R-267) for Part C and 0938-0964 (CMS-
10141) for Part D.
    We received the following comments, and our responses follow.
    Comment: Commenters were generally supportive of the proposal as 
written, with some commenters noting that it reflects current practices 
and prioritizes beneficiary preference.
    Response: We thank the commenters for the support.
    Comment: A commenter supported the proposal but suggested that CMS 
require plans to exhaust all available communication methods if the 
beneficiary does not respond to plan attempts to reach them.
    Response: We appreciate the suggestion. However, we believe the 
parameters of the proposal to require the plan to attempt to contact 
the individual to indicate a desired effective date is sufficient. We 
encourage plans to attempt to contact individuals using all feasible 
communication methods including by phone, in writing, or another 
preferred method.
    Comment: Several commenters suggested updating Medicare.gov to 
allow individuals to indicate their desired effective date during 
online enrollments, which would alleviate plan burden in needing to 
contact individuals who are eligible for more than one election period. 
One of the commenters added as an example that an individual may end up 
overlapping their EGHP coverage with Medicare coverage for a period of 
time if they do not understand the different enrollment timeframes or 
which SEP applies to their situation.
    Response: We appreciate the commenters' feedback. We will consider 
future updates to Medicare.gov that would enable individuals to 
indicate their preferred effective date or provide explanations that 
help individuals better understand possible effective dates or which 
SEP timeframes apply to their situation.

[[Page 30599]]

    Comment: A commenter suggested that the individual should be asked 
by the plan at the time of their enrollment when they want their plan 
coverage to begin. The commenter added that if an individual does not 
select their desired effective date when they contact the plan to 
enroll, CMS should require the plan to space out the three-attempt 
contact requirement.
    Response: We appreciate the feedback. If an individual is enrolling 
with the plan in person or by phone, we encourage the plan to ask the 
individual to indicate their preferred effective date. The proposal and 
sub-regulatory guidance do not specify that plans need to make three 
attempts to contact the individual if they do not indicate their 
preferred effective date. However, plans are strongly encouraged to 
make multiple contact attempts to request additional information from 
individuals before assigning an effective date.
    Comment: A commenter requested additional information in the sub-
regulatory guidance regarding the required timeframe to contact the 
individuals about selecting their enrollment effective date.
    Response: Plans determine which election period applies to each 
individual to assign the proper election period and effective date 
before the enrollment may be transmitted to CMS. Plans should contact 
individuals eligible for more than one election period about selecting 
their enrollment effective date within the timeframes for processing 
enrollment requests. Sub-regulatory guidance for processing enrollment 
requests in sections 40.3 of Chapter 2 of the Medicare Managed Care 
Manual and 40.3 of the Chapter 3 of the Medicare Prescription Drug 
Benefit Manual explains the timeframe for processing and transmitting 
election requests to CMS. Plans are required to submit the information 
necessary for CMS to add the individual to its records as an enrollee 
of the MA organization or PDP sponsor within 7 calendar days of receipt 
of the completed enrollment request.
    Comment: A commenter stated that allowing dually eligible 
beneficiaries to choose the election period that results in a desired 
effective date for MA or Part D could influence utilization patterns 
and impact associated costs for health care services. The commenter 
added that changes to enrollment periods and requirements could result 
in member disenrollment or churn, which may affect the financial 
stability of MA organizations.
    Response: While we appreciate the feedback, we do not believe this 
change would have such an impact on utilization patterns and associated 
costs for health care services. This change allowing the beneficiary to 
choose the election period that results in the desired effective date 
codifies longstanding sub-regulatory guidance and has been previously 
implemented by plans. Therefore, we expect that codifying this proposal 
will have minimal impact on plans' current enrollments.
    After consideration of all public comments, for the reasons 
described here and in the November 2023 proposed rule, we are 
finalizing our proposal at Sec. Sec.  422.68(g) and 423.40(f) without 
modification.

VI. Medicare Advantage/Part C and Part D Prescription Drug Plan 
Marketing

A. Distribution of Personal Beneficiary Data by Third Party Marketing 
Organizations (Sec. Sec.  422.2274(g) and 423.2274(g))

    In the December 2022 proposed rule, CMS proposed to add a new 
paragraph (4) at Sec. Sec.  422.2274(g) and 423.2274(g) to address 
issues with third party marketing organizations (TPMOs) distributing 
beneficiary contact information to other TPMOs, in any manner, 
including selling this information.\121\ In paragraph (4), we proposed 
that personal beneficiary data collected by a TPMO may not be 
distributed to other TPMOs. We explained that when a beneficiary calls 
a 1-800 number from a direct mail flyer, a television advertisement, or 
an internet advertisement, or other similar material, the beneficiary 
most likely believes they are only responding to or calling--and 
requesting contact with--the entity that advertised the 1-800 number 
and answers the call. However, some of these entities, in quickly read 
disclaimers or through web or printed material-based disclaimers in 
very small font, inform the beneficiary that their personal contact 
information may be sold or distributed to other entities. The contact 
information (name, address, phone number) obtained by these entities is 
then sold or distributed to one or more TPMOs, such as field marketing 
organizations and/or agents/brokers. As a result, these other entities 
then reach out or 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. 
We asserted that when a beneficiary calls an entity based on an 
advertisement, the beneficiary is only expecting to connect with that 
particular entity, not to have return calls made to their personal home 
or cell number from other entities.
---------------------------------------------------------------------------

    \121\ 87 FR 79535.
---------------------------------------------------------------------------

    As discussed in the December 2022 proposed rule, CMS has learned 
through environmental scanning efforts 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 did not believe that 
beneficiaries knowingly gave their permission to receive multiple calls 
from multiple different entities based on a single call made by a 
beneficiary and that beneficiaries intended in these scenarios that 
their information would be received only by one entity, that being the 
plan or agent or broker that will ultimately receive the beneficiary's 
enrollment request. As another example of this type of behavior, we 
noted in the December 2022 proposed rule that CMS was aware of 
situations where entities require the beneficiary to agree to allowing 
their contact information to be resold or shared prior to speaking with 
a representative or having access to any information. In these 
situations, a beneficiary initiates contact with one entity and then 
ends up receiving calls from multiple other unrelated entities. 
Additionally, we asserted that providing a quickly read disclaimer or 
providing a disclaimer in very small print or placing a disclaimer in 
an inconspicuous place when that disclaimer indicates that a 
beneficiary's contact information may be provided or sold to another 
entity or party, are considered misleading marketing tactics because 
these entities are using beneficiary contact information in a manner in 
which the beneficiary did not intend.
    In order to address this type of activity, we proposed to add a new 
paragraph (4) to Sec. Sec.  422.2274(g) and 423.2274(g) that would 
prohibit TPMOs from distributing any personal beneficiary data that 
they collect to other TPMOs. In the December 2022 proposed rule, we 
noted that this proposal was consistent with the statutory prohibition 
on unsolicited contact contained within sections 1851(j)(1)(A) and 
1860D-04(l)(1) of the Act, as well as the corresponding CMS regulations 
at 42 CFR 422.2264(a)(3) and 423.2264(a)(3). In addition, we note that 
CMS's authority to promulgate rules related to TPMOs in this 
circumstance also derives from sections 1851(h)(4)(C)

[[Page 30600]]

and 1860D-01(b)(1)(B)(vi) of the Act, which allow CMS to establish fair 
marketing standards that shall not permit MA organizations and Part D 
plans (and the agents, brokers, and other third parties representing 
such organizations) to conduct the prohibited activities described in 
subsection 1851(j)(1) of the Act. Likewise, we rely in this situation 
on sections 1856(b)(1), 1857(e)(1) and 1860D-12(b)(3)(D) of the Act, 
which grant the Secretary authority to establish by regulation other 
standards that are consistent with and carry out the statute and to 
include additional contract terms and conditions that are not 
inconsistent with the statute and that the Secretary finds necessary 
and appropriate.
    As noted above, CMS proposed in the December 2022 proposed rule to 
modify Sec. Sec.  422.2274(g) and 423.2274(g) to prohibit TPMOs from 
distributing personal beneficiary data to other TPMOs. However, in 
light of the comments received on our proposal, which we discuss 
further below, and for the reasons discussed in our responses, we are 
instead finalizing Sec.  422.2274(g)(4) and 423.2274(g)(4) with 
revisions compared to our proposal in the December 2022 proposed rule, 
which will permit TPMOs to share personal beneficiary data with other 
TPMOs for marketing or enrollment purposes only if they first obtain 
express written consent from the relevant beneficiary. In our below 
responses to comments received regarding the proposed changes to 
Sec. Sec.  422.2274(g)(4) and 423.2274(g)(4), we further articulate 
what TPMOs will be required to do to conform with this consent 
requirement, including what should be included in a disclosure to 
beneficiaries.
    We acknowledge that other agencies regulate certain types of 
information collection and sharing of personal information, such as the 
Department of Health and Human Services' Office for Civil Rights (OCR), 
the Federal Trade Commission (FTC), and the Federal Communications 
Commission (FCC). OCR administers and enforces the HIPAA Privacy Rule 
(45 CFR parts 160 and 164 subparts A and E) which provides standards 
for the use and disclosure of protected health information by HIPAA 
covered entities and business associates. A covered entity is a health 
care provider that conducts certain health care transactions 
electronically, a health plan, or a health care clearinghouse, while a 
business associate is a person or entity, other than a member of the 
workforce of a covered entity, who performs functions or activities on 
behalf of, or provides certain services to, a covered entity that 
involve access by the business associate to protected health 
information.\122\ Generally, protected health information is 
individually identifiable health information maintained or transmitted 
by a covered entity or its business associate. The definitions of a 
covered entity, business associate, and protected health information 
can be found at 45 CFR 160.103. The HIPAA Privacy Rule requires that 
covered entities enter contracts or other arrangements with their 
business associates to ensure that the business associates will 
appropriately safeguard protected health information.\123\ A covered 
entity or business associate can share protected health information 
with a telemarketer only if the covered entity or business associate 
has either obtained the individual's prior written authorization to do 
so or has entered into a business associate relationship with the 
telemarketer for the purpose of making a communication that is not 
marketing, such as to inform individuals about the covered entity's own 
goods or services.\124\ If the telemarketer is a business associate 
under the HIPAA Privacy Rule, it must agree by contract to use the 
information only for communicating on behalf of the covered entity, and 
not to market its own goods or services (or those of another third 
party).\125\
---------------------------------------------------------------------------

    \122\ 45 CFR 160.103.
    \123\ 45 CFR 164.502(a).
    \124\ United States Department of Health and Human Services, 
Office for Civil Rights: Can telemarketers obtain my health 
information and use it to call me to sell good and services?, 
https://www.hhs.gov/hipaa/for-individuals/faq/277/can-telemarketers-obtain-my-health-information-and-use-it/index.html. Last reviewed 
January 9, 2023.
    \125\ United States Department of Health and Human Services, 
Office for Civil Rights: Can telemarketers obtain my health 
information and use it to call me to sell good and services?
---------------------------------------------------------------------------

    As such, it becomes relevant for this final rule whether TPMOs are 
covered entities or business associates that must comply with the HIPAA 
Privacy Rule. TPMOs (as defined at Sec.  422.2260) have varying degrees 
of business and contractual arrangements with MA organizations and Part 
D sponsors (who are covered entities under the HIPAA Privacy Rule) and 
may or may not be considered business associates under the HIPAA 
Privacy Rule. It is the responsibility of the TPMO to understand 
whether they are a covered entity or acting as a business associate 
when collecting personal beneficiary data that meets the definition of 
protected health information. If the TPMO is a covered entity or 
business associate, the TPMO must ensure they are compliant with the 
HIPAA Privacy, Security, and Breach Notification Rules when using or 
disclosing an individual's protected health information.
    On December 13, 2023, in the Second Report and Order \126\ (FCC 23-
107), the FCC amended consent rules for robotexts and robocalls 
governed by the Telephone Consumer Protection Act (TCPA). In the order, 
FCC made it clear that texters and callers subject to the TCPA must 
obtain a consumer's prior express written consent when telemarketing 
via robocall or robotext and that the requirement applies a single 
seller at a time.\127\ Furthermore, the rule made clear that ``the 
consumer's consent is not transferrable or subject to sale to another 
caller because it must be given by the consumer to the seller.'' \128\ 
Sharing many concerns that CMS articulated in the December 2022 
proposed rule \129\ and this final rule, the FCC explained that ``lead 
generated communications are a large percentage of unwanted calls and 
texts and often rely on flimsy claims of consent and result in consent 
abuse by unscrupulous robotexters and robocallers.'' \130\ The TCPA 
generally requires callers to get consumer consent before making 
certain calls or texts to consumers using an ``automatic telephone 
dialing system'' (also known as an ``autodialer'') or an artificial or 
prerecorded voice. 47 U.S.C. 227(b)(1)(A).\131\ This new rule, once 
effective, will require lead generators and comparison-shopping 
websites to obtain one-to-one consent with a clear and conspicuous 
disclosure from the consumer for each seller that intends to

[[Page 30601]]

make a call or send a text using an automatic telephone dialing system 
or make a call containing an artificial or prerecorded voice.\132\ 
Therefore, even if a lead generator or comparison-shopping website 
lists multiple sellers on its web page, each seller is responsible for 
obtaining the prior express written consent from the called party 
through a ``clear and conspicuous'' disclosure on the lead generator or 
comparison-shopping website in order to robocall or robotext the 
consumer. The changes to the FCC consent rules also require that 
telemarketing texts and calls that result from consumer consent must be 
``logically and topically associated with the interaction that prompted 
the consent.'' \133\ The FCC explained that this requirement makes ``it 
clear that sharing lead information with a daisy-chain of ``partners'' 
is not permitted.'' \134\ The FCC refers to these changes as ``closing 
the lead generator loophole'' \135\ which will go into effect at a 
later date, either 12 months after publication in the Federal Register, 
or 30 days after notice that the Office of Management and Budget has 
completed review of any information collection requirements.\136\ These 
new FCC rules will apply to TPMOs operating in the MA and Part D 
marketplace that seek to contact Medicare beneficiaries with 
advertisements or telemarketing messages using an automatic telephone 
dialing system or an artificial or prerecorded voice.
---------------------------------------------------------------------------

    \126\ Federal Communications Commission, FC-23-107: Second 
Report and Order, Second Further Notice of Proposed Rulemaking in CG 
Docket NOS. 02-278 and 21-402, and Waiver Order in CG Docket no. 17-
59, https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf. 
Released December 18, 2023.
    \127\ Federal Communications Commission, FC-23-107, Page 12 of 
FCC 23-107. https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf. The content of the call or text determines whether the 
prior express consent from the called party must be in writing.
    \128\ Federal Communications Commission, FC-23-107, Page 21. 
https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
    \129\ 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.
    \130\ Federal Communications Commission, FC-23-107, Page 12. 
https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
    \131\ Federal Communications Commission, Telephone Consumer 
Protection Act 47 U.S.C. 227, RESTRICTIONS ON THE USE OF TELEPHONE 
EQUIPMENT. https://www.fcc.gov/sites/default/files/tcpa-rules.pdf.
    \132\ Federal Communications Commission, FC-23-107, Page 12. 
https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
    \133\ Federal Communications Commission, FC-23-107, Page 51. 
https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
    \134\ Federal Communications Commission, FC-23-107, Page 14. 
https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
    \135\ Federal Communications Commission, FC-23-107, Page 12. 
https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
    \136\ Federal Communications Commission, FC-23-107, VII. 
ORDERING CLAUSES, Page 39. https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
---------------------------------------------------------------------------

    The FTC also enforces rules and regulations that apply to TPMOs, 
such as the Telemarketing Sales Rule (TSR) \137\ (16 CFR 310) and 
Section 5 of the FTC Act (FTCA). The TSR is a set of regulations that 
apply to telemarketing and generally prohibits abusive and deceptive 
tactics in marketing. Section 5 of the FTCA provides that unfair or 
deceptive acts or practices in or affecting commerce are declared 
unlawful (15 U.S.C. 45(a)(1)).\138\ We note that the regulations in 
this rule do not attempt to change or define what is unlawful under 
OCR, FCC, or FTC regulations; we are reiterating that TPMOs operating 
in the MA and Part D marketplace must comply with numerous laws and 
regulations that govern information sharing, disclosure, and consent to 
be contacted for marketing or enrollment purposes. The limitations 
being adopted under the MA and Part D statutes in these MA and Part D 
regulations are not replacements for other protections for individual 
information collected in the course of marketing or enrollment, but 
supplement those protections with specific limitations and restrictions 
to protect Medicare beneficiaries so that CMS can take steps within its 
authority under Title 18 \139\ to protect Medicare beneficiaries 
(rather than deferring to other agencies to enforce other requirements 
that offer similar protections).
---------------------------------------------------------------------------

    \137\ https://www.ecfr.gov/current/title-16/part-310.
    \138\ https://uscode.house.gov/view.xhtml?req=(title:15%20section:45%20edition:prelim)%20OR%20(granu
leid:U.S.C.-prelim-title15-
section45)&f=treesort#=0&edition=prelim.
    \139\ https://www.ssa.gov/OP_Home/ssact/title18/1800.htm.
---------------------------------------------------------------------------

    We received the following comments on this proposal and our 
responses follow:
    Comment: We received several comments that the proposal disregards 
a beneficiary's choice on whether to opt in to having their personal 
contact information shared. While some commenters were largely 
supportive of the total prohibition, citing the protections to 
beneficiary privacy and autonomy, many commenters believed that 
beneficiaries should be able to consent to having their information 
shared. A few commenters stated that TPMOs should be able to share 
beneficiary contact information when the beneficiary knowingly consents 
and requests to have it shared, which would not be possible if the rule 
was finalized as proposed. Another commenter stated that the statute 
expressly gives beneficiaries the right to solicit direct contacts, and 
if CMS implemented this new requirement, without any ability for them 
to consent, that right to permit direct contacts would be taken away 
from the beneficiary. Some commenters suggested that rather than 
implementing a full prohibition on sharing information, CMS could 
introduce measures to clarify how to request consent for the sharing of 
beneficiary information to multiple entities. Commenters provided 
suggestions on how to ensure beneficiaries knowingly consent to having 
their data shared, which included adopting the FTC's clear and 
conspicuous standard, limitations on who may contact a beneficiary, and 
how often or for how long a beneficiary may be contacted. A few 
commenters believed that CMS incorrectly assumes a beneficiary never 
wants their information to be shared, or that they are unable to make 
that choice. A commenter agreed that stronger consent is needed, but 
disagreed with the CMS claim that beneficiaries are not aware that they 
are opting into their information being shared with multiple entities. 
Commenters also suggested including more effective disclosures or 
disclaimers that indicate the resale and/or the specific details of 
where and to whom this information will be shared. A commenter provided 
their standards as a resource, which listed the different standards 
they currently utilize.
    Response: CMS thanks commenters that were supportive of our 
proposal to prohibit the sharing of beneficiaries' personal information 
and appreciates the various suggestions that commenters provided to 
allow beneficiaries to consent to the sharing of their personal 
information. We recognize that other statutory and regulatory 
frameworks, such as the TCPA, TSR, and HIPAA Privacy Rule, which deal 
with sharing personal information and contacting consumers, allow 
individuals to consent to the sharing of their information or the 
receipt of calls from product and service providers. Equally as 
important, we recognize the right of beneficiaries to share their 
personal information and that some may want to share their information 
with many TPMOs to solicit direct contact from a larger group of TPMOs 
to assist them in selecting a health plan that best meets their needs. 
Therefore, we agree with the commenters that beneficiaries should be 
able to consent to having their personal information shared in a clear 
and understandable way and have modified the proposed regulation text 
to provide for this option. In this final rule and based upon 
suggestions received in comments, we are codifying that personal 
beneficiary data collected by a TPMO for marketing or enrolling the 
beneficiary into an MA or Part D plan may only be shared with another 
TPMO when prior express written consent is given by the beneficiary. 
Further, we are codifying that prior express written consent from the 
beneficiary to share the data and be contacted for marketing or 
enrollment purposes must be obtained separately for each TPMO that 
receives the data through a clear and conspicuous disclosure. We 
believe that beneficiaries have the right to share their personal data 
with whom they choose and should have the opportunity

[[Page 30602]]

to fully understand with whom their personal data may be shared. By 
finalizing the rule in this way, we are not codifying an outright 
prohibition of sharing personal beneficiary data. CMS sought technical 
studies on the results of limiting beneficiary data sharing and its 
effectiveness. For example, in a 2023 Pew Survey, CMS learned from 
Pew's findings that ``overall, 72% [of Americans] say there should be 
more government regulation of what companies can do with their 
customers' personal information.' '' \140\ The survey also revealed 
that ``a majority of Americans say they are concerned, lack control and 
have a limited understanding about how the data collected about them is 
used.'' \141\ No studies that we can find exist on whether completely 
limiting the distribution improves the beneficiary experience. We have, 
however, numerous complaints, both through 1-800-Medicare, the new FCC 
Second Report and Order \142\ cited earlier, as well as State Health 
Insurance Programs, testimony from health insurance administrators and 
executives,\143\ and advocacy groups noting that the overwhelming 
number of marketing calls beneficiaries receive from TPMOs are 
unwanted, confusing, and inhibit the beneficiary's ability to make an 
informed choice. Our final rule aims to limit when a beneficiary's 
personal data can be shared and ensures that they know who will be 
contacting them, which we believe will lower the number of complaints, 
be less overwhelming, and will result in beneficiaries having a more 
meaningful discussion with fewer agents, and ultimately enrolling in a 
health plan that best meets their needs.
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    \140\ Pew Research Center, How Americans View Data Privacy: 
Views of data privacy risks, personal data and digital privacy laws. 
https://www.pewresearch.org/internet/2023/10/18/views-of-data-privacy-risks-personal-data-and-digital-privacy-laws/.
    \141\ Pew Research Center, How Americans View Data Privacy: 
Views of data privacy risks, personal data and digital privacy laws. 
https://www.pewresearch.org/internet/2023/10/18/views-of-data-privacy-risks-personal-data-and-digital-privacy-laws/.
    \142\ Federal Communications Commission, FC-23-107. https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
    \143\ United States Senate Committee on Finance, Medicare 
Advantage Annual Enrollment: Cracking Down on Deceptive Practices 
and Improving Senior Experiences. https://www.finance.senate.gov/hearings/medicare-advantage-annual-enrollment-cracking-down-on-deceptive-practices-and-improving-senior-experiences.
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    We are codifying the regulation text in a way that is generally 
consistent with the one-to-one consent structure announced by the FCC 
in the Second Report and Order \144\ (FCC 23-107) in order to make it 
simple and less arduous for a TPMO to comply with both rules, when 
applicable. The FCC's Order amends the definition of prior express 
written consent at 47 CFR 64.1200 for a person to be called or texted 
advertisements or telemarketing messages using an automatic telephone 
dialing system or an artificial or prerecorded voice by requiring an 
agreement, in writing, that bears the signature of the person called or 
texted that clearly and conspicuously authorizes no more than one 
identified seller. The FCC explained that if a lead generator or 
comparison-shopping website seeks to obtain prior express written 
consent for multiple sellers, they must obtain prior express written 
consent separately for each seller. Secondly, the FCC Order requires a 
written agreement that includes a clear and conspicuous disclosure 
informing the person signing that they are authorizing the seller to 
deliver or cause to be delivered to the signatory telemarketing calls 
or texts using an automatic telephone dialing system or an artificial 
or prerecorded voice. The FCC defined clear and conspicuous as ``notice 
that would be apparent to a reasonable consumer.'' \145\
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    \144\ Federal Communications Commission, FC-23-107. https://docs.fcc.gov/public/attachments/FCC-23-107A1.pdf.
    \145\ Federal Communications Commission, FC-23-107, Page 16. 
https://docs.fcc.gov/public/attachments/FCC-23-107A1.
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    We believe that prior express written consent, one-to-one from 
person to seller, through a clear and conspicuous disclosure to share 
personal beneficiary data with another TPMO, is a reasonable and less 
restrictive standard than a ``complete prohibition'' on the sharing of 
personal beneficiary data with other TPMOs. This consent and disclosure 
are necessary to provide beneficiaries with the information they need 
to understand where their personal data is going, what they are 
consenting to being contacted about, and who will be contacting them 
for health care options. Prior express written consent will ensure that 
there is a record of the beneficiary consenting to the sharing of their 
data, which can easily be obtained through a website interface, but can 
also be provided through email or text message when a beneficiary calls 
a toll-free number. By adopting the one-to-one consent requirement, we 
will prevent TPMOs from having to build a different consent and 
disclosure structure on their websites and systems because it aligns 
with the one-to-one consent structure in the FCC rules on consenting to 
telemarketing calls or texts using an automatic telephone dialing 
system or an artificial or prerecorded voice. Under the FCC's new 
rules, if a TPMO marketing MA or Part D plan options wants to robotext 
or robocall a beneficiary, they must obtain consent from the 
beneficiary that they agree for that specific entity to contact them 
via robotext or robocall. Similarly, under our amended rule, if a TPMO 
wants to share a beneficiary's personal data with another TPMO, the 
TPMO must obtain consent from the beneficiary for each entity that it 
intends to share the data with. Thus, the shared one-to-one consent 
structure will make it easier for TPMOs to collect both consents at the 
same time; a consent to share the beneficiary's personal data with a 
specific entity and the consent for that entity to robotext, robocall, 
or call the beneficiary, as applicable.
    In addition, this rule will prevent the sharing of personal 
beneficiary data with another TPMO unless expressly authorized by the 
beneficiary, which means beneficiaries will not be called by TPMOs with 
whom they have not given permission to be called, even when the new FCC 
rule does not apply (i.e., a manually dialed phone call). Finally, the 
regulation requires a ``clear and conspicuous'' disclosure to the 
beneficiary, which is a standard used in the FCC Order as well as by 
the FTC as defined at 16 CFR 255.0(f). Under 16 CFR part 255--Guides 
Concerning Use of Endorsements and Testimonials in Advertising, the FTC 
defines clear and conspicuous to mean ``that a disclosure is difficult 
to miss (i.e., easily noticeable) and easily understandable by ordinary 
consumers.'' \146\ The FTC also provides numerous examples to 
illustrate how the definition of clear and conspicuous is applied in 
real life examples in Part 255.\147\ We find the FCC and FTC definition 
of clear and conspicuous to be similar but point to the FTC's 
definition as guiding for our rule because the definition has been 
recently updated \148\ and there are numerous examples that can help 
guide TPMOs in how to apply it.
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    \146\ https://www.ecfr.gov/current/title-16/part-255#p-255.0(f).
    \147\ https://www.ecfr.gov/current/title-16/part-255#p-255.0(f).
    \148\ Federal Trade Commission, Guides Concerning the Use of 
Endorsements and Testimonials in Advertising (88 FR 48092), updated 
July 26, 2023.
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    We understand that sometimes a beneficiary can be connected to 
another TPMO in real time. For example, a beneficiary may call a TPMO 
seeking to get information about Medicare plan options and that TPMO, 
in order to assist the beneficiary, may be able to

[[Page 30603]]

transfer or connect that beneficiary to another TPMO, such as an agent 
or broker during the call to provide real time assistance to the 
beneficiary. In that circumstance, where a live call can be transferred 
to another entity for assistance, we believe this is an acceptable 
approach that can be accomplished without obtaining prior express 
written consent as long as the beneficiary has verbally agreed or 
consented to be transferred during the live phone call. For purposes of 
this rule, we do not believe that transferring a live phone call from 
the beneficiary to an agent or broker that can provide immediate 
assistance to the beneficiary is considered ``sharing personal 
beneficiary data,'' which would require prior express written consent 
under our rule. However, if the TPMO would need to share a 
beneficiary's personal data with anyone that the beneficiary will not 
immediately be speaking with, they will need to comply with our rule 
and receive prior express written consent from the beneficiary to share 
their personal data.
    Our final rule applies when personal beneficiary data is collected 
by a TPMO for purposes of marketing or enrolling them into an MA plan 
or Part D plan. Therefore, if a TPMO collects a beneficiary's personal 
beneficiary data with the purpose of eventually marketing or enrolling 
that beneficiary into an MA or Part D Plan, it would be inappropriate 
for that TPMO to share the beneficiary's data with a second TPMO 
without the beneficiary's consent, even if that second TPMO does not 
plan to conduct any marketing or enrollment activities. If the 
beneficiary's data was collected and sold with the purpose of 
eventually marketing to the person or enrolling them into an MA or Part 
D plan (i.e. a sales lead), then the beneficiary must consent to the 
sharing of that data with each TPMO that is involved in the marketing 
or enrollment chain. Finally, we note that selling personal beneficiary 
data may implicate the Federal anti-kickback statute.
    Comment: A few commenters questioned CMS's statutory authority to 
limit beneficiary data sharing. Some commenters stated that the 
currently cited statutory authority does not address the distribution 
of personal beneficiary data and additionally, that under that 
authority, unsolicited outreach is already prohibited. This commenter 
stated the statute applies to all entities, and not just TPMOs, while 
CMS's proposal applies solely to TPMOs. A commenter requested that CMS 
clarify that it does not prohibit TPMOs from sharing directly with MA-
PD plans and sponsors.
    Response: We are finalizing changes to Sec. Sec.  422.2274(g) and 
423.2274(g) based on the statutory authorities at Sec. Sec.  
1851(j)(1)(A) and 1860D-04(l)(1) of the Act that prohibit unsolicited 
means of direct contact, as well as Sec. Sec.  1851(h)(4)(C) and 1860D-
01(b)(1)(B)(vi) of the Act, which allows CMS to establish fair 
marketing standards that shall not permit MA organizations and Part D 
plans (and the agents, brokers, and other third parties representing 
such organizations) to conduct the prohibited activities described in 
subsection 1851(j)(1) of the Act. Further, we rely in this situation on 
sections 1856(b)(1), 1857(e)(1) and 1860D-12(b)(3)(D) of the Act, which 
grant the Secretary authority to establish by regulation other 
standards that are consistent with and carry out the statute and to 
include additional contract terms and conditions that are not 
inconsistent with the statute and that the Secretary finds necessary 
and appropriate. Based on these authorities and comments received on 
our proposal that have informed this final rule, we are requiring that 
personal beneficiary data collected by a TPMO for marketing or 
enrolling the beneficiary into an MA or Part D plan may only be shared 
with another TPMO when prior express written consent is given by the 
beneficiary. This is necessary to prevent abusive practices by TPMOs 
that inundate beneficiaries with unwanted phone calls, text messages, 
and emails. Furthermore, this rule is consistent with the MA and Part D 
statutes because the restriction on sharing personal beneficiary data 
is limited to data collected for the purposes of marketing or 
enrollment.
    As a commenter pointed out, the statute that prohibits certain 
marketing practices at Sec.  1851(h)(4)(C) applies to MA organizations 
or the agents, brokers, and other third parties representing such 
organization. CMS has defined TPMOs to mean organizations and 
individuals, including independent agents and brokers, who are 
compensated to perform lead generation, marketing, sales, and 
enrollment related functions as a part of the chain of enrollment (the 
steps taken by a beneficiary from becoming aware of an MA plan or plans 
to making an enrollment decision). TPMOs may be a first tier, 
downstream or related entity (FDRs), as defined under Sec.  422.2, but 
may also be entities that are not FDRs but provide services to an MA 
plan or an MA plan's FDR.\149\ Therefore, the definition of TPMO 
broadly encompasses third parties involved in the marketing and 
enrollment functions and is a term that applies to entities that are 
prohibited from engaging in prohibited acts described in 1851(j)(1)(A) 
of the Act. We clarify here that the definition of TPMO does not apply 
to MA organizations or Part D sponsors, and therefore TPMOs may share 
personal beneficiary data with those entities without acquiring direct 
consent from the beneficiary under this rule. As noted earlier, covered 
entities and business associates would still need to ensure they are 
complying with HIPAA privacy rules when sharing personal beneficiary 
data.
---------------------------------------------------------------------------

    \149\ 42 CFR 422.2260.
---------------------------------------------------------------------------

    Comment: Commenters stated that data distribution is already 
governed by other statutes that conflict with CMS's proposal. A 
commenter stated CMS did not explain how ``personal beneficiary data'' 
sits alongside data sets such as Personally Identifiable Information 
(PII), Personal Health Information and Personal Health Records as well 
as how the proposed rule comports with other applicable statutes, like 
the Telephone Consumer Protection Act (TCPA), which is enforced by the 
Federal Communications Commission (FCC), and the Telemarketing Sales 
Rule (TSR), which is enforced by the Federal Trade Commission (FTC). 
This commenter stated that, if finalized, CMS's proposal would 
essentially remove that right to consent to share their data that is 
provided through these other statutes. Lastly, a commenter noted that 
TPMOs and other industry participants distribute personal beneficiary 
data for reasons unrelated to direct contact with beneficiaries, such 
as for modeling, technology development, and other purposes unrelated 
to direct contact with beneficiaries.
    Response: As previously discussed, our final policy does not take 
away a beneficiary's ability to consent to the sharing of their 
personal data. We are finalizing a modified policy that allows for 
personal beneficiary data to be shared where the TPMO has obtained 
prior express written consent from the beneficiary for each TPMO that 
will receive the data. Our modified policy provides beneficiaries with 
the ability to consent to their personal beneficiary data being shared, 
as is consistent with other agencies such as the FCC and FTC. At the 
same time, the ability for beneficiaries to provide express written 
consent for each TPMO strengthens beneficiary protections, by giving 
them more control over who can receive their contact information and 
how many TPMOs can contact them. We understand that TPMOs must comply 
with other statutes and regulations such as the HIPAA Privacy Rule, 
TCPA, and

[[Page 30604]]

TSR, and these informed our final policy in this rule. In the December 
2022 proposed rule, we described ``personal beneficiary data'' as 
``contact information,'' such as name, address, and phone number. We 
further clarify here that ``personal beneficiary data'' includes 
contact information but could also include any other information given 
by the beneficiary for the purpose of finding an appropriate MA or Part 
D plan. As examples, this could include health information or other 
personal information such as age, gender, or disability. For purposes 
of this rule, we describe the information collected from a beneficiary 
by a TPMO as ``personal beneficiary data.'' We are not attempting to 
classify this information as PII or PHI, which can have more specific 
meanings and definitions, such as those used in the HIPAA Privacy Rule. 
We recognize that the HIPAA Privacy Rule contains very specific 
disclosure and authorization rules that are more stringent than what we 
are finalizing in this rule, such as when it comes to covered entities 
or their business associates sharing information covered under the 
HIPAA Privacy Rule. We reiterate that the HIPAA Privacy Rule must be 
followed by TPMOs that are covered entities or business associates 
under the HIPAA Privacy Rule and it is the responsibility of the TPMO 
to determine their status as either a covered entity or business 
associate. A valid authorization under the HIPAA Privacy Rule must 
specify the name or other specific identification of the person, or 
class of persons, to whom the covered entity or business associate may 
make the requested use or disclosure. Since the recipient entities are 
specifically identified in a valid authorization such that an 
individual signing an authorization clearly understands the intended 
recipients, we would consider a disclosure pursuant to a valid 
authorization also compliant with our rule at Sec. Sec.  422.2274(g) 
and 423.2274(g).
    TPMOs that engage in the marketing and enrollment of Medicare 
beneficiaries must also comply with other rules that govern telephonic 
marketing and communication. The TCPA, governed by the FCC, restricts 
making telemarketing calls and texts with automatic telephone dialing 
systems or artificial or prerecorded voice. Similarly, the TSR, 
governed by the FTC, generally prohibits initiating any outbound 
telephone call that delivers a prerecorded message unless the seller 
has obtained from the recipient of the call an express agreement, in 
writing, that the seller obtained only after a clear and conspicuous 
disclosure that the purpose of the agreement is to authorize the seller 
to place prerecorded calls to such person.\150\ Therefore, TPMOs must 
follow those rules when they engage in those kinds of activities (i.e., 
calling leads through an automatic telephone dialing system using 
random number generation, using pre-recorded messages). However, TPMOs 
can also conduct telemarketing in ways that are not governed by the 
TCPA, such as by manually dialing a lead number and using a customer 
service or salesperson to speak with the person that answers the phone. 
Our final regulation seeks to place limits on the sharing of the 
personal beneficiary data collected by a TPMO in a way that allows 
TPMOs to develop disclosure and consent processes that easily conform 
to all applicable rules that may apply. By using a one-to-one consent 
structure in our rule, TPMOs may obtain permission to share personal 
beneficiary data with another TPMO at the same time they acquire 
permission to have that TPMO contact the beneficiary, which could fall 
under FTC or FCC rules depending on how the contact is made. Further, 
by requiring the TPMO to obtain prior express written consent from the 
beneficiary to share their personal data and be contacted for marketing 
or enrollment purposes through a clear and conspicuous disclosure for 
each TPMO, it ensures that the beneficiary has control over who is 
allowed to access their information. This also ensures that any 
manually dialed calls (calls that are not subject to consent rules 
under TCPA) that occur because a marketing lead was shared also have 
been consented to by the beneficiary.
---------------------------------------------------------------------------

    \150\ 16 CFR 310.4(b)(v).
---------------------------------------------------------------------------

    As described at Sec. Sec.  422.2264(a)(2)(iv) and 
423.2264(a)(2)(iv), an MA organization, Part D sponsor or its agents 
and brokers may not make unsolicited telemarketing calls, and 
Sec. Sec.  422.2264(a)(3) and 423.2264(a)(3) explains that calls are 
not considered unsolicited if the beneficiary provides consent or 
initiates contact with the plan. By requiring TPMOs to obtain a 
beneficiary's consent to be contacted along with their consent to share 
their personal data for purposes of marketing or enrollment, we are 
ensuring that any entity that receives the lead information that 
includes personal beneficiary data, has appropriate permission by way 
of one-to-one consent from the beneficiary to contact them in 
accordance with Sec. Sec.  422.2264(a)(3) and 423.2264(a)(3). We note 
that rules at Sec. Sec.  422.2264(b) and 423.2264(b) describe when MA 
organizations or Part D sponsors may contact current and former 
enrollees to discuss plan business. Calls that qualify as ``plan 
business'' are not considered ``unsolicited'' but in accordance with 
Sec. Sec.  422.2264(b)(2) and 423.2264(b)(2), MA organizations and Part 
D sponsors 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.
    A commenter pointed out that TPMOs share beneficiary data for 
reasons unrelated to direct contact with beneficiaries. For example, a 
TPMO could collect a beneficiary's personal data and have no intention 
of directly contacting them. They could sell it, use it for modeling or 
technology development, or for some other purpose. Ultimately, that 
information was provided by the beneficiary to assist in helping them 
select a health plan, and therefore prior express written consent to 
share that data with another TPMO must be given by the beneficiary 
under this rule. Our primary justification for imposing these data 
restrictions is to reduce or eliminate unwanted calls that potential 
enrollees are receiving from agents and brokers or other TPMOs. 
Therefore, if the data is de-identified or redacted in a way where the 
data cannot be used to contact the beneficiary as a potential sales 
lead, and the purpose of the data sharing is not related to marketing 
or enrollment, a TPMO can share the de-identified data with other TPMOs 
without prior express written consent. We are concerned that allowing 
the sharing of the full data under the guise of ``modeling'' or 
technology development'' could be abused by TPMOs as a means to move 
potential sales leads without consent. We reiterate that it makes no 
difference if the TPMO collects the personal beneficiary data without 
any intention of directly contact that person. It would be non-
compliant with this rule to share the personal beneficiary data with 
another TPMO without prior express written consent from the 
beneficiary.
    Comment: CMS received many comments on how this proposal would 
impact beneficiaries. Some commenters expressed support for the 
proposal and noted that, if finalized, this proposal would provide 
greater privacy and protection to beneficiaries from receiving an 
unreasonable number of marketing calls and inquiries. Additionally, a 
commenter stated that beneficiary autonomy and the ability to direct 
how they get information should take precedence over the business 
interests of lead generating companies

[[Page 30605]]

and those who use or purchase their information.
    Response: We thank the commenters for their support. We value the 
importance of beneficiaries having greater privacy as well as autonomy 
over their contact information and who it is shared with, especially 
when it is used to contact them. By balancing beneficiary protections 
with beneficiary choice, we believe that this final rule will have a 
strong positive impact on beneficiaries who have been struggling with 
the volume of unwanted phone calls, texts, and emails. This rule 
enables beneficiaries to decide what best meets their health care needs 
by controlling who contacts them and for what purposes. If a 
beneficiary wants to provide consent to be contacted by multiple TPMOs, 
this rule ensures they have that flexibility. However, if a beneficiary 
is only seeking to speak with one or two TPMOs, our rule ensures that 
the beneficiary will not receive unwanted and unsolicited calls or be 
misled by difficult to read disclaimers. TPMOs should use a consent 
method where the default selection is that the beneficiary chooses to 
not share their data; there should be an affirmative action by the 
beneficiary to acknowledge that sharing their data with another TPMO is 
permitted. By being able to consent to each listed TPMO through a clear 
and conspicuous disclaimer, beneficiaries can make informed decisions 
that best fit their personal preference.
    Comment: Some commenters expressed concern that this proposal would 
place a greater burden on beneficiaries. Without a TPMO's ability to 
distribute a beneficiary's personal data to another TPMO, these 
commenters believed beneficiaries would have fewer opportunities to 
receive information about plan options available to them, which would 
limit their plan options as well as their ability to find the best plan 
for their needs. As a commenter explained, beneficiaries are in a 
better position speaking with a broker that can sell many MA plans 
rather than an agent that can only sell one plan. Another commenter 
stated that under CMS's proposal, beneficiaries would have to identify 
each agent that represents the plans they are interested in, and if 
unable to do so, the beneficiaries would have to contact each 
individual plan to obtain plan benefit information.
    Response: CMS appreciates commenters for sharing their concerns 
regarding how beneficiaries' access to plan information and options 
would change under this proposal. We appreciate the commenters for 
providing insight into the ways TPMOs use beneficiary data, such as 
some TPMOs' reliance on sharing personal data multiple times in order 
to connect beneficiaries with the agent or broker that can best assist 
the beneficiary. We agree that many TPMOs have an important role to 
play in making it easier for beneficiaries to find the plan that best 
fits their needs. As noted above, we have modified our proposal to 
allow TPMOs to continue sharing a beneficiary's data as long as they 
obtain prior express written consent, through a clear and conspicuous 
disclaimer, for each TPMO that will receive the beneficiary's 
information and contact them. We have received many complaints 
regarding the high volume of unwanted calls beneficiaries are 
experiencing, which can be distressing and confusing to beneficiaries 
when trying to enroll in a plan. By having the ability to provide clear 
consent to the TPMOs they with whom they would like to speak, this new 
rule will make it easier for beneficiaries to control who is contacting 
them and provide beneficiaries with a clearer understanding of what 
they are consenting to prior to being contacted. TPMOs can still 
connect beneficiaries with agents and brokers or other TPMOs with the 
new guarantee that the beneficiary is consenting to speak with that 
specific entity. At the same time, this rule creates a safer and 
clearer environment for the beneficiary to find the best health plan 
for their needs, by ensuring they do not receive unwanted or 
unsolicited phone calls. Additionally, we believe this rule will 
provide an opportunity for TPMOs to continue to make the experience 
more user friendly and accessible for all beneficiaries, as 
beneficiaries shouldn't need to opt in to potentially receiving calls 
from an unknown number of TPMOs in order to compare plans and find the 
plan that best fits their needs.
    CMS understands the important role TPMOs can play in determining 
which is the best plan to meet a beneficiary's health needs. In this 
final rule, the beneficiary can still opt in to having their 
information shared with as many TPMOs as they'd like. A clear and 
conspicuous disclaimer will ensure that for each authorization for 
contact a beneficiary provides, they have full knowledge of who is 
receiving their information and the ability to knowingly and clearly 
consent to being contacted by this entity. We agree with commenters 
that beneficiaries should be able to easily and simply access 
information about plan options but disagree that putting some 
safeguards on how a beneficiary's personal data is shared will put a 
greater burden on beneficiaries. This final rule ensures that the 
beneficiary has the choice and ability to decide whether and who can 
contact them, while allowing TPMOs to continue supporting consenting 
beneficiaries by connecting them to the appropriate people that can 
help the beneficiary enroll in a plan that best meets their health care 
needs.
    Comment: CMS received comments discussing the adverse impact of 
this proposed rule on TPMOs and the Medicare Advantage (MA) industry. 
Some commenters were concerned that CMS's proposal to prohibit the 
distribution of personal beneficiary data would result in entities, 
including individual insurance agencies, being put out of business. 
Commenters stated that leads are necessary to market, with a few 
commenters mentioning that individual agents or agencies do not have 
the bandwidth or financial means to perform lead generation, marketing, 
or communications on their own. A few commenters were concerned about 
how this would impact TPMOs and insurance agencies' ability to connect 
beneficiaries with an agent or broker. As one commenter stated, lead 
generators offer one of the main mechanisms to identify interested 
beneficiaries and connect them with the agents and brokers who 
represent plans in their area. Other commenters were concerned about 
the impact on marketing activities of agents and brokers, stating that 
if this proposal were finalized, agents and brokers would be unable to 
rely on marketing specialists that connect them with beneficiaries. One 
commenter stated that this proposed change would be detrimental because 
these specialists have the expertise and technology to navigate the 
health care options and connect beneficiaries with an agent. Another 
commenter stated that this provision would fundamentally change the 
current market by severely limiting legitimate pre-enrollment business 
engagement between first tier entities and downstream and related 
entities.
    Response: CMS understands commenters' concerns about how this might 
affect the TPMO industry and specifically, the TPMOs that support MA 
organizations and Part D sponsors. We acknowledge that a complete 
prohibition on beneficiary data sharing would be detrimental to the 
TPMO industry and could adversely impact beneficiaries access to 
expertise when navigating their plan options. We believe the amended 
policy will mitigate these concerns and will balance the need to 
protect beneficiary data. While this final rule may require a shift

[[Page 30606]]

in current practices when TPMOs market or enroll beneficiaries, we 
expect that the overall effect on the industry will be positive as 
beneficiaries will have stronger protections against unwanted calls and 
transparency about who is calling them, while still having access to 
agents and brokers that provide plan options and choice. Our final rule 
does not place a limit on the number of TPMOs that a TPMO may share 
personal beneficiary data with, but it does require that a beneficiary 
consent to each TPMO that will receive their data. Lead generators, 
field marketing organizations, agents, brokers and other TPMOs will 
still be able to share a beneficiary's personal data, as long as they 
ensure the beneficiary consents through a clear and conspicuous 
disclaimer to each TPMO prior to receiving their data. We understand 
this may initially have an impact on TPMOs' processes and operations 
when adjusting to this new method of obtaining one-to-one consent 
through a clear and conspicuous disclaimer, but CMS is not, through 
this rule, prohibiting the ability of TPMOs to share personal 
beneficiary contact data.
    We believe TPMOs and beneficiaries will benefit from this rule 
because it will ensure that beneficiaries are receiving information and 
being contacted by the entities they explicitly consent to speaking 
with and TPMOs will be better able to support the individual 
beneficiary. The clear and conspicuous disclaimer will allow TPMOs to 
further educate beneficiaries about who they need to be connected with 
in order to find the best plan for their healthcare needs while 
ensuring a safer and more engaging environment for beneficiaries. 
Additionally, this rule applies solely to sharing personal beneficiary 
data for the purposes of marketing or enrollment and ensures that TPMOs 
are still able to share this data for other activities, provided they 
are compliant with other agencies that govern personal information and 
data sharing (such as the OCR).
    We acknowledge that this may shift how some TPMOs currently share 
personal beneficiary data but there are a variety of approaches that 
TPMOs can use to ensure obtaining a beneficiary's one-to-one consent is 
easy, accessible and straightforward for beneficiaries. For example, 
through a clear and conspicuous disclosure on a website, a TPMO could 
provide a check box list that allows the beneficiary to choose each 
TPMO that they want to hear from. We believe beneficiaries are best 
served by having the ability to affirmatively consent to who is 
contacting them.
    Comment: One commenter argued that the more robust the lead 
generation environment is, the more competition there is, as lead 
generators enable compliant companies to stay in the market. The 
commenter argues that this should mean more competition, which they 
argue leads to more informative consumer engagement. Another commenter 
stated that the proposed changes would have a negative economic impact 
as it would result in less awareness of MA plans and would likely lead 
to decreased enrollment.
    Response: We understand the importance of competition for a 
successful business but reiterate that our priority is to protect 
beneficiaries from misleading, inaccurate, or otherwise abusive 
communication and marketing practices and ensure that they are able to 
make coverage choices that best meet their health care needs. Our 
modified policy will mitigate commenter concerns and still allow 
competition in the marketplace for TPMOs that can operate in accordance 
with these rules. It will provide a safer environment for beneficiaries 
and still allow for numerous TPMO options from which a beneficiary may 
choose to assist in the selection of a health plan. We do not believe 
that this amended final policy will result in less awareness of MA 
plans or less enrollment. Beneficiary complaints received by CMS convey 
to us that beneficiaries are receiving too many calls, causing 
confusion, resulting in beneficiaries being overwhelmed, and unable to 
make a good choice for their health care needs. We believe more 
informative consumer engagement will not come from competition between 
lead generators, but from beneficiaries being able to consent to each 
TPMO from which they would like to receive a contact. Moreover, 
allowing beneficiaries to review a clear and conspicuous disclaimer 
will empower them with transparent information, greater choice, and 
personal autonomy.
    Comment: A few commenters expressed concern about how the proposed 
rule limits data sharing among downstream entities, or as some 
commenters called them, ``affiliated entities.'' One commenter stated 
that an independent agent could not share personal beneficiary 
information that the agent collects with another independent agent 
operating within the same field marketing organization. Another 
commenter stated that this CMS proposal would limit a plan's ability to 
distribute personal beneficiary information to their downstream 
entities, disrupting the hierarchical distribution of leads that match 
agents with leads and prevent lead duplication. The commenter stated 
that this chain of data sharing within affiliated entities ensures 
compliant leads, which is in the best interest of plans and 
beneficiaries. The commenter stated that the proposal would require 
TPMOs to generate their own leads, which may mean more duplicate leads 
or leads without proper consent. A few commenters were concerned that 
the data sharing prohibition would result in companies being unable to 
utilize the complex technology TPMOs use to determine what agent can 
best serve the needs of a specific beneficiary. One commenter mentioned 
that individual agents and agencies do not have the expertise, 
resources, and complex technologies to support marketing and outreach 
that are currently handled by large TPMOs. Some commenters noted that 
TPMOs provide services to independent agents that they contract with 
such as training, administrative support, customer service and 
marketing/lead generation and that this proposal would prevent those 
TPMOs from providing these services that licensed agents rely on. A 
commenter noted that TPMOs and other industry participants distribute 
personal beneficiary data for reasons unrelated to direct contact with 
beneficiaries, such as for modeling, technology development, and other 
purposes unrelated to direct contact with beneficiaries.
    Response: We thank commenters for their perspectives on how the 
proposed rule would impact data sharing among affiliated entities, 
downstream entities, independent agents, and when it could be 
appropriate to share beneficiary information across these entities. 
However, because we are amending the policy discussed in the proposed 
rule, we will discuss these topics in the context of the modified final 
policy.
    Under amended regulations that CMS is adopting in this final rule 
at Sec. Sec.  42 CFR 422.2274(g)(4) and 423.2274(g)(4), a TPMO may not 
share any personal beneficiary data with a TPMO that is a different 
legal entity unless prior express written consent has been given by the 
beneficiary. This includes sharing information with another legal 
entity that shares the same parent organization or has a contract to 
perform a downstream function of the organization; prior express 
written consent from the beneficiary is required under both 
circumstances. We do not believe that just because another entity is 
``affiliated'' with an organization, that the organization has the 
right to share a beneficiary's information with that other entity 
without the knowing consent of the beneficiary. This includes the 
sharing of beneficiary data among two

[[Page 30607]]

independent agents affiliated with the same FMO. An independent agent 
that shares personal beneficiary data with another independent agent 
even if both are affiliated with the same FMO would be out of 
compliance with our rule, unless prior express written consent is given 
by the beneficiary. As mentioned earlier, an exception to this is where 
a beneficiary provides verbal consent on a live phone call to be 
transferred to another entity for immediate assistance; we believe this 
is an acceptable approach that can be accomplished without obtaining 
prior express written consent. However, two agents that work directly 
for the same FMO as employees (not independent contractors) may share 
personal beneficiary data as long as the beneficiary has freely given 
that data to the FMO or it was obtained with the beneficiary's consent.
    Comment: CMS received comments addressing CMS's reasons for 
prohibiting TPMOs from sharing personal beneficiary information with 
each other. Some commenters were supportive of CMS's proposal and the 
assertions about this form of misleading marketing, where beneficiaries 
are being inundated with unwanted phone calls that they are unwittingly 
consenting to due to vague consent and difficult-to-read disclaimers. 
As a commenter mentioned, many SHIPs, agencies, beneficiaries, and 
their families have expressed concern about the misleading and 
confusing marketing activities conducted by TPMOs.
    Response: We appreciate commenters for the support of our proposal 
and for recognizing the impact of these unwanted phone calls on 
beneficiaries. We continue to ensure strong beneficiary protections 
against misleading marketing and communications and being inundated 
with unwanted phone calls while still ensuring they have access to plan 
options and choice. Our final rule reflects this balance of beneficiary 
protection and privacy with beneficiary access to information to inform 
their choices.
    Comment: A few commenters had general issues with our proposal. 
Some commenters stated that CMS is punishing all TPMOs for the behavior 
of some bad actors. One commenter suggested CMS is incorrectly assuming 
that many TPMOs sell beneficiary personal information to multiple 
unaffiliated entities. The commenter added that while some lead 
generators or performance marketers may misbehave, not all sales and 
distribution practices are problematic or should be prohibited. Another 
commenter argued that agent error is the main cause of most complaints 
and therefore this proposal would not have any impact.
    Response: We understand that many TPMOs and other entities act in 
good faith to aid beneficiaries in making an informed health care 
choice. We reiterate that CMS is not punishing TPMOs, but rather 
creating a more supportive and conducive environment for beneficiaries 
to access the information they need to make plan decisions while not 
being inundated with unwanted phone calls. Currently, as we've seen 
through routine surveillance of TPMO websites and information received 
from Congressional hearings and testimonies, personal beneficiary data 
is shared among many TPMOs with no ability for the beneficiary to 
select who or how many entities with and from whom they wish to consent 
to contact them. As an example, there are TPMO websites that provide an 
opportunity for a beneficiary to opt into being contacted and, within a 
small disclaimer with a lot of small text, includes a hyperlink to over 
100 licensed agents/brokers who may all call the beneficiary. The 
current activities have resulted in numerous complaints by 
beneficiaries. CMS's final rule provides stronger beneficiary 
protection while still enabling TPMOs to provide the vital support of 
ensuring beneficiaries are connected with an agent/broker or other TPMO 
who can help them find the plan that best fits their needs.
    In summary, we are not finalizing the rule as proposed at 
Sec. Sec.  422.2274(g)(4) and 423.2274(g)(4) that personal beneficiary 
data collected by a TPMO may not be distributed to other TPMOs. After 
considering the comments received in response to this proposal, and for 
the reasons that we have discussed in our responses, we are finalizing 
Sec. Sec.  422.2274(g)(4) and 423.2274(g)(4) with revisions that 
provide that personal beneficiary data collected by a TPMO for 
marketing or enrolling them into an MA or Part D plan may only be 
shared with another TPMO when prior express written consent is given by 
the beneficiary. Also, we explain that prior express written consent 
from the beneficiary to share the data and be contacted for marketing 
or enrollment purposes must be obtained through a clear and conspicuous 
disclosure that lists each entity receiving the data and allows the 
beneficiary to consent or reject to the sharing of their data with each 
individual TPMO. To align with our other marketing changes for agent 
broker compensation, and to coincide with the beginning of marketing 
and enrollment activities for the 2025 contract year, we are delaying 
the applicability of these changes to Sec. Sec.  422.2274(g) and 
423.2274(g) October 1, 2024. Therefore, any personal beneficiary data 
shared by a TPMO with another TPMO for purposes of marketing or 
enrollment must have prior express written consent by the beneficiary 
beginning on October 1, 2024. This includes beneficiary data that is 
collected prior to October 1, 2024, but will be transferred or shared 
with another TPMO on or after October 1, 2024. Simply put, TPMOs must 
have prior express written consent to share a beneficiary's personal 
data on or after October 1, 2024.

B. Marketing and Communications Requirements for Special Supplemental 
Benefits for the Chronically Ill (SSBCI) (Sec.  422.2267)

    Section 1851(h) and (j) of the Act provide a structural framework 
for how MA organizations may market to beneficiaries and direct CMS to 
set standards related to the review of marketing materials and 
establish limitations on marketing activities, as part of the standards 
for carrying out the MA program under section 1856(b) of the Act. In 
the January 2021 final rule, CMS used this statutory authority to 
codify guidance from the Medicare Communications & Marketing Guidelines 
(MCMG) into subpart V of part 422 (86 FR 5864). Several commenters in 
that prior rulemaking urged CMS to add specific provisions in the 
marketing and communications regulations regarding how MA organizations 
may market SSBCI described in Sec.  422.102(f). In response, CMS 
established a new requirement for a disclaimer to be used when SSBCI 
are mentioned. The SSBCI disclaimer was originally codified at Sec.  
422.2267(e)(32), and it currently appears at paragraph (e)(34). 
Currently, that regulation requires MA organizations to: (i) convey 
that the benefits mentioned are a part of special supplemental 
benefits, (ii) convey that not all members will qualify for these 
benefits; and (iii) include the model content in the material copy 
which mentions SSBCI benefits. Section 422.2267(e)(34) does not 
explicitly state that it applies to both marketing and communications 
materials, but our sub-regulatory guidance is clear that it applies 
whenever SSBCI are mentioned; the disclaimer is required regardless of 
whether the material that mentions the benefits is a marketing or 
communications material. The purpose of the SSBCI disclaimer is to 
ensure that beneficiaries are aware that SSBCI are not available to all 
plan enrollees and that the eligibility for these benefits is

[[Page 30608]]

limited by section 1852(a)(3)(D) of the Act and Sec.  422.102(f). 
Ensuring a clear statement of these limitations in a disclaimer will 
guard against beneficiary confusion or misunderstanding of the scope of 
SSBCI, and thus lessens the chance that a beneficiary will enroll in a 
certain plan believing they can access an SSBCI for which they may not 
ultimately be eligible.
    Per the January 2021 final rule, MA organizations were required to 
comply with the new SSBCI disclaimer requirement for coverage beginning 
January 1, 2022. Since MA organizations had over a year to implement 
their use of the SSBCI disclaimer at the time of the November 2023 
proposed rule, we took an opportunity to reevaluate the requirement at 
Sec.  422.2267(e)(34), considering our observation of its actual 
implementation.
    MA organizations market SSBCI by advertising various benefits, 
including coverage of groceries, pest control, prepared meals, 
household items, gasoline, utility bills, auto repair, pet supplies or 
grooming, and more. Although some of these SSBCI items and services may 
be available under a given plan, the enrollee must meet the criteria 
established to receive a particular SSBCI. In many instances, MA 
organizations have been found to use marketing to potentially 
misrepresent the benefit offered, often not presenting a clear picture 
of the benefit and limits on eligibility. In a May 2022 letter sent to 
Congress, the National Association of Insurance Commissioners (NAIC) 
detailed its findings from surveys with state departments of insurance, 
showing ``an increase in complaints from seniors about confusing, 
misleading and potentially deceptive advertising and marketing of these 
plans.'' \151\ Additionally, as discussed in prior rulemaking, CMS has 
seen an increase in complaints related to marketing, with more than 
twice as many complaints related to marketing in 2021 compared to 
2020.\152\ As evidenced by complaints CMS has received, some of the 
current marketing of SSBCI has the potential to give beneficiaries the 
wrong impression by leading them to believe they can automatically 
receive all SSBCI available by enrolling in the plan.
---------------------------------------------------------------------------

    \151\ https://content.naic.org/sites/default/files/State%20MA%20Marketing%20Authority%20Senate%20Letter%20.pdf.
    \152\ See 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 Final Rule (87 FR 27704), which appeared in the 
Federal Register on May 9, 2022.
---------------------------------------------------------------------------

    CMS has seen multiple examples of such misleading SSBCI ads among 
MA organizations. We have seen ads (for example, online, billboards, 
television) in which the MA organization presents an extensive list of 
benefits that are available, with this list being displayed prominently 
in large font and the SSBCI disclaimer appearing in very small font at 
the end of the ad. Often the disclaimer is brief, merely stating that 
the enrollee must have one of the identified chronic conditions in 
order to receive the benefit and that eligibility will be determined 
after enrollment, with no other information provided. A beneficiary 
reading such an ad could easily miss the small-size disclaimer at the 
end because their attention is immediately drawn to the long, 
attractive list of appealing benefits prominently displayed in large, 
bold font. This type of SSBCI marketing is potentially misleading 
because, at face value, it might appear to a beneficiary that if they 
enroll in the advertised plan, they can receive all the highlighted 
benefits, without any question as to the beneficiary's eligibility, 
what an eligibility determination entails, or when eligibility is 
assessed.
    Based on our findings, we proposed to expand the current required 
SSBCI disclaimer to include more specific requirements, with the 
intention of increasing transparency for beneficiaries and decreasing 
misleading advertising by MA organizations. Our proposed expansion of 
the SSBCI disclaimer included a clarification of what must occur for an 
enrollee to be eligible for the SSBCI. That is, per Sec.  422.102(f), 
the enrollee must first have the required chronic condition(s), then 
they must meet the definition of a ``chronically ill enrollee'' at 
section 1852(a)(3)(D)(iii) of the Act and Sec.  422.102(f)(1)(i)(A), 
and finally the MA organization must determine that the enrollee is 
eligible to receive a particular SSBCI under the plan's coverage 
criteria. (See section IV.C. of this final rule for a more detailed 
discussion of the requirements for SSBCI.) An MA organization designs 
and limits its SSBCI to target specific chronic conditions. An enrollee 
might meet the definition of ``chronically ill enrollee'' but 
nonetheless be ineligible for the MA organization's advertised SSBCI 
because they do not have the specific chronic condition(s) required for 
the particular SSBCI being advertised. Taking these important SSBCI 
eligibility requirements into account, we proposed to amend the 
required SSBCI disclaimer content to clearly communicate the 
eligibility parameters to beneficiaries without misleading them. 
Specifically, at Sec.  422.2267(e)(34), we proposed three key changes 
to the regulation and two clarifications.
    First, we proposed to redesignate current paragraph (e)(34)(ii) as 
paragraph (e)(34)(iii) and add a new paragraph (e)(34)(ii), in which we 
proposed to require MA organizations offering SSBCI to list, in their 
SSBCI disclaimer, the chronic condition or conditions the enrollee must 
have to be eligible for the SSBCI offered by the MA organization. Per 
Sec.  422.102(f)(1)(i)(A), a ``chronically ill enrollee'' must have one 
or more comorbid and medically complex chronic conditions to be 
eligible for SSBCI. (See section IV.C. of this final rule for a more 
detailed discussion of the definition of ``chronically ill enrollee'' 
and eligibility for SSBCI as part of our finalized provision to 
strengthen the requirements for how determinations are made that a 
particular item or service may be offered as SSBCI and eligibility 
determinations for SSBCI.) We proposed that if the number of 
condition(s) is five or fewer, then the SSBCI disclaimer must list all 
condition(s), and if the number of conditions is more than five, then 
the SSBCI disclaimer must list the top five conditions, as determined 
by the MA organization. For this top five list, we proposed that the MA 
organization has discretion to determine the five conditions to 
include. In making this determination, an MA organization might 
consider factors such as which conditions are more common or less 
obscure among the enrollee population the MA organization intends to 
serve. We explained that five was a reasonable number of conditions for 
the MA organization to list, so that a beneficiary might have an idea 
of the types of conditions that might be considered for eligibility for 
the SSBCI, without listing so many conditions that a beneficiary 
ignores the information.
    Second, we proposed to revise newly redesignated paragraph 
(e)(34)(iii). Section 422.2267(e)(34)(ii) currently requires that MA 
organizations that offer SSBCI convey that not all members will 
qualify. We proposed to expand this provision to require that the MA 
organization must convey in its SSBCI disclaimer that even if the 
enrollee has a listed chronic condition, the enrollee may not receive 
the benefit because coverage of the item or service depends on the 
enrollee being a ``chronically ill enrollee'' as defined in Sec.  
422.102(f)(1)(i)(A) and on the MA organization's coverage criteria for 
a specific SSBCI item or service required

[[Page 30609]]

by Sec.  422.102(f)(4). Section 1852(a)(3)(D) of the Act and Sec.  
422.102(f) provide that SSBCI are a permissible category of MA 
supplemental benefits only for a ``chronically ill enrollee,'' as that 
term is specifically defined, and the item or service must have a 
reasonable expectation of improving or maintaining the health or 
overall function of the chronically ill enrollee. In other words, just 
because an enrollee has one of the conditions listed in the SSBCI 
disclaimer, it does not automatically mean that the enrollee is 
eligible to receive the relevant SSBCI, as other criteria will also 
need to be met. In addition, a particular item or service must meet the 
requirements in Sec.  422.102(f)(1)(ii) to be offered as an SSBCI. 
Likewise, as finalized in section IV.C. of this final rule, the 
requirements for the item or service to be covered as an SSBCI at Sec.  
422.102(f) also apply in the sense that an MA organization would also 
need to meet those requirements to offer SSBCI. Determinations on 
whether an MA organization may offer coverage of a particular item or 
service as an SSBCI will generally be made before an MA organization 
begins marketing or communicating the benefits, therefore, we did not 
include those requirements for when an MA organization may offer SSBCI 
in the proposed expansion of the SSBCI disclaimer. Our proposed newly 
redesignated Sec.  422.2267(e)(34)(iii) referred to the eligibility 
requirements and MA organization responsibilities in Sec.  422.102(f) 
because we expected the MA organization to use this information in 
developing their SSBCI disclaimer to clearly convey that not all 
enrollees with the required condition(s) will be eligible to receive 
the SSBCI. Per Sec.  422.102(f) currently and with the revisions 
finalized in section IV.C. of this final rule, MA organizations 
offering SSBCI must have written policies based on objective criteria 
for determining a chronically ill enrollee's eligibility to receive a 
particular SSBCI.
    The SSBCI disclaimer is model content, so each MA organization may 
tailor their disclaimer's language to convey that, in addition to 
having an eligible chronic condition, the enrollee must also meet other 
eligibility requirements (i.e., the definition of a ``chronically ill 
enrollee'' and the coverage criteria of the MA organization for a 
specific SSBCI item or service) to receive the SSBCI. MA organizations 
would not need to specifically detail the additional eligibility 
requirements (such as the coverage criteria) in the disclaimer, but 
rather convey that coverage is dependent on additional factors, and not 
only that the enrollee has an eligible chronic condition. For example, 
an MA organization might use the following language in its SSBCI 
disclaimer: ``Eligibility for this benefit cannot be guaranteed based 
solely on your condition. All applicable eligibility requirements must 
be met before the benefit is provided. For details, please contact 
us.'' We are providing this language as an example, as the SSBCI 
disclaimer is model content. Therefore, in developing their SSBCI 
disclaimer, MA organizations may deviate from the model so long as they 
accurately convey the required information and follow CMS's specified 
order of content, if specified (Sec.  422.2267(c)). Currently, Sec.  
422.2267(e)(34) does not specify the order of content for the SSBCI 
disclaimer, and we did not propose to add such a requirement; however, 
MA organizations must accurately convey the required information listed 
in the regulatory text at Sec.  422.2267(e)(34)(i)-(iii) in their SSBCI 
disclaimer. In addition, the disclaimer as drafted by the MA 
organization must be clear, accurate, and comply with all applicable 
rules on marketing, communications, and the standards for required 
materials and content at Sec.  422.2267(a).
    Third, at new proposed paragraph (e)(34)(iv), we proposed specific 
formatting requirements for MA organizations' SSBCI disclaimers in ads, 
related to font and reading pace. These proposed formatting 
requirements would apply to SSBCI disclaimers in any type of ad, 
whether marketing or communications. For print ads, we reiterated our 
existing requirement under paragraph (a)(1) that MA organizations must 
display the disclaimer in 12-point font, Times New Roman or equivalent. 
For television, online, social media, radio, or other-voice-based ads, 
we proposed that MA organizations must either: (1) read the disclaimer 
at the same pace as the organization does for the phone number or other 
contact information mentioned in the ad, or (2) display the disclaimer 
in the same font size as the phone number or other contact information 
mentioned in the ad. For outdoor advertising (ODA)--which is defined in 
Sec.  422.2260 and includes billboards--we proposed that MA 
organizations must display the disclaimer in the same font size as the 
phone number or other contact information appearing on the billboard or 
other ODA. The specific font and reading pace requirements for the 
SSBCI disclaimer in ads would appear at new proposed paragraphs 
(e)(34)(iv)(A) and (B).
    Finally, in revisiting the requirement at Sec.  422.2267(e)(34), we 
explained that additional clarification of current requirements was 
appropriate. In the introductory language at paragraph (e)(34), we 
proposed a minor addition to clarify that the SSBCI disclaimer must be 
used by MA organizations who offer CMS-approved SSBCI (as specified in 
Sec.  422.102(f)). Also, we proposed to revise current paragraph 
(e)(34)(iii) (requiring the MA organization to include the SSBCI 
disclaimer in the material copy which mentions SSBCI benefits) and move 
it to new proposed paragraph (v). In this newly redesignated paragraph 
(v), we proposed to clarify that MA organizations must include the 
SSBCI disclaimer in all marketing and communications materials that 
mention SSBCI. We also proposed a slight adjustment in this paragraph 
to delete the redundant word ``benefits'' after ``SSBCI.''
    In summary, we stated in the proposed rule that this proposal would 
expand upon the current SSBCI disclaimer requirements at Sec.  
422.2267(e)(34) in several important ways. Requiring a more robust 
disclaimer with specific conditions listed would provide beneficiaries 
with more information to determine whether a particular plan with SSBCI 
is appropriate for their needs. We explained that the revised 
disclaimer would diminish the ambiguity of when SSBCI are covered, thus 
reducing the potential for misleading information or misleading 
advertising. We also stated that our goal was to ensure that 
beneficiaries enrolling in MA choose a plan that best meets their 
health care needs. Transparency and precision in marketing and 
communications to current and potential enrollees was of utmost 
importance in our proposal.
    We did not score this provision in the COI section since we believe 
all burden impacts of this provision have already been accounted for 
under OMB control number 0938-1051 (CMS-10260). In addition, this 
provision is not expected to have any economic impact on the Medicare 
Trust Fund.
    We solicited comment on this proposal, including on the accuracy of 
our assumptions regarding information collection requirements and 
regulatory impact. We did not receive comment on our information 
collection requirements nor regulatory impact analyses for the proposed 
revisions to Sec.  422.2267(e)(34) regarding the SSBCI disclaimer. We 
thank commenters for their input on CMS's proposed amendments to Sec.  
422.2267(e)(34). We received the following comments on this proposal, 
and our response follows:

[[Page 30610]]

    Comment: The majority of commenters overwhelmingly supported CMS's 
proposal to strengthen and add more specific requirements to the SSBCI 
disclaimer in order to decrease misleading advertising and increase 
transparency for beneficiaries. Many commenters believed that this 
proposal would enable beneficiaries to make the most informed decision 
about SSBCI based on their individual health conditions and select the 
plan that best meets their health care needs. These commenters agreed 
with CMS that some current SSBCI advertising could give the false 
impression that these benefits are available to all beneficiaries, 
which may confuse and mislead beneficiaries into enrolling in an MA 
plan with benefits they are not actually eligible for. Commenters 
emphasized the importance of a beneficiary being able to make fully 
informed choices and the need to decrease misleading marketing and 
communications. Several commenters noted the importance of the 
strengthened SSBCI disclaimer requirements to provide more clarity for 
beneficiaries and supported the language added to the disclaimer, such 
as the required list of chronic conditions and eligibility 
restrictions. For example, a commenter agreed that the proposed 
expansion of the SSBCI disclaimer would clarify what must occur for an 
enrollee to be eligible for the SSBCI. Another commenter stated that 
listing the relevant chronic condition(s) the beneficiary must have to 
be eligible in the marketing and communications materials, as well as 
adding the caveat that other coverage criteria also apply and may 
affect eligibility, will help provide more clarity to enrollees, their 
family members, and enrollment assisters or advisors.
    Response: We thank commenters for their support of our proposal to 
strengthen and expand the SSBCI disclaimer. We appreciate commenters' 
deeper insight and feedback into the importance of these requirements 
to both protect beneficiaries from misleading marketing and 
communications tactics and ensure beneficiaries can make informed 
health care choices.
    Comment: Many commenters offered recommendations for CMS's SSBCI 
disclaimer proposal. Some commenters suggested that the disclaimer 
language should be simple, straightforward, and easy to understand, 
using plain language at an appropriate reading level. A commenter 
suggested CMS could consider simplifying the disclaimer by using 
straightforward language to convey eligibility criteria, limitations, 
and the fact that eligibility does not guarantee benefits. The 
commenter also suggested CMS could provide a standardized template, 
language format, or utilize visual aids or bullet points to make the 
information more digestible and easier for a beneficiary to navigate. 
There was a recommendation to test the communication with 
beneficiaries. Another commenter appreciated the detailed benefit 
description but recommended refining the language to ensure clarity and 
ease of understanding for beneficiaries of varying literacy levels, 
promoting inclusive communication. A commenter suggested that CMS 
consult health literacy experts in the creation of SSBCI disclaimers.
    Response: We thank commenters for providing recommendations on how 
to ensure the updated SSBCI disclaimer is clear and easy for 
beneficiaries to understand given that the intent of our proposal is to 
ensure beneficiaries are clearly informed about their options. At the 
same time, we are aware and concerned about the many marketing and 
communications materials that mention SSBCI, but do not clearly 
communicate that beneficiaries have to meet certain criteria to be 
eligible for those benefits. Specifically, SSBCI are available to a 
small number of individuals that must meet specific eligibility 
criteria. As per section 1852(a)(3)(D) of the Act and Sec.  422.102(f), 
the specific benefit must be within the scope of the definition of 
SSBCI, including that the benefit be reasonably expected to improve or 
maintain the health or overall function of the chronically ill 
enrollee; the enrollee must first have the required chronic 
condition(s); the enrollee must meet the definition of a ``chronically 
ill enrollee'' at Sec.  422.102(f)(1)(i)(A); and finally the MA 
organization must determine that the enrollee is eligible to receive 
the particular SSBCI under the plan's coverage criteria for the 
specific SSBCI. To accurately advertise these benefits, MA 
organizations must make beneficiaries aware that certain eligibility 
criteria are used to determine who can receive SSBCI. A significant way 
to further this purpose is the SSBCI disclaimer. As such, it is 
important that this disclaimer thoroughly conveys all pertinent 
eligibility information that a beneficiary needs to determine whether 
they might be able to access the SSBCI. While the revisions and 
additions to the disclaimer that we proposed and are finalizing in this 
rule may be more substantial than before, we strongly believe that the 
benefits of the disclaimer outweigh any potential risks raised by 
commenters.
    We reiterate that the SSBCI disclaimer, currently and as revised in 
this rule, is model content, and MA organizations are not required to 
conform with a standardized template or model format provided by CMS, 
so long as the MA organization's materials accurately convey the 
required materials' vital information.
    However, as provided earlier, some example SSBCI disclaimer 
language that MA organizations might use includes, ``Eligibility for 
this benefit cannot be guaranteed based solely on your condition. All 
applicable eligibility requirements must be met before the benefit is 
provided. For details, please contact us.'' We believe this example 
language is clear and simple. To address commenters' concerns about 
using simple, straightforward, and plain language, we offer here 
another example of some SSBCI disclaimer language that MA organizations 
might use: ``Eligibility is determined by whether you have a chronic 
condition associated with this benefit. Standards may vary for each 
benefit. Contact us to confirm your eligibility for these benefits.'' 
Again, we believe this additional example language is clear and easy to 
understand, which is vital to allowing beneficiaries to make informed 
health care decisions. We note that these examples of SSBCI disclaimer 
language capture only the requirements at Sec.  422.2267(e)(34)(iii) 
and not paragraphs (e)(34)(i) or (ii). In addition to the information 
required at paragraph (e)(34)(iii), MA organizations must also provide 
the list of chronic conditions as required by paragraph (e)(34)(ii) as 
finalized.
    MA organizations may decide how to present the SSBCI disclaimer and 
make the information within it more digestible so long as the content 
and formatting requirements in Sec.  422.2267(e)(34), as finalized, are 
met. There is nothing precluding MA organizations from using visual 
aids or bullet points, provided they comply with the minimum 
requirements at Sec.  422.2267(e)(34) as finalized. Regarding the 
comment recommending CMS test the communication with beneficiaries, we 
appreciate this recommendation and will take it under consideration for 
the future. We agree with commenters that the SSBCI disclaimer language 
should be clear for varying literacy levels, and we encourage MA 
organizations to consider these things as they develop their own unique 
disclaimers. We also encourage MA organizations to consult with health 
literacy experts as necessary to ensure the information contained in 
their SSBCI disclaimers is accessible and inclusive for all 
beneficiaries.

[[Page 30611]]

    Comment: Some commenters expressed concern about the SSBCI 
disclaimer length, arguing that lengthy disclaimer language might cloud 
helpful information that was meant to increase beneficiary education of 
available benefits. These commenters were also concerned that the added 
language may have the unintended effect of discouraging beneficiaries 
from reaching out to access SSBCI services. A commenter explained that, 
as disclaimers get longer, more complicated, and less individualized, 
there is a greater risk that they are ignored, misunderstood, or 
dissuade a beneficiary from selecting an MA plan. A few commenters were 
concerned that the SSBCI disclaimer may get lost amidst other required 
CMS disclaimers and further confuse beneficiaries.
    Response: We appreciate the points commenters raised about the 
SSBCI disclaimer length and the possibility that added language may 
discourage beneficiaries from reaching out to access SSBCI services. 
However, we believe that the SSBCI disclaimer can be said succinctly as 
long as all the requirements at Sec.  422.2267(e)(34) are met and the 
eligibility restrictions are clear and accurate. We do not agree with 
commenters that the added language may discourage beneficiaries from 
reaching out to access SSBCI services. Instead, since SSBCI have 
limited eligibility, the added language would enable beneficiaries to 
have a clearer understanding of whether they may even be eligible for 
the advertised SSBCI. We are prioritizing this change to the SSBCI 
disclaimer because it is essential that beneficiaries have the 
information they need in order to select the plan that best meets their 
health care needs. If a beneficiary is interested in an advertised 
benefit, we believe that the SSBCI eligibility criteria are key 
information for beneficiaries to make an informed choice. The purpose 
of the disclaimer is to ensure that a beneficiary does not base their 
decision to sign up for a plan on advertised SSBCI for which the 
beneficiary turns out to be ineligible. This type of marketing and 
communications is potentially misleading and confusing to beneficiaries 
and could be out of compliance with CMS regulations. We believe 
transparently advertised SSBCI, accompanied by disclaimers that meet 
the revised requirements at Sec.  422.2267(e)(34) finalized here, will 
help to ensure beneficiaries have the information they need to make 
health care choices that best fit their needs. Moreover, we again 
stress our belief that the benefits outweigh any potential risks raised 
by commenters.
    Comment: Many commenters expressed their support for CMS's proposed 
formatting requirements for the SSBCI disclaimer. A commenter noted 
that listing the specific chronic condition in the same format, whether 
it be read at the same speed or displayed in the same font size, as the 
phone number listed in the ad, will better inform beneficiaries in 
making the right decision. Another commenter added that they 
appreciated the proposal that the disclaimer cannot be in smaller font 
than other key text in print communications and must be read at a 
comparable speed to other plan information for radio/television ads. 
They further added that SSBCI and other supplemental benefits continue 
to be a draw for beneficiaries, so this effort will help ensure that 
they are not misled about which benefits might be available to them. A 
commenter believed the additional formatting requirements are 
appropriate for the older adult population and indicated that the 
current SSBCI disclaimer information was not easy for beneficiaries to 
understand.
    Response: We thank commenters for expressing their support for the 
formatting requirements we proposed for the SSBCI disclaimer. We wish 
to ensure that in every marketing and communications advertising 
modality, beneficiaries can read or hear and clearly understand the 
disclaimer and be informed about SSBCI and the specific eligibility 
criteria.
    Comment: A few commenters voiced concerns about CMS's proposed 
formatting requirements for the SSBCI disclaimer. A few commenters were 
concerned that there would not be enough ad space for the full SSBCI 
disclaimer, and that the disclaimer could be longer than the ad itself. 
A commenter argued that due to the disclaimer length and font size, it 
could potentially fill the page or ad to where a beneficiary might 
become disinterested or confused with too much information. The 
commenter added that due to limited space on such ads, MA organizations 
may be deterred from promoting SSBCI that could provide beneficiaries 
with what they possibly need. A commenter also stated that the 
disclaimer accounts for almost 30 seconds of a radio ad, which is an 
important media avenue for the target population, and thus more CMS 
disclaimer requirements might be difficult to achieve due to media 
limitations. A few commenters recommended CMS work with MA 
organizations on communication standards, such as font size or 
disclaimer presentation, to ensure the ad modality is considered, 
giving specific suggestions for modalities such as social media ads, 
television commercials, out-of-home signs, search ads, and verbal ads 
like radio or streaming audio. Commenters suggested that for certain 
digital or offline modalities with limited space, CMS should permit a 
link to the disclaimer via a URL weblink or a QR code that would direct 
beneficiaries to the full SSBCI disclaimer elsewhere. A commenter noted 
that character counts and content limits enforced by some website 
owners create additional barriers to adding SSBCI disclaimer language. 
These commenters generally recommended that CMS adopt more flexible 
requirements or explicit exceptions for certain modalities that offer 
limited text display or are of short display duration, like banner ads, 
other online or television ads, and billboards.
    Response: We understand some commenters are concerned about the 
formatting requirements and how much space the SSBCI disclaimer might 
take up on a given marketing or communications ad. Our priority, 
however, is to ensure that SSBCI ads are not misleading or confusing 
for beneficiaries. Ensuring that beneficiaries have the information 
they need to make an informed choice is a paramount consideration, and 
the SSBCI disclaimer requirements adopted in this rule further that 
goal. Each MA organization's approach to ads is a business decision 
that depends, in part, on their marketing and communications strategy. 
Importantly, all aspects of our new SSBCI disclaimer requirements 
should be significant factors in the MA organization's decision-making 
process, in conjunction with any potential ad space limitations or 
other ad roadblocks. It is vital that beneficiaries have all the 
information necessary to select the plan that best meets their health 
care needs. If a beneficiary is interested in an advertised benefit, we 
believe that the SSBCI eligibility criteria are important for 
beneficiaries to make an informed choice, as they would not be able to 
access that benefit if they are ineligible. Without the SSBCI 
disclaimer, the beneficiary might end up enrolling in a plan only to 
find out that they cannot access the SSBCI, and it is possible that 
they, due to lacking the information necessary to make an informed 
enrollment choice, may have sacrificed other enrollment opportunities 
for the ability to access those advertised SSBCI. SSBCI are not 
benefits that everyone can access, so it should be clear that when

[[Page 30612]]

such a benefit is advertised, these benefits are not guaranteed unless 
specific eligibility criteria are met.
    We disagree with commenters that there should be a separate link 
for the full SSBCI disclaimer and are finalizing the formatting 
requirements as proposed. The disclaimer needs to be on the ad itself 
because a link would not make it clear to the beneficiary that there 
are specific chronic conditions and other eligibility requirements 
associated with being able to access a particular advertised SSBCI. The 
SSBCI disclaimer ensures that beneficiaries are immediately aware of 
the eligibility criteria for an advertised SSBCI and can make informed 
decisions about their health care coverage options. From a 
beneficiary's perspective, linking elsewhere would not make the 
information clear and more accessible, but would instead lead to an 
unnecessary delay in the amount of time it takes for the beneficiary to 
receive the information by adding a burdensome extra step of clicking 
on a link or QR code. Realistically, most beneficiaries would probably 
not click on such a link. Regarding character limits or any other text 
limitations in a specific modality, if the disclaimer does not fit, 
then it is likely not the most suitable modality for an SSBCI marketing 
ad given the nature of these benefits and nuances that are necessary 
for a beneficiary to make an informed choice when considering SSBCI. 
Our requirement is that the disclaimer must be included in all 
marketing and communications materials that mention SSBCI and must 
follow all content requirements as specified in the finalized 
regulatory text. If an ad mentions an SSBCI without the required 
disclaimer, then it is out of compliance with CMS rules.
    Comment: A few commenters communicated support for CMS's proposal 
to require the SSBCI disclaimer in all marketing and communications 
materials that mention SSBCI. Other commenters were unclear as to 
whether the disclaimer should apply to all communications or only for 
pre-enrollment activity, rather than post-enrollment communications. A 
commenter noted that for post-enrollment communications, an enrollee 
would have already been notified they meet the necessary qualifications 
for the benefit and would have already been receiving educational 
material on the benefit, so the addition of the SSBCI disclaimer would 
create confusion. The commenter also expressed concerns about 
differences between VBID and SSBCI disclaimer requirements and that 
this could further confuse beneficiaries.
    Response: We thank commenters for their support of our requirement 
that the SSBCI disclaimer be present in all marketing and 
communications materials that mention SSBCI. As finalized in Sec.  
422.2267(e)(34), the SSBCI disclaimer must appear in all communications 
materials produced by MA organizations, including both pre-enrollment 
and post-enrollment communications materials that mention SSBCI. We 
disagree with the commenter's sentiment that including the disclaimer 
on post-enrollment communications materials would confuse the enrollee. 
Even if an enrollee has already been notified that they meet the SSBCI 
qualifications, we do not believe there would be any harm or risk in 
including the disclaimer on a potential post-enrollment educational 
communications material for that enrollee. The enrollee could simply 
disregard the disclaimer since they already know that they qualify for 
the benefit. Moreover, we believe the likelihood of an MA organization 
sending post-enrollment communications materials on SSBCI to enrollees 
whom the MA organization has already notified that they qualify for the 
benefits is low because those enrollees would likely not need to be 
educated further on these benefits, but instead would probably be ready 
to utilize the benefits.
    Regarding the comment about differences between VBID and SSBCI 
disclaimer requirements and potential beneficiary confusion, we note 
that the VBID model is administered under section 1115A of the Act, and 
there is authority to waive certain program requirements if necessary 
to test the payment or service model; we refer readers to the web page 
for the VBID model at: https://www.cms.gov/priorities/innovation/innovation-models/vbid for more information about the model and its 
requirements. Due to the nature of the VBID model and the flexibilities 
in benefits available under that model, there are specific marketing 
and communications requirements applicable to model participants. Given 
SSBCI and VBID benefits are different benefits with different 
requirements, both disclaimers are necessary.
    Comment: A few commenters were concerned that the chronic 
conditions list would be difficult for MA organizations to implement 
and that it could lead to beneficiary confusion. Some commenters were 
worried it could get confusing for MA organizations to explain in an 
SSBCI disclaimer the chronic conditions that apply to the specific 
benefits listed or promoted in an ad. A commenter believed it was 
unclear how CMS intended MA organizations to proceed when an ad 
includes multiple SSBCI, for which there might be varying eligibility 
criteria or condition requirements. Another commenter added that for an 
MA organization offering multiple SSBCIs, the disclaimer, as worded, 
might result in an overly long and complex disclaimer, and most 
prospective enrollees would not read or understand it. Some commenters 
had concerns about how to implement the list of top five chronic 
conditions and how that list might impact beneficiaries, and requested 
CMS further clarify their expectations. These commenters requested CMS 
clarify that the SSBCI disclaimer needs to identify up to five chronic 
conditions for which one or more SSBCI may be available, rather than 
specifying up to five chronic conditions for each individual SSBCI, 
which may be lengthy. A few commenters were concerned that by listing 
only five conditions for an SSBCI, enrollees with eligible conditions 
not listed may inadvertently believe that they are not eligible for the 
SSBCI because it gives the impression that the five conditions listed 
are the only ones covered.
    Response: We agree with commenters that some clarification of the 
requirements for the chronic conditions list in the SSBCI disclaimer is 
needed. We recognize that an MA organization may include more than one 
type of SSBCI in its marketing or communications material. 
Consequently, there is a strong possibility that each type of SSBCI may 
have different eligible chronic conditions or there may be some overlap 
because some chronic conditions apply to more than one type of SSBCI 
mentioned in the material. There is also the possibility that an MA 
organization may have multiple plans with different SSBCI, and 
consequently may choose to either advertise the SSBCI specific to each 
plan or advertise SSBCI for all plans generally. After considering 
these nuances, we acknowledge that there are many different potential 
scenarios for how MA organizations might advertise SSBCI and use their 
SSBCI disclaimer to associate the listed chronic conditions with the 
types of SSBCI mentioned. We are therefore finalizing Sec.  
422.2267(e)(34)(ii) with revisions compared to our proposal in the 
November 2023 proposed rule, as follows.
    First, we are changing the reference in paragraph (e)(34)(ii) from 
``MA organization'' to ``applicable MA plan(s)'' to clarify that the 
SSBCI the MA organization advertises must be

[[Page 30613]]

clearly tied to the applicable MA plan or plans that offer that SSBCI. 
For similar reasons, we are finalizing paragraph (e)(34)(iii) with a 
modification that clarifies that the disclaimer used by the MA 
organization must communicate that coverage depends on the enrollee 
being a ``chronically ill enrollee'' and on ``the applicable MA plan's 
coverage criteria'' for a specific SSBCI. Therefore, if an MA 
organization is advertising SSBCI for all of the MA organization's 
plans that offer SSBCI, and there are differences between those plans 
in terms of the types of SSBCI and types of chronic conditions the 
enrollee must have to be eligible for the SSBCI, then the MA 
organization must make those differences explicitly clear.
    Next, we are clarifying the requirements for the chronic conditions 
list in the SSBCI disclaimer by outlining several different scenarios 
and the requirements associated with each. Specifically, we are 
finalizing the regulation text with revisions to address: (1) when only 
one type of SSBCI is mentioned, and (2) when multiple types of SSBCI 
are mentioned. When only one type of SSBCI is mentioned, the regulation 
addresses two scenarios: (1) If the number of condition(s) is five or 
fewer, then the MA organization must list all condition(s); and (2) If 
the number of conditions is more than five, then the MA organization 
must list the top five conditions (as determined by the MA 
organization). When multiple types of SSBCI are mentioned, the 
regulation addresses two scenarios: (1) If the number of condition(s) 
is five or fewer, then the MA organization must list all condition(s), 
and if relevant, state that these condition(s) may not apply to all 
types of SSBCI mentioned; and (2) If the number of condition(s) is more 
than five, then the MA organization must list the top five conditions 
(as determined by the MA organization) for which one or more listed 
SSBCI is available.
    We believe that making these modifications to clearly outline the 
different scenarios achieves the goal of limiting ambiguity for MA 
organizations, while simultaneously preserving our intention to ensure 
that SSBCI marketing and communications is transparent and not 
misleading for beneficiaries. Additionally, we believe an alternate 
approach of tying each listed chronic condition to each type of SSBCI 
mentioned would have been overly burdensome and resulted in a long, 
complex SSBCI disclaimer. Lastly, we would like to address the comment 
that listing only five chronic conditions may inadvertently lead 
enrollees with eligible conditions not listed to believe that they are 
not eligible for the SSBCI because it may give the impression that the 
five conditions listed are the only ones that are eligible. We agree 
that this is a valid concern, therefore, we are finalizing Sec.  
422.2267(e)(34)(ii) with a revision which requires that, in instances 
where the MA organization lists the top five conditions, but there are 
more than five conditions that may be eligible for the benefit, MA 
organizations must convey that there are other eligible conditions not 
listed. We believe that all these modifications are responsive to 
comments and further strengthen and clarify our SSBCI disclaimer 
requirements.
    Comment: A commenter was worried about giving deference to MA 
organizations to choose the top five conditions they will list, 
suggesting CMS use a metric for MA organization determinations on what 
conditions would constitute such a ``top five,'' or, in the 
alternative, that the MA organization be required to list all the 
applicable conditions. A different commenter had a similar request with 
concerns that if CMS were to finalize this amendment as proposed, then 
MA organizations could select conditions in a way that increases racial 
health disparities (such as by omitting sickle cell anemia from the 
list).
    Response: We acknowledge the commenter's concern about giving 
deference to MA organizations to choose the top five conditions they 
will list. However, we are finalizing our proposal to allow the MA 
organization's discretion as to which top five conditions to include 
because we believe the MA organization is best positioned to make this 
determination since they are most familiar with their own SSBCI and 
corresponding eligibility and coverage criteria. Regarding the 
suggestion for CMS to use a metric for MA organizations to determine 
whether a specific qualifying condition is one of the top five 
conditions, we remind commenters that in the proposed rule, we provided 
some factors that an MA organization might consider, such as which 
conditions are more common or less obscure among the enrollee 
population the MA organization intends to serve. Other approaches an MA 
organization might take are to list the top five conditions that are 
most prevalent in the service area of the MA plan offering the SSBCI, 
or to list the top five conditions that are used most commonly in 
determining eligibility for the SSBCI. We believe these examples are 
sufficient and defer to MA organizations to make their own decisions on 
their chosen top five conditions using these considerations so long as 
there is a reasonable explanation for why the selected conditions are 
the ``top five'' using a reasonable interpretation of the regulation. 
We believe that the MA organization should not be required to list all 
applicable chronic conditions because, as stated previously, a 
beneficiary may ignore the information if many conditions are listed.
    Regarding the concern about MA organizations potentially selecting 
conditions in a way that increases racial health disparities, we note 
that MA organizations are subject to anti-discrimination provisions 
under 45 CFR Part 92. Therefore, an MA organization that is found to be 
deliberately selecting chronic conditions for the list in their SSBCI 
disclaimer in a discriminatory manner, including a racially 
discriminatory manner, may face compliance action.
    Comment: Some commenters worried that CMS's proposed new 
requirements for the SSBCI disclaimer would make SSBCI less accessible 
to beneficiaries because they might think they are ineligible if they 
do not see their chronic condition listed. Regarding the disclaimer 
content, another commenter stated that they believed this change might 
be confusing to beneficiaries who may not know if they meet the Sec.  
422.102(f)(1)(i)(A) definition of ``chronically ill enrollee.'' They 
instead recommended that the standard for eligibility be simple to 
understand, such as, if a beneficiary has an eligible chronic 
condition, then they will be eligible for the benefit.
    Response: We agree with commenters' concerns that if a beneficiary 
does not see their chronic condition listed in the SSBCI disclaimer, 
then they might think they are ineligible for the benefit. Therefore, 
we are finalizing Sec.  422.2267(e)(34)(ii) with changes to require the 
MA organization, where relevant, to state in its disclaimer that there 
may be other eligible chronic conditions that are not listed. We 
believe this will decrease the likelihood of beneficiaries assuming 
they cannot access SSBCI if their chronic condition is not listed in 
the disclaimer.
    Regarding comments about the disclaimer content (specifically 
proposed Sec.  422.2267(e)(34)(iii)) being potentially confusing to 
beneficiaries, we clarify here that MA organizations should not cite 
the CMS regulatory definition of ``chronically ill enrollee'' in their 
actual SSBCI disclaimer, as this would not make sense to beneficiaries. 
In addition, MA organizations must not simply state that if a 
beneficiary has an eligible chronic condition, then they

[[Page 30614]]

will be eligible for the benefit because this is not accurate. Rather, 
as noted in the proposed rule, each MA organization may tailor their 
disclaimer's language to convey that, in addition to having an eligible 
chronic condition, the enrollee must also meet other eligibility 
requirements to receive the SSBCI. In the proposed rule and in a 
previous response to a comment, we offered some example language to 
this effect that an MA organization might use in its disclaimer. To 
reiterate, the SSBCI disclaimer is model content, therefore, MA 
organizations may deviate from the model so long as they accurately 
convey the required regulatory information in their disclaimer. As 
previously stated, we encourage MA organizations to use simple and easy 
to understand disclaimers written in plain language. The policy we 
proposed and are finalizing is that the SSBCI disclaimer must convey 
that even if the enrollee has a listed chronic condition, the enrollee 
will not necessarily receive the listed SSBCI because coverage of the 
item or service depends on the enrollee meeting other eligibility and 
coverage criteria.
    Comment: A few commenters opposed our proposal, claiming that the 
disclaimer is not the right approach or not the most effective way to 
address misleading SSBCI marketing and communications. Commenters 
expressed support for increasing the transparency of available 
supplemental benefits that beneficiaries are eligible to utilize but 
disagreed that additional disclaimer requirements are an effective way 
to do this. A commenter expressed concern that the additional SSBCI 
disclaimer requirements would not truly address CMS's concerns with 
deceptive marketing and communications practices by bad actors. Some 
commenters recommended CMS withdraw the proposal and not change the 
current SSBCI disclaimer requirements, which they claimed are more 
streamlined than the proposed disclaimer. A commenter stated that the 
longer and more complicated the disclaimers get, the less effective 
they become. Another commenter suggested CMS withdraw the proposal and 
work with stakeholders to determine a more effective strategy whereby 
SSBCI transparency for beneficiaries can be meaningfully improved. A 
commenter noted their beneficiary complaint tracking suggests that 
disclaimers are not as effective as direct communication with sales 
representatives, agents and brokers, and customer service 
representatives. The commenter expressed the critical role agents and 
brokers play in explaining the types of supplemental benefits, 
eligibility requirements, access, and other critical information that 
can be distilled down from the disclaimers in an easy-to-understand 
format tailored for each beneficiary.
    Response: We understand that some commenters are not fully 
supportive of this policy for various reasons, however, we have decided 
to finalize our proposal with slight modifications. While we recognize 
that there may be a range of different approaches to solve the problems 
we have historically observed in SSBCI marketing and communications, in 
formulating our proposal, we have decided that strengthening the SSBCI 
disclaimer was an effective option to address misleading and non-
transparent SSBCI marketing and communications. We have received 
numerous complaints and concerns from a variety of sources, such as 
beneficiaries, advocacy groups, and State Health Insurance Programs, 
about the draw of these benefits and the harm caused when insufficient 
information about these benefits leads a beneficiary to enroll in an MA 
plan that does not meet their health care needs. These instances have 
led to beneficiaries enrolling in plans because they were lured by ads 
mentioning these special benefits only to discover that they are 
ineligible for the advertised SSBCI. We believe that the strengthened 
SSBCI disclaimer could decrease confusing or potentially deceptive 
marketing and communications practices as it is clearer and more 
comprehensive than the current disclaimer. We believe this is in fact 
the right approach and will be effective in delivering SSBCI marketing 
and communications messaging to beneficiaries in a clear, transparent 
way that is not misleading or confusing.
    Therefore, we decline commenters' suggestions to withdraw this 
proposal. We note that we will continue to provide guidance to MA 
organizations and answer questions about the requirements for the SSBCI 
disclaimer and compliance with our other regulatory requirements. 
Lastly, we agree with commenters that agents and brokers, sales 
representatives, and customer service representatives play a critical 
role in communicating with beneficiaries and explaining SSBCI in a way 
that is easy for beneficiaries to understand.
    Comment: A few commenters believed CMS's proposed changes to the 
SSBCI disclaimer requirements may confuse or mislead dually eligible 
individuals. A commenter argued that some dually eligible individuals, 
in response to SSBCI advertising or communications, may choose an MA 
plan to receive some limited additional benefits that are unavailable 
under traditional Medicare; the commenter expressed concern that such 
individuals may make this enrollment choice because they are unaware 
that as dually eligible individuals they can access some of the same 
benefits through a Medicaid program. The commenter stated that the 
SSBCI disclaimer language should be amended to transparently advise 
potential enrollees what they may be giving up by choosing one of these 
MA plans, as many dually eligible individuals are misled into choosing 
an MA plan based on the extra benefits, when they may already be 
eligible for such benefits under Medicaid. Another commenter urged CMS 
to prohibit misleading marketing and communications of SSBCI that 
duplicate Medicaid benefits, arguing that advocates report that many 
dually eligible individuals are lured by these ads and report not 
understanding the limits of the extra benefits or restrictions. The 
commenter requested more robust SSBCI disclaimer language than 
contemplated by this rule. Another commenter suggested that CMS should 
require D-SNPs specifically to indicate (through their SSBCI 
disclaimer, on all plan marketing, and communications materials, and in 
the EOC) which benefits are also available through Medicaid, to reduce 
misleading marketing and communications of SSBCI that duplicate 
Medicaid benefits. The commenter believed that this would not be an 
unduly burdensome requirement because D-SNPs already tailor each plan's 
information to a particular state and frequently advertise benefits to 
which dually eligible individuals are already entitled to receive more 
comprehensively in both duration and scope under Medicaid.
    Response: We understand commenters' concerns regarding the 
potential for misleading marketing and communications of SSBCI that 
duplicate Medicaid benefits. This is an important consideration, and we 
appreciate commenters raising the issue. CMS is committed to protecting 
all beneficiaries, including dually eligible individuals, from 
confusing and potentially misleading marketing and communications 
practices, while also ensuring that they have accurate and necessary 
information to make coverage choices that best meet their health care 
needs. While we are not including SSBCI disclaimer language 
specifically for dually eligible individuals or D-

[[Page 30615]]

SNPs, we do want to clarify our existing authority related to MA 
marketing.
    Sections 1851(h) and 1852(j) of the Act provide CMS with the 
authority to review marketing rules, develop marketing standards, and 
ensure that marketing materials are accurate and not misleading. 
Additionally, these provisions provide CMS with the authority to 
prohibit certain marketing activities conducted by MA organizations 
and, when applicable, agents, brokers, and other third parties 
representing these organizations. Pursuant to section 1851(h)(1) and 
(2) of the Act and CMS's implementing regulations, MA organizations may 
not distribute any marketing material to MA-eligible individuals 
(including dually eligible individuals, when applicable) unless the 
material has been submitted to CMS for review and CMS has not 
disapproved such material. CMS's regulations at Sec.  422.2262 provide, 
among other things, that MA organizations may not mislead, confuse, or 
provide materially inaccurate information to current or potential 
enrollees, or engage in activities that could misrepresent the MA 
organization. Section 422.2262 applies to all MA communications and 
marketing materials, including advertising on behalf of MA 
organizations. In accordance with regulations at Sec.  422.2261, MA 
organizations must submit all marketing materials for CMS review and 
may not distribute or otherwise make available any marketing materials 
unless CMS has reviewed and approved the material, the material has 
been deemed approved, or the material has been accepted via CMS's File 
and Use process. Additionally, CMS routinely monitors MA marketing 
materials and may take compliance action if we determine that an MA 
organization is out of compliance with our rules. Considering the 
existing authority CMS has for oversight and enforcement, we believe 
this is sufficient to address commenters' concerns regarding dually 
eligible individuals and the SSBCI disclaimer.
    We expect and require MA organizations whose audience may include 
dually eligible individuals to craft their ads and their SSBCI 
disclaimers in a way that is accurate and not misleading or confusing, 
in accordance with CMS rules. We recognize that partial-benefit dually 
eligible individuals and full-benefit dually eligible individuals have 
different levels of access to Medicaid benefits. For example, while 
full-benefit dually eligible individuals would generally have access to 
non-emergency transportation (NEMT) through their Medicaid coverage, 
partial-benefit dually eligible individuals generally would not. An MA 
organization advertising SSBCI that include NEMT would offer a new 
benefit for partial-benefit dually eligible individuals, but the NEMT 
generally would not be a new benefit for full-benefit dually eligible 
individuals. Given that both categories of dually eligible individuals 
may enroll in almost any non-SNP, it does not seem practical for MA 
organizations to tailor the SSBCI disclaimer in a way that describes 
which SSBCI would be covered under Medicaid, depending on the 
eligibility category of the dually eligible individual. In some states, 
Medicaid benefits may be limited to certain waiver participants or only 
covered in specific situations. At this time, we will not be modifying 
the SSBCI disclaimer further, but we understand commenters' concerns 
and will consider this for future rulemaking.
    Comment: A commenter suggested that the actual SSBCI eligibility 
criteria must be available in the MA organization's existing plan 
materials (such as the Evidence of Coverage (EOC), Summary of Benefits 
(SB), and plan website) and that the SSBCI disclaimer should tell the 
beneficiary how they can obtain these eligibility criteria and 
hyperlink to them from any online reference.
    Response: To the extent that the materials noted by the commenter 
already contain the same (or more detailed) content as required in the 
SSBCI disclaimer in a manner that achieves the same purpose, CMS would 
consider the MA organizations producing these materials compliant with 
Sec.  422.2267(e)(34) as finalized, for purposes of the disclaimer 
content. Thus, in these cases, there is no need for the MA organization 
to add redundant information to these materials in the form of an SSBCI 
disclaimer because the required information is already present, and in 
some cases more detailed, for the beneficiary. This would be the case, 
for example, in the EOC, an important plan material where covered 
benefits are described. We note that the EOC is a standardized 
communications material, meaning that, per Sec.  422.2267(b), it must 
be used in the form and manner provided by CMS without alteration, 
aside from a few exceptions. In chapter 4, section 2 (Medical Benefits 
Chart) of the current 2024 EOC standardized document, CMS requires MA 
organizations offering SSBCI to include all applicable chronic 
conditions, information regarding the process and/or criteria for 
determining eligibility for SSBCI, the actual CMS-approved benefits, 
and the applicable copays, coinsurance, and deductible for the SSBCI. 
Per Sec.  422.111(b)(2), (b)(6), and (f)(9), MA organizations are 
required to disclose in the EOC the benefits offered under a plan, 
including applicable conditions and limitations, any other conditions 
associated with the receipt or use of benefits, any mandatory or 
optional supplemental benefits, and the terms and conditions for those 
supplemental benefits.
    CMS disagrees with the commenter that the disclaimer should also 
include details about how a beneficiary can obtain the specific SSBCI 
eligibility criteria used by the MA organization. We agree that the 
potential eligibility criteria restrictions should be transparent and 
straightforward for beneficiaries, but the disclaimer is model content 
that is intended to ensure beneficiaries are aware that there are 
eligibility criteria and to understand some of the eligible conditions 
that apply. This will ensure beneficiaries are informed that there are 
SSBCI restrictions and to notify the beneficiary that they may inquire 
further with the MA organization about the details of these 
restrictions if they so choose. We would also like to clarify that the 
disclaimer is meant to be easy to read and understand, and to quickly 
alert beneficiaries that they may not be eligible for certain listed 
benefits. Adding additional information or a hyperlink would further 
lengthen the disclaimer, so we are not requiring that. We are also not 
prohibiting MA organizations from electing to provide additional 
information not required by Sec.  422.2267(e)(34) as finalized in this 
rule. There are ways that MA organizations can help guide beneficiaries 
in their SSBCI education. As mentioned earlier, an MA organization can 
encourage a beneficiary to reach out to them, using simple language 
such as, ``For details, please contact us'' which would offer 
beneficiaries an easy and straightforward way to learn more about 
whether they are eligible for a specific SSBCI. The SSBCI disclaimer 
requirements, as finalized, are designed to ensure that beneficiaries 
are immediately aware that SSBCI is not a guaranteed benefit, and they 
may inquire further with the MA organization if they want to learn more 
about the eligibility restrictions.
    Comment: Another commenter requested that CMS clarify that there 
will be an exception for marketing and communications materials that do 
not currently require the Federal Contracting Statement, such as social 
media, SMS text messages, outdoor ads, banners, and envelopes.

[[Page 30616]]

    Response: As finalized, there will not be an exception to the SSBCI 
disclaimer requirement for marketing and communications materials that 
do not currently require the Federal Contracting Statement. The intent 
of the disclaimer is to ensure that any place where SSBCI is mentioned, 
beneficiaries are fully aware that eligibility restrictions apply so 
that they can make informed health care choices. We believe that the 
marketing and communications modalities such as those listed by the 
commenter are modalities where beneficiaries tend to be most at risk of 
being misled by SSBCI ads and where the content appears to offer 
benefits that a beneficiary wants and suggests they can easily access 
or receive by enrolling in the plan. If the beneficiary is unaware that 
there is a chance they may not qualify, then they may unwittingly sign 
up for the plan because of benefits that they will not ultimately be 
able to receive. The exceptions for the Federal Contracting Statement 
are relevant to that specific provision only and do not apply to the 
SSBCI disclaimer as finalized here.
    Comment: A commenter remarked that ODA are inclusive of billboards 
and bus shelter ads, which are often read by motorists. The commenter 
believed imposing new requirements for ODA decreases legibility, 
impact, and potential safety and requested that CMS allow SSBCI ads to 
have varying disclaimer requirements based on the ODA medium.
    Response: We thank commenters for sharing their concerns about 
safety for motorists when it comes to including the SSBCI disclaimer on 
ODA. We agree that these are important considerations for MA 
organizations when making SSBCI advertising decisions. It is the MA 
organization's discretion regarding where to advertise SSBCI. If an MA 
organization has concerns regarding legibility, impact, and potential 
safety when it comes to including the SSBCI disclaimer on a particular 
ODA, then they may wish to reconsider their pursuit of that ad modality 
for SSBCI. MA organizations have ample choice in how they choose to 
advertise, however, they must comply with our SSBCI disclaimer 
requirements, including ODA formatting requirements.
    Comment: Other commenters encouraged CMS to make the SSBCI 
disclaimer's model language even clearer by explicitly stating that not 
everyone who has Medicare is eligible for the benefit and explaining 
how enrollment in an MA plan differs from traditional Medicare. A 
commenter suggested that the SSBCI disclaimer should include 
information about the trade-offs between MA and traditional Medicare 
and describe potential hurdles in MA, for example, provider networks, 
utilization management, and prior authorization.
    Response: We believe the SSBCI disclaimer requirements, as 
finalized, do already make it clear that not everyone who has Medicare 
is eligible for the SSBCI, as MA organizations are required to note 
SSBCI eligibility restrictions in the disclaimer. Regarding comments 
recommending that the disclaimer explain the differences between MA and 
traditional Medicare, we disagree and believe this would not be 
appropriate nor align with the core purpose of the SSBCI disclaimer. 
CMS does not require MA organizations to include information about the 
trade-offs or any comparison between MA and traditional Medicare in 
their marketing and communications materials, and we are not 
establishing such a requirement for the SSBCI disclaimer. However, we 
note that per Sec.  422.2262, CMS does require MA organizations to 
provide materially accurate information to current or potential 
enrollees. Therefore, MA organizations must provide accurate 
information about provider networks, utilization management, and prior 
authorization wherever MA organizations choose to include such 
information in their marketing and communications materials.
    Comment: Some commenters recommended CMS ensure proper enforcement 
against misleading SSBCI marketing and communications tactics. One 
commenter urged CMS to impose high penalties on MA organizations that 
fail to comply with all the revised marketing and communications 
requirements for the MA program and that such enforcement action should 
include civil monetary penalties, suspensions, and for the most abusive 
actors, permanent bans from MA program participation. Another commenter 
noted that the current procedures for enforcement of marketing and 
communications regulations that CMS has in place are not working, and 
marketing and communications practices that are confusing and 
misleading to seniors need to stop.
    Response: We thank commenters for raising the important topic of 
enforcement against misleading marketing and communications in general, 
and we want to assure commenters that CMS takes its enforcement efforts 
seriously, especially as they relate to the SSBCI disclaimer 
requirements, as finalized. Accordingly, we would like to provide an 
overview of our approach to MA enforcement.
    CMS engages in various enforcement efforts across the MA program to 
help ensure the health and wellbeing of MA enrollees. The Office of 
Program Operations and Local Engagement (OPOLE) routinely monitors MA 
organizations, with dedicated CMS account managers across ten regions 
of the country assigned to each MA organization. CMS also maintains MA 
organization marketing monitoring projects which consist, as provided 
in Sec.  422.2261, of reviewing and approving (if in accordance with 
CMS regulations) marketing materials produced by MA organizations and 
their TPMOs.
    Through routine oversight and monitoring, CMS may take compliance 
actions if it determines that an MA organization is out of compliance 
with the terms of its contract with CMS. Based on an assessment of the 
circumstances surrounding non-compliance, CMS may issue a compliance 
action such as a notice of non-compliance, warning letter, or 
corrective action plan. As described in Sec.  422.504(m)(3), a notice 
of non-compliance may be issued for any failure to comply with the 
requirements of the MA organization's current or prior contract with 
CMS; a warning letter may be issued for serious and/or continued non-
compliance with the MA organization's current or prior contract with 
CMS; and a corrective action plan may be issued for repeated, not 
corrected, or particularly serious non-compliance. CMS's criteria for 
issuing a compliance action depends on six key factors listed at Sec.  
422.504(m)(2).
    In addition to account management, routine monitoring efforts, 
auditing, and compliance actions, CMS also has the authority to impose 
financial penalties, marketing and enrollment sanctions, or contract 
terminations against MA organizations whose non-compliance meets 
certain statutory thresholds. CMS evaluates circumstances of documented 
non-compliance against those thresholds in determining an appropriate 
action. In circumstances when non-compliance by an MA organization is 
pervasive, ongoing, and may require significant time and resources to 
identify and correct, CMS might require a corrective action plan or, if 
the statutory threshold for non-compliance is met, impose enrollment 
and marketing sanctions in an effort to protect additional 
beneficiaries from enrolling in the plan until the MA organization can 
demonstrate that their issues have been sufficiently corrected and no 
longer likely to recur. If, however, it is determined that an MA 
organization's non-compliance has already been corrected by the time it

[[Page 30617]]

was identified through CMS's oversight and enforcement efforts, and 
enrollees or prospective enrollees are no longer in danger of 
experiencing inappropriate delays or denials to their benefits, a civil 
money penalty might be the most appropriate response if the non-
compliance met statutory standards. If standards for a financial 
penalty are not met, CMS may still issue a notice of non-compliance 
which will count against the MA organization during CMS's annual review 
of their past performance.
    In summary, we believe that the above outlined procedures for 
enforcement of marketing regulations that CMS currently has in place 
are appropriate and effective. We are confident that these procedures 
will sufficiently address any potential non-compliance with the SSBCI 
disclaimer rule by MA organizations.
Summary of Regulatory Changes
    We received a range of comments pertaining to this proposal, the 
majority of which reflected support for the regulation. After 
considering the comments we received and for the reasons outlined in 
the proposed rule and our responses to comments, we are amending Sec.  
422.2267(e)(34) largely as proposed, but with modifications. We are 
finalizing paragraph (e)(34)(ii) with revisions to adopt more specific 
requirements for when and how an MA organization must list up to five 
chronic conditions used to determine eligibility for SSBCI identified 
in marketing and communications materials. These requirements specify 
how an MA organization must structure its list of chronic conditions in 
the SSBCI disclaimer when only one type of SSBCI is mentioned and when 
multiple types of SSBCI are mentioned. Modifications in paragraph 
(e)(34)(ii) also include changing ``MA organization'' to ``applicable 
MA plan'' and requiring, where there are more than five eligible 
conditions, a note indicating that there are other eligible conditions 
not listed. We are finalizing paragraph (e)(34)(iii) with modifications 
to ensure that the specific coverage criteria of the MA plan that 
offers the SSBCI are referenced as additional eligibility requirements. 
We are also finalizing paragraph (e)(34)(iii) without the phrase 
``items and services'' to avoid any implication that SSBCI that are 
reductions in cost sharing are not included in the SSBCI disclaimer 
requirement. The SSBCI disclaimer is required for all marketing and 
communications materials that mention SSBCI of any type. The new SSBCI 
disclaimer requirements, as finalized here, will apply to all contract 
year 2025 marketing and communications beginning October 1, 2024, and 
in subsequent years.

C. Agent Broker Compensation

    Agents and brokers are an integral part of the MA and Part D 
industry, helping millions of Medicare beneficiaries to learn about and 
enroll in Medicare, MA plans, and PDPs by providing expert guidance on 
plan options in their local area, while assisting with everything from 
comparing costs and coverage to applying for financial assistance. 
Pursuant to section 1851(j)(2)(D) of the Act, the Secretary has a 
statutory obligation to establish guidelines to ensure that the use of 
agent and broker compensation creates incentives for agents and brokers 
to enroll individuals in the MA plan that is intended to best meet 
beneficiaries' health care needs. In September 2008, we published the 
Revisions to the Medicare Advantage and Prescription Drug Benefit 
Programs interim final rule (73 FR 54237), our first regulation to 
establish requirements for agent and broker compensation, which 
included certain limitations on agent and broker compensation and other 
safeguards. In that rulemaking, we noted that these reforms addressed 
concerns that the previously permitted compensation structure resulted 
in financial incentives for agents to only market and enroll 
beneficiaries in some plan products and not others due to larger 
commissions. These incentives potentially resulted in beneficiaries 
being directed towards plans that were not best suited to their needs.
    In that interim final rule, we noted that depending on the 
circumstances, agent and broker relationships can be problematic under 
the federal anti-kickback statute if they involve, by way of example 
only, compensation in excess of fair market value, compensation 
structures tied to the health status of the beneficiary (for example, 
cherry-picking), or compensation that varies based on the attainment of 
certain enrollment targets. These and other fraud and abuse risks exist 
among the current agent and broker relationships. We note that the HHS 
Office of the Inspector General (OIG) advisory opinion process is 
available to parties seeking OIG's opinion as to the legality of a 
particular arrangement. Information about this process remains 
available on the OIG's website at http://oig.hhs.gov/fraud/advisoryopinions.html. CMS has also periodically made updates to the 
agent and broker compensation requirements in subsequent rulemaking (73 
FR 67406).
    It has become apparent that the growth of MA and changes in MA 
marketing warrant further updates to ensure the appropriate guardrails 
are in place to protect beneficiaries and support competition. For 
example, shifts in the industry and resulting changes in contract terms 
offered to agents and brokers and other third-party marketing 
organizations (TPMOs) for enrollment-related services and expenses 
warrant further action to ensure compliance with statutory requirements 
and that the compensation paid to agents and brokers incentivizes them 
to enroll individuals in the MA plan that is intended to best meet 
their health care needs. CMS has also observed that the MA marketplace, 
nationwide, has become increasingly consolidated among a few large 
national parent organizations, which presumably have greater capital to 
expend on sales, marketing, and other incentives and bonus payments to 
agents and brokers than smaller market MA plans. This provides a 
greater opportunity for these larger organizations, either directly or 
through third parties, to use financial incentives outside and 
potentially in violation of CMS's rules to encourage agents and brokers 
to enroll individuals in their plan over a competitor's plan. For 
example, CMS has seen web-based advertisements for agents and brokers 
to work with or sell particular plans where the agents and brokers are 
offered bonuses and perks (such as golf parties, trips, and extra cash) 
framed as allowable administrative add-ons in exchange for enrollments. 
These payments, while being presented to the agents and brokers as 
bonuses or incentives, are implemented in such a way that allows the 
plan sponsor, in most cases, to credibly account for these anti-
competitive payments as ``administrative'' rather than ``compensation'' 
and these payments are therefore not limited by the existing regulatory 
limits on compensation. We note these payments may implicate and, 
depending on the facts and circumstances, potentially violate the 
Federal anti-kickback statute.
    CMS has also received complaints from a host of different 
organizations, including state partners, beneficiary advocacy 
organizations, and MA plans, among others. A common thread to the 
complaints is that agents and brokers are being paid, typically through 
various purported administrative and other add-on payments, amounts 
that cumulatively exceed the maximum compensation allowed under the 
current regulations. Moreover, CMS has observed that such payments have

[[Page 30618]]

created an environment similar to what prompted CMS to engage in the 
original agent and broker compensation rulemaking in 2008, where the 
amounts being paid for activities that MAOs do not characterize as 
``compensation,'' are rapidly increasing. The result is that agents and 
brokers are presented with a suite of questionable financial incentives 
that are likely to influence which MA plan an agent encourages a 
beneficiary to select during enrollment.
    We believe these financial incentives are contributing to behaviors 
that are driving an increase in beneficiary marketing complaints 
received by CMS in recent years. As was discussed in our most recent 
Medicare Program Contract Year 2023 Rule, based on the most recent data 
available at that time, in 2021, CMS received more than twice the 
number of beneficiary complaints related to marketing of MA plans 
compared to 2020, and for some states those numbers were much higher 
(87 FR 27704 through 27902). These complaints are typically filed by 
enrollees or their caregivers with CMS through 1-800-Medicare or CMS 
regional offices, and generally allege that a beneficiary was 
encouraged or pressured to join an MA plan, and that once enrolled, the 
plan was not what the enrollee expected or what was explained to them 
when they spoke to an agent or broker.
    In the Contract Year 2024 Policy and Technical Changes to the 
Medicare Advantage Program, Medicare Prescription Drug Benefit Program, 
Medicare Cost Plan Program, and Programs of All-Inclusive Care for the 
Elderly final rule (88 FR 22234 through 22256), which appeared in the 
Federal Register on April 12, 2023, we discussed at length the rapidly 
increasing use of various marketing activities that typically result in 
beneficiaries being connected with agents and brokers to be enrolled in 
MA plans. Based on a number of complaints CMS reviewed, as well as 
audio recordings of sale calls, it appears that the increased marketing 
of 1-800 numbers to facilitate enrollment in MA plans through national 
television advertisements combined with the subsequent actions of 
agents and brokers when beneficiaries responded to those ads resulted 
in beneficiary confusion. In some instances, through listening to call 
recordings, CMS observed that when beneficiaries reached an agent or 
broker in response to these television ads, the beneficiary was often 
pressured by the agent or broker to continue with a plan enrollment 
even though the beneficiary was clearly confused.
    At the same time, these types of complaints have escalated at a 
pace that mirrors the growth of administrative or add-on payments, 
which we contend are being misused to pay agents and brokers over and 
above the CMS-set compensation limits on payment to agents and brokers. 
CMS is concerned that when the value of administrative payments offered 
to agents and brokers reaches the levels that CMS has observed in 
recent years, these payments may distort the process that agents and 
brokers are expected to engage in when they assist beneficiaries in 
weighing the merits of different available plans. This distortion 
disadvantages beneficiaries who enroll in a plan based on the 
recommendation or encouragement of an agent or broker who may be 
influenced by how much or what kind of administrative payment the agent 
or broker expects to receive, rather than enrolling the beneficiary in 
an option that is intended to best meet the beneficiary's health care 
needs.
    Consequently, the rise in MA marketing complaints noted previously 
suggests that agents and brokers are being influenced to engage in high 
pressure tactics, which may in turn cause beneficiary confusion about 
their enrollment choices, to meet enrollment targets or earn 
``administrative payments,'' either directly or on behalf of their 
employer or affiliated marketing organization, in excess of the capped 
compensation payment set by CMS. Although CMS' existing regulations 
already prohibit plans, and by extension their agents and brokers, from 
engaging in misleading or confusing communications with current or 
potential enrollees, in the proposed rule we noted that additional 
limitations on payments to agents and brokers may be necessary to 
adequately address the rise in MA marketing complaints described here.
    Additionally, while our proposed rule largely focused on payments 
and compensation made to agents and brokers, we noted that CMS is also 
concerned about how payments from MA plans to TPMOs may further 
influence or obscure the activities of agent and brokers. In 
particular, CMS expressed interest in the effect of payments made from 
MA plans to Field Marketing Organizations (FMOs), which is a type of 
TPMO that employs or is affiliated with agents and brokers to complete 
MA enrollment activities, which have increased in influence in recent 
years. FMOs may also conduct additional marketing activities on behalf 
of MA plans, such as lead generating and advertising. In fact, at the 
time of our first agent and broker compensation regulation, CMS 
expressed concern about amounts paid to FMOs for services that do not 
necessarily relate directly to enrollments completed by the agent or 
broker who deals directly with the beneficiary (73 FR 54239). Some 
examples of such services are training, material development, customer 
service, direct mail, and agent recruitment.
    As we noted in the preamble to the two interim final rules 
published in 2008 (73 FR 67406 and 73 FR 54226), all parties should be 
mindful that their compensation arrangements, including arrangements 
with FMOs and other similar type entities, must comply with the fraud 
and abuse laws, including the federal anti-kickback statute. Beginning 
as early as 2010, an OIG report indicated that ``plan sponsors may have 
created financial incentives that could lead FMOs to encourage sales 
agents to enroll Medicare beneficiaries in plans that do not meet their 
health care needs. Because FMOs, like sales agents, may influence 
Medicare beneficiaries' enrollment in MA plans, CMS should issue 
additional regulations more clearly defining how and how much FMOs 
should be paid for their services.'' \153\ In the time since CMS first 
began to regulate agent and broker compensation, we have seen the FMO 
landscape change from mostly smaller, regionally based companies to a 
largely consolidated group of large national private equity-backed or 
publicly-traded companies.
---------------------------------------------------------------------------

    \153\ Levinson, Daniel R, BENEFICIARIES REMAIN VULNERABLE TO 
SALES AGENTS' MARKETING OF MEDICARE ADVANTAGE PLANS (March 2010); 
https://oig.hhs.gov/oei/reports/oei-05-09-00070.pdf.
---------------------------------------------------------------------------

    Finally, in addition to the undue influence that perks, add-on 
payments, volume bonuses and other financial incentives that are paid 
by MA organizations to FMOs may have on agents and brokers, they also 
create a situation where there is an unlevel playing field among plans. 
Larger, national MA plans are likely able to more easily shoulder the 
added costs paid to FMOs, as compared to smaller, more locally based MA 
plans. Furthermore, we have received reports that some larger FMOs are 
more likely to contract with large national plans rather than smaller 
regional plans, negatively impacting competition. On July 9, 2021, 
President Biden issued Executive Order (E.O.) 14036: ``Promoting 
Competition in the American Economy,'' (hereinafter referred to as E.O. 
14036). E.O. 14036 describes the Administration's policy goals to 
promote a fair, open, competitive marketplace, and directs

[[Page 30619]]

the U.S. Department of Health and Human Services to consider policies 
that ensure Americans can choose health insurance plans that meet their 
needs and compare plan offerings, furthering competition and consumer 
choice. The regulatory changes included in the 2023 proposed rule also 
aimed to deter anti-competitive practices engaged in by MA 
organizations, agents, brokers, and TPMOs that prevent beneficiaries 
from exercising fully informed choice and limit competition in the 
Medicare plan marketplace among Traditional Medicare, MA plans, and 
Medigap plans.
    CMS is concerned that the more recent increases in fees being paid 
to larger FMOs have resulted in a ``bidding war'' among MA plans to 
secure anti-competitive contract terms with FMOs and their affiliated 
agents and brokers. If left unaddressed, such bidding wars will 
continue to escalate with anti-competitive results, as smaller local or 
regional plans that are unable to pay exorbitant fees to FMOs risk 
losing enrollees to larger, national plans who can. In addition to 
seeking comment to help us develop additional regulatory action, we 
specifically requested comments regarding how CMS can further ensure 
that payments made by MA plans to FMOs do not undercut the intended 
outcome of the agent and broker compensation proposals included in this 
final rule; we thank commenters for the wealth of information they have 
shared and we will continue to integrate this new knowledge as we 
explore potential future rulemaking.
    In addition, the comments that we received in response to the 
November 2023 proposed rule indicate that there is, in fact, an 
additional force at work in misaligning the incentives of agents and 
brokers enrolling Medicare beneficiaries into MA plans. Commenters 
brought to our attention that agents and brokers who are direct 
employees of FMOs, call centers, and other TPMOs typically receive an 
annual salary from their employer. We note that the salary received by 
employees of a TPMO from their employer does not currently fall under 
our regulatory definition of ``compensation.'' Commenters stated that 
an agent who is not directly employed by a call center may receive 
renewal payments for a beneficiary who remains enrolled in the plan 
that agent has helped the beneficiary select. By contrast, commenters 
also stated that a call center employee who is salaried may never be 
eligible to receive renewal payments and may only be incentivized to 
generate new enrollments. In this way, commenters expressed concerns 
that the incentives between the two types of agents and brokers may be 
different, and so a one-size fits all approach to regulating agent and 
broker compensation for all agents who enroll beneficiaries into MA 
plans has inherent limitations. This is an area of policy we will 
consider in future rulemaking.
    As noted previously, sections 1851(j)(2)(D) and 1851(h)(4)(D) of 
the Act direct the Secretary to set limits on compensation rates to 
``ensure that the use of compensation creates incentives for agents and 
brokers to enroll individuals in the MA plan that is intended to best 
meet their health care needs,'' and that the Secretary ``shall only 
permit a Medicare Advantage organization (and the agents, brokers, and 
other third parties representing such organization) to conduct the 
activities described in subsection (j)(2) in accordance with the 
limitations established under such subsection.'' In this final rule, we 
are focusing on current payment structures, including the use of 
administrative payments, among MA organizations and agents, brokers, 
and TMPOs, specifically FMOs, that may incentivize some agents or 
brokers to emphasize or prioritize one plan over another, irrespective 
of the beneficiary's needs, leading to enrollment in a plan that does 
not best fit the beneficiary's needs and a distortion of the 
competitive process.
    Our regulations at Sec.  422.2274 set out limitations regarding 
various types of payments and compensation that may be paid to agents, 
brokers, and third parties who represent MA organizations. Each of 
these limitations is intended to better align the professional 
incentives of the agents and brokers with the interests of the Medicare 
beneficiaries they serve. Our regulations specify maximum compensation 
amounts that may be paid to agents and brokers for initial enrollment 
and renewals. The regulations also currently allow for payment to 
agents and brokers for administrative costs such as training and 
operational overhead, as long as the payments are at or below the value 
of those services in the marketplace. The maximum compensation for 
initial and renewal enrollments and the requirement that administrative 
payments reflect fair market value for actual administrative services 
have been intended to ensure incentives for agents and brokers to help 
enroll beneficiaries into MA plans that best meet their health care 
needs.
    However, while CMS has affirmatively stated the types of allowable 
payment arrangements and the parameters for those payments in 
regulations at Sec.  422.2274, as previously discussed, some recent 
studies suggest that MA plans offer additional or alternative 
incentives to agents and brokers, often through third parties such as 
FMOs, to prioritize enrollment into some plans over others. These 
incentives are both explicit (in the form of higher payments 
purportedly for administrative services) and implicit (such as in the 
case of passing on leads, as discussed later in this section).\154\
---------------------------------------------------------------------------

    \154\ The Commonwealth Fund, The Challenges of Choosing Medicare 
Coverage: Views from Insurance Brokers and Agents (Feb. 28, 2023); 
https://www.commonwealthfund.org/publications/2023/feb/challenges-choosing-medicare-coverage-views-insurance-brokers-agents.
---------------------------------------------------------------------------

    As previously mentioned, we believe payments categorized by MA 
organizations as ``administrative expenses,'' paid by MA organizations 
to agents and brokers, have significantly outpaced the market rates for 
similar services provided in non-MA markets, such as Traditional 
Medicare with Medigap. This is based on information shared by insurance 
associations and focus groups and published in research articles by 
groups such as the Commonwealth Fund, which found that ``most brokers 
and agents in the focus groups recalled receiving higher commissions 
[total payments, including compensation and administrative payments]--
sometimes much higher--for enrolling people in Medicare Advantage plans 
compared to Medigap.'' \155\
---------------------------------------------------------------------------

    \155\ The Commonwealth Fund, The Challenges of Choosing Medicare 
Coverage: Views from Insurance Brokers and Agents (February. 28, 
2023); https://www.commonwealthfund.org/publications/2023/feb/challenges-choosing-medicare-coverage-views-insurance-brokers-agents.
---------------------------------------------------------------------------

    Similarly, some MA organizations are paying for things such as 
travel or operational overhead on a ``per enrollment'' basis, resulting 
in instances where an agent or broker may be paid multiple times for 
the same one-time expense, if the agent incurring the expense happened 
to enroll more than one beneficiary into the plan making the payment. 
For example, an agent could be reimbursed for the cost of traveling to 
an event where that agent enrolls a beneficiary into an MA plan; if the 
cost of travel is paid on a ``per enrollment'' basis, the agent would 
be reimbursed the price of the trip multiplied by the number of 
enrollments the agent facilitated while at that event. In this 
scenario, whichever MA organization reimburses for travel at the 
highest rates would effectively be offering a higher commission per 
enrollee, as the increased amount paid for travel, in additional to the 
allowable compensation, would be higher. While

[[Page 30620]]

this would not violate existing MA regulations, this would inherently 
create a conflict of interest for the agent. As statute requires that 
the Secretary ``ensure that the use of compensation creates incentives 
for agents and brokers to enroll individuals in the MA plan that is 
intended to best meet their health care needs,'' we believe this type 
of conflict must be addressed.
    We are also concerned that other activities undertaken by a TPMO, 
as a part of their business relationships with MA organizations, may 
influence the plan choices offered or how plan choices are presented by 
the agent or broker to a prospective enrollee. For example, we have 
learned of arrangements where a TPMO, such as an FMO, provides an MA 
organization with both marketing and brokering services. As part of the 
arrangement, the MA organization pays the FMO for leads generated by 
the FMO and then the leads are given directly to the FMO's agents 
instead of to the MA organization itself (or the MA organization's 
other contracted agents and brokers). When the FMO's agents then 
contact the individual and enroll the individual into an MA plan, the 
MA organization pays the agent or the FMO the enrollment compensation 
described in Sec.  422.2274(d), separate and apart from any referral 
fee paid to the FMO under Sec.  422.2274(f).
    While MA organizations that are engaged in these types of 
arrangements (such as paying FMOs for lead generating activities and 
marketing, then giving the leads to the FMO's agents and then paying 
compensation for that same enrollment) might argue that they are not 
intending to influence an agent or broker in determining which plan 
``best meets the health care needs of a beneficiary,'' we believe it is 
likely that these arrangements are having this effect. We believe that 
current contracts in place between FMOs and MA organizations can 
trickle down to influence agents and brokers in enrolling more 
beneficiaries into those plans that also provide the agents and brokers 
with leads, regardless of the appropriateness of the plan is for the 
individual enrollees. In fact, FMOs could leverage these leads as a 
form of additional compensation by ``rewarding'' agents who enroll 
beneficiaries into a specific plan with additional leads. Therefore, 
CMS is required under section 1851(j)(2)(D) of the Act to establish 
guidelines that will bring the incentives for agents and brokers to 
enroll individuals in an MA plan that is intended to best meet their 
health care needs, in accordance with the statute and as such is CMS' 
intention here.
    In the proposed rule we proposed to: (1) generally prohibit 
contract terms between MA organizations and agents, brokers, or other 
TMPOs that may interfere with the agent's or broker's ability to 
objectively assess and recommend the plan which best fits a 
beneficiary's health care needs; (2) set a single agent and broker 
compensation rate for all plans, while revising the scope of what is 
considered ``compensation;'' and (3) eliminate the regulatory framework 
which currently allows for separate payment to agents and brokers for 
administrative services. We also proposed to make conforming edits to 
the agent broker compensation rules at Sec.  423.2274. We will continue 
to monitor the MA marketing ecosystem and the influence of FMOs, lead 
generators, call centers, web-based sources, TV ads, and other fast-
moving aspects of MA marketing to ensure beneficiaries are protected 
from misleading or predatory behavior while also having access to the 
information and support they need to make an informed decision about 
their Medicare coverage. For example, CMS will continue to monitor the 
behaviors addressed in this final rule at VI.A, which limit the 
distribution of personal beneficiary data by TPMOs (Sec. Sec.  
422.2274(g)(4) and 423.2274(g)(4)).
1. Limitation on Contract Terms
    We proposed to add at Sec.  422.2274(c)(13) that, beginning in 
contract year 2025, MA organizations must ensure that no provision of a 
contract with an agent, broker, or TPMO, including FMO, has the direct 
or indirect effect of creating an incentive that would reasonably be 
expected to inhibit an agent's or broker's ability to objectively 
assess and recommend which plan best meets the health care needs of a 
beneficiary.
    Examples of the anti-competitive contract terms we proposed to 
prohibit included, for instance, those that specify renewal or other 
terms of a plan's contract with an agent broker or FMO contingent upon 
preferentially higher rates of enrollment; that make an MA 
organization's contract with an FMO or reimbursement rates for 
marketing activities contingent upon agents and brokers employed by the 
FMO meeting specified enrollment quotas; terms that provide for bonuses 
or additional payments from an MA organizations to an FMO with the 
explicit or implicit understanding that the money be passed on to 
agents or brokers based on enrollment volume in plans sponsored by that 
MA organization; for an FMO to provide an agent or broker leads or 
other incentives based on previously enrolling beneficiaries into 
specific plans for a reason other than what best meets their health 
care needs.
    As we explained in the November 2023 proposed rule, CMS believes 
that the proposed limitations on contract terms would give plans 
further direction as to the types of incentives and outcomes that must 
be avoided without being overly prescriptive as to how the plans should 
structure these arrangements.
    We received the following comments on this proposal.
    Comment: Commenters generally indicated their support for this 
proposal to require that MA organizations must ensure that no provision 
of a contract with an agent, broker, or TPMO has the direct or indirect 
effect of creating an incentive that would reasonably be expected to 
inhibit an agent or broker's ability to objectively assess and 
recommend which plan best meets the health care needs of the 
beneficiary.
    Response: We thank commenters for their support.
    Comment: Some commenters requested additional information about the 
types of incentives and contract terms we intended to limit and the 
means by which we intend to enforce these restrictions.
    Response: We thank commenters for their thoughtful input. While we 
recognize that it is impossible to anticipate every scenario that could 
present itself, it is important that we are clear in our meaning of the 
phrase ``direct or indirect effect of creating an incentive that would 
reasonably be expected to inhibit an agent or broker's ability to 
objectively assess and recommend which plan best suits the 
beneficiaries' health care needs.''
    Relying on a ``reasonableness standard,'' we would not, for 
example, read our regulation to prohibit MA plans from contracting with 
independent agents who have not been appointed to represent all 
possible competitors in a market. In this case, an agent who does not 
represent all possible competitors is inherently more likely to enroll 
beneficiaries into the plan(s) with which he or she is contracted. 
However, provided there is no contractual or financial incentive that 
would prevent the agent from choosing to seek additional arrangements 
and sell competitors' plans, the agent and the MAO(s) with which it 
contracts would be in compliance with our rule.
    If, by way of another example, a TPMO or agent was offered a bonus 
or other payment by a plan or a TPMO

[[Page 30621]]

contracted by a plan or plans, in exchange for declining to represent a 
competing MA plan, this would be an example of a contract term that 
would likely violate the rule, as it is inherently anti-competitive in 
nature and on its face has the effect of encouraging enrollment in one 
plan over another based largely on the receipt of a financial reward 
for not representing or promoting a competitor plan's product.
    Similarly, depending on the facts and circumstances, bonuses for 
hitting volume-based targets for sales of a plan may not be directly 
anti-competitive if they do not outwardly discourage or preclude a TPMO 
from marketing other plans, but it would likely have the indirect 
effect of creating an incentive for the TPMO to prioritize sales of one 
plan over another based on those financial incentives and not the best 
interests of the enrollees. Because the indirect effect of volume-based 
bonuses of this kind would be anti-competitive in nature, they would 
likely run afoul of the provision, and, like other potential scenarios 
described herein, could implicate fraud and abuse laws as well.
    CMS expects to review contracts as part of routine monitoring, as 
well as relying on complaints and other methods of investigation, and 
work conducted by the Office of the Inspector General, to enforce this 
regulation. We also may pursue additional data collection regarding 
these contract arrangements as part of our established Part C reporting 
requirements process in future years.
    After considering public comments, and the overwhelming support for 
this proposal, and for the reasons described in the November 2023 
proposed rule and in our earlier responses, we are finalizing the 
policy as proposed at Sec.  422.2274(c)(13) requiring that MA 
organizations must ensure that no provision of a contract with an 
agent, broker, or TPMO has the direct or indirect effect of creating an 
incentive that would reasonably be expected to inhibit an agent's or 
broker's ability to objectively assess and recommend which plan best 
meets the health care needs of a beneficiary; we are including one 
modification to the regulatory text to make clear that this requirement 
is applicable beginning with marketing and communications activities 
related to the 2025 contract year. We are continuing to consider 
whether additional guidance in this space may be necessary in future 
rulemaking.
2. Compensation Rates
    Under current regulations, compensation for agents and brokers 
(described at Sec.  422.2274(d)(2) and excluding administrative 
payments as described in Sec.  422.2274(e)) may be paid at a rate 
determined by the MA organization but may not exceed caps that CMS 
calculates each year, based on fair market value (FMV) as specified at 
Sec.  422.2274(a). For example, the CY2024 national agent/broker FMV 
compensation caps are $611 for each MA initial enrollment, $306 for a 
MA renewal enrollment, $100 for each Part D initial enrollment, and $50 
for a Part D renewal enrollment.
    We have learned that overall payments to agents and brokers can 
vary significantly depending on which plan an individual enrolls in. In 
the November 2023 proposed rule, we expressed concern that the lack of 
a uniform compensation standard across plans can encourage the types of 
arrangements that provide strong financial incentives for agents and 
brokers to favor some plans over others and that these incentives could 
result in beneficiaries enrolling in plans that do not best fit their 
needs. To eliminate this potential for bias and make certain that CMS' 
regulations governing agent and broker compensation ensure that agents 
and brokers are incented to enroll individuals in the MA plan that is 
intended to best meet their health care needs, we proposed to amend our 
regulations to require that all payments to agents or brokers that are 
tied to enrollment, related to an enrollment in an MA plan or product, 
or are for services conducted as part of the relationship associated 
with the enrollment into an MA plan or product must be included under 
compensation, as defined at Sec.  422.2274(a), including payments for 
activities previously excluded under the definition of compensation at 
Sec.  422.2274(a)(ii), and are regulated by the compensation 
requirements of Sec.  422.2274(d)(1) through (3). We also proposed to 
make conforming amendments to the regulations at Sec.  422.2274(e)(2) 
to clarify that all administrative payments are included in the 
calculation of enrollment-based compensation; this proposal is further 
discussed in section VI.B. (X)(c) of this final rule, ``Administrative 
Payments.''
    Further, we proposed to change the caps on compensation payments 
that are currently provided in Sec.  422.2274 to set fixed rates that 
would be paid by all plans across the board. As proposed, agents and 
brokers would be paid the same amount either from the MA plan directly 
or by an FMO. We noted that our proposal does not extend to payments 
for referrals as described at Sec.  422.2274(f); we believe the cap set 
on referral payments is sufficient to avoid the harms described 
previously, and that a referral payment is often made in lieu of a 
compensation payment, and so it does not provide the same incentives as 
compensation payments.
    We believe that this approach may help level the playing field for 
all plans represented by an agent or broker and promotes competition. 
In addition, by explicitly saying that compensation extends to 
additional activities as a part of the relationship between the agent 
and the beneficiary, we reinforce CMS' longstanding understanding that 
the initial and renewal compensation amounts are based on the fact that 
additional work may be done by an agent or broker throughout the plan 
year, including fielding follow-up questions from the beneficiary or 
collecting additional information from a beneficiary.
    Comment: A few commenters requested clarification regarding the 
timing and applicability of this proposed policy for the 2025 contract 
year and expressed concern that activities necessary to prepare for the 
2025 contract year AEP begin far in advance of the 2025 calendar year. 
Commenters stated that a rule finalized in the Spring of 2024 with an 
effective date 60 days later may put many agents and brokers who have 
already begun securing their annual training, testing, and state 
appointments out of compliance before the AEP has even begun.
    Response: We understand that the narrow timeline between 
finalization of this rule and the time at which agents and brokers will 
begin engaging in necessary and mandatory activities to prepare for the 
2025 contract year may make it difficult for them to remain in 
compliance with this rule. In recognition of the timing concerns noted 
by commenters, we are the clarifying that applicability of these 
changes to Sec. Sec.  422.2274 and Sec.  423.2274 until October 1, 
2024, so these updates will coincide with the beginning of marketing 
activities for the 2025 contract year. We are clarifying in our 
regulatory text that prior to that date, CMS's existing agent and 
broker compensation requirements will continue to apply, meaning that, 
for instance, arrangements between MAOs and TPMOs or agents that are 
not in compliance with our proposals will not be subject to remedial 
action for activities engaged in before October 1, 2024, even if they 
were related to 2025 contract year plans.
    After considering feedback in public comments, we are finalizing 
our policy to require that, beginning with contract year 2025, all 
payments to agents or

[[Page 30622]]

brokers that are tied to enrollment, related to an enrollment in an MA 
plan or product, or are for services conducted as part of the 
relationship associated with the enrollment into an MA plan or product 
must be included under compensation, as defined at Sec.  422.2274(a), 
including payments for activities previously excluded under the 
definition of compensation at Sec.  422.2274(a)(ii), and are regulated 
by the compensation requirements of Sec.  422.2274(d)(1) through (3). 
To memorialize this updated policy, we are finalizing an updated 
definition of compensation at Sec.  422.2274(a) that will apply 
beginning with contract year 2025, meaning that MAOs and the TPMOs that 
they work with will need to begin to comply with these updated 
standards beginning on October 1, 2024, when marketing activities for 
contract year 2025 begin. We are also adopting language to the existing 
definition of compensation to make clear that this definition will 
apply for contract years through contract 2024, meaning that MAOs and 
TPMOs should continue to comply with CMS's existing agent and broker 
compensation policies until marketing activities for contract year 2025 
begin on October 1, 2024. We are also finalizing our policy to make 
conforming amendments to the regulations at Sec.  422.2274(e)(2) to 
clarify that all administrative payments are included in the 
calculation of enrollment-based compensation, with an applicability 
date of October 1, 2024.
    MA organizations are also currently required, under Sec.  
422.2274(c)(5), to report to CMS on an annual basis the specific rates 
and range of rates they will be paying independent agents and brokers. 
We proposed to remove the reporting requirement at Sec.  
422.2274(c)(5), as all agents and brokers would be paid the same 
compensation rate in a given year under our proposal.
    We did not receive any comments on this aspect of our proposal and 
are finalizing it as proposed.
3. Administrative Payments
    As discussed previously, CMS proposed that all payments to an agent 
or broker relating to the initial enrollment, renewal, or services 
related to a plan product would be included in the definition of 
compensation. For consistency with that proposed policy, we also 
proposed to incorporate ``administrative payments'' currently described 
at Sec.  422.2274(e)(1) into compensation, and to amend Sec.  
422.2274(e)(2) to clarify that administrative payments would be 
included in the calculation of enrollment-based compensation beginning 
in Contract Year 2025. As we discussed in the proposed rule, we believe 
this step is necessary to ensure that MA organizations cannot utilize 
the existing regulatory framework allowing for separate payment for 
administrative services to effectively circumvent the FMV caps on agent 
and broker compensation. For instance, we stated in the November 2023 
proposed rule that we understand that many plans are paying agents and 
brokers for conducting health risk assessments (HRAs) and categorize 
these HRAs as an ``administrative service.'' We understand the fair 
market value of these services, when provided by non-medical staff, to 
be approximately $12.50 per hour and the time required to complete an 
HRA is intended to be no more than twenty minutes.\156\ However, we 
explained that we have been made aware of instances of an agent or 
broker enrolling a beneficiary into a plan, asking the enrollee to 
complete one of these short assessments, and then being compensated at 
rates of up to $125 per HRA. Compensation at these levels is not 
consistent with market value and CMS believes that compensation at 
these levels far exceeds the fair market value of the actual service 
being performed and therefore should not be categorized as an 
``administrative service.'' Moreover, a study funded by the CDC to 
provide guidance for best practices ``recommend that HRAs be tied 
closely with clinician practice and be collected electronically and 
incorporated into electronic/patient health records [. . .] agents/
brokers lack the necessary health care knowledge, information 
technology capabilities, and provider relationships to link HRAs in the 
recommended way.'' \157\ For this reason, we believe that the HRAs 
completed by agents and brokers do not have the same value as those 
performed and interpreted by health care providers or in a health care 
setting.
---------------------------------------------------------------------------

    \156\ CDC, Interim Guidance for Health Risk Assessments and 
their Modes of Provision for Medicare Beneficiaries; https://www.cms.gov/files/document/healthriskassessmentscdcfinalpdf.
    \157\ The Commonwealth Fund, The Challenges of Choosing Medicare 
Coverage: Views from Insurance Brokers and Agents (Feb. 28, 2023); 
https://www.commonwealthfund.org/publications/2023/feb/challenges-choosing-medicare-coverage-views-insurance-brokers-agents; cf. 
Guidance on Development of Health Risk Assessment as Part of the 
Annual Wellness Visit for Medicare Beneficiaries--(Section 4103 of 
the Patient Protection and Affordable Care Act) https://www.cdc.gov/policy/paeo/hra/hraawvguidancereportfinal.pdf.
---------------------------------------------------------------------------

    Similarly, we explained in the November 2023 proposed rule that 
according to recent market surveys and information gleaned from 
oversight activities, payments purportedly for training and testing and 
other administrative tasks for agents and brokers selling some MA plans 
seem to significantly outpace payments for similar activities made by 
other MA plans, as well as payments for similar activities undertaken 
by insurance agents and brokers in other industries. The higher overall 
cost as compared to other industries, combined with the otherwise 
inexplicable difference in payments for administrative activities for 
some MA organizations compared to others, further points to the payment 
for these administrative activities being used as a mechanism to 
effectively pay agents and brokers enrollment compensation amounts in 
excess of the limits specified at Sec.  422.2274(a) and (d).
    By eliminating separate payment for administrative services, we 
stated that we expected that this proposal would eliminate a 
significant method which some plans may have used to circumvent the 
regulatory limits on enrollment compensation. Furthermore, we explained 
that we believed ensuring a fixed payment rate for agents will result 
in compensation greater than what is currently provided through typical 
contractual arrangements with FMOs, as there would no longer be a range 
of compensation rates at which the MA organizations could pay for 
agents and brokers' services. While our proposal would prohibit 
separate administrative payments, as described below, we proposed to 
adjust the FMV for compensation to take into account costs for certain 
appropriate administrative activities.
    We recognized in the proposed rule that this approach could result 
in some agents and brokers being unable to directly recoup 
administrative costs such as overhead or lead purchasing from its 
compensation from Medicare health and drug plans, unless the agent has 
a certain volume of business. For instance, the cost of a customer 
relationship management (CRM) system (the software used to connect and 
log calls to potential enrollees) is estimated to be about $50 per 
month. Under our proposed rule, this expense would require at least one 
enrollment compensation per year to cover these costs, whereas under 
our current regulations it is currently permissible for an MA 
organization to pay for these costs directly, as administrative costs, 
leaving the entire compensation for enrollments as income for the agent 
or broker. However, we explained in the proposed rule that given the 
high volume of enrollees that use an agent or broker for enrollment 
services, we did

[[Page 30623]]

not believe there to be a large risk of agents or brokers failing to 
cross that initial threshold to recoup their administrative costs.
    We also explained in the proposed rule that we considered an 
alternate policy proposal wherein we would maintain our current 
definitions of compensation and administrative payments but would 
remove the option for a plan to make administrative payments based on 
enrollment, as currently codified at Sec.  422.2274(e)(2). We 
considered instead requiring that administrative payments be made a 
maximum of one time per administrative cost, per agent or broker. We 
considered the argument that these expenses, such as payments for 
training and testing, or nonmonetary compensation such as leads, should 
be paid at their FMV and not as a factor of overall enrollment because 
the value of such administrative tasks is usually a fixed rate, 
regardless of how many enrollments are ultimately generated by the 
agent or broker engaged in these administrative tasks.
    We also considered whether, under this alternative policy approach, 
it would be best to require that each administrative expense be 
reimbursed at the same rate by each contracting MA organization as a 
means of encouraging agents and brokers to represent multiple plans at 
any given time. However, as we noted in the proposed rule, this 
alternative policy would, of necessity, be comparatively prescriptive 
and could present challenges for all parties as it relates to the 
tracking these expenses. We believe our proposal to include all 
payments to an agent or broker under the definition of compensation is 
likely to reduce the ability of plans and/or TPMOs to circumvent the 
maximum compensation rates defined by CMS via the annual FMV 
determination.
    We sought comment on this proposal.
    Comment: Similar to what we note previously, a few commenters 
requested clarification regarding the timing and applicability of this 
proposed policy for the 2025 Contract Year, and expressed concern that 
activities necessary to prepare for the 2025 contract year AEP begin 
far in advance of the 2025 calendar year, noting that if the rule was 
finalized in the Spring of 2024 and effective 60 days later, many 
agents and brokers would have already begun securing their annual 
training, testing, and state appointments out of compliance before the 
2025 AEP has even begun.
    Response: As previously stated, we understand that the narrow 
timeline between finalization of this rule and the time at which agents 
and brokers will begin engaging in necessary and mandatory activities 
to prepare for the 2025 contract year may make it challenging for them 
to remain in compliance, however, we believe that implementing these 
payment guardrails as soon as possible is necessary to protect the 
interests and health of Medicare beneficiaries. In recognition of the 
timing considerations related to the 2025 contract year on the 
effective date of this final rule, we are clarifying that the 
applicability of this and all marketing provisions begins on October 1, 
2024, per Sec.  422.2263(a).
    Comment: Many commenters expressed support for these proposals, 
indicating that they believe this move to make compensation amounts 
uniform for the sale of all plans will help curb the aggressive 
marketing tactics used by certain agents and brokers, and will reduce 
pressure placed on Medicare beneficiaries to enroll in plans that they 
do not fully understand, or which may not best suit their individual 
health care needs.
    Response: We thank commenters for their support.
    Comment: Many commenters stated that they supported this proposal 
because they believe it is important to make payments to agents and 
brokers clear and knowable, rather than subject to add-on 
administrative payments that are paid ``under the table'' and where 
neither CMS nor the consumer have any insight into these payment 
relationships or amounts.
    Response: We thank commenters for their support and believe that by 
making compensation amounts universal, agents and brokers will 
hopefully be free from undue influence to enroll beneficiaries in one 
plan over another, but the beneficiaries themselves can be confident 
that their agent or broker is indeed working to ensure that they are 
enrolled in the MA plan that is best suited to meet their health care 
needs.
    Comment: Some commenters expressed support for the proposal because 
it would enable small carriers to remain competitive with larger 
carriers, as they would not have to compete with larger carriers in 
offering ever-increasing incentives for agents, brokers, and TPMOs to 
represent these plans. Additionally, without additional incentives to 
increase steerage, smaller plans may have a better opportunity to 
compete in the marketplace.
    Response: We thank commenters for their support of the proposal.
    Comment: A commenter requested clarification about whether or how a 
plan could stop compensation for new enrollments in a plan mid-year if 
plans are no longer permitted to submit a range of compensation rates 
that would be applicable for that plan year.
    Response: As proposed Sec.  422.2274(d)(2) stated that for an 
initial enrollment year a plan may pay an agent or broker compensation 
at FMV. However, in proposing to set a fixed rate for compensation 
levels that plans ``may'' pay to agents and brokers, we did not intend 
to eliminate the option for a plan to choose not to pay compensation 
for an enrollment at all. Therefore, we are clarifying that under the 
regulations governing agent broker compensation at Sec. Sec.  422.2274 
and 423.2274 that CMS is adopting in this final rule, a plan may choose 
at any time to communicate to the agents and brokers representing it 
that it will no longer be compensating them for enrollments into that 
plan without being out of compliance of these regulations.
    Comment: A few commenters expressed concerns that requiring plans 
to pay agents and brokers the same amount for compensation would have a 
negative impact on smaller MA organizations and Part D sponsors who may 
not be able to afford to pay the new uniform compensation rate and 
would therefore be unable to afford to pay agents and brokers to 
represent their plans.
    Response: We understand the concern that smaller MA organizations 
may not be as well equipped to pay the mandatory compensation rate as a 
larger MA organization and will be prevented from negotiating with 
agents and brokers for a lower rate below the compensation cap as they 
can under our current rules. However, our data \158\ suggests that 
negotiating below the payment cap was a very rare phenomenon, and we 
believe that the advantages gained by eliminating the continual 
increase in administrative payments, and therefore the need to increase 
payments made and offered to agents, brokers, and TPMOs will offset any 
financial losses caused by this increase to compensation expenses, as 
it is our understanding that the administrative fees paid per enrollee 
far exceed the compensation paid for that enrollment.
---------------------------------------------------------------------------

    \158\ https://www.cms.gov/medicare/health-drug-plans/managed-care-marketing/medicare-marketing-guidelines/agent-broker-compensation.
---------------------------------------------------------------------------

    Comment: Many commenters disagreed with this proposal as a whole 
and argued that the types of aggressive marketing tactics we discussed 
in the preamble are most often engaged in by agents and brokers who are 
employees of FMOs and call centers, and that the incentives for these 
employed agents and brokers would not be mitigated by

[[Page 30624]]

our proposed compensation policies because employed agents receive a 
salary, whereas other independent agents and brokers make their living 
on commissions for enrollments. They contend that this policy, as a 
whole, does not distinguish between the different types of agents and 
their employment relationships, and is not narrowly targeted to rein in 
the abusive behaviors discussed.
    Response: We thank commenters for their thoughtful comments and the 
information that they provided about the different types of 
relationships between agents and other TPMOs in the MA industry. We 
understand that, while our policy would have the desired effect of 
changing the incentives for some agents and brokers to ensure that they 
are aligned with the best interests of the Medicare beneficiaries whom 
they serve, there is a subset of agents and brokers who are directly 
employed by TPMOs--specifically FMOs and call centers--and these agents 
and brokers may not experience the same change in incentives because 
their salaried income may not be directly based on the CMS-defined 
compensation rates. We recognize that this distinction is an important 
part of the agent and broker ecosystem, and one which we will continue 
to explore as we contemplate future rulemaking.
    However, we do not believe that the possibility that our policy may 
not reach a subset of the agents and brokers in this ecosystem is a 
reason not to finalize it. We believe this policy will have the desired 
effect of better aligning incentives for agents and brokers to ensure 
that they are enrolling beneficiaries in the MA plan that best meets 
the beneficiaries' health care needs, and not the plans that offer the 
agents and brokers the highest payments per enrollee. We also note that 
the policy to generally prohibit certain types of contract terms being 
finalized in this final rule at Sec.  422.2274(c)(13), will afford a 
level of protection with regard to contract terms between MA 
organizations and TPMOs that direct or indirect effect of creating an 
incentive that would reasonably be expected to inhibit an agent or 
broker, including salaried agents and brokers, from being able to 
objectively assess and recommend which plan best fits the health care 
needs of a beneficiary. Importantly, MA organizations, agents, brokers, 
and other TPMOs also must comply with all applicable fraud and abuse 
laws including, but not limited to, the Federal anti-kickback statute.
    Comment: Many commenters expressed their opposition to our proposal 
because many agents and brokers rely on the payment of administrative 
fees (sometimes also referred to as overrides) from an MA organization 
to their FMO to provide them with ``free'' services, such as access to 
plan comparison and enrollment tools, trainings, as well as contracting 
and compliance support. The FMOs are able to provide these ``free'' 
services to agents and brokers by negotiating with the MA organizations 
to pay the FMO the administrative fees associated with the agent or 
brokers' enrollments. Without the availability of such fees, commenters 
expressed concern that FMOs would no longer provide agents and brokers 
with these extra services without which they did not believe agents and 
brokers could effectively accomplish their enrollment work.
    Response: We understand that removing the category of 
``administrative payments'' (i.e. overrides), would change the current 
flow of payments from an MA organization to agents and brokers for an 
enrollment. We believe that by making the full payments directly to the 
agents and brokers, agents and brokers themselves will have the 
opportunity to decide which services are truly essential and how much 
those services are worth.
    After considering public comments, we are generally finalizing our 
substantive proposal to include all payments to an agent or broker 
under the definition of compensation as proposed; in recognition of the 
timing considerations related to the 2025 contract year on the 
effective date of this final rule, we are clarifying that the 
applicability of this and all marketing provisions begins on October 1, 
2024, per Sec.  422.2263(a). To memorialize this updated policy, we are 
finalizing our policy to incorporate ``administrative payments'' 
currently described at Sec.  422.2274(e)(1) into compensation, and to 
amend Sec.  422.2274(e)(2) to clarify that administrative payments 
would be included in the calculation of enrollment-based compensation 
beginning in Contract Year 2025. This means that that MAOs and the 
TPMOs that they contract or work with will need to begin to comply with 
these updated standards beginning on October 1, 2024, when marketing 
activities for contract year 2025 begin, per Sec.  422.2263(a). We are 
also adopting language to the existing regulatory text to make clear 
that this definition will apply to contract years through contract year 
2024, meaning that MAOs and TPMOs should continue to comply with CMS's 
existing agent and broker compensation policies until the date that 
marketing activities for contract year 2025 begin.
    We also proposed to increase the compensation rate described at 
Sec.  422.2274(a) to add certain appropriate administrative costs. In 
particular, we indicated that we believed that the administrative cost 
associated with the licensing, training and testing, and recording 
requirements at Sec. Sec.  422.2274(b) and 422.2274(g)(2)(ii) may 
warrant an increase in the rate of compensation, given the significant 
and predictable cost of these mandatory activities.\159\ Based on our 
fair market value analysis, we believed these activities would warrant 
increasing the base compensation rate by $31,\160\ to be updated 
annually as part of the scheduled compensation rate update described at 
Sec.  422.2274(a). Therefore, we proposed, beginning in 2025, that FMV 
would be increased by $31 to account for administrative payments 
included under the compensation rate, and to be updated annually in 
compliance with the requirements for FMV updates.
---------------------------------------------------------------------------

    \159\ https://www.cms.gov/medicare/enrollment-renewal/managed-care-eligibility-enrollment/agent-broker-compenstation.
    \160\ Our calculations arriving at this number are further 
discussed in the COI in section X.B.10 of this final rule, titled 
ICRs Regarding Agent Broker Compensation (Sec.  422.2274).
---------------------------------------------------------------------------

    When proposed, we believed it was necessary to increase the rate 
for compensation by $31, based on the estimated costs for licensing, 
training, testing, and call recording that would need to be covered by 
this single enrollment-based payment. We proposed to begin with a one-
time $31 increase, including various locality-specific adjustments, 
with annual FMV updates to this amount as described by the regulation, 
including ``adding the current year FMV and the product of the current 
year FMV and MA Growth Percentage for aged and disabled 
beneficiaries.'' In the November 2023 proposed rule, we also noted that 
we did not explicitly propose a proportionate increase to compensation 
for renewals and that we considered this in determining the amount by 
which we proposed to increase the rate for compensation for 
enrollments.
    We sought comment on our proposal to increase the rate of 
compensation to account for necessary administrative costs that would 
be incorporated into this rate under our previous proposal. 
Specifically, CMS requested comment on the administrative costs that 
should be considered, and how else we might determine their value, as 
we consider the future of the compensation structure.

[[Page 30625]]

    Comment: As in the previous policies, commenters indicated their 
concern that an effective date immediately after finalization of the 
policy would be difficult if not impossible to comply with.
    Response: As with the modifications to the compensation rate 
discussed above, we are delaying the applicability date for the changes 
to the agent and broker compensation requirements at Sec. Sec.  
422.2274 (a), (c), and (d) to October 1, 2024, and therefore will not 
be applicable prior to the start of marketing and enrollment activity 
for the 2025 contract year.
    In recognition of the timing considerations related to the 2025 
contract year on the effective date of this final rule, we are 
clarifying that the applicability of this and all marketing provisions 
begins on October 1, 2024, per Sec.  422.2263(a).We believe that 
implementing these payment guardrails as soon as possible, will enhance 
the beneficiary experience with agents and brokers during the 2025 AEP. 
The benefit of this implementation date offsets any concerns about 
complexity or potential extra payment generated by this implementation 
framework.
    Comment: A commenter requested clarification regarding how this 
proposal would affect renewals.
    Response: As indicated in the proposed rule at 88 FR 78556, we did 
not separately propose a specific numeric increase in renewals 
proportionate to the proposed increase in initial compensation. 
However, the proposed regulation text governing renewal compensation, 
at Sec.  422.2274(d)(3), as proposed, states that ``For each enrollment 
in a renewal year, MA plans may pay compensation at a rate of 50 
percent of FMV.'' The reference to FMV within Sec.  422.2274(d)(3) 
refers to the FMV for agent broker compensation specified in CMS's 
regulations at Sec.  422.2274(a). Therefore, any updates to the FMV, 
including those which is CMS finalizing here, would automatically be 
incorporated into the calculation of compensation rate for renewals and 
would not need a separate proposal to achieve this result. See Tables 
FC-1 and FC-2 for more detail.
    Comment: Many commenters indicated that CMS's proposed $31 increase 
to the flat-rate compensation amount would be insufficient to cover 
even the two primary activities we listed in the proposed rule (call 
recording and training and testing). Commenters indicated that agents 
and brokers have many other business expenses, such as plan comparison 
tools and appointment fees which were not included in calculating the 
rate update. Furthermore, some commenters explained that agents and 
brokers often engage in work and provide services that are unlikely to 
result in enrollment but are for the benefit of those beneficiaries, 
such as providing guidance to estate planners. We also heard from many 
commenters, including agents and brokers as well as beneficiaries, 
about additional services agents and brokers provide beneficiaries 
through their knowledge of plans and access to industry-standard 
technology; for instance, commenters noted that a local agent may help 
a beneficiary identify a plan that includes a preferred doctor, or help 
an enrolled beneficiary find the local in-network pharmacy with the 
lowest prices on that beneficiary's drugs.
    Commenters argued that these activities, and the fair market value 
of the tools and services agents and brokers need to perform their 
jobs, warranted a significantly higher per-enrollee compensation rate. 
Some commenters suggested figures for a more appropriate compensation 
increase ranging from $50 to $500 more, per new enrollee, while others 
recommended that the increase be a percentage of the base compensation 
amount.
    Commenters suggested that without sufficient compensation, many 
agents and brokers would no longer be able to serve the MA market, and 
new agents and brokers would not have the resources to enter the market 
in the first place.
    Response: We thank the many commenters who provided us with a more 
complete picture of the many administrative and other services and 
expenses agents and brokers undertake when assisting beneficiaries with 
enrollments. These comments have made us aware that, in our initial 
proposal, we may not have adequately accounted for the array of 
services that agents and brokers may provide when we calculated our 
proposed payment increase. It was not our intention to make the MA 
compensation rate so low that agents and brokers would be driven out of 
the industry or would be unable to enter it in the first place.
    However, we do believe it is important to ensure that, while we 
support agents and brokers and the services they provide, the MA 
program and its funds are not being used to subsidize other programs 
and industries. For example, we understand that in the proposed rule we 
may have undervalued the cost of CRM (customer-relationship management) 
tools which provide call recording software. However, it is our 
understanding that these tools serve additional functions beyond the 
mandatory call recording and transcription, and that this functionality 
may be used by an agent or broker when soliciting an enrollment for a 
non-Medicare, private market plan. Therefore, we believe that it is 
reasonable for MA compensation rates to reflect less than 100 percent 
of the cost of purchasing or licensing these tools.
    After considering what we have learned and the many responses we 
received through public comment, we have concluded that our original 
proposed increase to compensation was too low. Commenters' feedback, 
both general and specific, was closely considered and we believe it is 
necessary to update the compensation rate increase to better reflect 
the costs of MA agent or broker services. Commenters suggested many 
different figures and means of calculating an appropriate amount. As 
discussed previously, the true cost of most administrative expenses can 
vary greatly from one agent or broker to another and is based in data 
and contracts that CMS does not have access to, so it would be 
extremely difficult for us to accurately capture, making a line-item 
calculation not practicable. This was further reflected in the wide 
variation among alternate rates posed by commenters, with a few 
commenters suggesting an alternate rate increase of $50, another $75, 
while the majority recommended higher rates beginning at $100 and some 
going as high as $500. Some commenters suggested that we should 
calculate the compensation increase as a percentage of the base rate, 
such as 30% or 33% of the current $611 compensation figure.
    Considering the complexities involved, we believe that choosing a 
flat rate for calculating the increase is an appropriate path forward 
to create parity among agents, regardless of which plan, plan type, or 
type of Medicare enrollment they effectuate on behalf of the 
beneficiary. Administrative payments are intended to cover 
administrative costs faced by the agent or broker and those costs 
should be the same regardless of the type of plan in which a 
beneficiary enrolls, including a standalone PDP. Therefore, there is no 
need to vary administrative payments based on plan type and a flat rate 
approach is the most appropriate way to achieve our goal of eliminating 
financial incentives in the form of larger, purported administrative 
payments which are over and above FMV from a particular plan or plans, 
that may have the effect of encouraging agents and brokers to steer 
enrollment in one plan

[[Page 30626]]

or plan type versus another. A uniform, flat rate achieves this goal.
    Several commenters suggested that an increase of $100 would be an 
appropriate starting point and reflects the minimum monthly costs of 
necessary licensing and technology costs. We understand that other 
commenters recommended an increase of more than $100, including some 
commenters that suggested an increase of $200 or more. However, we 
believe, based on the totality of comments that recommendations for an 
increase above $100 may have been inflated to include the full price of 
all technology and systems that are also utilized to effectuate sales 
in other markets or for different product types other than MA or PDP 
products. In addition, it appears that these higher dollar 
recommendations may reflect the agent and brokers' loss of ``bonus 
payments'' and other purported ``administrative payments'' they may 
previously have received, some of which were always beyond the scope 
and FMV of the services involved in enrolling beneficiaries into MA and 
PDP plans and therefore should not have been included under 
compensation or administrative payments.
    We believe that increasing the FMV rate for new enrollments by a 
total of $100, and therefore applied to renewals at a maximum amount of 
50 percent of the total compensation amount, should provide agents and 
brokers with sufficient funds to continue to access necessary 
administrative tools and trainings, to offset appointment fees and 
encourage the representation of multiple plans, and therefore to 
continue providing adequate service to Medicare beneficiaries. 
Accordingly, based on the information provided in comments and for the 
reasons discussed in this final rule, we are finalizing a policy to 
make a one-time $100 increase to the FMV compensation rate for agents 
and brokers for initial enrollments into MA plans for the 2025 plan 
contract year.
[GRAPHIC] [TIFF OMITTED] TR23AP24.011

    By way of example, if we were to assume that the FMV increase in 
years 2025 and 2026 is 2.5 percent, the payment rates for those years 
would be as follows:
[GRAPHIC] [TIFF OMITTED] TR23AP24.012

    Comment: Several comments expressed confusion about whether this 
payment is an ``all-in cap'' that is intended to include all fees paid 
by an MA organization to an agent, broker, or other TPMO, and what that 
would mean for payments related to marketing activities.
    Response: This proposal, and all agent broker compensation rules at 
Sec.  422.2274(d) are limited to independent agents and brokers, and do 
not extend to TMPOs more generally. Therefore, this policy represents a 
limitation on payments in excess of those paid under ``compensation'' 
only for commissions paid for enrollments to independent agents and 
brokers. Though we are continuing to consider future rulemaking in this 
space, our current policy does not extend to placing limitations on 
payments from an MAO to a TPMO who is not an independent agent or 
broker for activities that are not undertaken as part of an enrollment 
by an independent agent or broker.
    After considering public comments on this proposal, for the 2025 
contract year, we are finalizing at Sec.  422.2274(a) a one-time FMV 
increase of $100, which will then be added to the base compensation 
rate for 2025; the sum of the 2025 compensation rate and the $100 will 
form a new base compensation rate that will be updated annually 
according to our FMV updates described in Sec.  422.312. We are also 
finalizing changes to Sec.  422.2274(d)(1)(ii) that beginning with 
contract year 2023, MA organizations are limited to the compensation 
amounts outlined in Sec.  422.2274(a).
    We received many out-of-scope comments related to agent and broker 
compensation as part of this rulemaking. We received many comments 
indicating the need for a regulatory distinction between agents 
employed by call centers and those who are truly independent and only 
contract with TPMOs. We appreciate these comments and will continue to 
explore ways in which further regulation in this space may further our 
goals of ensuring that the use of compensation creates incentives for 
agents and brokers to enroll individuals in the MA plan that best meets 
their health care needs.
    We also received many comments encouraging more robust enforcement 
of our current regulations, and comments encouraging CMS to relax our 
rules somewhat to ensure that all agents have the ability to effectuate 
sales for all plans. We received feedback asking for more regulation in 
this policy space, and comments asking us to slow regulatory action to 
give the policies finalized in the past few years, time to mature. We 
have read and considered all comments and will consider these 
suggestions as we contemplate future rulemaking.

[[Page 30627]]

4. Agent Broker Compensation for Part D Plans
    Finally, we also are finalizing our proposal to apply each of the 
policies described previously, governing agent and broker compensation 
for the sale of MA plans, to also apply to compensation for agents and 
brokers that market PDP plans, as codified at Sec.  423.2274.
    Pursuant to sections 1851(j)(2)(D) and 1860D-4(l) of the Act, the 
Secretary has a statutory obligation to establish guidelines to ensure 
that the use of agent and broker compensation creates incentives for 
agents and brokers to enroll individuals in the MA and Part D 
prescription drug plans that are intended to best meet beneficiaries' 
health care needs.
    As we explained in the November 2023 proposed rule, because the 
same agents and brokers are often licensed to sell both MA plans and 
PDPs, we believe it is necessary under our statutory authority to apply 
the same compensation rules to the sale of both MA plans and PDPs in 
order to ensure that both plan types are being held to the same 
standards and are on a `level playing field' when it comes to 
incentives faced by agents and brokers. This includes increasing the 
FMV rate compensation rate.
    In the November 2023 proposed rule we also stated that we think it 
is necessary to extend these regulations to the sale of PDPs to avoid 
shifting the incentives discussed at length previously, such as the 
incentive for agents to favor one plan over another based upon bonuses 
or other payments that are not currently accounted for under the 
definition of ``compensation.'' If conforming changes are not made to 
the sale of PDP plans, the PDP plans may have an unfair advantage in 
that they have the opportunity to offer additional payments and perks 
to FMOs and agents, while MA plan sponsors are limited by the policies 
proposed previously. Therefore, for the same reasons that we described 
in the proposed rule for adopting the proposed changes to Sec.  
422.2274, we also proposed to make conforming amendments to Sec.  
423.2274.
    We sought comment on this proposal, and specifically whether and to 
what extend modifications to these proposals should be made to account 
for differences between MA and Part D plan types.
    We did not receive any comments on the proposal to extend these 
changes to the sale of PDP plans. Thus, we are finalizing updates to 42 
CFR 423.2274 (a), (c), (d), and (e) largely as proposed. However, in 
light of the changes to the MA compensation rate described in section 
X.C.3. of this final rule and the need for parity between MA and PDP 
plan sales discussed in this section, we are conforming changes to the 
PDP compensation rates at Sec.  423.2274 (to increase the PDP 
compensation rate for initial enrollments by $100. Likewise, where CMS 
is finalizing the regulation text in Sec.  422.2274(a), (c), and (d) 
with minor organizational and editorial changes for clarity, we are 
adopting conforming changes to the regulation text that we are 
finalizing in Sec.  423.2274(a), (c), and (d). Our policies are in 
alignment with the rules being finalized for MA agents and brokers, 
with an applicability date for these rules on October 1, 2024, for the 
2025 plan contract year.
5. Summary of the Final Policy
    We are finalizing the following policies with regard to agent and 
broker compensation:
     For contract year 2025 and subsequent contract years, 
generally prohibit contract terms between MA organizations and agents, 
brokers, or other TMPOs that may directly or indirectly interfere with 
the agent's or broker's ability to objectively assess and recommend the 
plan which best fits a beneficiary's health care needs, as reflected in 
Sec.  422.2274(c)(4) of this final rule.
     Set a single agent and broker compensation rate for all 
plans, as reflected in Sec.  422.2274(d)(2), while revising the scope 
of what is considered ``compensation,'' applicable to contract year 
2025 and subsequent contract years, as reflected in Sec.  422.2274(a) 
and (e).
     Eliminate the regulatory framework which currently allows 
for separate payment to agents and brokers for administrative services, 
applicable to contract year 2025 and subsequent contract years, as 
reflected in Sec.  422.2274(e).
     Make conforming edits to the PDP agent broker compensation 
rules at Sec.  423.2274.

VII. Medicare Advantage/Part C and Part D Prescription Drug Plan 
Quality Rating System (42 CFR 422.164, 422.166, 422.260, 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 as part of its responsibility to 
disseminate comparative information, including information about 
quality, to beneficiaries under sections 1851(d) and 1860D-1(c) of the 
Act and based on 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 MA beneficiary 
rebates under section 1854(b) of the Act. 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 Parts 422 and 423 Medicare Advantage and 
Part D Prescription Drug Program Quality Rating System. (83 FR 16526-
27). As a result, the policies and regulatory changes finalized here 
will 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 apply to MA plans 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. To support the CMS National Quality 
Strategy, CMS is moving towards a building-block approach to streamline 
quality measures across CMS quality and value-based care programs. 
Across our programs, where applicable, we are considering including the 
Universal Foundation \161\ of quality measures, which is a core set of 
measures that are aligned across CMS programs. CMS is committed to 
aligning a core set of measures across all our quality and value-based 
care programs and ensuring we measure quality across the entire care 
continuum in a way that promotes the best, safest, and most equitable 
care for all individuals. Improving alignment of measures across 
federal programs and with private payers would reduce provider burden 
while also improving the effectiveness

[[Page 30628]]

and comparability of measures. Using the Universal Foundation of 
quality measures would focus provider attention, reduce burden, 
identify disparities in care, prioritize development of interoperable, 
digital quality measures, allow for cross-comparisons across programs, 
and help identify measurement gaps. The Universal Foundation is a 
building block to which programs would add additional aligned or 
program-specific measures. This core set of measures would evolve over 
time to meet the needs of individuals served across CMS programs. We 
submitted the Initiation and Engagement of Substance Use Disorder 
Treatment (IET) measure (Part C) (a Universal Foundation measure) to 
the 2023 Measures under Consideration list as part of the Pre-
Rulemaking Measure Review process as a step toward proposing use of 
that measure in the Star Ratings system through future rulemaking to 
align with the Universal Foundation. We also note that, beginning with 
measurement year 2023, Part C contracts are beginning to report to CMS 
additional measures that are part of the Universal Foundation, such as 
Adult Immunization Status, Depression Screening and Follow-Up for 
Adolescents and Adults, and Social Need Screening and Intervention, for 
the display page. We have previously solicited feedback regarding 
potentially proposing these measures as Star Ratings in the future 
through both 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 the Advance Notice of Methodological 
Changes for Calendar Year (CY) 2024 for Medicare Advantage (MA) 
Capitation Rates and Part C and Part D Payment Policies. We intend to 
submit these measures to the Pre-Rulemaking Measure Review process in 
the future and propose them through future rulemaking as additional 
Star Ratings measures. The remaining measures that are part of the 
Universal Foundation are already part of the current Part C and Part D 
Star Ratings program.
---------------------------------------------------------------------------

    \161\ https://www.nejm.org/doi/full/10.1056/NEJMp2215539.
---------------------------------------------------------------------------

    In the December 2022 proposed rule, in addition to the policies 
addressed in the April 2023 final rule,\162\ we proposed to make 
changes in the specific measures used in the Star Ratings System:
---------------------------------------------------------------------------

    \162\ In the April 2023 final rule, we finalized several 
policies from the December 2022 proposed rule, including the 
introduction of a health equity index reward and removal of the 
existing reward factor starting with the 2027 Star Ratings and a 
series of measure updates: removing the Part C Diabetes Care--Kidney 
Disease Monitoring measure; updating the Part D Medication Adherence 
for Diabetes Medication, Medication Adherence for Hypertension (RAS 
Antagonists), and Medication Adherence for Cholesterol (Statins) 
measures; and adding the Part C Kidney Health Evaluation for 
Patients with Diabetes measure. In the April 2023 final rule, we 
also finalized several methodological changes: reducing the weight 
of patient experience/complaints and access measures; adding an 
additional basis for the subregulatory removal of Star Ratings 
measures; and removing the 60 percent rule for the adjustment for 
extreme and uncontrollable circumstances. Finally, we also finalized 
a series of technical clarifications of the existing rules related 
to adjustments for disasters and contract consolidations, 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. 88 FR 22263 through 
22297.
---------------------------------------------------------------------------

     Remove the stand-alone Part C Medication Reconciliation 
Post-discharge measure;
     Add the updated Part C Colorectal Cancer Screening measure 
with the National Committee for Quality Alliance (NCQA) specification 
change;
     Add the updated Part C Care for Older Adults--Functional 
Status Assessment measure with the NCQA specification change;
     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 also proposed a series of technical clarifications of the 
existing rules related to Quality Bonus Payment (QBP) appeals processes 
and weighting of measures with a substantive specification change.
    In the December 2022 proposed rule, we proposed these changes to 
apply to the 2024 measurement period and the 2026 Star Ratings, but as 
discussed in and given the timing of this final rule, we are finalizing 
these policies (that is, data would be collected, and performance 
measured) for the 2025 measurement period and the 2027 Star Ratings 
unless otherwise stated.
    In the November 2023 proposed rule, we proposed to update the 
Medication Therapy Management (MTM) Program Completion Rate for 
Comprehensive Medication Review (CMR) measure (Part D). We also 
proposed the following methodological enhancements, clarifications, and 
operational updates:
     Revise the process for identifying data completeness 
issues and calculating scaled reductions for the Part C appeals 
measures.
     Update how the Categorical Adjustment Index (CAI) and 
health equity index (HEI) reward are calculated in the case of contract 
consolidations.
     Revise an aspect of the QBP appeals process.
     Add that a sponsor may request CMS review of its 
contract's administrative claims data used for the Part D Patient 
Safety measures no later than the annual deadline set by CMS for the 
applicable Star Ratings year.
    Unless otherwise stated, finalized changes would apply (that is, 
data would be collected and performance measured) for the 2025 
measurement period and the 2027 Star Ratings.
    CMS appreciates the feedback we received on our proposals in both 
proposed rules. In the sections that follow, which are arranged by 
topic area, we summarize each proposal and comments we received and 
provide our responses.

B. 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 procedures for adding, updating, and removing measures for 
the Star Ratings program. 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 (83 FR 16532) hereinafter referred 
to as the April 2018 final rule, 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. 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.
    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. For example, we regularly review 
measures developed by

[[Page 30629]]

NCQA and Pharmacy Quality Alliance (PQA).
1. Measure Removals
a. Medication Reconciliation Post-Discharge (Part C)
    We proposed 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 included beginning with the 2024 Star 
Ratings. In the January 2021 final rule at 86 FR 5921-24, CMS finalized 
inclusion of the TRC measure (Part C) 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 Star Ratings as a stand-alone measure and as one of the four 
indicators included in the TRC measure. As discussed at 86 FR 5921-24, 
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. 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.
    For measurement year 2020, NCQA provided multiple updates to the 
TRC measure as described at 86 FR 5921-22. 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 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 proposed to remove the stand-alone MRP measure from the Part C 
Star Ratings 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 for Part C Star Ratings. We 
solicited comments on this proposal.
    Comment: Most commenters supported the removal of the MRP measure. 
Some commenters raised concerns regarding having both the stand-alone 
MRP measure and having MRP as a component of the TRC measure for a 
period of time until the stand-alone measure is retired. A few 
commenters suggested the removal of the MRP measure should coincide 
with the addition of the TRC measure, which was added to the 2024 Star 
Ratings.
    Response: We thank the commenters for their support of our 
proposal. The stand-alone MRP measure is being removed beginning with 
the 2025 measurement year, which provides MA organizations with notice 
of the measures being used for quality ratings in advance of the 
measurement year. During this interim period, having MRP as a stand-
alone measure as well as a component of the TRC measure gives it a 
slightly higher weight in the Star Ratings. Since both the stand-alone 
MRP measure and the TRC measure are weighted as process measures (which 
is a weight of 1), the weight of MRP across these two measures is still 
relatively low. In light of this and the importance of reconciling 
medications following an inpatient stay, we do not believe that the 
short period during which both the MRP measure and the TRC measure are 
included in the Part C Star Ratings is problematic.
    Comment: A commenter noted that plans will be disincentivized to 
focus on MRP once the stand-alone measure is removed.
    Response: We understand the commenter's concern but note that plans 
should continue focusing on reconciling medications following an 
inpatient stay given this also impacts the TRC measure and other 
measures in the Star Ratings such as reducing hospital readmissions and 
improving care coordination.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing the removal of the MRP measure from the Part C Star Ratings 
starting with the 2025 measurement year and the 2027 Star Ratings.
2. 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 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 proposed 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 proposed expanding the age range for the 
Colorectal Cancer Screening measure to adults aged 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) that participate in Exchanges \163\ and the adult 
core set for

[[Page 30630]]

Medicaid plans,\164\ have introduced this change into their programs as 
they also use the same HEDIS measure.
---------------------------------------------------------------------------

    \163\ https://www.cms.gov/files/document/final-2022-call-letter-qrs-qhp-enrollee-survey.pdf.
    \164\ 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. We first 
displayed the updated measure for the 2022 measurement year, on the 
2024 display page.
    We solicited comments on this proposal.
    Comment: Most commenters strongly supported CMS expanding the age 
range for the Colorectal Cancer Screening measure to include 
beneficiaries starting at age 45, with many citing data on the 
importance of earlier colorectal cancer screenings.
    Response: We appreciate the support to expand the age range for the 
colorectal cancer screening measure, following updated clinical 
guidelines established by the USPSTF.
    Comment: A commenter was concerned that the expanded age range may 
negatively impact the measure rate because more enrollees will be 
included in the denominator.
    Response: We strive to ensure the Star Rating measures reflect the 
most recent clinical guidelines. The USPSTF recommends offering 
colorectal cancer screening at age 45 due to recent trends of 
increasing colorectal cancer in adults younger than 50 years old and 
the benefits of screening in reducing cancer diagnoses. CMS will 
maintain the legacy measure with the narrower age range in the Star 
Ratings through the end of the 2024 measurement year and the 2026 Star 
Ratings. Because the updated measure with the broader age range has 
been on the display page beginning with the 2022 measurement period, 
plans will have a total of 3 measurement years to transition to the 
most recent clinical guidelines, which are reflected in the updated 
measure. We do not believe that additional time is necessary or 
appropriate because the change in the USPSTF recommendation was nearly 
3 years ago as of the time this final rule is published. Ensuring that 
the Star Ratings reflect up to date clinical guidelines is an important 
consideration both for providing comparative information to 
beneficiaries about MA plan quality and ensuring that the MA program 
furnishes appropriate care and access to covered services.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to the comments, we are 
finalizing expanding the age range for the Colorectal Cancer Screening 
measure. Given the timing of the finalization of this rule, we are 
finalizing the addition of the Colorectal Cancer Screening measure with 
the expanded age range starting with the 2025 measurement year and the 
2027 Star Ratings. Table VII.1 summarizes the updated Colorectal Cancer 
Screening measure finalized in this rule. The measure description 
listed in this table is a high-level description.
b. Care for Older Adults--Functional Status Assessment (Part C)--
Substantive Change
    We proposed to add the Care for Older Adults (COA)--Functional 
Status 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 data reported in 2021, based on the 2020 measurement 
year, NCQA implemented a change for the COA--Functional Status 
Assessment.\165\ 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), and 
(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 data reported in 2021.
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    \165\ We solicited feedback on these changes in the Advance 
Notice of Calendar Year (CY) 2021 Medicare Advantage (MA) Capitation 
Rates and Part C and Part D Payment Policies.
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    The measure change for the COA--Functional Status Assessment 
measure is a substantive update 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 proposed 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 ADLs were assessed; 
(2) notation that IADLs were assessed; or (3) result of assessment 
using a standardized functional assessment tool.
    We solicited comments on this proposal.
    Comment: Most commenters supported returning the updated COA--
Functional Status Assessment measure back to the Star Ratings noting 
the importance of assessing functional status in older beneficiaries.
    Response: We thank the commenters for their support of our 
proposal.
    Comment: A commenter raised concerns with duplicative efforts in 
monitoring functional status in the Star Ratings program since it 
includes other measures such as the SNP Care Management measure and the 
Physical Functioning Activities of Daily Living (PFADL) measure.
    Response: We disagree that this measure duplicates information and 
performance monitored through other measures. The PFADL measure is 
currently on the display page and is different than the COA--Functional 
Status Assessment measure in that it measures changes in functional 
status over time for all MA enrollees, not only SNP enrollees, and does 
not measure whether an enrollee had an assessment. The SNP Care 
Management measure is broader in that it focuses on whether a SNP 
enrollee had an assessment of their health needs and risks and is not 
about assessments specifically of functional status.
    Comment: A commenter recommended delaying the return of this 
measure to the Star Ratings until NCQA decides whether the measure will 
be retired because the 2024

[[Page 30631]]

Advance Notice noted that NCQA was considering an alternative measure 
that may replace the COA--Functional Status Assessment measure.
    Response: At this time NCQA is no longer considering the retirement 
of this measure and there is therefore no reason to delay the return of 
this measure to the Star Ratings.
    Comment: A commenter requested additional guidance as to how the 
HEDIS measure specifications delineate ``standardized functional 
assessment tools.''
    Response: In Volume 2 of the HEDIS Technical Specifications for 
Health Plans,\166\ there are examples of standardized functional status 
assessment tools that may be used to satisfy the measure, such as the 
SF-36,[supreg] Assessment of Living Skills and Resources (ALSAR), 
Independent Living Scale (ILS), Katz Index of Independence in ADL, 
Klein-Bell ADL Scale, Lawton & Brody's IADL scales, and Patient 
Reported Outcome Measurement Information System (PROMIS) Global or 
Physical Function Scales.
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    \166\ https://www.ncqa.org/hedis/measures/.
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    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to the comments, we are 
finalizing adding back the COA--Functional Status Assessment measure to 
the Star Ratings. Given the timing of the finalization of this rule, we 
are finalizing the addition of the COA--Functional Status Assessment 
measure starting with the 2025 measurement year and the 2027 Star 
Ratings. Table VII.1 summarizes the updated COA--Functional Status 
Assessment measure finalized in this rule. The measure description 
listed in this table is a high-level description.
c. Medication Therapy Management (MTM) Program Completion Rate for 
Comprehensive Medication Review (CMR) (Part D)--Substantive Change
    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).
    CMS also uses the MTM Program Completion Rate for CMR measure, 
which is defined as the percent of MTM program enrollees who received a 
CMR during the reporting period to show how many members in a plan's 
MTM program had an assessment from their plan by a pharmacist or other 
health professional to help them manage their medications. As part of 
the completion of a CMR, a Part D enrollee receives a written summary 
of the discussion in CMS's Standardized Format, including an action 
plan that recommends what the member can do to better understand and 
use their medications.\167\
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    \167\ The Medicare Part C & D Star Ratings Technical Notes 
provide details on existing measures and are available at: https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovgenin/performancedata.
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    In the December 2022 proposed rule, CMS proposed changes to the MTM 
program targeting criteria, including: (1) requiring plan sponsors to 
target all core chronic diseases identified by CMS, codifying the 
current 9 core chronic diseases \168\ 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). We estimated that the 
proposed changes would increase the number and percentage of Part D 
enrollees eligible for MTM from 4.5 million (9 percent) to 11.4 million 
(23 percent).
---------------------------------------------------------------------------

    \168\ 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 (*).
---------------------------------------------------------------------------

    As noted in the April 2023 final rule, we did not address comments 
received on the provisions of the proposed rule that were not finalized 
in that rule, such as the proposed MTM program targeting criteria 
changes, and stated that they would be addressed at a later time, in a 
subsequent rulemaking document, as appropriate. If those proposed 
changes were to be finalized, the number of Part D enrollees eligible 
for MTM programs would increase, and the denominator of the MTM Program 
Completion Rate for CMR measure would expand accordingly; therefore, 
such changes in the targeting criteria would be substantive updates to 
the Star Rating measure per Sec.  423.184(d)(2). Specifically, the 
proposed changes to the targeting criteria would not update the actual 
measure specifications but would meaningfully impact the number of Part 
D enrollees eligible for MTM services from 9 percent to an estimated 23 
percent and, thus, substantially increase the number of enrollees 
included in the denominator of the MTM Program Completion Rate for CMR 
measure, if finalized.
    Accordingly, CMS proposed that if the changes to eligibility for 
the MTM program in the December 2022 proposed rule (as previously 
described) are finalized, we would move the MTM Program Completion Rate 
for CMR measure to the display page for at least 2 years due to 
substantive measure updates associated with the change in MTM program 
eligibility criteria (88 FR 78558). Since there is no change to the 
measure specifications other than the eligibility for the MTM program, 
there would be no legacy measure to calculate while the updated measure 
is on the display page. The MTM-eligible denominator population would 
have meaningfully increased due to changes in the program requirements, 
and CMS would not have the means to calculate the measure using the 
previous MTM eligibility criteria. Therefore, we proposed that the 
measure would be removed from the Star Ratings entirely for the 2025 
and 2026 measurement years and would return to the Star Ratings program 
no earlier than the 2027 measurement year for the 2029 Star Ratings. 
CMS did not anticipate any additional burden associated with the 
measure update, as burden tied to the changes in the MTM eligibility 
criteria was already considered in estimates for the December 2022 
proposed rule. Under our proposal for the MTM Program Completion Rate 
for CMR measure, if the proposed changes to eligibility for MTM 
programs were not finalized, CMS would not make any substantive changes 
to the measure--that is, we would also not finalize the proposal in 
this rule to update the Star Rating measure. Readers should refer to 
section III.E. of this final rule for discussion of proposal to change 
the MTM program eligibility criteria.
    We invited public comment on this proposal to update the MTM 
Program Completion Rate for CMR measure and received several comments. 
A discussion of these comments, along with our responses follows.
    Comment: Most commenters supported the proposal to move the MTM 
Program Completion Rate for CMR measure to the display page for at

[[Page 30632]]

least two years if the proposed changes to the MTM program targeting 
criteria are finalized.
    Response: We appreciate the supportive comments. As discussed in 
section III.E. Part D MTM Program in this final rule, CMS is finalizing 
changes to the targeting criteria at Sec.  423.153(d)(2). CMS estimates 
that the number of Part D enrollees eligible for MTM will increase from 
3.6 million (7 percent of Part D enrollees) to 7.1 million (13 percent 
of Part D enrollees) based on updated 2022 data.
    Comment: A few commenters specifically did not support moving the 
MTM Program Completion Rate for CMR measure to the display page because 
they do not support changes to the MTM program targeting criteria. A 
few commenters expressed concern regarding the increased impact of the 
remaining Part D Star Rating measures if the MTM Program Completion 
Rate for CMR measure was moved to the display page and not included in 
the Star Ratings.
    Response: Refer to section III.E. Part D MTM Program section in 
this final rule for information on the MTM program changes that will be 
applicable on January 1, 2025. Comments on the substance of the changes 
to the Part D MTM program that were timely received (that is, received 
during the comment period for the December 2022 proposed rule, which 
closed February 13, 2023) are addressed in that section.
    We understand the concerns raised by commenters that there would be 
one less Part D measure included in the calculations to determine the 
overall Star Rating for MA-PD plans and/or the Part D summary Star 
Rating; however, there is no legacy measure to include in the Star 
Ratings because the MTM-eligible population for the denominator would 
change. Due to these substantive increases to the MTM-eligible measure 
denominator population, and the rules for substantive measure updates 
per Sec.  423.184(d)(2), the MTM Program Completion Rate for CMR 
measure must move to the display page for at least 2 years before using 
the updated measure in the Star Ratings. While on the display page, CMS 
will continue to monitor the rates as the MTM program eligibility 
criteria changes are implemented.
    Comment: A few commenters suggested that CMS work with a measure 
steward, such as the PQA, to develop alternate or companion measures 
that measure the success or impact of MTM services on health outcomes. 
A commenter recommended that CMS implement the PQA Medication Therapy 
Resolution Monitoring metric.
    Response: CMS encourages the industry and the PQA to develop new 
MTM quality measures that CMS may consider for use in the Star Ratings 
program in the future. We believe the commenter was referencing the 
PQA's Medication Therapy Problem Resolution monitoring measure. 
According to the PQA, monitoring measures such as this do not fit the 
characteristics or intended use of a performance measure.\169\
---------------------------------------------------------------------------

    \169\ https://www.pqaalliance.org/pqa-measures s.
---------------------------------------------------------------------------

    After consideration of the comments received, we are finalizing the 
proposed update to move the MTM Program Completion Rate for CMR measure 
to the display page for at least two years before adding it to the Star 
Ratings. As discussed in section III.E. in this final rule, CMS is 
finalizing changes to the targeting criteria at Sec.  423.153(d)(2) 
that will be effective on January 1, 2025. Therefore, the MTM Program 
Completion Rate for CMR measure will move to the display page entirely 
for the 2025 and 2026 measurement years and would return as a new 
measure to the Star Ratings program for the 2027 measurement year for 
the 2029 Star Ratings. Table VII.1 summarizes the updated MTM Program 
Completion Rate for CMR measure finalized in this rule.
3. Measure Additions
a. 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)
    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 the PQA.
    CMS proposed to add the following three Part D measures to the 2026 
Star Ratings (2024 measurement year), which are measures developed by 
the PQA: COB, Poly-ACH, and Poly-CNS. The new Part D measures are 
calculated from Prescription Drug Event (PDE) or CMS administrative 
data, so they do not require any new data collections. Additionally, as 
announced in the Advance Notice of Calendar Year (CY) 2024 Medicare 
Advantage (MA) Capitation Rates and Part C and Part D Payment Policies 
\170\ the added measures would 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).
---------------------------------------------------------------------------

    \170\ Advance Notice of Methodological Changes for Calendar Year 
(CY) 2024 for Medicare Advantage (MA) Capitation Rates and Part C 
and Part D Payment Policies at https://www.cms.gov/files/document/2024-advance-notice.pdf.
---------------------------------------------------------------------------

    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 during the measurement period.
     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 anticholinergic 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 measures help plans identify enrollees who are at risk of 
respiratory depression or fatal overdoses, cognitive decline, or falls 
and fractures, respectively, and help plans encourage appropriate 
prescribing when medically necessary.
    Per 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 Star Ratings measures. In addition, these 
measures 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, and were 
reviewed by the Measure Applications Partnership (MAP) for input and 
recommendations to HHS on measure selection for CMS programs.\171\ The 
Polypharmacy measures received conditional support for rulemaking 
pending additional consensus based entity (CBE) endorsement (that is, 
approval and full support for rulemaking was conditional only because 
the measure was not

[[Page 30633]]

already National Quality Forum (NQF) endorsed), and the COB measure is 
a CBE-endorsed measure by NQF; therefore, the COB measure received 
support for rulemaking. NQF endorsement is not a requirement under 
Sec. Sec.  422.164 and 423.184 to add a measure to the Medicare Part C 
and D Star Ratings System. CMS reviews measures that are nationally 
endorsed and in alignment with the private sector, such as measures 
developed by NCQA and the PQA, for adoption and use in the Star 
Ratings, and may develop its own measures. CMS has determined that 
these three PQA-endorsed measures are clinically important and reliable 
measures, and we proposed to add these three measures to the Star 
Ratings.
---------------------------------------------------------------------------

    \171\ Pre-Rulemaking MUC Lists and Recommendation Reports at 
https://mmshub.cms.gov/measure-lifecycle/measure-implementation/pre-rulemaking/lists-and-reports.
---------------------------------------------------------------------------

    These three measures have been on the display page on www.cms.gov 
since 2021 (2019 measurement year) using MYs as part of the 
specifications. CMS adapted these measures from the PQA to adjust for 
partial enrollment by using MYs, however, the PQA's measure 
specifications have been always based on CE. Therefore, to align more 
closely with the PQA measure specifications, CMS is updating these 
measures, making a non-substantive update to use CE instead of MYs 
during the display period and subsequently will continue to use CE in 
using these measures (on the display page or as part of the Star 
Ratings). We described the non-substantive update in the December 2022 
proposed rule to provide complete information on the measures we 
proposed to add to the Star Ratings and discussed the non-substantive 
updates in the Announcement of Calendar Year (CY) 2024 Medicare 
Advantage (MA) Capitation Rates and Part C and Part D Payment Policies 
as required by Sec.  423.184(d)(1).
    In this section of this rule, we summarize the comments we received 
on adding the COB, Poly-ACH, and Poly-CNS measures to the Star Ratings, 
with the non-substantive updates, and provide our responses and final 
decisions.
    Comment: A few commenters strongly supported incorporating the COB 
and the two Polypharmacy measures to the Star Ratings as these measures 
are important to address areas of significant risk to beneficiaries. 
The commenters noted that there is also support in peer-reviewed 
literature that concurrent use of therapies targeted by these measures 
should be limited. Additionally, a few commenters supported adding 
these measures to the Star Ratings since all three were submitted for 
review by the MUC pre-rulemaking process and were approved by the MAP 
committees.
    Response: We appreciate the support for adding these three measures 
to the Star Ratings.
    Comment: A majority of commenters did not support moving the COB, 
Poly-ACH, and Poly-CNS measures from the display page to the Star 
Ratings. Additionally, commenters requested that only one of the two 
Polypharmacy measures be selected due to overlap of National Drug Codes 
(NDCs) and medication classes included in the measure specifications. 
One commenter supported the Poly-CNS over the Poly-ACH measure out of 
concern for the mental health population and that deprescribing 
anticholinergics in beneficiaries who have been clinically stable may 
compromise their health.
    Response: We thank the commenters for their feedback. The measures 
are important areas of focus for the Medicare Part D population from a 
clinical perspective. The COB measure will help plans identify 
beneficiaries who have concurrent opioids and benzodiazepine 
prescriptions since taking these medications concurrently exposes these 
beneficiaries to high risk of respiratory depression and fatal 
overdose. According to the Centers for Disease Control and Prevention 
(CDC) 2022 Clinical Practice Guideline for Prescribing Opioids for Pain 
(``CDC Guideline''), the CDC recommended that there should be 
particular caution when prescribing opioid pain medication and 
benzodiazepine concurrently.\172\ We believe that the COB measure is an 
important and appropriate way to focus on this clinical concern. The 
PQA Measure Development Team, Stakeholder Advisory Panel, and the 
American Geriatrics Society (AGS) Beers Criteria Update Panel co-chairs 
recommended the two separate Polypharmacy measures (the Poly-CNS and 
Poly-ACH measures) because of different supporting evidence, concurrent 
use thresholds (three for Poly-CNS and two for Poly-ACH), additive 
pharmacodynamic effects, and associated clinical outcomes (falls with 
CNS-active medications and cognitive decline with anticholinergics). 
The AGS 2019 Updated Beers Criteria provided a strong recommendation 
based on moderate to high evidence (depending on the drug therapy) to 
avoid concurrent use of three or more CNS-active medications in older 
adults because of an increased risk of falls, and for some CNS-active 
combinations, fractures. Additionally, a study published in JAMA 
Internal Medicine in 2017, analyzing data from the National Ambulatory 
Medical Care Survey, demonstrated that CNS polypharmacy in older adult 
has been trending upward and found that CNS polypharmacy in older 
adults more than doubled from 2004 to 2013.\173\ Furthermore, for the 
Poly-ACH measure, the updated Beers Criteria provided a strong 
recommendation based on moderate evidence to avoid concurrent use of 
two or more anticholinergic medications in older adults because of an 
increased risk of cognitive decline. A systematic literature review 
which examined 27 studies from 1966 to 2008 determined that a high 
burden of anticholinergic use consistently showed a negative 
association with cognitive performance in older adults.\174\ Based on 
clinical recommendations and supporting evidence, CMS concurs with the 
PQA, the measure steward, that two separate Polypharmacy measures are 
appropriate to assess these two areas of focus separately.
---------------------------------------------------------------------------

    \172\ CDC Clinical Practice Guideline for Prescribing Opioids 
for Pain--United States, 2022 at https://www.cdc.gov/mmwr/volumes/71/rr/rr7103a1.htm?s_cid=rr7103a1_w.
    \173\ Maust DT, Gerlach LB, Gibson A, et al. Trends in Central 
Nervous System-Active Polypharmacy Among Older Adults Seen in 
Outpatient Care in the United States. JAMA Intern Med. 2017; 
177(4):583-585. PMID: 28192559.
    \174\ Campbell N, Boustani M, Limbil T, et al. The cognitive 
impact of anticholinergics: a clinical review. Clin Interv Aging. 
2009; 4:225-33. PMID: 19554093.
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    We conducted additional data analyses on overlap across the three 
measures from both medication specification and beneficiary-level 
perspectives based on public comments we received. We found that the 
COB and Poly-ACH measures do not have duplicative medication classes or 
overlapping NDCs. However, the Poly-CNS measure includes medication 
classes and NDCs that overlap with both the Poly-ACH and COB measures.
    Also, we identified Part D beneficiaries who met the numerator 
inclusion criteria in each of the three measures and evaluated if they 
had overlapping contract enrollment periods (``enrollment episodes'') 
across the measures. Note, if a beneficiary has multiple enrollment 
episodes in the same Part D contract or different contracts, they must 
meet the numerator criteria separately for each episode. The highest 
percent of overlapping numerator beneficiary enrollment episodes was 
between the COB and Poly-CNS measures but below 50 percent 
(approximately 26.8 percent of the numerator beneficiary enrollment 
episodes in the COB measure were found in the Poly-CNS measure and 40.9 
percent of the numerator beneficiary enrollment episodes in Poly-

[[Page 30634]]

CNS were found in COB). The overlap between the Poly-ACH and Poly-CNS 
measures' numerators was lower (almost 26.3 percent of the numerator 
beneficiary enrollment episodes in the Poly-ACH measure were found in 
the Poly-CNS measure and 9.0 percent were found in Poly-ACH). As 
expected, the beneficiary overlap was even lower between the COB and 
Poly-ACH measures because there are no medication overlaps between the 
two measure specifications, but beneficiaries may meet the numerator 
inclusion criteria based on their medication regimens (about 2.1 
percent of the numerator beneficiary enrollment episodes in the COB 
measure were found in the Poly-ACH measure and 9.2 percent in Poly-ACH 
were found in COB).
    Based on these comments and data analysis on overlap rates, at this 
time we are only adding the COB and Poly-ACH measures to the Star 
Ratings; the Poly-CNS measure will not be added to the Star Ratings at 
this time due to concerns raised about overlapping medication classes 
and to monitor for potential duplicative medication therapy classes 
across the three measures. Because the Poly-CNS measure is a clinically 
relevant measure for the Part D population, we will retain this measure 
on the display page. Similar to the Star Ratings, measures on the 
display page and their numeric measure scores are publicly reported for 
information purposes. However, unlike the Star Ratings, measures on the 
display page are not assigned a star and are not associated with QBPs 
for MA organizations. We may reconsider adding the Poly-CNS to the Star 
Ratings in the future through rulemaking.
    We do not expect a zero-percentage measure rate for these measures 
as, in some rare cases, it may be medically necessary for beneficiaries 
to take multiple anticholinergics. Additionally, CMS does not establish 
a pre-determined threshold to assign stars to these measures and uses 
the clustering methodology. Therefore, CMS does not have specific cut 
points or thresholds for performance of Part D contracts in the Star 
Ratings. Rather, for these measures, contracts are compared based on 
their contract type and how beneficiaries enrolled in the contracts are 
taking multiple concurrent prescriptions. In light of the clinical 
considerations, including the Poly-ACH and the COB measure in the Star 
Ratings is appropriate as a means to ensure that these important areas 
of focus are reflected in the overall measure of quality and 
performance provided by the Star Ratings. We will also share the 
specification comments with the PQA, the measure steward.
    Comment: A few commenters were concerned that these measures pose 
similar challenges as the retired Star Ratings High Risk Medication 
(HRM) measure, and addition of the measures to the Star Ratings may 
lead to tighter utilization management (UM) and safety edits that could 
result in additional administrative burden to prescribers, pharmacists, 
and beneficiaries or access issues or disruption of therapy for 
beneficiaries. Commenters recognized the measures' importance but were 
concerned with prescriber burden. Additionally, commenters believed 
that other policies in the Part D program to address these areas of 
concern already exist, such as Drug Management Programs (DMPs), 
concurrent drug utilization review and point-of-sale (POS) edits, MTM 
programs, and UM such as prior authorizations.
    Response: We strongly believe that the COB, Poly-CNS, and Poly-ACH 
measures are important measures that address specific clinical risks in 
the Medicare Part D population. We do not anticipate that there will be 
increased workload for plans or providers due to adding any of these 
measures to the Star Ratings. These measures are not new and have been 
on display page since 2021 (using data from the 2019 measurement year); 
therefore, plans, providers, and beneficiaries are familiar and 
experienced with these measures. The long-term benefits of improved 
medication safety, reduce medication errors, and better patient 
outcomes significantly outweigh some potential burden associated with 
efforts to address over-utilization. Additionally, we understand that 
use of these medications may be medically necessary for some 
beneficiaries 65 and older, and as noted in the response earlier in 
this section of the preamble, CMS does not expect a zero-percentage 
rate in the COB, Poly-CNS, or Poly-ACH measures. As demonstrated in the 
annual data included in the December 2022 proposed rule (87 FR 79619), 
the rates are decreasing for all three measures, suggesting improvement 
is occurring.
    Furthermore, these three measures are not duplicative of existing 
policies in Part D which are complementary tools to target specific 
types of concurrent use of medications among Medicare Part D enrollees 
and drive quality improvement. The COB and Polypharmacy measures are 
intended as retrospective plan performance measures; concurrent drug 
utilization reviews, as required under Sec.  423.153(c)(2), and opioid 
safety edits are reviews at POS to proactively engage beneficiaries and 
prescribers to address prescription opioid overuse; DMPs are required 
statutorily in section 1860D-4(c)(5)(A) of the Act for plans to monitor 
beneficiaries who are at-risk for misuse or abuse of frequently abused 
drugs. Frequently abused drug, as defined at 42 CFR 423.100, is a 
controlled substance that the Secretary determines, based on several 
factors, is frequently abused or diverted. CMS has determined that 
opioids (except buprenorphine for opioid use disorder and injectables) 
and benzodiazepines are frequently abused drugs for purposes of Part D 
DMPs. MTM helps beneficiaries and their caregivers improve their 
medication use and optimize therapeutic outcomes.
    As a reminder, sponsors may apply UM controls to reduce 
inappropriate use of concurrent therapies. UM controls must be 
submitted and approved by CMS through HPMS formulary submissions, 
unless they are POS safety related edits that can be implemented 
without submission or approval by CMS pertaining to duplicative therapy 
or when FDA labeling clearly indicates the dispensing is unsafe, 
duplicative, or contraindicated, such as edits regarding specific age-
related contraindications. Edits based upon warnings and precautions in 
the label, as opposed to contraindications or doses that exceed those 
supported by the label, must be submitted to CMS for approval. Sponsors 
that implement unapproved edits for these medications may be found to 
have data integrity issues. Per Sec. Sec.  422.164(g) and 423.184(g), 
CMS may reduce a contract's measure rating to 1 star for concerns such 
as data inaccuracies, partiality, or incompleteness. Such 
determinations may be based on a number of reasons, including 
mishandling of data, inappropriate processing, or implementation of 
incorrect practices that have an impact on the accuracy, impartiality, 
or completeness of the data used for one or more specific measure(s). 
Implementation of unapproved edits for these measures may bias 
sponsors' PDE data used for these measures and thus be subject to this 
policy. Inclusion of polypharmacy medications in the measures is not a 
contraindication to use, but rather an opportunity to evaluate the use 
of concurrent polypharmacy medications in Medicare Part D beneficiaries 
65 years and older.
    Comment: Some commenters requested that CMS delay adding these 
measures to the Star Ratings by at least 2 years to provide sponsors 
additional time to prepare for the transition because it may be 
difficult to improve

[[Page 30635]]

the measures or incentivize prescribers and to minimize unnecessary 
disruptions in therapy.
    Response: Sponsors were given advance notice that CMS planned 
rulemaking to add these measures to the Star Ratings in the 
Announcement of Calendar Year (CY) 2020 Medicare Advantage Capitation 
Rates and Medicare Advantage and Part D Payment Policies and Final Call 
Letter, which was released in April 2019. Per Sec.  423.184(c)(3), new 
Part D measures are posted on the display page for at least 2 years 
prior to becoming a Star Ratings measure. Sponsors have been on notice 
for more than 4 years that these measures could be added to the Star 
Ratings, and all three measures have been on the display page since 
2021 (2019 measurement year). We are finalizing the adoption of the COB 
and Poly-ACH measures beginning with the 2025 measurement period for 
the 2027 Star Ratings. Part D plans have had sufficient time to gain 
experience with these measures and to prepare for these measures to be 
added to the Star Ratings.
    Comment: Commenters requested that CMS add socio-demographic status 
(SDS) risk-adjustment to the COB and Polypharmacy measures because 
Medicare Advantage organizations, in particular those that offer dual 
eligible or special needs plans, will be disproportionately affected as 
these plans enroll a greater number of complex patients with mental 
health conditions or disabilities.
    Response: Currently these measures have not been tested for SDS 
risk-adjustment because the Poly-ACH, Poly-CNS, and COB measures are 
process measures and are not recommended for SDS risk adjustment by the 
PQA. We will share this comment with the PQA, the measure steward.
    Comment: Some commenters opposed the COB and Poly-CNS measures 
because they believe these measures contradict the updated CDC 2022 
Clinical Practice Guideline for Prescribing Opioids for Pain. These 
commenters noted that the CDC Guideline discourages including 
inflexible dose thresholds in policies involving opioid pain 
medications.
    Response: The COB and Poly-CNS measure specifications do not 
contradict the CDC Guideline \175\ which recommends particular caution 
when prescribing opioid pain medication and benzodiazepines 
concurrently and that prescribers should consider whether benefits 
outweigh risks of concurrent prescribing of opioids and other central 
nervous system depressants. These measures do not include dosage 
thresholds in the measure specifications and are not intended to guide 
clinical-decision-making for individual patients, but rather, these 
measures evaluate the use of concurrent therapies.
---------------------------------------------------------------------------

    \175\ Centers for Disease Control and Prevention (CDC) Clinical 
Practice Guideline for Prescribing Opioid for Pain--United States, 
2022 at https://www.cdc.gov/mmwr/volumes/71/rr/rr7103a1.htm?s_cid=rr7103a1_w.
---------------------------------------------------------------------------

    For the COB and Polypharmacy measures, since there are no dosage 
thresholds, a beneficiary would be potentially eligible for the COB and 
polypharmacy measures once they have overlapping days supply for 
concurrent use of unique target medications included in these measures. 
Specifically, the COB measure evaluates the percentage of beneficiaries 
18 years of age or greater with concurrent use of prescription opioids 
and benzodiazepines. The COB numerator is defined as the number of 
beneficiaries from the denominator with 2 or more prescription claims 
for any benzodiazepines with different dates of service and concurrent 
use of opioids and benzodiazepines for 30 or more cumulative days. The 
COB denominator is defined as beneficiaries with 2 or more prescription 
claims for opioid prescriptions on different dates of service and with 
15 or more cumulative days' supply during the measurement year. The 
Poly-CNS measure evaluates the percentage of beneficiaries 65 years of 
age or older with concurrent use of 3 or more unique CNS-active 
medications. The numerator is defined as the number of beneficiaries 
from the denominator with concurrent use of 30 or more cumulative days 
of 3 or more unique CNS-active medications, each with 2 or more 
prescription claims on different dates of service during the 
measurement year. The denominator is defined as beneficiaries with 2 or 
more prescription claims for the same CNS-active medication on 
different dates of service during the measurement year.
    Comment: Commenters requested that CMS expand exclusions for both 
Polypharmacy measures to include diagnoses of significant mental health 
(such as schizophrenia or bipolar disorder) since these conditions are 
typically treated with multiple antipsychotics, anti-depressants, and/
or anti-epileptics. Commenters noted that these measures may have 
limited benefits to beneficiaries with Alzheimer's disease and 
dementia, recommended that CMS consider extending overlap days to at 
least 120 days or more to ensure that plans and providers can work 
collaboratively in developing realistic plans around deprescribing, and 
recommended that CMS consider dosage reduction or tapering therapy of 
concurrent anticholinergic medications. Another commenter recommended 
excluding benzodiazepine prescriptions that are less than 5 days' 
supply due to a procedure for the COB measure. Commenters requested 
that long-term care (LTC) residents be excluded from the COB measure 
since benzodiazepines are used in the LTC population to treat anxiety 
or used as a muscle relaxant which could result in delay in therapy. 
Furthermore, a commenter noted that concomitant use of opioids and 
benzodiazepines are closely monitored in LTC facilities. Additionally, 
a commenter suggested that CMS consider dosages of concurrent 
anticholinergic medications and their overall anticholinergic 
potential, as opposed to a count of medications, before identifying 
members for potential overprescribing since beneficiaries with severe 
mental illnesses may be using multiple antipsychotics, or anti-
depressants, and/or anti-epileptics.
    Response: We appreciate the commenters' feedback. As a reminder, 
both Polypharmacy measures exclude beneficiaries in hospice care. 
Additionally, beneficiaries with a seizure disorder diagnosis during 
the measurement year are excluded from the Poly-CNS measure. The 
current exclusions for the COB measure are beneficiaries in hospice 
care, with a cancer diagnosis, with sickle cell disease diagnosis, and 
in palliative care during the measurement year. Older adults with co-
occurring mental health disorders and multiple anticholinergic 
medications face an elevated risk of adverse consequences, particularly 
cognitive decline, increased fall risks, and central nervous system 
side effects. Continuous monitoring of these individuals is crucial for 
early detection, medication optimization, and quality of life 
improvement. Studies have demonstrated positive outcomes when 
healthcare providers implemented routine anticholinergic burden 
assessment and medication-switching interventions; these findings 
underscore the critical need for continuous monitoring and proactive 
management of the anticholinergic burden in this vulnerable 
population.176 177 178

[[Page 30636]]

Therefore, CMS will apply the measure specifications as intended by 
PQA, the measure steward. PQA employs a highly rigorous and transparent 
process for developing and endorsing quality measures. This multi-phase 
lifecycle involves several crucial phases like measure 
conceptualization, specification, testing, endorsement, and 
implementation and maintenance. In the final implementation and 
maintenance stage, endorsed measures are reviewed and updated 
periodically to reflect evolving practice standards and data 
availability. This ongoing process ensures that measures remain 
clinically relevant and valid.
---------------------------------------------------------------------------

    \176\ Eum, S., Hill, S.K., Rubin, L.H., Carnahan, R.M., Reilly, 
J.L., Ivleva, E.I., . . . & Bishop, J.R. (2017). Cognitive burden of 
anticholinergic medications in psychotic disorders. Schizophrenia 
research, 190, 129-135.
    \177\ Lupu, A.M., Clinebell, K., Gannon, J.M., Ellison, J.C., & 
Chengappa, K.R. (2017). Reducing anticholinergic medication burden 
in patients with psychotic or bipolar disorders. The Journal of 
Clinical Psychiatry, 78(9), 17141.
    \178\ Mukku, S.S., Sinha, P., Sivakumar, P.T., & Varghese, M. 
(2021). Anticholinergic burden among hospitalised older adults with 
psychiatric illnesses--a retrospective study. Current Drug Safety, 
16(3), 264-271.
---------------------------------------------------------------------------

    We will share measure specification comments for expanding the 
exclusions and the methodology considerations with the PQA, the measure 
steward for the COB and polypharmacy measures.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to the comments, we are 
finalizing the addition of the Poly-ACH and COB measures in the Star 
Ratings program beginning with the 2025 measurement year for the 2027 
Star Ratings. The Poly-CNS measure will remain on the display page and 
not be added to the Star Ratings.
    In addition, we announced the non-substantive updates to the Poly-
CNS, Poly-ACH, and COB measures to align with the PQA measure 
specifications to use CE and no longer adjust for MYs in the 
Announcement of Calendar Year (CY) 2024 Medicare Advantage (MA) 
Capitation Rates and Part C and Part D Payment Policies as required by 
Sec.  423.184(d)(1). CMS will make the update to change from MYs to CE 
for the 2024 measurement year for all three measures. The Poly-ACH and 
COB measures will be added to the Star Ratings program beginning with 
the 2025 measurement year for the 2027 Star Ratings with these updates.
4. Summary of Measure Changes for the Part C and D Star Ratings
    Table VII.1 summarizes the additional and updated measures 
addressed in this final rule, beginning with the 2027 Star Ratings. The 
measure descriptions listed in this table are high-level descriptions. 
The annual Star Ratings measure specifications supporting document, the 
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 2027 are 
produced in the fall of 2026. If a measurement period is listed as 
``the calendar year 2 years prior to the Star Ratings year'' and the 
Star Ratings year is 2027, the measurement period is referencing the 
January 1, 2025 to December 31, 2025 period.
BILLING CODE P

[[Page 30637]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.013

C. Revising the Rule for Non-Substantive Measure Updates (Sec. Sec.  
422.164(d) and 423.184(d))

    We proposed 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. This proposal was 
only adding another example to the non-exhaustive list of non-
substantive measure changes that the current regulations permit to be 
done through the Advance Notice/Rate Announcement process. For example, 
as described in the CY 2024 Rate Announcement, we are implementing the 
web-based mode (as an addition to the current mixed mode protocol) for 
the 2024 Consumer Assessment of Healthcare Providers and Systems 
(CAHPS) survey implementation used for the 2025 Star Ratings. 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 when Sec. Sec.  422.164(d) 
and 423.184(d) were initially adopted, 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

[[Page 30638]]

alternative data sources or expansion of modes of data collection. 
These two examples are similar but not exactly the same, so we proposed 
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, adding a web mode of survey administration to 
the current survey administration of mail with telephone follow-up of 
non-respondents to the mail survey that historically has been used for 
CAHPS and Health Outcomes Survey (HOS) would not change what is being 
measured, but would only expand the way the data can be collected. 
Therefore, that is a non-substantive update to the measures.
    We proposed 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 solicited comments on this proposal.
    Comment: We received several comments supporting the proposal to 
revise regulation text by adding a new mode of data collection as 
another example of a non-substantive change.
    Response: CMS thanks the commenters for their support.
    Comment: We received a few comments opposed to this proposal. 
Commenters stated that a new mode of data collection should be 
considered a substantive change. A couple of commenters were concerned 
a change in survey modality would produce different survey results and 
that survey modality preferences differ by age groups, which may affect 
the population responding. A commenter expressed concerned that web-
based respondents could create a source of bias in the data due to 
differences in socioeconomic factors, plan type, or geography and could 
impact contract performance.
    Response: CMS disagrees that changes to expand modes of data 
collection would be a substantive change to a measure. Notwithstanding 
an expansion of the modes of data collection, the denominator will 
remain the same. Expanding the modes of data collection will generally 
result in more data regarding performance on the measure. As a result, 
the measure will better reflect actual performance of the organization 
and provide more information to CMS and the public.
    For example, for the survey administration for CAHPS and HOS 
measures used as the example in the proposed rule, the denominator for 
the measures continues to include plan enrollees. The addition of web 
surveys to the mail-phone survey protocol in no way changes the 
numerator or denominator of the measure. Further, our study of using 
web surveys as well as mail-phone surveys did not indicate any 
significant change in the resulting data or measure scores, consistent 
with other studies.\179\ The CAHPS survey measures and results are 
unchanged as a result of our proposed change to add a new mode of data 
collection as a non-substantive change. In the field test, a majority 
of respondents in the web-mail-phone protocol still chose to respond by 
mail or phone. Among respondents with an available email address, 79 
percent chose to respond by mail or phone. Further, the composition of 
respondents is similar in the web-mail-phone and mail-phone protocols. 
We compared respondents to the web-mail-phone and mail-phone protocols 
by age, sex, receipt of a low-income subsidy or dual eligible status 
(LIS/DE), race/ethnicity, education, and health status, and found that 
respondents were quite similar; the overall pattern of differences was 
consistent with chance.
---------------------------------------------------------------------------

    \179\ For example, Fowler FJ, Cosenza C, Cripps LA, Edgman-
Levitan S, Cleary PD. The effect of administration mode on CAHPS 
survey response rates and results: A comparison of mail and web-
based approaches. Health Serv Res. 2019; 54: 714-721. https://doi.org/10.1111/1475-6773.13109.
---------------------------------------------------------------------------

    The use of a three-phase sequential multimode approach, web 
followed by mail followed by telephone, allows MA enrollees choices 
about how to respond. It maintains or increases response rates for all 
groups of MA enrollees and is available to those with or without 
broadband or telephone access. While the increases in response rates 
vary slightly by enrollee characteristics, this does not create bias, 
as scores from those randomized for the web-mail-phone protocol were 
similar to those randomized for the mail-phone protocol in our field 
test. Of 39 items compared between the web-mail-phone and mail-phone 
protocols, none differed in case-mix adjusted mean score at p<0.01 and 
only two differed at p<0.05, a pattern consistent with chance. Thus, 
there is no evidence of a mode effect on scores from the web-mail-phone 
protocol relative to the mail-phone protocol.
    While different plan rates of email availability may influence 
response rates gains, they do not bias plan scores because response by 
web results in scores similar to those obtained under the mail-phone 
protocol. Similarly, no overall effect on scores over time is 
anticipated with the addition of the web mode.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to the comments, we are 
finalizing the clarification to the regulation text at Sec. Sec.  
422.164(d)(1)(v) and 423.184(d)(1)(v). As this clarification is 
consistent with current practice and policy, CMS is applying it 
immediately on the effective date of the final rule and for measures in 
the 2025 Star Ratings where CMS has complied with Sec. Sec.  
422.164(d)(1) and 423.184(d)(1) in adopting the non-substantive change.

D. Weight of Measures With Substantive Updates (Sec. Sec.  
422.166(e)(2) and 423.186(e)(2))

    We proposed 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 when these regulations were first adopted, 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 proposed 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 provided to substantively updated 
measures for the first year they are returned to the Star Ratings (86 
FR 5919). In the second and subsequent years after the measure returns 
to the Star Ratings after being on the display page with a substantive 
update, the measure would be assigned the weight associated with its 
category, which is what happens with new measures as

[[Page 30639]]

well. In addition, we proposed to revise the heading for paragraph 
(e)(2) to reflect how the provision addresses the weight of both new 
and substantively updated measures.
    We solicited comments on this proposal.
    Comment: All commenters supported the proposal to clarify how we 
treat measures with substantive updates when they return to the Star 
Ratings program. Some commenters noted that this proposal would result 
in a phase-in approach reducing potential volatility, and it provides 
plans sufficient notice to familiarize themselves with a measure's 
updated specifications, assess potential impacts, and incorporate 
changes to internal processes if needed. A commenter requested CMS 
confirm that when the three Part D medication adherence measures return 
to the Star Ratings after adding risk adjustment for sociodemographic 
status, they will each have a weight of 1 for the first year.
    Response: We appreciate the commenters' support. In the April 2023 
final rule, CMS finalized the substantive update to the three 
medication adherence measures for the 2028 Star Ratings (2026 
measurement year). The first year (2028 Star Ratings) the updated 
medication adherence measures will be in the Star Ratings they will 
have a weight of 1, but then beginning with the following Star Ratings 
year, the weight will increase to 3, as these measures are categorized 
as intermediate outcome measures.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to the comments, we are 
finalizing the additional language added to Sec. Sec.  422.166(e)(2) 
and 423.186(e)(2) with a slight clarification that in subsequent years, 
a new or substantively updated measure will be assigned the weight 
associated with its category, and we are finalizing the update to the 
heading for paragraph (e)(2). As this clarification is consistent with 
current practice and policy, CMS is applying it immediately on the 
effective date of the final rule and to the 2025 Star Ratings.

E. Data Integrity (Sec. Sec.  422.164(g) and 423.184(g))

    We currently have rules specified at Sec. Sec.  422.164(g) and 
423.184(g) to reduce a measure rating when CMS determines that a 
contract's measure data are incomplete, inaccurate, or biased. For the 
Part C appeals measures, we have statistical criteria to reduce a 
contract's appeals measures for missing Independent Review Entity (IRE) 
data. Specifically, these criteria allow us to use scaled reductions 
for the appeals measures to account for the degree to which the data 
are missing. See 83 FR 16562 through 16564. The data underlying a 
measure score and Star Rating must be complete, accurate, and unbiased 
for them to be useful for the purposes we have codified at Sec. Sec.  
422.160(b) and 423.180(b). In the April 2018 final rule (83 FR 16562), 
CMS codified at Sec. Sec.  422.164(g)(1)(iii) and 423.184(g)(1)(ii) a 
policy to make scaled reductions to the Part C and D appeals measures' 
Star Ratings when the relevant IRE data are not complete based on the 
Timeliness Monitoring Project (TMP) or audit information. Following the 
process in Sec.  423.184(e)(2) and for the reason specified in Sec.  
423.184(e)(1)(ii), we removed the two Part D appeals measures (Appeals 
Auto-Forward and Appeals Upheld) beginning with the 2020 measurement 
year and 2022 Star Ratings in the 2020 Rate Announcement \180\ due to 
low statistical reliability; thus, the scaled reductions are no longer 
applicable to the Part D appeals measures. However, we made no changes 
to the scaled reductions used with the Part C appeals measures, Plan 
Makes Timely Decisions about Appeals and Reviewing Appeals Decisions, 
because there were no similar statistical reliability issues with those 
measures. Therefore, these two Part C measures continue to be subject 
to the scaled reductions authorized at Sec.  422.164(g)(1)(iii) based 
on TMP or audit information.
---------------------------------------------------------------------------

    \180\ Announcement of Calendar Year (CY) 2020 Medicare Advantage 
Capitation Rates and Medicare Advantage and Part D Payment Policies 
and Final Call Letter (cms.gov).
---------------------------------------------------------------------------

    Because the Part D appeals measures are no longer part of the Star 
Ratings, we proposed to remove and reserve the paragraphs at Sec. Sec.  
422.164(g)(1)(iii)(B), (1)(iii)(F), (1)(iii)(I), and 423.184(g)(1)(ii). 
Paragraphs (B), (F), and (I) of Sec.  422.164(g)(1)(iii) all address 
how the error rate on the TMP for the Part D appeals measures had been 
used in calculating scaled reductions for MA-PDs that are measured on 
both Part C and Part D appeals. Currently, Sec.  423.184(g)(1)(ii) 
addresses the scaled reductions for Part D appeals measures based on 
the TMP. Given the removal of the Part D appeals measures from the Star 
Ratings, these provisions are moot. We proposed to reserve the relevant 
paragraphs to avoid the risk that redesignating the remaining 
paragraphs would cause unintended consequences with any existing 
references to these provisions.
    The completeness of the IRE data is critical to support fair and 
accurate measurement of the two Part C appeals measures. Since the 2019 
Star Ratings we have used data from the TMP, which uses the Part C 
audit protocols for collecting Organization Determinations, Appeals and 
Grievances (ODAG) universes, to determine whether the IRE data used to 
calculate the Part C appeals measures are complete. As described at 
Sec.  422.164(g)(iii), we use scaled reductions to account for the 
degree to which the IRE data are missing. The current regulations 
describe how scaled reductions are based on the TMP. However, due to a 
change in the Part C audit protocols for collecting universes of ODAG 
data, we proposed to modify, and in one case reserve, paragraphs 
(g)(1)(iii), (g)(1)(iii)(A)(1) and (2), (g)(1)(iii)(H), (g)(1)(iii)(J), 
(g)(1)(iii)(K)(2), and (g)(1)(iii)(O) to change how we address 
reductions in the Star Ratings for Part C appeals measures using 
different data. We proposed to revise the introductory language in 
Sec.  422.164(g)(1)(iii) to remove references to the timeliness 
monitoring study and audits and replace them with references to data 
from MA organizations, the IRE, or CMS administrative sources. In 
addition, our proposed revisions to this paragraph included minor 
grammatical changes to the verb tense. We also proposed to modify Sec.  
422.164(g)(1)(iii)(A) to use data from MA organizations, the IRE, or 
CMS administrative sources to determine the completeness of the data at 
the IRE for the Part C appeals measures starting with the 2025 
measurement year and the 2027 Star Ratings. Currently, data collected 
through Sec.  422.516(a) could be used to confirm the completeness of 
the IRE data; however, data collected from MA organizations through 
other mechanisms in addition to data from the IRE or CMS administrative 
sources could be used in the future. The proposed amendment to Sec.  
422.164(g)(1)(iii)(A) was not intended to limit the data CMS uses to 
conduct analyses of the completeness of the IRE data in order to adapt 
to changing information submissions that could be reliably used for the 
same purpose in the future. The revisions proposed for the other 
paragraphs provided for a new calculation to implement scaled 
reductions for the Part C appeals measures for specific data integrity 
issues.
    Part C contracts are required to send partially favorable 
(partially adverse) and unfavorable (adverse) decisions to the IRE 
within applicable timeframes as specified at Sec.  422.590(a) through 
(e). In order for the existing Part C appeals measures (Plan Makes 
Timely Decisions

[[Page 30640]]

about Appeals and Reviewing Appeals Decisions) to accurately reflect 
plan performances in those areas, the appeals must be sent to the IRE 
because the data source for these measures is based on the data that 
have been submitted to the IRE. Currently, through the Part C Reporting 
Requirements established under Sec.  422.516(a), CMS collects 
information at the contract level from MA organizations about the 
number of partially favorable reconsiderations (that is, the number of 
partially favorable claims and the number of partially favorable 
service requests by enrollees/representatives and non-contract 
providers) and unfavorable reconsiderations (that is, the number of 
unfavorable claims and the number of unfavorable service requests by 
enrollees/representatives and non-contract providers) over a calendar 
year.\181\ These data are subject to data validation requirements, in 
accordance with specifications developed by CMS, under Sec.  
422.516(g), to confirm that they are reliable, valid, complete, and 
comparable. CMS would use this information to determine the total 
number of cases that should have been sent to the IRE over the 
measurement year (that is, number of partially favorable 
reconsiderations + number of unfavorable reconsiderations) to compare 
to information from the IRE about submissions received from each MA 
organization. In the future, CMS may use detailed beneficiary-level 
data collected on the number of partially favorable reconsiderations 
and the number of unfavorable reconsiderations if such more detailed 
information is collected under CMS's statutory and regulatory authority 
to require reporting and data submission from MA organizations (such as 
the reporting requirements in Sec. Sec.  422.504(f)(2) and/or 
422.516(a)).
---------------------------------------------------------------------------

    \181\ In the Medicare Part C Technical Specifications Document 
for Contract Year 2023, elements E through L in Subsection #4 on 
page 15 are currently used to identify unfavorable and partially 
favorable reconsiderations (https://www.cms.gov/files/document/
cy2023-part_technical-specifications-222023.pdf).
---------------------------------------------------------------------------

    To determine if a contract may be subject to a potential reduction 
for the Part C appeals measures' Star Ratings, we proposed to compare 
the total number of appeals received by the IRE that were supposed to 
be sent to the IRE per regulations as specified at Sec.  422.590(a) 
through (e) and (g) (which are explained in guidance at section 50.12.1 
of the Parts C & D Enrollee Grievances, Organization/Coverage 
Determinations, and Appeals Guidance \182\), including all appeals 
regardless of their disposition (for example, including appeals that 
are dismissed or withdrawn), to the total number of appeals that were 
supposed to go to the IRE. The total number of appeals that were 
supposed to be sent to the IRE would be based on the sum of the number 
of partially favorable reconsiderations and the number of unfavorable 
reconsiderations from the Part C Reporting Requirements during the 
measurement year (January 1st to December 31st). We proposed to modify 
the calculation of the error rate at Sec.  422.164(g)(1)(iii)(H) by 
taking 1 minus the quotient of the total number of cases received by 
the IRE and the total number of cases that were supposed to be sent to 
the IRE (Equation 1). The total number of appeals that were supposed to 
be sent to the IRE in Equation 2 would be calculated from the data 
described in the revisions to Sec.  422.164(g)(1)(iii)(A):
---------------------------------------------------------------------------

    \182\ https://www.cms.gov/medicare/appeals-and-grievances/mmcag/downloads/parts-c-and-d-enrollee-grievances-organization-coverage-determinations-and-appeals-guidance.pdf.
---------------------------------------------------------------------------

Equation (1)
[GRAPHIC] [TIFF OMITTED] TR23AP24.014

Equation (2)
Total Number of Cases that should have been forwarded to the IRE = 
Number of partially favorable reconsiderations + Number of unfavorable 
reconsiderations

    We proposed to remove and reserve Sec.  422.164(g)(1)(iii)(J) 
because we intend to calculate the Part C error rate based on 12 months 
rather than a projected number of cases not forwarded to the IRE in a 
3-month period as has historically been done with the TMP data. 
Currently, a contract is subject to a possible reduction due to lack of 
IRE data completeness if the calculated error rate is 20 percent or 
more and the projected number of cases not forwarded to the IRE is at 
least 10 in a 3-month period as described at Sec.  
422.164(g)(1)(iii)(K). We proposed to modify Sec.  
422.164(g)(1)(iii)(K)(2) so that the number of cases not forwarded to 
the IRE is at least 10 for the measurement year (that is, total number 
of cases that should have been forwarded to the IRE minus the total 
number of cases received by the IRE is at least 10 for the measurement 
year). The requirement for a minimum number of cases is needed to 
address statistical concerns with precision and small numbers. If a 
contract meets only one of the conditions specified in paragraph (K), 
the contract would not be subject to reductions for IRE data 
completeness issues.
    We proposed at Sec.  422.164(g)(1)(iii)(O) that the two Part C 
appeals measure Star Ratings be reduced to 1 star if CMS does not have 
accurate, complete, and unbiased data to validate the completeness of 
the Part C appeals measures. For example, the data collected in the 
Part C Reporting Requirements go through a data validation process 
(Sec.  422.516(a)). CMS has developed and implemented data validation 
standards to ensure that data reported by sponsoring organizations 
pursuant to Sec.  422.516 satisfy the regulatory obligation. If these 
data are used to validate the completeness of the IRE data used to 
calculate the Part C appeals measures, we would reduce the two Part C 
appeals measure Star Ratings to 1 star if a contract fails data 
validation of the applicable Part C Reporting Requirements sections for 
reconsiderations by not scoring at least 95 percent or is not compliant 
with data validation standards (which includes sub-standards as 
applicable), since we cannot confirm the data used for the Part C 
appeals measures are complete.
    We also proposed to update Sec.  422.164(g)(1)(iii)(A)(2) to change 
the data source in the case of contract consolidations so that the data 
described in paragraph (g)(1)(iii)(A)(1) are combined for consumed and 
surviving contracts for the first year after consolidation. In 
addition, we proposed to delete the phrase ``For contract 
consolidations approved on or after January 1, 2022'' as unnecessary.
    We did not propose to update the steps currently described at Sec.  
422.164(g)(1)(iii)(C), (D), (E), (G), K(1), (L), (M), and (N) to 
determine whether a scaled reduction should be applied to the two Part 
C appeals measures. We welcomed feedback on this updated approach for 
making scaled reductions

[[Page 30641]]

proposed at Sec.  422.164(g)(1)(iii), (1)(iii)(A)(1) and (2), 
(1)(iii)(H), (1)(iii)(K)(2), and (1)(iii)(O), the removal of the Part D 
related provisions at Sec.  422.164(g)(1)(iii)(B), (1)(iii)(F), and 
(1)(iii)(I), and Sec.  423.184(g)(1)(ii), and removal of the provision 
at Sec.  422.164(g)(1)(iii)(J), and we received several comments. A 
discussion of these comments, along with our responses follows.
    Comment: We received a number of comments in support of our 
proposal to update the methodology for applying scaled reductions for 
the Part C appeals measures. A couple of commenters expressed strong 
support for this update, because it will help ensure data integrity by 
discouraging MA plans from not sending required appeals to the IRE to 
earn higher Star Ratings.
    Response: CMS appreciates the support of the update to the 
methodology for applying scaled reductions for the Part C appeals 
measures. Given the financial and marketing incentives associated with 
higher performance in Star Ratings, CMS agrees that safeguards are 
needed to protect the Star Ratings from actions that inflate 
performance or mask deficiencies.
    Comment: A few commenters asked for clarifications about the types 
of cases that CMS is reviewing for the scaled reductions and the types 
of cases that need to be sent to the IRE. A commenter asked if it was 
CMS's intent to send all favorable cases to the IRE.
    Response: We are only examining the appeals that are currently 
required to be sent to the IRE. Part C contracts are required to send 
partially favorable (partially adverse) and unfavorable (adverse) 
decisions to the IRE within applicable timeframes as specified at Sec.  
422.590(a) through (e) and (g). (88 FR 78560). It is not CMS's intent 
for plans to send all favorable cases (from the plan level) to the IRE.
    CMS has also addressed and explained the obligation of an MA plan 
to send cases to the IRE in current Medicare guidance in the Parts C & 
D Enrollee Grievances, Organization/Coverage Determinations, and 
Appeals Guidance: Effect of Failure to Meet the Timeframe for Level 1 
Appeals.\183\ If a plan fails to provide the enrollee with a level 1 
appeal decision within the required timeframes, this failure 
constitutes an adverse decision. In this case, the plan must forward 
the complete case file to the IRE pursuant to Sec.  422.590(d) and (g). 
See also section 50.12.1 regarding forwarding adverse level 1 appeals 
to the IRE. CMS guidance also permits an exception to this when a plan 
makes a fully favorable determination on a level 1 appeal less than 24 
hours after the end of the adjudication timeframe and effectuates the 
favorable determination. In this case, the plan should consider 
effectuating and notifying the enrollee of the favorable appeal 
decision in lieu of forwarding the appeal to the IRE.
---------------------------------------------------------------------------

    \183\ https://www.cms.gov/medicare/appeals-and-grievances/mmcag/downloads/parts-c-and-d-enrollee-grievances-organization-coverage-determinations-and-appeals-guidance.pdf.
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    For the updates to the scaled reductions methodology, which we are 
finalizing as proposed with one clarification, we are examining all 
cases that were sent to the IRE that should have been sent versus the 
ones that were supposed to be sent per regulation and guidance. The 
denominator would include the number of level 1 appeals where the plan 
made an unfavorable or partially favorable decision for the appeal. The 
numerator would include all the cases that the IRE received regardless 
of the disposition the IRE subsequently gave the case (i.e., 
unfavorable (upheld); favorable (overturn), partially favorable 
(partially overturn), received by but not evaluated by the IRE because 
the MA plan approved coverage or dismissed). We are adopting additional 
language at Sec.  422.164(g)(1)(iii)(H) to clarify that the numerator 
is the total number of cases received by the IRE that should have been 
sent.
    Comment: A commenter asked for clarification on how a negative 
error rate would be treated, noting that would be possible since CMS is 
reviewing all cases regardless of disposition.
    Response: CMS clarifies that there cannot be a negative error rate 
unless a plan sends cases to the IRE that they should not be sending. 
CMS is comparing all cases sent to the IRE relative to all cases that 
should have been sent to the IRE. We are adding language at Sec.  
422.164(g)(1)(iii)(H) to clarify that the numerator is the total number 
of cases received by the IRE that were supposed to be sent to the IRE. 
The denominator remains the number of cases that should have been 
forwarded to the IRE.
    Comment: A commenter recommended that CMS reconsider the inclusion 
of dismissed appeals, noting that such appeals are dismissed due to a 
variety of reasons and inclusion in the Star Ratings may 
inappropriately impact performance. A couple of commenters asked for 
clarification on what other kinds of dismissals would be included. They 
noted that CMS proposes the total number of cases received by the IRE 
would include all appeals regardless of their disposition and gives the 
example of appeals dismissed for reasons other than the plan's 
agreement to cover disputed services.
    Response: There are no changes to the current Part C appeals 
measures and which appeals are included. The proposed methodology to 
apply scaled reductions is a mechanism to ensure that the data used for 
evaluating performance for these measures are accurate, complete, and 
unbiased. Through this methodology, we are determining if all of the 
cases that should have been sent to IRE were sent. For the Plan Makes 
Timely Decisions about Appeals (Part C) measure, the denominator 
includes unfavorable (upheld) appeals, favorable (overturned) appeals, 
partially favorable (partially overturned) appeals, and appeals 
received by but not evaluated by the IRE because the MA plan approved 
coverage. The Reviewing Appeals Decisions (Part C) measure excludes 
dismissed and withdrawn appeals and appeals received but not evaluated 
by the IRE because the MA plan approved coverage.
    As a reminder, Part C sponsors are required to send all adverse or 
partially adverse cases to the IRE. In some cases, the IRE could 
dismiss the appeal or the appeal (that is, reconsideration request) 
could be withdrawn after the appeal is sent to the IRE. Cases may be 
dismissed for a variety of reasons under Sec.  422.590(d). For example, 
if the enrollee requested a pre-service appeal but then passes away 
before the appeal process is complete, the case is dismissed. If a plan 
processed an appeal, but the plan should not have because a proper 
party did not file the appeal request, such as an individual who is not 
the enrollee and who does not have a valid power of attorney or 
appointment of representation form, the IRE will also dismiss it. Cases 
can be withdrawn when the appellant contacts the IRE directly and 
advises them that they no longer wish to proceed with their appeal.
    Comment: A few commenters recommended a transition year so Part C 
sponsors can get used to the new approach for scaled reductions. A 
commenter wanted additional time since they suggested that plans may 
need to put in additional efforts to ensure that they pass data 
validation for the Part C Reporting Requirements.
    Response: Part C sponsors currently collect and submit to CMS the 
data that would be used for the scaled reductions through the Part C 
Reporting Requirements established by CMS under Sec.  422.516(a). CMS 
does not believe that a transition year is needed since we

[[Page 30642]]

would be using existing data collected at the contract level from MA 
organizations about the number of partially favorable reconsiderations 
(that is, the number of partially favorable claims and the number of 
partially favorable service requests by enrollees/representatives and 
non-contract providers) and unfavorable reconsiderations (that is, the 
number of unfavorable claims and the number of unfavorable service 
requests by enrollees/representatives and non-contract providers) over 
the measurement year. (Partially favorable and unfavorable 
reconsiderations must all be forwarded to the IRE.) In the future, we 
noted in the proposed rule that alternative data sources could be used 
that collect similar information. To help in the transition to the 
updated methodology, CMS will add information to HPMS for the 2026 Star 
Ratings to provide information about the scaled reductions that would 
have been applied if this methodology was in place for that year. This 
information most likely will be posted in HPMS following the release of 
the 2026 Star Ratings plan previews.
    Comment: A few commenters questioned whether CMS expected plans to 
achieve a 95 percent or greater accuracy rate. A commenter was 
concerned this would impact smaller plans more.
    Response: CMS did not propose to use a 95 percent error rate as 
part of the scaled reductions implemented pursuant to Sec.  
422.164(g)(1)(iii). We did not propose any changes to the error rates 
at Sec.  422.164(g)(1)(iii)(D) to determine the size of the scaled 
reductions. The thresholds used for determining the reduction are now 
and will continue to be under this revision to Sec.  
422.164(g)(1)(iii), as follows: (1) 20 percent, 1 star reduction; (2) 
40 percent, 2-star reduction; (3) 60 percent, 3-star reduction; and (4) 
80 percent, 4 star reduction. However, these scaled reductions are 
specific to the evaluation of missing cases that have not been 
forwarded to the IRE when they should have been for calculation of the 
appeals measures.
    Per Sec.  422.164(g)(1)(ii), CMS has a different downgrade policy 
for Star Ratings measures based on whether the data that an MA 
organization must submit to CMS under Sec.  422.516 do not pass data 
validation. Since we will use data submitted under Sec.  422.516 to 
evaluate data completeness of the cases submitted to the IRE for the 
Part C appeals measures, we will use similar rules to evaluate the 
quality of the appeals information submitted that is used to determine 
data completeness of the Part C appeal measures that is described at 
Sec.  422.164(g)(1)(iii)(O).
    Per Sec.  422.164(g)(1)(ii) (which we did not propose to amend and 
are not revising in this final rule), if a contract fails data 
validation of the applicable Part C Reporting Requirements sections 
(that is, the reporting required under Sec.  422.516) for 
reconsiderations by not scoring at least 95 percent or is not compliant 
with data validation standards, we proposed to reduce the appeals 
measures' Star Ratings to 1 star. Our longstanding policy has been to 
reduce a contract's measure rating if we determine that a contract's 
data are inaccurate, incomplete, or biased. The validation score of 95 
percent on Part C and Part D Reporting Requirements is an existing data 
integrity policy that applies to other measures. CMS finalized these 
data integrity policies at Sec. Sec.  422.164(g)(1)(ii) and 
423.184(g)(1)(i) to distinguish between occasional errors and 
systematic issues. (see 83 FR 16562) Currently, the two Star Ratings 
measures based on Part C and D Reporting Requirements data (SNP Care 
Management (Part C) and Medication Therapy Management (MTM) Program 
Completion Rate for Comprehensive Medication Reviews (CMR) (Part D)) 
are calculated using data reported by plan sponsors and validated via 
an independent data validation using CMS standards. Per the Part C and 
D Star Ratings Technical Notes, contracts that do not score at least 95 
percent on data validation for these reporting sections and/or were not 
compliant with data validation standards/sub-standards for at least one 
of the data elements used to calculate the measures are not rated in 
these measures, and the contract's measure score is reduced to 1 star. 
CMS has relied on the Part C and D Reporting Requirements data 
validation audit to confirm the integrity of these plan-reported data 
since these two measures were first added to the Star Ratings program.
    Since we will be using the Part C Reporting Requirements data to 
calculate scaled reductions, we proposed to reduce the Part C appeals 
measures to 1 star if we do not have data that passed the Part C 
Reporting Requirements data validation audit to validate the data 
completeness of these measures. Plan size should not affect accuracy of 
data validation for the reporting sections. Additionally, as 
established under Sec. Sec.  422.164(g)(2) and 423.184(g)(2), CMS can 
reduce a measure Star Rating to 1 for additional issues related to data 
accuracy not described in Sec. Sec.  422.164(g)(1)(i) through (iii) or 
423.184(g)(1)(i).
    Comment: A commenter opposed the change in timeframe from a 3-month 
period to the measurement year because they believe without a change in 
the case minimum it would increase the burden on contracts, 
particularly low-volume contracts. Another commenter strongly supports 
the change to a 12-month period since it aligns with the measurement 
period for the measure.
    Response: CMS does not agree that the proposed scaled reductions 
methodology would increase the burden to contracts, and we appreciate 
the support for the 12-month timeframe. CMS is planning to use data 
that are already provided by MA organizations and available to CMS. The 
data from the current Part C Reporting Requirements established under 
Sec.  422.516 would be used to calculate the scaled reductions; 
therefore, there is no increased burden for sponsors. The proposed 
timeframe of 12 months more accurately aligns with the measurement 
period for both Part C appeals measures. We exclude from the scaled 
reductions contracts that have 10 or fewer cases that should have been 
forwarded to the IRE and were not during the measurement year to 
address statistical concerns with precision. Increasing this number to 
greater than 10 cases would create incentives for contracts not to 
forward cases to the IRE that they should be forwarding.
    Comment: A commenter asked whether the TMP data will continue to be 
leveraged to determine data completeness and calculate the scaled 
reductions for the Part C appeals measures.
    Response: The TMP data will no longer be used for determining 
scaled reductions of the Part C appeals measures.
    After consideration of the public comments we received and for the 
reasons outlined in the proposed rule and our responses to comments, we 
are finalizing as proposed this updated approach for making scaled 
reductions at Sec.  422.164(g)(1)(iii), (1)(iii)(A)(1) and (2), 
(1)(iii)(H), (1)(iii)(K)(2), and (1)(iii)(O) for the 2027 Star Ratings 
(2025 measurement year) with a modification to clarify that the 
numerator is the total number of cases received by the IRE that should 
have been sent at Sec.  422.164(g)(1)(iii)(H). We are finalizing the 
removal of the Part D related provisions at Sec.  
422.164(g)(1)(iii)(B), (1)(iii)(F), and (1)(iii)(I), and Sec.  
423.184(g)(1)(ii), and the removal of the provision at Sec.  
422.164(g)(1)(iii)(J) without modification.

[[Page 30643]]

F. Review of Sponsor's Data (Sec. Sec.  422.164(h) and 423.184(h))

    Currently, Sec. Sec.  422.164(h) and 423.184(h) provide that an MA 
organization (and a cost plan organization as the regulations are 
applied under Sec.  417.472(k)) and a Part D plan sponsor may request a 
review of certain administrative data (that is, the contracts' appeals 
data and Complaints Tracking Module data) before Star Ratings are 
calculated. The regulations provide for CMS to establish an annual 
deadline by which such requests must be submitted. In the November 2023 
proposed rule, CMS proposed to expand the policy for requests that CMS 
review certain data used for Star Ratings to include administrative 
data used for their contract's Part D Star Rating Patient Safety 
measures by adding new Sec. Sec.  422.164(h)(3) and 423.184(h)(3). 
These requests would also have to be received by the annual deadline 
set by CMS. We intended that the requests could include CMS's review of 
PDE, diagnosis code, and enrollment data that are used for the Part D 
Star Rating Patient Safety measures, but the requests are not 
necessarily limited to these specific data.
    CMS reports and updates the rates for the current Part D Star 
Ratings Patient Safety measures (that is, Medication Adherence for 
Cholesterol (Statins) (ADH-Statins), Medication Adherence for 
Hypertension (RAS Antagonists) (ADH-RAS), Medication Adherence for 
Diabetes Medications (ADH-Diabetes), and Statin Use in Persons with 
Diabetes (SUPD) measures) via the Patient Safety Analysis Web Portal 
for sponsors to review and download. Part D sponsors can use the 
Patient Safety reports to compare their performance to overall averages 
and monitor their progress in improving their measure rates. In the 
April 17, 2023, HPMS memorandum titled, Information to Review Data Used 
for Medicare Part C and D Star Ratings and Display Measures, CMS 
reminded sponsors of the various datasets and reports available for 
sponsors to review their underlying measure data that are the basis for 
the Part C and D Star Ratings and display measures, including the 
monthly Part D Patient Safety measure reports. We expect sponsors to 
review their monthly Patient Safety reports that include measure rates 
along with available underlying administrative data and alert CMS of 
potential errors or anomalies in the rate calculations per the measure 
specifications in advance of CMS's plan preview periods to allow 
sufficient time to investigate and resolve them before the release of 
the Star Ratings.
    Reviewing administrative data for the Patient Safety measures is a 
time-consuming process. In addition, once CMS implements SDS risk 
adjustment for the three Medication Adherence measures, as finalized in 
the April 2023 final rule (88 FR 22265 through 22270), the final 
measure rates, which are calculated in July after the end of the 
measurement period, would require increased processing time to 
calculate. To allow enough time for CMS to review a sponsor's 
administrative data and ensure the accuracy of the final calculated 
Patient Safety measure rates, we proposed that sponsoring 
organizations' requests for CMS review of administrative data must be 
received no later than the annual deadline set by CMS.
    Beginning with the 2025 measurement year (2027 Star Ratings), we 
proposed at Sec. Sec.  422.164(h)(3) and 423.184(h)(3) that any 
requests by an MA organization or Part D sponsor to review its 
administrative data for Patient Safety measures be made by the annual 
deadline set by CMS for the applicable Star Ratings year. We stated in 
the November 2023 proposed rule that, similar to the implementation of 
Sec. Sec.  422.164(h)(1) and (2) and 423.184(h)(1) and (2), to provide 
flexibility to set the deadline contingent on the timing of the 
availability of data for plans to review, we intend to announce the 
deadline in advance either through the process described for changes in 
and adoption of payment and risk adjustment policies section 1853(b) of 
the Act (that is, the annual Advance Notice and Rate Announcement) or 
an HPMS memorandum.
    Given the timing of the publication of the Advance Notice of 
Methodological Changes for Calendar Year (CY) 2025 for Medicare 
Advantage (MA) Capitation Rates and Part C and Part D Payment Policies 
and of this proposal, we stated that we would announce the deadline for 
measurement year 2025 in the final rule that addresses proposed 
Sec. Sec.  422.164(h)(3) and 432.184(h)(3). In subsequent years, we 
would announce annual deadlines in advance via annual Advance Notice 
and Rate Announcement, or by a HPMS memorandum. For the 2025 
measurement year (2027 Star Ratings), we stated that we expected this 
deadline to be May 18, 2026. In establishing this deadline, we factored 
in data completeness along with operational deadlines to produce the 
final Star Ratings. These requests may be time-consuming to review, and 
it is beneficial to receive the requests before the final rates are 
calculated and before the first plan preview. Historically, we find 
that PDE data for performance measurement are complete by April of the 
following year (that is, PDE data for Year of Service (YOS) 2025 is 
generally complete by April of 2026) even though the PDE submission 
deadline is established at the end of June following the payment year.
    We invited public comment on this proposal and received several 
comments. A discussion of these comments, along with our responses 
follows.
    Comment: Most commenters supported the proposal to set an annual 
deadline for MA organizations or Part D sponsors to request reviews of 
its administrative data for the Patient Safety measures. A few 
commenters supported the proposal but requested to move the deadline to 
mid-late June or have a phased-in approach to set multiple deadlines 
based on PDE dates of service to facilitate a complete review.
    Response: We appreciate the support received for this proposal. We 
proposed May 18, 2026, as the initial deadline for the 2025 measurement 
year for the 2027 Star Ratings and announced the date in the proposed 
rule due to the timing of the publication of the CY 2025 Advance Notice 
and Rate Announcement. The deadline was selected due to the time to 
complete the reviews and calculate the rates, and because the PDE data 
used to calculate the Patient Safety measures are generally complete by 
that point based on our analysis. We will continue to monitor the 
number of sponsor requests for administrative reviews for the Patient 
Safety measures, the time it takes for CMS to complete the reviews, and 
data completeness. In future years, we intend to announce the deadline 
through the annual Advance Notice and Rate Announcement or an HPMS 
memorandum and may adjust the deadline accordingly. We note that Sec.  
422.164(h)(3) and 423.184(h)(3), as proposed and finalized, do not 
require CMS to announce the deadline through the Advance Notice and 
Rate Announcement, which permits CMS the flexibility to use other means 
(such as an HPMS memo) to announce the deadline by which sponsoring 
organizations may request CMS to review their administrative data for 
the Patient Safety measures.
    Comment: A commenter noted they supported the proposal for plans to 
request that CMS review their administrative claims data used for the 
Part D Patient Safety measures.
    Response: We proposed to establish a deadline for sponsors to 
request that CMS review their administrative data

[[Page 30644]]

used for the Star Ratings Part D Patient Safety measures because the 
requests are time consuming, and we need to allow sufficient time for 
the reviews especially after implementation of the SDS risk adjustment 
for the Medication Adherence measure calculations. However, CMS has 
always permitted sponsors to make these requests. We provide detailed 
Patient Safety measure reports to sponsors on a monthly basis via the 
Patient Safety Analysis Web Portal to monitor their performance and 
alert CMS if potential errors or anomalies are identified. Then, CMS 
provides instructions on how to securely submit data for review. We 
will continue to provide information through HPMS memoranda on the 
process and procedures to request CMS review of these administrative 
data.
    Comment: We received some suggestions to expand the administrative 
reviews to include other forms of payment outside of the Medicare PDEs 
for Patient Safety reports such as cash payment data, Veteran Affairs 
benefits, or other supplemental data.
    Response: The Medicare Part C & D Star Ratings Technical Notes, 
available on the Part C and D Performance Measure web page \184\ for 
each year's Star Ratings, outline the data sources used to calculate 
the Star Ratings Part D Patient Safety measures. Per Sec.  
423.184(d)(1)(v), non-substantive updates, including updates to data 
sources, to the Part D measures must be announced during or in advance 
of the measurement period through the Advance Notice process. (The same 
general rule applies as well to Part C measures per Sec.  
422.164(d)(1)(v).) CMS does not accept PDEs for claims that were not 
submitted for processing and/or reimbursement under the plan by either 
a network pharmacy or enrollee as discussed in the May 11, 2012, HPMS 
memorandum, Prohibition on Submitting PDEs for non-Part D 
Prescriptions. The April 23, 2013, HPMS memorandum, May 2013 Updates to 
the Drug Data Processing System, provides scenarios in which sponsors 
are allowed to submit PDE records with $0.00 in drugs costs.
---------------------------------------------------------------------------

    \184\ https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data.
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    After reviewing the comments received and for the reasons outlined 
in the proposed rule and our responses to comments, we are finalizing 
the proposal at Sec. Sec.  422.164(h)(3) and 423.184(h)(3) that any 
requests by an MA organization or Part D sponsor to review its 
administrative data for Patient Safety measures be made by the annual 
deadline set by CMS for the applicable Star Ratings year. For the 2025 
measurement year (2027 Star Ratings) the deadline will be May 18, 2026. 
For subsequent years, we intend to announce the annual deadlines via 
the annual Advance Notice and Rate Announcement or by an HPMS 
memorandum.

G. Categorical Adjustment Index (Sec. Sec.  422.166(f)(2) and 
423.186(f)(2))

    We proposed to calculate the percentage of LIS/DE enrollees and 
percentage of disabled enrollees used to determine the CAI adjustment 
factor in the case of contract consolidations based on the combined 
contract enrollment from all contracts in the consolidation beginning 
with the 2027 Star Ratings. The methodology for the CAI is codified at 
Sec. Sec.  422.166(f)(2) and 423.186(f)(2). The CAI adjusts for the 
average within-contract disparity in performance associated with the 
percentages of LIS/DE and disabled enrollees within that contract. 
Currently, the percentage of LIS/DE enrollees and percentage of 
disabled enrollees for the surviving contract of a consolidation that 
are used to determine the CAI adjustment factor are calculated using 
enrollment data for the month of December for the measurement period of 
the Star Ratings year for the surviving contract as described at 
Sec. Sec.  422.166(f)(2)(i)(B) and 423.186(f)(2)(i)(B). To more 
accurately reflect the membership of the surviving contract after the 
consolidation, we proposed to determine the percentage of LIS/DE 
enrollees and percentage of disabled enrollees for the surviving 
contract by combining the enrollment data across all contracts in the 
consolidation.
    We proposed to modify Sec. Sec.  422.166(f)(2)(i)(B) and 
423.186(f)(2)(i)(B) to calculate the percentage of LIS/DE enrollees and 
the percentage of disabled enrollees for the surviving contract for the 
first 2 years following a consolidation by combining the enrollment 
data for the month of December for the measurement period of the Star 
Ratings year across all contracts in the consolidation. Once the 
enrollment data are combined across the contracts in the consolidation, 
all other steps described at Sec. Sec.  422.166(f)(2)(i)(B) and 
423.186(f)(2)(i)(B) for determining the percentage LIS/DE enrollees and 
percentage disabled enrollees would remain the same, but we proposed to 
restructure that regulation text into new paragraphs (f)(2)(i)(B)(2) 
through (4). We proposed this change since Sec. Sec.  422.166(b)(3) and 
423.186(b)(3) do not address the calculation of enrollment for the CAI 
in the event of a contract consolidation; rather, they focus on the 
calculation of measure scores in the case of consolidations.
    We invited public comment on this proposal and received several 
comments. A discussion of these comments, along with our responses 
follows.
    Comment: A commenter supported finalizing as proposed and another 
commenter appreciated CMS providing clarity on the calculation of the 
CAI.
    Response: We thank these commenters for their support.
    Comment: A commenter felt there are several benefits to the 
proposal but also raised some concerns. The commenter asked for 
clarification on how data from multiple contracts are weighted or 
integrated. The commenter also requested transparent and accessible 
information about the adjustments so beneficiaries and advocacy groups 
can understand the changes and their implications. The commenter also 
raised concerns that if the adjustment favors larger entities or 
provides incentives for improved ratings post-consolidation, healthcare 
organizations might strategically consolidate to maximize their 
performance ratings.
    Response: Data from the contracts involved in the consolidation are 
not weighted in the process we proposed and are finalizing at 
Sec. Sec.  422.166(f)(2)(i)(B) and 423.186(f)(2)(i)(B). Rather the 
percentage of LIS/DE enrollees and the percentage of disabled enrollees 
will be calculated for the surviving contract of the consolidation 
based on all enrollees across all of the contracts involved in the 
consolidation. For example, if Contract A is consolidating into 
Contract B as of January 1, 2025, the percentage of LIS/DE enrollees 
and the percentage of disabled enrollees used in determining the CAI 
adjustment factor for Contract B for the 2025 Star Ratings will be 
calculated across all enrollees in Contract A and Contract B.
    Data and information related to the CAI are shared publicly in 
multiple ways. The CAI adjustment categories are shared each year on 
CMS.gov at the time the Advance Notice is released. Each year on the 
Part C and D Performance Data page on CMS.gov, CMS shares the CAI 
measure supplement with details related to the adjusted measure set for 
the CAI and data tables with the final adjustment categories for each 
contract for the given Star Ratings year: https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data.
    Regarding the commenter's concern about this adjustment potentially 
favoring larger entities and making

[[Page 30645]]

consolidations more likely, there is nothing about this approach that 
would favor a larger entity. Currently, measure-level scores are 
already combined across the surviving and consumed contracts, so we do 
not believe this relatively small technical change would create new 
incentives for contracts to consolidate. This approach will also not 
make consolidations more likely because this approach will more 
accurately reflect the membership of the surviving contract after the 
consolidation including members from the consumed contracts. In 
addition, the Star Ratings measure scores for the surviving contract of 
a consolidation are calculated so that the scores reflect the 
membership of the surviving contract after the consolidation as 
specified at Sec. Sec.  422.162(b)(3) and 423.182(b)(3).
    After consideration of the public comments we received and for the 
reasons outlined in the proposed rule and our responses to comments, we 
are finalizing the revision at Sec. Sec.  422.166(f)(2)(i)(B) and 
423.186(f)(2)(i)(B) to calculate the percentage LIS/DE enrollees and 
the percentage disabled enrollees for the surviving contract for the 
first 2 years following a consolidation by combining the enrollment 
data for the month of December for the measurement period of the Star 
Ratings year across all contracts in the consolidation as proposed 
without modification.

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

    We proposed how to calculate the HEI reward in the case of contract 
consolidations beginning with the 2027 Star Ratings. (The 2027 Star 
Ratings would be the first Star Ratings to include the HEI.) The 
methodology for the HEI reward is codified at Sec. Sec.  422.166(f)(3) 
and 423.186(f)(3). The HEI rewards contracts for obtaining high 
measure-level scores for the subset of enrollees with the specified 
social risk factors (SRFs). The goal of the HEI reward is to improve 
health equity by incentivizing MA, cost, and PDP contracts to perform 
well among enrollees with specified SRFs. In calculating the HEI reward 
for the surviving contract of a consolidation, we want to avoid masking 
the scores of contracts with low performance among enrollees with the 
specified SRFs under higher performing contracts. We also want to avoid 
masking contracts that serve relatively few enrollees with the 
specified SRFs under contracts that serve relatively many more of these 
enrollees.
    For the first year following a consolidation, we proposed to add 
new paragraphs Sec. Sec.  422.166(f)(3)(viii)(A) and 
423.186(f)(3)(viii)(A) to assign the surviving contract of a 
consolidation the enrollment-weighted mean of the HEI reward of the 
consumed and surviving contracts using enrollment from July of the most 
recent measurement year used in calculating the HEI reward; the 
existing rules laid out at Sec. Sec.  422.162(b)(3)(iv) and 
423.182(b)(3)(iv) address how CMS handles combining measures scores for 
consolidations, but do not address how CMS would handle the calculation 
of the HEI when contracts consolidate since the HEI is not a measure. 
We proposed that contracts that do not meet the minimum percentage of 
enrollees with the specified SRF thresholds or the minimum performance 
threshold described at Sec. Sec.  422.166(f)(3)(vii) and 
423.186(f)(3)(vii) would have a reward value of zero used in 
calculating the enrollment-weighted mean reward. For the second year 
following a consolidation, we proposed at new paragraphs Sec. Sec.  
422.166(f)(3)(viii)(B) and 423.186(f)(3)(viii)(B) that, when 
calculating the HEI score for the surviving contract, the patient-level 
data used in calculating the HEI score would be combined across the 
contracts in the consolidation prior to calculating the HEI score. The 
HEI score for the surviving contract would then be used to calculate 
the HEI reward for the surviving contract following the methodology 
described in Sec. Sec.  422.166(f)(3)(viii) and 423.186(f)(3)(viii).
    We invited public comment on this proposal and received several 
comments. A discussion of these comments, along with our responses 
follows.
    Comment: Most commenters supported the proposal, and another 
commenter appreciated the additional clarity on how the HEI will be 
calculated across a broad range of situations.
    Response: CMS thanks these commenters for their support.
    Comment: A commenter asked for additional clarification and 
examples of how the surviving contract's HEI reward would be calculated 
and combined across contracts noting that it is unclear how CMS intends 
to combine patient-level data ``across contracts prior to calculating 
the HEI score.'' The commenter stated that the proposal referenced the 
enrollment-weighted mean, but additional clarification and examples 
would be helpful.
    Response: The methodology for combining data across contracts in 
the consolidation when calculating the HEI reward for the surviving 
contract will depend on which year the consolidation is in. In the 
first year following a consolidation, the HEI reward for the surviving 
contract will be calculated as the enrollment-weighted mean reward of 
the HEI rewards for all contracts in the consolidation using July 
enrollment from the most recent measurement year used in calculating 
the HEI.
    In the second year following a consolidation, patient-level data 
for the measurement years used in calculating the HEI will be combined 
across contracts in the consolidation by assigning members from the 
consumed contract(s) to the surviving contract. These combined patient-
level data will be used to calculate the HEI score and reward for the 
surviving contract, including the calculation of the percentage of 
enrollees with the specified SRFs for the surviving contract and the 
surviving contract's measure scores for the subset of enrollees with 
the specified SRFs following the methodology at Sec. Sec.  
422.166(f)(3) and 423.186(f)(3).
    For example, if Contract A is consolidating into Contract B as of 
January 1, 2027, the first year following the consolidation is 2027. 
Therefore, the HEI reward for the 2027 Star Ratings will be calculated 
for Contract A and Contract B separately using data from measurement 
years 2024 and 2025. The final HEI reward for Contract B (the surviving 
contract) will then be calculated as the enrollment-weighted mean of 
the HEI rewards for Contracts A and B using enrollment from July 2025. 
If Contract A had an HEI reward of 0.066667 and July 2025 total 
enrollment of 10,000 and Contract B had an HEI reward of 0.235897 and 
July 2025 total enrollment of 5,000, then the final HEI reward for 
Contract B would be 0.123077 ((0.066667 * 10,000 + 0.235897 * 5,000)/
(10,000 + 5,000)).
    Continuing this example when calculating the HEI reward for the 
2028 Star Ratings for Contract B (that is, the surviving contract), the 
patient-level data from measurement years 2025 and 2026 will be 
combined for Contracts A and B. That is, the patient-level data from 
measurement years 2025 and 2026 used to calculate the HEI score and 
reward for Contract B will contain all enrollees from Contracts A and 
B.
    Comment: A commenter recommended CMS specify that total enrollment, 
as opposed to enrollment of beneficiaries with the specified SRFs, will 
be used in calculating the enrollment-weighted mean of the HEI rewards.
    Response: Total contract enrollment as of July of the most recent 
measurement year used in calculating

[[Page 30646]]

the HEI will be used to calculate the enrollment-weighted mean HEI 
reward for the surviving contract in the first year following the 
consolidation. Based on this, we are finalizing as proposed with an 
additional revision to Sec. Sec.  422.166(f)(3)(viii)(A) and 
423.186(f)(3)(viii)(A) to clarify that total contract enrollment is 
used from July of the most recent measurement year. As illustrated in 
the example above where Contract A is consolidating into Contract B as 
of January 1, 2027, we use total enrollment as of July 2025 to 
calculate the enrollment-weighted mean HEI reward for Contract B (the 
surviving contract) in the 2027 Star Ratings.
    Comment: A few commenters stated that expanding eligibility for the 
HEI reward to more MA plans would reduce the likelihood that currently 
ineligible plans might pursue contract consolidations to ``game'' the 
system.
    Response: The proposed approach to calculating the HEI reward in 
the case of consolidations is appropriate because the HEI reward 
captures the entire population of enrollees with SRFs in the surviving 
contract. With regard to expanding eligibility for the HEI reward, one 
of the goals CMS considered when developing the HEI reward was to avoid 
rewarding contracts that may do well among enrollees with the SRFs 
included in the HEI but serve few enrollees with those SRFs relative to 
their total enrollment, making it easier to do well. As discussed in 
the April 2023 final rule, requiring both a minimum HEI score and a 
minimum percentage of enrollees in a contract with the 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.
    Comment: A commenter stated the proposal should be closely 
evaluated for the impacts of private equity, specifically the impacts 
mergers and acquisitions with private equity involvement may have on 
enrollment of systemically excluded populations, beneficiaries who meet 
the SRF threshold requirements, and the level of integration within 
plans.
    Response: We do not believe that there is anything in the proposal, 
which we are finalizing with clarifications, for how to calculate the 
HEI reward for consolidating contracts that would make private equity 
involvement more likely. Calculating the HEI reward for the surviving 
contract in a consolidation as proposed will ensure the HEI reward 
accurately reflects the membership of the surviving contract after the 
consolidation. In addition, the Star Ratings measure scores for the 
surviving contract of a consolidation are calculated so they reflect 
the membership of the surviving contract after the consolidation as 
specified at Sec. Sec.  422.162(b)(3) and 423.182(b)(3).
    After consideration of the public comments we received and for the 
reasons outlined in the proposed rule and our responses to comments, we 
are finalizing the addition of Sec. Sec.  422.166(f)(3)(viii)(A) and 
(B) and 423.186(f)(3)(viii)(A) and (B) as proposed with a modification 
to clarify that total contract enrollment from July of the most recent 
measurement year is used in calculating the enrollment weights in the 
first year following the consolidation.

H. Quality Bonus Payment Appeal 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 an MA contract to appeal its 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 and 21491), 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.
1. Administrator Review
    In the November 2023 proposed rule, we proposed to revise the 
language at Sec.  422.260(c)(2)(vii) to provide the CMS Administrator 
the opportunity to review and modify the hearing officer's decision 
within 10 business days of its issuance. We proposed that if the 
Administrator does not review and issue a decision within 10 business 
days, the hearing officer's decision is final and binding. Under this 
proposal, if the Administrator does review and modify the hearing 
officer's decision, a new decision would be issued as directed by the 
Administrator. This proposed amendment would be implemented for all QBP 
appeals after the effective date of the final rule.
    We invited public comment on this proposal and received several 
comments. A discussion of these comments, along with our responses 
follows.
    Comment: Commenters supported providing the Administrator the 
opportunity to review hearing officer decisions. A few asked for 
clarification of the criteria that trigger a review by the 
Administrator, including whether plans can request this review. A 
commenter requested we modify this proposal such that Administrator 
review serves as another level of appeal opportunity for plans, and 
another asked that we document clear modes of communication to ensure 
timely receipt of information.
    Response: CMS appreciates the support. The Administrator will have 
the discretion to review (or review and modify) all hearing officer 
decisions during the 10 business day period established in the 
regulation. This is not another appeal opportunity for MA 
organizations. Information about QBP appeals is communicated promptly 
via email.
    After consideration of the public comments we received and for the 
reasons outlined in the proposed rule and our responses to comments, we 
are finalizing as proposed the revision of Sec.  422.260(c)(2)(vii) to 
state that the CMS Administrator has the discretion to review and 
modify the hearing officer's decision on a QBP appeal within 10 
business days of its issuance by the hearing officer.
2. Permissible Bases for 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. In the December 2022 
proposed rule, we proposed to clarify in Sec.  422.260(c)(3)(iii) some 
additional aspects of that administrative review process for appeals of 
QBP status determinations that are consistent with how we have 
historically administered the appeals process.
    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 (for example, following a 
different timeframe than the one in the measure specifications as 
adopted in the

[[Page 30647]]

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 proposed 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 proposed 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 (MPF) pricing files, data from the Medicare 
Beneficiary Database Suite of Systems, Medicare Advantage Prescription 
Drug (MARx) system, and other Federal data sources. The listed data 
sources have 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 using 
data 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 NCQA. 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 per 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 also proposed 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 such as telephone numbers and language 
preference information provided directly by the MA and PDP contract. 
There are detailed specifications for data collection \185\ for vendors 
to follow; CMS conducts oversight of the data collection efforts of the 
approved survey vendors.
---------------------------------------------------------------------------

    \185\ 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 PDE data, Medicare Beneficiary Database Suite 
of Systems, enrollment data from the 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 System (DDPS), which processes and 
validates the data with extensive system edits.\186\ CMS also has an 
outside analytic contractor independently review PDEs and work with 
sponsors on data integrity issues.\187\ 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, 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.\188\
---------------------------------------------------------------------------

    \186\ DDPS edit list effective for CY2024 is available at 
https://www.csscoperations.com/internet/csscw3.nsf/DIDC/
PFYJBZSUNW~Prescription%20Drug%20Program%20(Part%20D)~References.
    \187\ For background on this process see April 29, 2022, 
memorandum to sponsors Continuation of the Prescription Drug Event 
(PDE) Reports and PDE Analysis Reporting Initiatives for the 2022 
Benefit Year available at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/Continuation_PDE_Reports_and_Analysis_Reporting_Initiatives_2022_508_0.pdf.
    \188\ 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. 
We proposed to modify Sec.  422.260(c)(2)(v) so that the MA 
organization must provide a preponderance of 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 also proposed to 
add 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.
    If the reconsideration official or 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 proposed additional language at Sec.  
422.260(c)(1)(i) to clarify that ratings can go up, stay the same, or 
go down

[[Page 30648]]

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 
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 recalculation 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 recalculation, the new rating will be used. For example, if 
CMS has to do a systematic recalculation for the 2024 Star Ratings 
following the release of the preliminary 2025 QBP ratings, a contract's 
2024 Star Ratings used for the 2025 QBP ratings will not be decreased 
but the change that caused a systematic recalculation will be addressed 
when the 2025 Star Ratings are calculated (e.g., if the recalculation 
resulted in an update to the 2024 Star Ratings cut points for a 
measure, the updated cut points would be used to determine guardrails 
for the 2025 Star Ratings. Likewise, if the recalculation resulted in a 
change in measures scores, the updated measure scores would be used in 
calculating the improvement measures). If the recalculation of the 2024 
Star Ratings results in a higher rating for a contract, the higher 
rating will be used. We proposed 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 solicited comments on this proposal.
    Comment: A handful of commenters did not support CMS's proposal to 
add a provision to the QBP appeals process to clarify that certain data 
sources would not be eligible for requesting an administrative review. 
They did not support restricting the opportunity to appeal to certain 
measures. A commenter noted that if a sponsoring organization believes 
it may have been unfairly penalized in the Star Ratings calculations, 
the organization should have a venue to bring that argument forward, 
regardless of measure source. A commenter stated that the survey data 
collected for CAHPS and HOS measures are subjective, and the collection 
methods for these surveys may result in bias due to the diverse 
beneficiary responses and differences in survey and digital literacy 
across member populations. This commenter noted that plans should 
retain the right to raise methodological questions about the accuracy 
of survey measure scores given that the measures are case-mix adjusted, 
the potential for incorrect adjustments, and invalid responses from 
beneficiaries.
    Response: As we noted in the proposed rule, this proposal was to 
clarify and codify in regulation existing subregulatory guidance on how 
we have historically administered the appeals process. The data sources 
that cannot be appealed for data inaccuracy have 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 survey data, 
contracts may (and under this final rule may continue to) appeal 
calculation errors such as incorrectly calculating the case-mix 
adjustments, but they cannot claim that there is a data inaccuracy in 
beneficiary responses or appeal beneficiary responses. CMS does not 
agree that CAHPS or HOS survey responses are subjective. These 
responses represent the viewpoint of the beneficiary but that is the 
goal and purpose of the surveys--to gather and reflect the 
beneficiary's experience with the plan. A contract cannot dispute how a 
beneficiary responds to a survey and the rating the beneficiary gives 
their plan, for example. Part C and D sponsors contract with CMS-
approved survey vendors to administer the surveys, and these vendors 
follow detailed data administration protocols to ensure the accuracy of 
the data collected and that the data collection process, including the 
survey administration, is free from bias.
    Comment: A commenter noted that PDE changes are allowed for 
approximately 5 years after the close of a contract year, and while it 
is rare to need to appeal these rates, the possibility exists. 
Therefore, the commenter believed that prohibiting QBP appeals on data 
inaccuracies in PDE data used for Star Rating measures was not 
appropriate.
    Response: For the Part D measures that use PDE data, the 2024 
Medicare Part C & D Star Ratings Technical Notes \189\ state that 
original and adjustment final action PDEs submitted by the sponsor and 
accepted by the drug data processing system (DDPS) prior to the annual 
PDE submission deadline are used to calculate this measure and that PDE 
adjustments made post-reconciliation are not reflected in this measure. 
Therefore, changes that the Part D sponsors make to their PDE data 
post-reconciliation will not be considered in the Part D Star Rating 
calculations and any potential impact to the QBP as a result of post-
reconciliation changes are not appealable.
---------------------------------------------------------------------------

    \189\ https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data.
---------------------------------------------------------------------------

    As we stated in the proposed rule, CMS validates the PDE data 
submitted by the Part D sponsors. Part D sponsors submit PDE records to 
CMS through DDPS which performs detailed validation, reports processing 
outcomes, and stores PDE records. Through the PDE edit or error code 
process, DDPS performs checks of the PDE records for format, integrity, 
and validity before storing the data for future payment calculations. 
There are numerous checks that could trigger PDE error codes related to 
missing/invalid data, beneficiary eligibility, low-income eligibility, 
benefit phase, NDC-level validity and coverability, basic costs 
accounting, detailed financial field calculations, among others.\190\ 
Error correction/resolution is a central component in ensuring the 
acceptance, accuracy, and completeness of a sponsor's PDE records. 
Sponsors should

[[Page 30649]]

resolve issues that triggered PDE edits/error codes in a timely 
manner.\191\ The data must be submitted and accepted by the PDE 
submission deadline to be included in the annual Part D payment 
reconciliation, and sponsors must certify (based on best knowledge, 
information, and belief) that the claims data it submits are accurate, 
complete, and truthful and acknowledge that the claims data will be 
used for the purpose of obtaining Federal reimbursement (42 CFR 
423.505(k)(3)). CMS uses PDE data that were submitted prior to the PDE 
submission deadline for the Part D payment reconciliation and certified 
by the Part D sponsor in the Part D Star Ratings calculations.
---------------------------------------------------------------------------

    \190\ See the DDPS Edit download available at https://
www.csscoperations.com/internet/csscw3.nsf/DIDC/
FGSMOX8LWK~Prescription%20Drug%20Program%20(Part%20D)~References.
    \191\ See HPMS memorandum, ``Revision to Previous Guidance 
Titled ``Timely Submission of Prescription Drug Event (PDE) Records 
and Resolution of Rejected PDEs,'' '' October 6, 2011.
---------------------------------------------------------------------------

    We have historically not allowed sponsors to appeal Part D Star 
Rating measures based on incorrect PDE data because there is already an 
alternative process to help sponsors identify issues through the PDE 
error code process, as well as a process in place for sponsors to make 
PDE data corrections prior to the PDE submission deadline for the Part 
D payment reconciliation. However, there are many opportunities for 
sponsors to review their data to ensure accurate data are used in the 
Star Ratings program. CMS annually reminds sponsors of the various 
datasets and reports available to review their underlying measure data 
that are the basis for the Part C and D Star Ratings and display 
measures. Every April, we remind sponsors to alert CMS of potential 
errors or anomalies in advance of CMS's plan preview periods to allow 
sufficient time to investigate and resolve them before the release of 
the Star Ratings. Another memorandum, sent annually in April, outlines 
updates to the Medicare Part D Patient Safety measures and reports. In 
addition, Patient Safety User Guides and monthly reports are available 
for Patient Safety measures through the Patient Safety Analysis Web 
Portal. Revising the QBP appeal process from how it is currently 
administered to provide additional opportunities for sponsoring 
organizations to retroactively challenge their PDE data would 
unnecessarily burden the QBP appeal process, undermine the existing PDE 
submission, review, and correction processes, and eliminate the 
incentive of plans to ensure that CMS has accurate data on which to 
calculate the Star Ratings.
    Comment: A commenter expressed concern that ``other Federal Data 
Sources'' is a very broad term.
    Response: As we noted in the preamble, an example of Federal data 
sources used in the Star Ratings is FEMA data regarding disaster 
declarations. Federal data sources are any systems of record or 
authoritative data sources held by the federal government. To the 
extent that any new Star Ratings measure is based on Federal data 
sources that are not specifically listed in Sec.  422.260(c)(3)(iii), 
we encourage commenters in future rulemakings proposing such new Star 
Ratings measures to submit concerns about whether such Federal data 
sources are the appropriate authoritative data or should be subject to 
additional opportunities for sponsoring organizations to challenge data 
issues using the QBP appeal process.
    Comment: A commenter supported the proposal, stating that the two 
plan preview periods provide sufficient opportunities to refute 
suspected errors.
    Response: We appreciate the support.
3. Burden of Proof
    We received no comments on the 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, Sec.  422.260(c)(1)(i) clarifying that ratings can go up, stay 
the same, or go down based on an appeal of the QBP determination, and 
Sec.  422.260(d) clarifying 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.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to the comments, we are 
finalizing the proposed clarifications at Sec.  422.260(c)(1)(i), 
(c)(2)(v), (c)(3)(iii), and (d) with a small revision to paragraph (d) 
to clarify that information provided during the administrative review 
process may include information from other MA organizations and slight 
reorganization to Sec.  422.260(c)(3)(iii) to improve the clarity of 
the regulation. As these clarifications and revisions to the regulation 
are consistent with current practice and policy and do not 
substantively change the appeal rights of an MA organization, CMS is 
applying these changes immediately on the effective date of the final 
rule and to the 2025 Star Ratings.

VIII. Improvements to Special Needs Plans

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

    Under section 1859(b)(6)(B) and (f)(2) of the Act, Institutional 
Special Needs Plans (I-SNPs) are MA special needs plans (SNPs) that 
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. ``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 explicitly listed as part of the 
definition of ``institutionalized'' at Sec.  422.2 but meets both of 
the following criteria: (i) it furnishes similar long-term, healthcare 
services that are covered under Medicare Part A, Medicare Part B, or 
Medicaid; and (ii) its 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 whether 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.

[[Page 30650]]

CMS currently permits MA organizations to submit SNP applications that 
are restricted to institutionalized individuals only or 
institutionalized-equivalent individuals only, or to submit an 
application for a combination I-SNP that covers beneficiaries who 
qualify for either institutionalized or institutionalized-equivalent 
status but are enrolled under the same plan.
    We proposed 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's current MA application process. In 
addition, we proposed 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 
explained that adding these four definitions would clarify the specific 
standards that are applicable to I-SNPs, as distinguished from other MA 
plans and from other MA SNPs. The proposed revisions to the definitions 
include tying the definitions of ``institutionalized'' and 
``institutionalized-equivalent'' in Sec.  422.2 and the list of 
eligible institutions set forth in that definition to the proposed 
definition of I-SNP. In addition, our proposed definitions of the terms 
``facility-based institutional special needs plan (FI-SNP)'' and 
``hybrid institutional special needs plan (HI-SNP)'' included specific 
performance requirements tied to the type of special needs individual 
enrolled in the plan, while the proposed definition of ``institutional-
equivalent special needs plan (IE-SNP)'' focused on how IE-SNPs 
restrict enrollment to MA-eligible individuals who meet the definition 
of ``institutionalized-equivalent.'' Specifically, we proposed that the 
definition of the term facility-based institutional special needs plan 
(FI-SNP) would include that such plans own or contract with at least 
one institution in each county in the plan's service area and with each 
institution that serves enrollees in the plan. This approach of 
specifying certain requirements as part of the definition of a specific 
type of plan is consistent with how CMS has adopted regulatory 
definitions for D-SNPs, FIDE SNPs, and HIDE SNPs in Sec.  422.2. The 
proposed definitions clarified that MA organizations may offer I-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 codifies our current sub-regulatory guidance and 
those practices CMS has historically used during the MA application 
process and would not change current or future eligibility and 
enrollment requirements for I-SNP plan subtypes. In addition, adopting 
regulatory definitions that are specific to the type of I-SNP and the 
populations served by the I-SNPs allows clearer distinctions and rules 
about regulatory requirements that are applicable to a specific type of 
I-SNP. For example, we proposed in the Medicare Program; Contract Year 
2025 Policy and Technical Changes to the Medicare Advantage Program, 
Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, 
and Programs of All-Inclusive Care for the Elderly; Health Information 
Technology Standards and Implementation Specifications (the ``November 
2023 proposed rule'') \192\ to amend Sec.  422.116 to adopt an 
exception to existing network adequacy requirements for facility-based 
I-SNPs, which are special needs plans that restrict enrollment to 
individuals who meet the definition of institutionalized, own or 
contract with at least one institution, and own or have a contractual 
arrangement with each institutional facility serving enrollees in the 
plan. See section VIII.B of the November 2023 proposed rule and section 
VIII.E of this final rule for more information about that proposal.
---------------------------------------------------------------------------

    \192\ The November 2023 proposed rule can be found here: https://www.federalregister.gov/d/2023-24118.
---------------------------------------------------------------------------

    Lastly, we proposed 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'' at Sec.  422.2) contain requirements allowing I-
SNP clinical and care coordination staff access to enrollees of the I-
SNP who are institutionalized. The proposed new Sec.  422.101(f)(2)(vi) 
would codify longstanding sub-regulatory guidance in section 20.3 of 
Chapter 16B of the Medicare Managed Care Manual (MMCM) that is designed 
to provide I-SNP enrollees protections regarding access to care 
coordination and communication between providers and I-SNP staff. Under 
our proposal, access would be assured for I-SNP enrollees to care 
coordination services from I-SNP clinical and care coordination staff 
that are employed by the MA organization offering the I-SNP or under 
contract with the I-SNP to furnish healthcare, clinical or care 
coordination services. As we noted in the December 2022 proposed rule, 
I-SNP clinical and care coordination staff may be employed by the MA 
organization offering the I-SNP or be 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 I-SNP staff. In the proposed 
rule, we explained 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 would include provisions allowing access 
for ISNP staff would better protect beneficiaries.
    We received the following comments on our proposals, and our 
responses follow:
    Comment: A commenter sought clarification regarding the contracting 
requirements for Hybrid Institutional SNPs (HI-SNPs); specifically, the 
commenter asked that CMS clarify the requirement that HI-SNPs ``must 
own or have a contractual arrangement with each institutionalized 
facility serving enrollees.'' The commenter stated that it may not be 
possible to have a contract with a nursing home in a rural area, or the 
existing single facility may be of low quality, but enrollees in that 
facility would be well-served by having access to providers located in 
adjacent counties for service, and still benefit from the additional 
support and coordination offered by the I-SNP.
    Response: We appreciate the commenter's concerns related to service 
area requirements and access for their enrollees who might be able to 
seek services in counties adjacent to the HI-SNP's service area. In 
setting the proposed requirements for HI-SNPs, CMS considered that the 
plan would be a hybrid and thus include both MA-eligible individuals 
who meet the definition of ``institutionalized'' and MA-eligible 
individuals who meet the definition of ``institutionalized-
equivalent.'' Because HI-SNPs may enroll individuals that meet the 
definition of ``institutionalized'' under Sec.  422.2, the performance 
requirements for FI-SNPs that exclusively serve institutionalized 
individuals must also apply to the HI-SNP in order to ensure that the 
institutionalized enrollees of the HI-SNP are similarly protected and 
receive the necessary services. We proposed that FI-SNPs must own or 
have a contractual arrangement with

[[Page 30651]]

each institutionalized facility serving enrollees in the plan to align 
with longstanding sub-regulatory guidance in section 20.3 of Chapter 
16B of the MMCM. Under Chapter 16B, CMS has interpreted contractual 
arrangement to mean a network participation contract and will continue 
to do so in this final rule. This policy provides an important 
beneficiary protection as it ensures that the MA organization that 
offers the FI-SNP or HI-SNP contracts with the institution in order to 
ensure that the institution adheres to critical care management 
measures and MOC standards that apply to the I-SNP. Therefore, HI-SNPs 
that also enroll and cover institutionalized special needs individuals 
must own or contract 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 must own or have a contractual 
arrangement with each institutionalized facility serving enrollees in 
the plan in order to comply with the requirements set forth at Sec.  
422.2 for the purposes of defining a special needs individual. For 
example: if a Medicare beneficiary seeks to enroll in a HI-SNP, the 
plan must own or have a contract with the long-term care facility where 
the beneficiary resides--otherwise, the beneficiary is not eligible for 
enrollment. This requirement is consistent with sub-regulatory guidance 
in section 20.3.4 the Chapter 16B of the MMCM.
    In CMS's experience, I-SNPs have been able to successfully comply 
with this requirement to own or contract with the necessary 
institutions. CMS will continue to monitor compliance with this 
requirement in reviewing applications for I-SNPs and in monitoring and 
overseeing the MA program. In addition, we are adopting a slight 
clarification to the definition of FI-SNP, which will also apply to HI-
SNPs, to use the phrase ``in the plan's service area'' Instead of the 
proposed phrase ``within the plan's county-based service area.'' This 
revision better aligns with the definition of Service Area in 42 CFR 
422.2 ``Service area.'' This revision does not change the substance of 
the requirement that each FI-SNP and HI-SNP own or have a contract with 
at least one institution in each county of the plan's service area.
    Comment: A commenter expressed concern that I-SNPs do little to 
assist enrollees who wish to return to a community setting because of 
incentives to maintain plan enrollment, and that most I-SNP enrollees 
would be better served in a D-SNP or in Traditional Medicare. While the 
commenter did not specify, based on the context of the comment, CMS 
interprets that the commenter was referring to all I-SNPs that enroll 
beneficiaries who are institutionalized. The commenter further stated 
that alternative coverage (that is, D-SNPs or Traditional Medicare) 
avoids the strong incentives that plague facility-based I-SNPs to keep 
enrollees in settings that are inappropriate for their health needs 
and/or does not meet their wishes. The commenter stated that more 
regulation of I-SNPs is required to ensure that enrollee needs are met. 
Another commenter expressed concerns with the increased enrollment in 
I-SNPs, and evidence identified in a report by MedPAC in 2013 \193\ 
that I-SNPs are prescribing inappropriate medications, specifically, 
the commenter's interpretation that the report found that I-SNPs have 
higher rates than regular MA plans for the use of potentially harmful 
drugs among the elderly as well as reporting the use of drug 
combinations with potentially harmful interactions; and that I-SNPs 
could be denying beneficiaries needed hospital care, or that plan 
ownership of a SNF could result in denials of coverage of needed, but 
expensive care.
---------------------------------------------------------------------------

    \193\ The commenter cites MedPAC, Chapter 14 (March 2013); 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.
---------------------------------------------------------------------------

    Response: We thank the commenters and share the concerns that an 
enrollee's residency wishes be met, and that appropriate care be 
provided to I-SNP enrollees by the I-SNP. In implementing a SNP model 
of care, the MA organization must conduct a comprehensive initial, and 
then annual, health risk assessment of the individual's physical, 
psychosocial, and functional needs as required by Sec.  
422.101(f)(1)(i). Per 42 CFR 422.101(f)(1)(ii), the MA organizations 
offering a SNP must also develop and implement a comprehensive 
individualized care plan (ICP) through an interdisciplinary care team 
in consultation with the enrolled beneficiary, as feasible, identifying 
goals and objectives including measurable outcomes as well as specific 
services and benefits to be provided. The requirement at Sec.  
422.101(f)(1)(ii) for consultation with the enrolled beneficiary means 
that the enrollee's goals and wishes, with regards to living in the 
community, as well as access to covered services or treatment plans, 
must be captured in their ICP.
    As far as evaluating whether an institutionalized individual is 
better served by a D-SNP, I-SNP, or Traditional Medicare, Medicare 
beneficiaries are free to make their own enrollment decisions regarding 
how to receive Medicare benefits; section 1851 of the Act provides that 
each MA-eligible beneficiary is entitled to elect to receive Part A and 
B benefits through the Traditional Medicare program or enrollment in an 
MA plan for which the individual is eligible. We encourage all 
beneficiaries to review their coverage options whether it be 
Traditional Medicare or Medicare Advantage and believe that the 
educational tools and materials we make available on Medicare.gov help 
to facilitate that decision-making. Beneficiaries may also find helpful 
information through the ``Medicare & You'' handbook, by calling 1-800-
MEDICARE, or by contacting the State Health Assistance Program (SHIP) 
in their state.\194\ Healthcare providers, including the long-term care 
institutions in which institutionalized special needs individuals 
reside, must respect the choice that beneficiaries make in electing 
their Medicare coverage whether it is through Traditional Medicare or 
an MA plan.\195\
---------------------------------------------------------------------------

    \194\ Beneficiaries can find their local SHIP through https://www.shiphelp.org/, and clicking on ``Find Local Medicare Help.''
    \195\ CMS previously addressed this matter in the memo ``Memo to 
Long Term Care Facilities on Medicare Health Plan Enrollment 
(October 2021), see https://www.cms.gov/files/document/ltcfdisenrollmentmemo.pdf.
---------------------------------------------------------------------------

    We also share the commenter's concern that beneficiaries may be 
prescribed inappropriate medications. We note that MedPAC acknowledges 
in their report that this particular finding may be a result of 
monitoring practices among I-SNPs. MedPAC noted in 2013 that 
``[a]lthough I-SNPs also have higher rates than regular MA plans for 
the use of potentially harmful drugs among the elderly and the use of 
drug combinations with potentially harmful interactions, their higher 
rates of monitoring of persistently used drugs suggest that drugs with 
potential interactions or adverse effects are also being closely 
monitored.'' \196\ As the report notes, MedPAC suggests that I-SNPs do 
enroll a population with a higher use of potentially harmful drugs when 
compared to non-I-SNPs, but then suggests that I-SNPs are closely 
monitoring for potential adverse events. CMS publishes SNP data 
pertaining to the Star Ratings quality measure Care for Older Adults--
Medication Review,

[[Page 30652]]

which MA special needs plans are required to submit as part of the 
Healthcare Effectiveness Data and Information Set (HEDIS) reporting 
requirements, and Use of High-Risk Medications in Older Adults (a HEDIS 
measure), as part of Final Medicare Special Needs Plans HEDIS[supreg] 
Performance Results annual reports, and will continue to review this 
performance data for all I-SNPs.\197\
---------------------------------------------------------------------------

    \196\ See MedPAC, Report to the Congress: Medicare Payment 
Policy, March 2013, ``Medicare Advantage special needs plans.'' 
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.
    \197\ The Care for Older Adults--Medication Review measure is 
used in the Medicare Advantage and Part D Quality Star Ratings that 
are available online at https://www.cms.gov/medicare/health-drug-plans/part-c-d-performance-data. In addition, multi-year reports 
covering a selection of HEDIS measures reported by MA SNPs can be 
found here: https://www.cms.gov/medicare/enrollment-renewal/special-needs-plans/data-information-set.
---------------------------------------------------------------------------

    Comment: A commenter expressed support of the HI-SNP model and 
stated that restricting enrollment in HI-SNPs to include both MA-
eligible individuals who meet the definition of ``institutionalized'' 
and MA-eligible individuals who meet the definition of 
``institutionalized-equivalent'' will ensure individuals in both 
categories receive necessary supports across the continuum of their 
care needs without having to experience the disruption of changing 
Medicare coverage types should an enrollee need for more extensive 
long-term care. They also believe the HI-SNP and IE-SNP models create 
an incentive for an I-SNP to serve people who can safely live in the 
community and could significantly improve continuity and coordination 
of care for individuals residing in states that do not offer integrated 
duals programs.
    Another commenter expressed support for the proposed clarification 
of I-SNP types and requested that CMS report enrollment in the 
different types of I-SNP in the CMS MA monthly publicly available 
enrollment reports to better understand the growth in these plans.
    Response: We thank the commenters for their support of our 
proposal. We note that CMS currently publishes monthly SNP enrollment 
data on the CMS website.\198\ These monthly reports provide I-SNP 
enrollment totals as well as the number of active I-SNP plans. CMS may 
explore the possibility of providing enrollment and plan data at the 
SNP subtype level in the future.
---------------------------------------------------------------------------

    \198\ A PDF and Excel version of each monthly report can be 
found here: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/Special-Needs-Plan-SNP-Data.
---------------------------------------------------------------------------

    Comment: A commenter noted that CMS requested comment on whether 
the proposed regulatory text needs to more specifically address 
information-sharing or other issues related to I-SNPs being able to 
access information about and gain access to facilities where their 
enrollees reside. The commenter cited a statement in the December 2022 
proposed rule related to the I-SNP proposal that CMS has received 
reports that providers sometimes fail to share relevant information 
regarding an enrollee's health or need for care with the I-SNP staff. 
The commenter recommended that, prior to revising the MA regulations, 
CMS should review the issue for substance and specifics, including 
looking at best practices related to joint facility staff and plan 
staff participation in care management, which could provide CMS with 
some useful examples or evidence suggesting that facilities requiring 
plan reliance on paper documentation over in person or virtual 
participation in facility activities is a sub-optimal alternative.
    Response: We thank the commenter for supporting our proposal 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. As proposed and finalized here, Sec.  
422.101(f)(2)(vi) reflects longstanding sub-regulatory guidance in 
section 20.3 of Chapter 16B of the MMCM that is designed to provide I-
SNPs enrollees with protections regarding access to care coordination 
and to ensure communication between providers and I-SNP staff. We 
expect MA organizations sponsoring I-SNPs to have communication 
provisions in their contracts with network long-term care providers 
where enrollees reside that should stem barriers to information 
sharing. While our experience with this long-standing sub-regulatory 
guidance has given us insight into the need for this policy as set 
forth in our proposed rule, we welcome continued input on this topic 
should additional guidance or rulemaking be needed in this area.
    Comment: Another commenter noted codifying CMS's sub-regulatory 
guidance for I-SNPs is appropriate as I-SNPs continue to grow in 
enrollment. The commenter further elaborated by noting that is 
essential that the facility share data with the I-SNP such as data 
regarding the clinical, psychosocial, health-related social needs of 
their I-SNP enrolled residents, as well as other data relevant to the 
plan of care is essential to achieving the best possible outcomes for 
enrollees living in an institutional setting. The commenter noted that 
CMS's expectations and requirements for MA plans should align across 
health plan types and be consistent with the health information-sharing 
requirements of the Medicare and Medicaid programs.
    Response: We thank the commenter for their support of the proposed 
rule and agree that data-sharing among plans, facilities and providers 
is crucial to supporting the health care needs of I-SNP enrollees. We 
note, however, that as proposed and finalized, Sec.  422.101(f)(2)(iv) 
imposes obligations on I-SNPs, and policy modifications regarding data-
sharing more broadly, such as between non-SNP MA plans and providers or 
facilities, is outside the scope of this rule.
    Comment: A commenter noted that CMS should apply the level of care 
requirements in the definition of ``institutionalized-equivalent'' 
under Sec.  422.2, which would be applied to the proposed definitions 
of IE-SNP and HI-SNPs, to improve the Part D program, that is, that CMS 
should require Part D plans to engage in a similar assessment of 
whether enrollees that are living in the community require an 
institutional level of care. The commenter further noted that enrollees 
in IE-SNPs/HI-SNPs and Part D programs have substantially similar 
chronic conditions and cognitive impairments, including the prevalence 
of these conditions, the dual eligibility of enrollees, and 
prescription drug needs of Medicare enrollees. The commenter suggested 
that if CMS amended various aspects of Part D regulations to address 
the subset of enrollees with such needs, it would significantly improve 
the care and services enrollees receive through the Part D program as 
well as the Medicare and Medicaid programs overall. For example, the 
commenter noted that if CMS were to increase LTC pharmacy services 
regardless of setting, medication management would be more effective, 
patient outcomes would improve, and overall health care spending would 
be lower. The commenter noted that CMS should consider tools and 
processes to allow Part D plans to identify enrollees' institutional 
level of care needs and incorporate that into the information Part D 
plans must obtain regarding Part D enrollees.
    Response: We appreciate the commenter's suggestion regarding the 
use of a tool to assess the level of care (LOC) needs of enrollees in 
the Part D program. We note that the use of these tools for determining 
that the individual requires an institutional LOC is codified at 42 CFR 
422.2 ``institutionalized-equivalent,'' for purposes of I-SNP 
eligibility and enrollment. We proposed

[[Page 30653]]

and are finalizing clarifications of the specific standards that are 
applicable to I-SNPs, as distinguished from other MA plans and from 
other MA SNPs, as well as codify FI-SNP and IE-SNP enrollee protections 
regarding access to care coordination and communication between 
providers and I-SNP staff. CMS is implementing this proposal by adding 
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's current MA application process, and only addresses 
requirements that I-SNPs must implement for their enrollees. We did not 
propose changes to Part D requirements of the nature suggested by the 
commenter. Thus, the comment to apply I-SNP requirements more broadly 
to Part D plans is out of scope for this rule.
    All MA SNPs must cover the Medicare Part D benefit per the 
definition of specialized MA plans for special needs individuals in 
Sec.  422.2; therefore, the individual care plan for all I-SNP 
enrollees should address Part D benefits as well as MA basic benefits 
(that is, Part A and B benefits) and MA supplemental benefits.
    After considering all the comments we received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing definitions of the terms Facility-based Institutional 
special needs plan (FI-SNP), Hybrid Institutional special needs plan 
(HI-SNP), Institutional special needs plan (I-SNP), and Institutional-
equivalent special needs plan (IE-SNP) at Sec.  422.2 largely as 
proposed. In the definitions of FI-SNP, HI-SNP, and I-SNP, we are 
slightly reorganizing the definitions to improve their readability. We 
are modifying the definition of FI-SNP to more clearly provide how FI-
SNPs must own or contract with institutions as described in the 
definition. Finally, we are also revising the definition of FI-SNP by 
replacing ``with the plan's county-based service area'' with ``in the 
plan's service area.'' This revision better aligns with the definition 
of Service Area in 42 CFR 422.2 ``Service area.''
    In addition, after considering all the comments we received and for 
the reasons outlined in the proposed rule and our responses to 
comments, we are finalizing revisions to Sec.  422.101(f) to add a new 
paragraph (f)(2)(vi) as proposed to require the model of care for each 
I-SNP (regardless of the type of I-SNP) to 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.

B. 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)(2) through (4) of 
the Act, SNPs are required 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. Section 1859(f)(5)(A) of the Act, added by Section 164 of the 
Medicare Improvements for Patients and Providers Act (hereinafter 
referred to as MIPPA) (Pub. L. 110-275), imposes specific care 
management requirements for all SNPs effective January 1, 2010. 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).
    In the December 2022 proposed rule, we proposed to codify certain 
sub-regulatory 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.
    We provide additional summaries of the proposed MOC provisions and 
responses to comments received below.
1. Codification of Model of Care (MOC) Scoring Requirements for Special 
Needs Plans (SNPs) (Sec.  422.101(f)(3)(iii))
    Section 1859(f)(7) of the Act requires 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 CMS 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 (CMS-4190-F2) (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 certain 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, 
as required under part 422, subpart K, to demonstrate that they meet 
SNP specific requirements, including the requirements in Sec.  
422.101(f) that MA organizations offering a SNP implement an evidence-
based MOC to be evaluated by the NCQA; in Sec.  422.107 that D-SNPs 
have a contract with the State Medicaid agencies in the states in which 
they operate; and 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. 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, 
issued, and updated guidance on the MOC to improve plan performance and 
beneficiary care. Section 1859(f)(5) of the Act outlines requirements 
for an evidence-based model of care that include--(1) an appropriate 
network of

[[Page 30654]]

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. These provisions in section 1859(f)(5) of the Act 
are the statutory foundation for much of our subsequent regulatory 
standards for the MOC. 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). 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. 
Additional background on our existing guidance and the importance of 
the MOC is in the proposed rule at 87 FR 79572 through 79573.
    In the December 2022 proposed rule, we proposed to codify the SNP 
MOC scoring protocols by amending Sec.  422.101(f)(3)(iii) to include 
the current sub-regulatory 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.
    First, we proposed 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 proposed 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. A full list of the most recent elements and factors used in 
evaluating and scoring the MOCs is in the Model of Care Scoring 
Guidelines for Contract Year 2025; 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.'' \199\ 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.
---------------------------------------------------------------------------

    \199\ The Model of Care Scoring Guidelines for Contract Year 
2025 can be found here: https://snpmoc.ncqa.org/static/media/CY2025SNP_MOC_Scrng_Gdlns_508.4c71d8c17b37b33ff079.pdf. The 
``Initial and Renewal Model of Care Submissions, and Off-cycle 
Submission of Model of Care Changes'' can be found here: https://omb.report/icr/202105-0938-005/doc/original/111555400.pdf.
---------------------------------------------------------------------------

    We proposed 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 proposed 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 proposed 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 also proposed, at new paragraph (f)(3)(iii)(B), 
to codify different the approval time limits for the MOCs of I-SNPs and 
D-SNPs, basing the approval period on the final score of the MOC on the 
aggregate minimum benchmark. We proposed 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 proposed 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 any 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 also 
proposed that the opportunity to cure deficiencies in the MOC is only 
available once per scoring cycle for each MOC submission. We noted that 
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 for a contract year. 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

[[Page 30655]]

failure to meet a necessary qualification for SNPs.
    We received the following comments regarding the aforementioned 
provisions and provide our responses later in this section.
    Comment: We received several comments addressing the SNP Model of 
Care Element Matrix (the Matrix),\200\ which reflects the content and 
evaluative criteria of the MOC. One commenter suggested that CMS reduce 
duplication and the level of detail within the Matrix, particularly 
redundancies across factors, elements, and/or where there is evidence 
that the element or factor is not required to be part of a robust care 
management program.
---------------------------------------------------------------------------

    \200\ The MOC Element Matrix cand be found on CMS.gov at: 
https://www.cms.gov/files/document/cy2023attachmentamodelofcarematrixinitialandrenewalsubmissionmnfnl.docx.
---------------------------------------------------------------------------

    Response: We did not propose to codify the content and evaluation 
criteria for approval of the MOC, and as such, we do not believe these 
comments regarding the level of specificity in the Matrix are within 
scope of the proposed rule. However, we will take these comments into 
consideration when renewing the next MOC Paperwork Reduction Act (PRA) 
package and for future rulemaking. CMS currently publishes the Matrix 
for comment 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). We encourage all parties to 
submit comments during the next PRA package renewal regarding MOC 
burden estimates.
    Comment: A commenter suggested that CMS reevaluate the MOC 
submission process and NCQA's review of initial and renewal MOCs and to 
coordinate with CMS audit processes for efficiency, consistency, and 
effectiveness to the extent that the burden placed on SNPs to submit 
MOCs is commensurate with current CMS burden estimates.
    Response: While we believe our current burden estimates fairly 
capture the MOC process, CMS will take comments suggesting a more 
effective MOC review process and audit system under advisement. In 
regard to consistency, NCQA and CMS work collaboratively to ensure MOCs 
are reviewed in the manner appropriate to and in alignment with the MOC 
submission requirements and CMS audit protocols.
    Comment: A commenter recommended that CMS consider the potential 
impact of environmental disasters or other major shifts, such as the 
COVID-19 pandemic, on the implementation of the MOC's approved care 
management processes and policies. This commenter recommended CMS 
provide for the ability of plans to diverge from regular processes and 
activities contained in the MOC during such an event or shift.
    Response: We appreciate this comment and recognize the value of 
such a discussion. NCQA is required by Sec.  422.101(f)(3)(ii) to 
evaluate whether goals from the previous MOC were fulfilled when 
reviewing a new or subsequent MOC for approval. To the extent that the 
commenter was addressing review of an MA organization's overall 
implementation of its MOC, that is outside of the scope of the proposal 
to codify the minimum scoring benchmarks, the length of the approval 
period, and the availability of a cure period when a MOC fails to meet 
the minimum benchmarks. Actual implementation of the MOC is reviewed as 
part of CMS's auditing and oversight. We note that CMS does have a 
framework in place to convey any temporary changes needed to the MOC 
process or requirements through the issuance of departmental or agency 
communications that may be necessary during a public health emergency 
or similar situation, as evidenced by policy updates provided during 
the coronavirus disease 2019 (COVID-19) public health emergency (see 
CMS memo ``Information Related to Coronavirus Disease 2019--COVID-
19'').\201\ As we noted in that memo at the time, CMS recognized that 
in light of the COVID-19 outbreak, an MAO with one or more SNPs may 
need to implement strategies that do not fully comply with their 
approved SNP MOC in order to provide care to enrollees while ensuring 
that enrollees and health care providers are also protected from the 
spread of COVID-19. CMS stated then that we would consider the special 
circumstances presented by the COVID-19 outbreak when conducting MOC 
monitoring or oversight activities. For instance, CMS could permit SNPs 
to use real-time, audio-visual, interactive virtual means of 
communication to meet the face-to-face encounter requirements in an 
emergency if the SNP's MOC states that care coordination visits and 
encounters are in person. We continue to believe that this is an 
appropriate way to address MOC implementation during a public health 
emergency or similar situation. In addition, we remind MA organizations 
of the existing requirements at Sec.  422.100(m) that apply during a 
disaster or emergency; those also apply to MA SNPs. We also reiterate, 
however, that even during an emergency or disaster, all enrollees, 
including SNP enrollees, must receive all medically necessary items and 
services, including care coordination.
---------------------------------------------------------------------------

    \201\ The memo can be found here: https://www.cms.gov/files/document/updated-guidance-ma-and-part-d-plan-sponsors-42120.pdf.
---------------------------------------------------------------------------

    Comment: A commenter recommended that CMS require each D-SNP to 
make its model of care publicly available. This commenter suggested 
that this would help beneficiaries and other stakeholders determine 
whether a given D-SNP is fulfilling obligations outlined in its own 
model of care.
    Response: We did not propose and are not finalizing at this time a 
requirement for D-SNPs to publish their MOCs. All SNPs (including D-
SNPs) must identify and clearly define measurable goals and health 
outcomes for the MOC as part of their MOC submission under MOC 4 
Element B. This includes but is not limited to: identifying and clearly 
defining the SNP's measurable goals and health outcomes; describing how 
identified measurable goals and health outcomes are communicated 
throughout the SNP organization; and evaluating whether goals were 
fulfilled from the previous MOC. NCQA reviews the information provided 
by the SNP and will assign a failing score if the plan cannot meet all 
factors within the element. SNPs are also required to submit 
documentation showing plan compliance to their approved MOC as part of 
the current CMS SNP audit process. Following NCQA's review, each SNP is 
assigned a score and an associated approval period. These MOC scores 
are available on NCQA's website, cover the past three years of 
submissions, and include NCQA's detailed scoring of each MOC Element. 
We encourage interested parties to review the materials and information 
posted by NCQA. CMS will continue to employ a robust audit protocol to 
ensure that all SNPs are implementing their MOCs appropriately.
    After consideration of the comments and for the reasons outlined in 
the proposed rule and our responses to comments, we are finalizing the 
proposed amendments to Sec.  422.101(f)(3)(iii) substantially as 
proposed but with minor grammatical and organizational changes. As 
finalized, Sec.  422.101(f)(3)(iii) establishes the aggregate minimum 
benchmark score for a MOC to be approved, the time period of approval, 
and the opportunity for an MA organization to submit a corrected MOC 
for re-evaluation if the MOC is scored below

[[Page 30656]]

the minimum benchmarks on NCQA's first review.
4. Amending SNP MOCs After NCQA Approval (Sec.  422.101(f)(3)(iv))
    CMS also proposed to codify current policies and procedures for an 
MA organization 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 in the midst of its approved MOC timeframe. CMS 
announced a process for SNPs to submit MOC changes for review in the CY 
2016 Final Call Letter. Currently, a DSNP 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. These 
kinds of 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 for review and 
approval. However, beginning with CY 2020, C-SNPs were required to 
submit MOCs annually, and thus, their MOCs receive approvals for a 
period of one-year. As a result of the annual review and approval of C-
SNP MOCs, C-SNPs were not permitted to submit a revised MOC through an 
off-cycle submission.
    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 substantive that notification to CMS and review of the 
changes to the MOC by NCQA and CMS 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. The proposed adoption of Sec.  
422.101(f)(3)(iv) was 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. We explained in the proposed 
rule that for this 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. In such cases, 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. As part of the 
December 2022 proposed rule, we proposed to establish when an MA 
organization may submit updates and corrections to its approved MOC.
    First, we proposed to codify the off-cycle process at Sec.  
422.101(f)(3)(iv). We proposed 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 
which are prohibited from submitting off-cycle submissions. 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, to guarantee the safety 
of enrollees, or to meet State Medicaid requirements. Although we did 
not propose to codify this specific language in the December 2022 
proposed rule nor are we finalizing it here, CMS will continue to use 
this discretion when reviewing applicable submission requests. We 
proposed to maintain this process and codify it at Sec.  
422.101(f)(3)(iv)(A). We proposed 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 requires an off-cycle submission 
to ensure compliance with applicable law.
    We stated in the proposed rule that we were proposing to use 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. We also stated 
that we were proposing, in an effort to ensure consistent application 
of this standard and demonstrate our intent, that these be limited 
situations where a revision is truly necessary, the finalized 
regulation text would provide that CMS would make this determination 
and provide directions to the MA organization. We also stated in the 
proposed rule that if an MA organization believed that this standard 
for when revision is necessary to ensure compliance by the SNP and its 
MOC is met, the MA organization should contact CMS for guidance and 
approval to submit a revision. However, the proposed regulation text 
did not include this standard and proposed paragraph (f)(iv)(A) stated 
that 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. We read the phrase ``to 
ensure compliance with applicable law'' to encompass the situations 
described in the preamble of the proposed rule (and here in the final 
rule) or similar situations where CMS has determined that a potential 
or existing violation needs to be addressed. ``Applicable law'' 
encompasses MA regulations and statutes, and for D-SNPs, certain 
Medicaid regulations and statutes; where a MOC would potentially result 
in harm to enrollees or changes to a MOC are necessary to ensure the 
safety of enrollees, we view these changes as changes required by 
applicable law, because the fundamental nature and purpose of the MOC 
is to ensure that the SNP addresses the needs of the special needs 
individuals enrolled in the SNP. We also stated in the proposed rule 
that if an MA organization believed that this standard for when 
revision is necessary to ensure compliance by the SNP and its

[[Page 30657]]

MOC is met, the MA organization should contact CMS for guidance and 
approval to submit a revision.
    Since the beginning of the off-cycle submission process, CMS has 
provided guidance clarifying which MOC changes require submission to 
CMS and how SNPs should submit their MOC changes to CMS. We have 
previously said 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. However, given the level of questions we have 
received over the years regarding what constitutes a significant 
change, we proposed 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) provided 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 personnel 
conducting care coordination activities (for example, medical provider 
to non-medical provider, clinical vs. non-clinical personnel);
     Changes to quality metrics used to measure performance.
    The proposed regulation text did not include 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 to the MOC that are permitted but that do not need to be 
submitted through HPMS include but are not limited to:
     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.
    We also proposed, Sec.  422.101(f)(3)(iv)(D), that SNPs may not 
implement any changes to a MOC until NCQA has approved the changes. We 
explained in the proposed rule that 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, but 
that the revised MOCs would not be rescored. We proposed 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 original approval period 
(that is, 1-year or multi-year) by NCQA. Therefore, changes made to MOC 
cannot be used to improve a low score. We stated how we anticipate that 
the current procedures and documentation processes used to implement 
the requirements would continue under our proposal and explained our 
position that such procedures and operational practices do not require 
rulemaking and that 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 stated that we intended 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 and that we would 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.
    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. We did not include NCQA's 
off-cycle scoring policy and the implications in the proposed 
regulation text, but we are clarifying in this final rule at Sec.  
422.101(f)(3)(iv)(D) to note that all changes, as applicable under 
Sec.  422.101(f)(3)(iv)(B), that are part of a SNP's off-cycle 
submission are reviewed by NCQA as ``Acceptable'' or ``Non-
acceptable.'' By ``Acceptable,'' we mean that the changes have been 
approved by NCQA and the MOC has been updated; whereas by ``Non-
acceptable'' we mean that the changes have been rejected by NCQA and 
the MOC has not been changed.
    We proposed under Sec.  422.101(f)(3)(iv)(F) to codify existing 
operational practices with respect to off-cycle submissions by C-SNPs. 
As previously discussed, currently, C-SNPs are prohibited from 
submitting off-cycle MOC submissions. We proposed 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. Otherwise, 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)(iv)(G) to confirm that the revised 
MOC is consistent with the standards outlined in the original MOC. We 
proposed, at Sec.  422.101(f)(3)(iv)(G), to permit a single opportunity 
for a SNP to revise its off-cycle submission to revise a MOC if there 
is a deficiency in the submission. The cure process proposed, which is 
the current operational process use by NCQA, would permit 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

[[Page 30658]]

the off-cycle review process. We proposed 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 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 as the MOC has yet 
to go into effect. Under the proposal, we stated that we would 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, and then the start of the off-cycle submission window on June 
1, 2023. In order to clarify this process, we proposed to codify this 
guidance at Sec.  422.101(f)(3)(iv)(C). We proposed 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 reiterated in the proposed rule that we still believe 
that to substantively revise an MOC should be a rare occurrence rather 
than an eventuality. These proposed processes and procedures were 
intended to 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 sought comment on the codification 
of the current off-cycle MOC submission process.
    We reiterated in the proposed rule that the proposed regulations 
reflect and would codify current policy and procedures. While we 
proposed that the regulations would be applicable beginning with a 
future year, we stated our intent to continue our current policy as 
reflected in the proposed rule. We also stated in the December 2022 
proposed rule that the proposed changes carried no burden because the 
proposal was a codification of previously issued sub-regulatory 
guidance in Chapter 5 and other CMS transmittals to impacted MA 
organizations. We also explained that the proposed provisions are 
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. This position continues and we believe that this final rule, 
which finalizes Sec.  422.101(f)(3)(iv) generally as proposed (with 
several modifications to clarify the regulation) is consistent with 
current procedures and the approved PRA package.
    We received comments to these proposed provisions regarding off-
cycle revisions to approved MOCs and our responses follow.
    Comment: A commenter suggested that the need for off-cycle 
submissions will become more frequent as the increasing number of 
requirements, industry developments, and ever-evolving best practices 
around health equity, care coordination, provider networks, and other 
emerging standards make it more likely that substantive changes will 
need to be made. Thus, the commenter reasoned, SNPs are likely to find 
it necessary to more frequently submit an off-cycle review so that 
their MOCs remain current to structures, processes, practices, and 
programs that are operationalized for SNP members. The commenter 
suggested that CMS revise and/or clarify the language on what is 
considered a ``substantive change'' as it remains unclear, and plans 
will default to assuming they should submit their MOCs. The commenter 
also suggested that CMS allow for some flexibility in CMS audits around 
MOC compliance, suggesting that when the plan documents the deviations 
(including the purpose and extent of any deviation) from the written/
approved MOC when needed, and the plan believes the deviations are 
``not-substantive'' consistent with CMS criteria, the plan should not 
be penalized for its failure to submit their MOC for an off-cycle 
review.
    Response: CMS recognizes that industry developments and changes in 
applicable federal health care laws may impact the nature of health 
care delivery and care coordination among SNPs and their members. We 
proposed and are finalizing at Sec.  422.101(f)(3)(iv)(A) and (B) the 
standards that are to be used to identify when an off-cycle submission 
to revise an approved MOC will be permitted.
    As proposed in new paragraphs (f)(3)(iv)(A) and (B), an MA 
organization that offers a D-SNP or I-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:
     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.
     D-SNPs and I-SNPs are required to submit updates or 
corrections as part of an off-cycle submissions based on:
    [cir] 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;
    [cir] Target population changes that warrant modifications to care 
management approaches;
    [cir] 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;
    [cir] 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
    [cir] Changes to quality metrics used to measure performance.
    We are making minor changes to proposed paragraphs (f)(3)(iv)(A) 
and (B) to increase the clarity of the regulation. We are finalizing 
paragraph (f)(3)(iv)(A) to provide that C-SNPs, D-SNPs and I-SNPs must 
submit updates and corrections to their NCQA-approved MOC when CMS 
requires an off-cycle submission to ensure compliance with applicable 
law. Finalizing new Sec.  422.101(f)(3)(iv)(A) with these revisions 
makes it clear that when CMS requires an off-cycle submission, such as 
when CMS identifies an issue during an audit, the MA organization 
offering the C-SNP, D-SNP or I-SNP must submit off-cycle revision to 
NCQA for review and approval of the necessary changes to the MOC.
    We are finalizing paragraph (f)(3)(iv)(B) to specify when D-SNPs 
and I-SNPs are permitted to use an off-cycle submission to submit 
updates and corrections to their MOCs to NCQA for review and approval. 
As we proposed, updates and revisions or corrections of this type are 
permitted only for certain reasons. As finalized, Sec.  
422.101(f)(3)(iv)(B) provides that D-SNPs and I-SNPs must submit 
updates and corrections to their NCQA-approved MOC between June 1st and 
November 30th of each calendar year if the I-SNP or D-SNP wishes to 
make any of the listed revisions. The list of revisions, at paragraphs 
(f)(3)(iv)(B)(1) through (5)

[[Page 30659]]

tracks the permitted changes we proposed to codify in paragraphs 
(f)(3)(iv)(B)(1) through (5). (87 FR 79713) We believe that the 
revisions we are finalizing in the regulation text are not substantive 
changes in policy compared to what CMS proposed in the December 2022 
proposed rule but are a reorganization to clarify when requests to 
change the MOC are submitted. The final rule clarifies that the period 
between June 1st through November 30th of each calendar year is the 
time period for a D-SNP or I-SNP that seeks to make changes to its MOC 
off-cycle, to submit their updates and/or changes to the previously 
approved MOC. However, when CMS directs a C-SNP, D-SNP or I-SNP to make 
changes to their MOC in order to comply with applicable law, it is CMS 
who will direct the timing of the submission (and the June to November 
time period mentioned above might not necessarily apply). The changes 
described in paragraphs (f)(3)(iv)(B)(1) through (5) are generally 
voluntary changes that the D-SNP or I-SNP is making to its SNP 
operations and administration that subsequently require changes to the 
MOC. In these instances, D-SNP or I-SNP must seek an off-cycle revision 
to its MOC to implement the changes. In these cases, the changes in 
operation and administration are independent from any CMS direction to 
ensure compliance with applicable law.
    A D-SNP or I-SNP that decides to make significant revisions to 
their existing approved MOC must 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, before implementing and using the 
changes to the MOC. As discussed in the preamble to the proposed rule, 
significant revisions within the scope of Sec.  422.101(f)(3)(iv)(B) 
are those that have a significant impact on care management approaches, 
enrollee benefits, and/or SNP operations. The intent of the rule under 
Sec.  422.101(f)(3)(iv)(B) is to codify and clearly delineate events 
that would be considered by CMS as significant revisions. We believe 
that this language is sufficient to direct plans; however, CMS will 
monitor the initial off-cycle period to review whether SNPs continue to 
submit changes that fail to meet the intent of the requirement and will 
provide additional examples of what is considered a significant 
revision within the scope of this rule, as necessary.
    The proposed rule (87 FR 79575) provided examples of the type of 
non-significant changes that an MA organization may make without using 
the off-cycle submission and approval process. Those changes as 
outlined in the proposed rule included, but were not limited to, 
revisions to the MOC to address a change in ownership of the MA 
organization, changes in administrative staff and changes to 
demographic data. When an MA organization that sponsors a SNP has a 
change that is not an immaterial change as noted here and the MA 
organization is unsure if the change is sufficiently similar in type 
and scope to the changes as noted above, the MA organization should 
seek guidance from CMS. The list of changes that do require an off-
cycle submission of updates and corrections to the approved MOC in 
Sec.  422.101(f)(3)(iv)(B) is sufficiently detailed to be applied by MA 
organizations and CMS in the future. It is not acceptable, and it is 
inconsistent with this final rule (specifically Sec.  
422.101(f)(3)(iv)(D)) for an MA organization to make a change within 
the scope of Sec.  422.101(f)(3)(iv)(B) without review and approval 
from NCQA. We recommend that an MA organization that is unsure if a 
change it is contemplating to its approved MOC needs to be submitted 
for review and approval, the MA organization should contact CMS for 
guidance. In such cases, CMS will apply the regulation as finalized and 
instruct the MA organization whether the change is within the scope of 
Sec.  422.101(f)(3)(iv) as finalized.
    Lastly, although some comments expressed concern about alignment of 
audit standards with off-cycle review and approval of MOCs, we believe 
that the current audit process has consistently reviewed and treated 
approved off-cycle changes to MOCs (that is, off-cycle changes marked 
as approved or acceptable by NCQA) as acceptable. CMS will review and 
update our SNP audit protocols as warranted and CMS will consider 
feedback from stakeholders when determining if additional revisions are 
needed to ensure that CMS audits hold SNPs to their approved MOCs, 
including any approved changes to the MOCs.
    Comment: A commenter did not support the proposal to include 
``changes to quality metrics used to measure performance'' on the list 
of reasons requiring off-cycle submission and approval. The commenter 
noted that SNPs are required to conduct an annual quality improvement 
program that measures the effectiveness of its MOC. The commenter also 
stated that the goal of performance improvement and quality measurement 
is to improve the SNP's ability to deliver health services, improve 
member health outcomes, and increase organizational effectiveness. They 
noted that this includes examining current processes, including quality 
measures that should be modified. The commenter further noted that it 
may be necessary to change an entire quality measure to ensure that 
performance measures align with program goals and improve health 
outcomes. The commenter expressed that it would be an administrative 
burden to submit an off-cycle MOC for CMS approval of a change in 
quality metric(s) and that this submission requirement may have the 
effect of discouraging SNPs from making needed changes to their MOC, 
potentially impacting operational efficiencies and member health 
outcomes.
    Response: We appreciate the commenter's suggestion, but we are not 
changing our policy on this topic. We believe it is important to review 
any changes to MOC quality metrics before such changes are implemented 
to ensure the operational integrity of the MOC by plans and so that 
SNPs are employing appropriate measurements so that NCQA can gauge the 
effectiveness overall of the MOCs implementation. As proposed and 
finalized here, the rule codified at Sec.  422.101(f)(3)(iv)(B)(3) 
(that SNPs must submit off-cycle submissions based on changes to 
quality metrics used to measure performance) is from our long-standing 
off-cycle submission guidelines, and thus, a continuation of a policy 
that we believe SNPs are currently meeting. In addition, we note that 
the off-cycle revisions are for MOCs that SNPs have begun implementing 
after review and approval by NCQA; changing the quality metrics after 
performance has begun should also be reviewed to ensure that the 
changes in metrics are not designed to mask performance deficiencies or 
failure to implement the MOC as approved.
    Comment: A commenter suggested that CMS increase the review 
capacity at NCQA to handle MOC reviews, especially off-cycle reviews in 
a timely, consistent, and effective way. They believe there should be a 
standard response timeline with standard, consistent, and timely 
communication. The commenter noted that a review should take no more 
than 30 days and the plans should be able to review the findings 
through an online portal.
    Response: We do not believe that adopting a deadline for NCQA 
review of off-cycle MOC revisions would positively serve the MA program 
or lead to better or more efficient reviews of off-cycle submissions. 
NCQA already provides regular and timely review of off-cycle MOCs 
throughout the established review window. However,

[[Page 30660]]

we increasingly find that MA organizations that have many SNPs make a 
bulk submission of multiple changes to multiple MOCs (that is, making 
the same changes to multiple MOCs) at the end of the off-cycle window. 
When this occurs, it can cause some delay in NCQA's ability to finalize 
review of off-cycle submissions for all SNPs. We believe some SNPs 
struggled to find CMS' sub-regulatory guidance on significant versus 
non-significant changes and that this final rule will provide 
additional clarity in identifying when an off-cycle revision to an 
approved MOC is necessary. However, MA organizations that have a 
substantial number of off-cycle MOC submissions can avoid delays by 
submitting their MOCs at the beginning of the submission window 
timeframe, which is typically when fewer submissions have been received 
for review by NCQA. We also encourage, as a best practice, that MA 
organizations reach out to the Part C Policy mailbox prior to 
submission to provide notification to CMS and NCQA that the MA 
organization plans to submit a large bulk submission, as advance notice 
may assist NCQA to prepare and complete a more efficient review.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing new paragraph (f)(3)(iv) (for requirements on off-cycle 
changes to an approved MOC) largely as that regulation text was 
proposed but with modifications compared to our proposed regulation 
text. The modifications, listed here, are primarily to clarify and 
improve paragraph (f)(3)(iv):
    In paragraph (f)(3)(iv), we are adding the text ``organization 
sponsoring'' between the proposed language ``An MA'' and ``a SNP that. 
. .'' for additional clarity. As finalized, the introductory language 
in paragraph (f)(3)(iv) reads: ``An MA organization sponsoring 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:'' This revision is clearer that the MA organization 
that offers the SNP is the legal entity responsible for the 
submissions.
    In paragraphs (f)(3)(iv)(A) and (f)(3)(iv)(B), we are finalizing 
the paragraphs with revisions (described in more detail in a response 
to public comments earlier in this section) to clarify when off-cycle 
changes to an MOC must be submitted because CMS has directed the change 
to comply with applicable law and when off-cycle changes to an MOC must 
be submitted because of changes in how a D-SNP or I-SNP is administered 
or operates. As we noted earlier in this preamble, these changes are 
for additional clarity in the regulation.
    We are also finalizing paragraph (f)(3)(iv)(B)(1) with 
organizational changes to make it easier to read and clearer that the 
standard ``substantial change'' applies to all of the listed areas. The 
areas under paragraph (f)(3)(iv)(B)(1) are now labeled as (i) the 
health risk assessment process; (ii) revising processes to develop and 
update the Individualized Care Plan (ICP); (iii) the integrated care 
team process; (iv) risk stratification methodology; and (v) care 
transition protocols. The revisions are more consistent with the intent 
of the proposal.
    In paragraph (f)(3)(iv)(C), we have corrected the verb tense from 
``will only review'' to ``only reviews.''
    In paragraph (f)(3)(iv)(D), we are finalizing several changes to 
increase clarity in the regulation text but have not made substantive 
changes in policy. As finalized, paragraph (f)(3)(iv)(D)--in four 
sentences--clearly states that changes may not be made until NCQA has 
reviewed and approved the off-cycle changes and addresses how NCQA will 
review the changes. The first sentence states that SNPs may not make 
changes until NCQA has reviewed and approved the off-cycle MOC changes. 
A new second sentence states that NCQA does not rescore the MOC during 
the off-cycle process, but changes are reviewed and determined by NCQA 
to be either ``Acceptable'' or ``Non-acceptable.'' Two additional 
sentences follow to explain that ``Acceptable'' means that the changes 
have been approved by NCQA and the MOC has been updated; ``Non-
acceptable'' means the changes have been rejected by NCQA and the MOC 
has not been changed; and that if NCQA determines that off-cycle 
changes are unacceptable, the SNP must continue to implement the MOC as 
originally approved. These revisions are consistent with the proposal 
and the current process.
    In paragraph (f)(3)(iv)(F), we are finalizing the provision to use 
``permitted'' rather than ``eligible'' as it better reflects our 
current policy so that it now reads: ``C-SNPs are only permitted to 
submit an off-cycle MOC submission when CMS requires an off-cycle 
submission to ensure compliance with applicable law.''
    Finally, we are finalizing paragraph (f)(3)(iv)(G) to clarify the 
single opportunity for an SNP to submit a corrected off-cycle revision 
to the MOC if the initial off-cycle submission is not approved. The 
revisions generally use language that is consistent with Sec.  
422.101(f)(3)(iii)(C), which better signals that this part of the off-
cycle revision process is similar to the cure period provided when the 
MOC submission is determined to have deficiencies. As finalized, 
paragraph (f)(3)(iv)(G) reads: ``When a deficiency is identified in the 
off-cycle MOC revision(s) submitted by a SNP, the SNP has one 
opportunity to submit a corrected off-cycle revision between June 1st 
and November 30th of each calendar year.''
    Although there were inadvertent differences in how the preamble of 
the proposed rule explained the proposed regulation text, we are 
finalizing the substance of our proposed policy for how off-cycle 
revisions to the MOCs of I-SNPs and D-SNPs could be requested and would 
be subject to review and approval before changes could be implemented.

C. Amending the Definition of Severe or Disabling Chronic Condition; 
Defining C-SNPs and Plan Types; and Codifying List of Chronic 
Conditions (Sec. Sec.  422.2, 422.4(a)(1)(iv), and 422.52(g))

    A specialized MA plan for special needs individuals, generally 
known as a special needs plan or a SNP, is an MA plan specifically 
designed to provide targeted care and limits 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

[[Page 30661]]

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 the special 
needs individuals eligible to enroll in C-SNPs. The amendments had an 
effective date of January 1, 2022, and included the following related 
to the revision of this definition: a directing 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; 
mandating the inclusion of several current C-SNP chronic conditions 
onto the list; and directing the Panel take into account the 
availability of benefits in the Medicare Advantage Value-Based 
Insurance Design model.
    We proposed to codify the BBA of 2018's amendment to the definition 
of severe or disabling chronic condition; to codify the definition of 
C-SNP; to implement the BBA of 2018 by updating and codifying the 
recommended list of chronic conditions recommended by a Panel of 
clinical advisors as specified by the BBA; and to codify existing sub-
regulatory guidance permitting the use of certain chronic condition 
combinations for the purposes of offering single standalone C-SNP plan 
benefit packages (PBPs).

A. Amending the Definition of Severe or Disabling Chronic Condition

    Currently, Sec.  422.2 defines ``severe or disabling chronic 
condition'' as meaning, for the purpose of defining a special needs 
individual, an MA eligible individual who has one or more co-morbid and 
medically complex chronic conditions 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. As summarized in more detail in the 
December 2022 proposed rule this definition was adopted to track 
amendments to section 1859(b)(6)(B)(iii) of the Act made by section 
164(e) of the Medicare Improvement for Patients and Providers Act of 
2008 (MIPPA) to define special needs individuals eligible for C-SNPs 
beginning January 1, 2010. (87 FR 79560) Section 164(e) of MIPPA also 
directed the Secretary to convene a Panel of clinical advisors to 
determine the chronic conditions used to identify special needs 
individuals for C-SNP eligibility. CMS subsequently convened the Panel 
in October 2008 and implemented the fifteen SNP-specific chronic 
conditions recommended by the Panel that met the definition of severe 
or disabling and needed specialized care management. The list was later 
incorporated into Chapter 16-B of the Medicare Managed Care Manual 
(MMCM). Starting in 2010, CMS adopted sub-regulatory 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-
categorical conditions or disorders that provide further information 
regarding the types of diseases that qualify under the chronic 
condition categories. Examples of conditions with sub-categorical 
disorders include autoimmune disorders, cardiovascular disorders, 
severe hematologic disorders, chronic lung disorders, chronic disabling 
mental health conditions, and chronic disabling neurologic disorders. 
Currently, C-SNPs that target several of the severe or disabling 
chronic conditions listed in our guidance must enroll an eligible 
beneficiary who has one or more of the targeted conditions, including 
the 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 16-B where the special needs individuals 
may have one or more of the conditions in the grouping or (2) a MA 
organization-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 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 that the Secretary may determine 
would benefit from enrollment in such a specialized MA plan for 
individuals with severe or disabling chronic conditions 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].'' Section 1859(f)(9) of the Act, as added by the BBA of 2018, 
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 each of the 
following criteria:
     Conditions that meet 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 conditions 
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.

[[Page 30662]]

     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).
    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.
    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. 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 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.
    Upon review and deliberation, the Panel identified the following 22 
chronic conditions as meeting the statutory criteria:
    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.
    We proposed to codify the list of chronic conditions created by the 
Panel as part of the definition of severe or disabling chronic 
condition at Sec.  422.2. The proposal took into account the changes 
recommended by the Panel to the list of chronic conditions that are 
currently used by CMS to approve C-SNPs. These changes include:

[[Page 30663]]

     Removing the term ``limited'' in listing the severe or 
disabling chronic conditions that make an individual eligible to enroll 
in a C-SNP. 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 would 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 did not propose to use the 
word ``including'' in the proposed definition. We proposed 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;
     Renaming ``Chronic alcohol and other drug dependence'' to 
``Chronic alcohol use disorder and other substance use disorders;''
     Adding dermatomyositis, psoriatic arthritis, and 
scleroderma to the 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;
     Adding valvular heart disease to the Cardiovascular 
disorders chronic condition category;
     Adding new chronic condition category, ``Overweight, 
Obesity, and Metabolic Syndrome;''
     Adding 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;
     Renaming 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;
     Adding Cystic Fibrosis and Chronic Obstructive Pulmonary 
Disease (COPD) to the Chronic lung disorders chronic condition 
category;
     Adding post-traumatic stress disorder (PTSD), eating 
disorders, and anxiety disorders to the Chronic and disabling mental 
health conditions category;
     Adding fibromyalgia, chronic fatigue syndrome, and spinal 
cord injuries to the Neurologic disorders conditions category;
     Adding post-organ transplantation care and 
immunodeficiency and immunosuppressive disorders as new chronic 
condition categories;
     Creating 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;
     Creating 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
     Creating new chronic condition category ``Conditions that 
require continued therapy services in order for individuals to maintain 
or retain functioning.''
    As 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 proposed that C-SNPs would 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 as finalized will apply the same statutory 
and regulatory considerations per the parameters of a severe or 
disabling chronic condition and as noted in Title XVIII of the Act and 
42 CFR part 422. In finalizing the three categories that are focused on 
impacts on health and functionality rather than underlying disease or 
condition, we are not eliminating the need for the effect on the 
enrollee to meet the statutory criteria in section 1859(f)(9) of the 
Act. As we noted in the December 2022 proposed rule, 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.
    We received the following comments, and our responses follow:
    Comment: Many commenters expressed general support for the list of 
chronic conditions; however, individual commenters provided specific 
support for certain additions to the list, such as: ``Dementia;'' the 
category ``Conditions that may cause cognitive impairment;'' ``chronic 
alcohol use disorder and other substance use disorders;'' chronic 
kidney disease (CKD); anxiety associated with chronic obstructive 
pulmonary disease (COPD); substance use disorders (SUD); chronic and 
disabling mental health conditions;; and the category ``Overweight, 
Obesity, and Metabolic Syndrome.'' There was also support for 
broadening the current set of chronic condition categories to a more 
holistic definition that accounts for the overall health and functional 
ability of an individual, including functional and cognitive needs. 
Commenters believe allowing enrollees with these conditions to enter 
into specialized C-SNPs will provide access to increased care 
coordination and improve health outcomes. Specifically, commenters who 
were supportive of adding CKD

[[Page 30664]]

noted that access to a specialized network of providers may prevent or 
slow disease progression toward ESRD.
    Response: We appreciate the commenters support for these changes.
    Comment: In responding to our solicitation of comment regarding the 
extent to which MA organizations would need more guidance with 
implementation of the proposed functional chronic condition categories, 
a commenter suggested that CMS take the approach of reviewing plan 
proposals for new C-SNPs organized around those functional categories 
and based on that experience, CMS should determine whether additional 
guidance is needed.
    Response: We believe there is a great deal of merit to this 
suggestion. As CMS implements and operationalizes the new chronic 
condition list, we will assess whether additional guidance or 
information is needed to ensure compliance with the regulations 
(including those we are finalizing here) and the statute. Consistent 
with our current MA application procedures, all SNPs are currently 
required to submit their model of care (MOC) to CMS for NCQA evaluation 
and approval as per CMS guidance under 42 CFR 422.4(a)(1)(iv). CMS will 
consider the SNP's outline of care coordination activities as part of 
the MOC when determining whether additional guidance is necessary for 
submitting SNP applications under the new function-based C-SNPs.
    Comment: A commenter suggested that CMS permit C-SNPs to offer 
plans that address the needs of beneficiaries, even if their specific 
disease or chronic conditions are different because it would an 
important step forward for integrated long-term care. The commenter 
notes that it is the needs of an individual, the activities of daily 
living (ADLs) and instrumental activities of daily living (IADLs) that 
should determine entry into a C-SNP, not the specific diagnosis.
    Response: We appreciate the comment. It is unclear to us the 
specific needs the commenter believes should be addressed by defining 
the term severe or disabling chronic condition for purposes of 
establishing MA SNPs to address such conditions. As we noted in the 
December 2022 proposed rule, and in this final rule, the BBA of 2018 
added requirements establishing chronic conditions. Section 
1859(f)(9)(A) of the Act 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) of 
the Act; 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.
    While we agree that the use ADLs and IADLs can assist health care 
providers and payers determine the health needs of patients, the Panel 
did not specifically create a chronic condition category around these 
measurements. As noted earlier in the preamble, the 2019 chronic 
condition Panel was limited to using these criteria when determining 
the content of the chronic conditions list. The Panel did recommend 
some function-based additions to the list that may be associated with 
conditions leading to deterioration of abilities, such as chronic 
condition (20) ``Conditions with functional challenges and require 
similar services including the following: spinal cord injuries, 
paralysis, limb loss, stroke, and arthritis.'' Because of these 
requirements, CMS does not have the authority to establish C-SNPs as 
suggested by the commenter at this time.
    Comment: A commenter noted that Table D-A 1 on page 79566 of the 
December 2022 proposed rule showed that only one C-SNP focused on 
substance use disorders between 2007-2022. The commenter recommends CMS 
work with stakeholders to identify recommendations and guidelines that 
would make it easier for other MA organizations to redevelop and 
deliver such plans.
    Response: We thank the commenter for their perspective. We 
acknowledge that few MA organizations have sponsored C-SNPs focusing on 
substance use disorders since the beginning of the program. CMS will 
review this request and determine whether we can employ informational 
outreach efforts or forums to encourage the use of underutilized 
chronic condition categories by organizations sponsoring C-SNPs. We 
encourage the public to provide additional information regarding the 
difficulties of creating certain condition-specific C-SNPs.
    Comment: A commenter supported the adoption of the revised 
definition of ``Severe or Disabling Chronic'' Conditions and adding a 
new chronic condition category for ``Overweight, Obesity, and Metabolic 
Syndrome.'' The commenter urged CMS to use its authority to recognize 
that FDA-approved anti-obesity medications (AOMs) as clinically 
recommended treatments for a chronic disease--obesity, and may 
therefore be covered under Part D.
    Response: We thank the commenter. However, the comment regarding 
AOMs and Part D coverage is out of scope for this rulemaking.
    Comment: A commenter suggested that our proposed amendment to the 
definition of severe or disabling chronic condition reinforces the 
linkage between C-SNP and special supplemental benefits for the 
chronically ill (SSBCI) eligibility in that the same definition also is 
used for SSBCI eligibility determination in the BBA of 2018. The 
commenter stated that this may encourage more plans to use functional 
and cognitive needs to target SSBCI eligibility.
    Response: We appreciate the comment, but CMS believes that the Act 
distinguishes the targeted beneficiaries of these benefits and programs 
in different ways that potentially limit the chronic conditions that 
may be employed between SSBCI and C-SNPs.
    As defined in section 1852(a)(3)(D)(iii) of the Act, for the 
purposes of SSBCI, a chronically ill enrollee means an enrollee in an 
MA plan that the Secretary determines:
     has one or more comorbid and medically complex chronic 
conditions that is life threatening or significantly limits the overall 
health or function of the enrollee;
     has a high risk of hospitalization or other adverse health 
outcomes; and
     requires intensive care coordination.
    CMS added this definition to our regulations at Sec.  
422.102(f)(1)(i)(A).
    As we noted in the preamble to this final rule, the BBA of 2018 
amended section 1859(b)(6)(B)(iii)(II) of the Act by adding a new 
definition of special needs individuals means an MA eligible individual 
who meets such requirements as the Secretary may determine would 
benefit from enrollment in such a specialized MA plan described in 
subparagraph (A) for individuals with severe or disabling chronic 
conditions who 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

[[Page 30665]]

health outcomes, and require intensive care coordination and that is 
listed under 1859(f)(9)(A) of the Act.
    The definition of chronically ill enrollee for the purposes of 
SSBCI is not specifically tied to the set of chronic conditions 
established by the Panel of clinical advisors under section 
1859(f)(9)(A) as is the case for the definition of special needs 
individuals with ``severe or disabling chronic conditions'' that must 
be used in determining eligibility for C-SNPs. In addition, the 
definition of ``chronically ill enrollee'' in section 1852(a)(3)(D) of 
the Act does not include an assessment whether the Secretary determines 
the individual would benefit from enrollment in a specialized MA plan. 
CMS did not propose to specifically align eligibility for SSBCI with 
eligibility for C-SNPs and is not finalizing such a limitation for 
SSBCI in this rule. Rather, CMS proposed and finalized in the 2020 
Final Rule (85 FR 33796) that for the purposes of SSBCI, the chronic 
conditions established by the Panel may be used to meet the statutory 
criterion of having one or more comorbid and medically complex chronic 
conditions that is life threatening or significantly limits the overall 
health or function of the enrollee as required at 
422.102(f)(1)(i)(A)(1). In the case of determining eligibility for 
SSBCI, MA plans are permitted to use other conditions not on the 
updated chronic condition list provided the condition is life 
threatening or significantly limits the overall health or function of 
the enrollee.
    Comment: A commenter noted individuals that would be eligible for 
enrollment in a functional status-focused C-SNP would likely require 
robust functional, cognitive, and social determinants of health (SDOH) 
supports in addition to medical and behavioral health care services. 
The commenter expressed concerned that if enrollees in a functional-
status focused C-SNP cannot access Medicaid funded LTSS, those 
enrollees would not fully benefit from this new C-SNP type. The 
commenter suggested that CMS work with stakeholders to identify new 
opportunities to provide appropriate and necessary functional and 
cognitive support services for this population, including SSBCI.
    Response: We appreciate the comment and note that C-SNPs must have 
specific attributes that go beyond the provision of basic Medicare 
Parts A and B services and care coordination that is required of all 
coordinated care plans. For example, C-SNPs must develop and implement 
a comprehensive individualized plan of care through an 
interdisciplinary care team in consultation with enrollee, as feasible, 
identifying goals and objectives including measurable outcomes as well 
as specific services and benefits to be provided to the enrollee. (See 
Sec.  422.101.(f)(1)(ii)) Additionally, C-SNPs may offer supplemental 
benefits, including SSBCI, to provide a more robust set of items and 
services than offered under Traditional Medicare that are tailored to 
the needs of the plan population. C-SNPs do not have Medicaid 
integration requirements as some D-SNP plans do, as indicated in the 
definitions of FIDE SNPs and HIDE SNPs at Sec.  422.2. While LTSS 
services may be available for individual C-SNP enrollees who are also 
enrolled in Medicaid, it is not currently a requirement that C-SNPs 
contractually integrate Part A/B services with Medicaid services 
offered by a state Medicaid agency or a Medicaid managed care plan that 
serves the same enrollee. However, coordination of services that are 
medically necessary for an enrollee and covered for that enrollee by 
Medicaid is an appropriate consideration for a C-SNP in developing the 
individualized plan of care for the enrollee. CMS understands that 
integration of Medicaid funded LTSS can be a great benefit to dually 
eligible beneficiaries, and we will continue to look at opportunities 
to service this population.
    Comment: MedPAC specifically provided comment that they did not 
support the proposal to increase the number of chronic conditions under 
the proposed definition of severe or disabling chronic condition at 
Sec.  422.2, nor do they support the current number of chronic 
conditions as listed in Chapter 16B of the MMCM. MedPAC noted that the 
Commission has long expressed concern that the list of conditions that 
C-SNPs can address was too broad and recommended that the list be 
narrowed. They stated that MA plans that are not C-SNPs should be able 
to manage most of the clinical conditions on the list; and that 95 
percent of C-SNP enrollees are in plans that focus on just three 
conditions--cardiovascular disorders, diabetes, and chronic heart 
failure--that are relatively common in the Medicare population. In 
addition, MA plans now have the flexibility, through the MA Value-Based 
Insurance Design (VBID) demonstration and changes to the uniformity 
requirement, to target reductions in cost sharing and supplemental 
benefits to enrollees with specific conditions, which weakens the 
rationale for offering a separate set of plans that focus on a specific 
condition. Lastly, MedPAC stated that C-SNPs are only warranted for a 
small number of conditions, including HIV/AIDS, ESRD, and chronic and 
disabling mental illness.
    Response: We note that the list of chronic conditions contained in 
the proposed definition of severe or disabling chronic condition under 
Sec.  422.2, like the current list of chronic conditions listed in 
Chapter 16B of the Medicare Managed Care Manual, is based on the 
recommendations by the expert Panel of clinical advisors. As noted in 
the proposed rule, the proposed chronic condition recommendations were 
reviewed by a Panel of clinical advisors in accordance with subsection 
1859(f)(9)(A) of the Act, as modified by the BBA 2018, as well as all 
other requirements set by statute (for the specifics of those 
requirements, please see 87 FR 79452). CMS concurs with the Panel's 
recommendations, and believes the Panel was in the best position to 
provide an objective assessment of what constitutes a severe or 
disabling chronic condition.
    CMS recognizes that MA organizations have chosen to utilize a small 
subsegment of chronic conditions when establishing C-SNPs since the 
inception of the program. However, we believe following the Panel's 
recommendations of increasing the number of severe or disabling chronic 
conditions may encourage MA organizations to establish innovative 
approaches to comprehensive care for those with other severe or 
disabling chronic conditions.
    We acknowledge that MA plans should be able to manage most of the 
clinical conditions on the list without the need to sponsor a disease-
specific C-SNP. However, we reiterate the unique statutory and 
regulatory SNP care management and quality improvement requirements 
that are expected of C-SNPs established under section 1859(f) of the 
Act, and Sec. Sec.  422.101(f) and 422.152(g). Currently, non-SNP MA 
plans are not required to meet these same standards. For example, the 
requirement at Sec.  422.101(f)(1) that SNPs must implement a MOC and 
the requirements at Sec.  422.101(f)(1)(ii) and (iii) to develop and 
implement an individualized care plan and interdisciplinary team, 
respectively, are not required of all MA plans (or even all MA 
coordinated care plans) and provide important additional benefits for 
the beneficiaries who are eligible for and enroll in C-SNPs.
    With respect to the comment that C-SNPs are only warranted for a 
small number of conditions such as HIV/AIDS, ESRD, and chronic and 
disabling

[[Page 30666]]

mental illness, as noted previously, our decision to increase the 
number of chronic conditions on the list is based on the 
recommendations by the Panel of clinical advisors as mandated by 
statute. Importantly, the statute does not set numerical limits when 
considering conditions that should be on the list, rather the statute 
sets standards the Panel must consider when deciding the merits of any 
disease in fitting the definition of a severe or disabling chronic 
condition. When considering the composition of the list of chronic 
conditions, CMS follows the direction the Panel provides in utilizing 
the review conditions established by statute. Again, the Panel was 
asked to consider changes to the new definition of special needs 
individual, which is an eligible individual that the Secretary may 
determine would benefit from enrollment in such a specialized MA plan 
for individuals with severe or disabling chronic conditions 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].'' The Panel ensured that the updated definition speaks to the 
severity and medical complexity of the condition and its impact on the 
care considerations that the enrollee, their SNP care coordinator, and 
providers must navigate to optimize health outcomes for C-SNP 
enrollees.
    Finally, we proposed in the December 2022 proposed rule that this 
new definition of severe or disabling chronic condition (that is, the 
new chronic condition list) would be applicable for plan years that 
begin on or after January 1, 2025, a delay of one additional year 
beyond the proposed applicability for most of the policies in that 
proposed rule. We proposed a delayed implementation of this for 
operational considerations and to allow plans and CMS to put in the 
place the necessary operational steps to permit transition from the 
current list of chronic conditions (and C-SNPs offered using that list) 
to the new definition and list of severe or disabling chronic 
conditions. Part of these considerations included the timing of MOC 
creation for C-SNPs that are due to CMS the February prior to upcoming 
contract year in which the MOC would take effect. After considering the 
gap in time between the issuance of the December 2022 proposed rule and 
the finalization of these provisions in the April 2024 final rule, we 
decided that it not necessary to delay the applicability of the new 
definitions for C-SNP and severe or disabling chronic condition under 
Sec.  422.2 and the finalized rule at Sec.  422.4 regarding groups of 
chronic conditions. This means that these rules will take effect with 
the effective date of this rule and be applicable beginning January 1, 
2025. We acknowledge that C-SNP approval processes and MOC approval 
timelines mean that C-SNPs will not be able to effectively use this new 
definition to offer new C-SNPs until CY 2026 coverage. With the 
implementation of the new definition, several current chronic 
conditions would transition to new chronic condition categories, such 
as End Stage Renal Disease (ESRD) and End Stage Liver Disease. MA 
organizations seeking to establish a plan covering End Stage Liver 
Disease for CY 2026 would be able to do so under the new category of 
Chronic Gastrointestinal Disease. We also proposed a delay implementing 
the proposed new definition of severe or disabling chronic condition 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. We will move forward with the codification of the 
new definition of severe or disabling chronic conditions effective with 
the April 2024 final rule; however, CKD C-SNPs (like other conditions 
in the new list) will only be available starting with CY 2026. This 
allows CMS and plans time to review operational and bid considerations. 
At the time this final rule is issued, the MA rates for 2025 will have 
been (or will shortly be) released because MA rates for the next 
calendar year must be released the first Monday in April of the 
calendar year. Current ESRD C-SNPs plan bids are based on a distinct 
bidding methodology. CMS will provide additional bid pricing 
information to MA organizations consistent with current procedures.
    After review of the comments we received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing the proposed definition for the term ``severe or disabling 
chronic condition'' as proposed with minor modifications to the 
formatting of the regulatory text to improve the clarity of the 
definition.
B. 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 required of all coordinated care 
plans; such additional standards include the enrollment limitations, 
model of care, 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 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. See section 
HC.1 of this final rule regarding our finalization of a revised 
definition for the term severe or disabling chronic condition. 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. As we explained in the proposed rule, because 
the proposed definition was intended 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. 
The December 2022 proposed rule generally reflected current policy and 
practice, with a few modifications as discussed where applicable. As 
part of current C-SNP sub-regulatory guidance and during the MA plan 
application process, MA organizations 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

[[Page 30667]]

(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 proposed, 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 a 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 proposed to codify how a C-SNP may focus on 
multiple chronic conditions in two ways. The proposed definition of C-
SNP provided that the restricted enrollment to individuals with severe 
or disabling chronic conditions includes restricting enrollment based 
on the multiple commonly co-morbid and clinically linked conditions 
groupings specified in Sec.  422.4(a)(1)(iv).
    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.
    Considering the established clinical connection between these 
conditions and the interest among plans and beneficiaries, we proposed 
to maintain the current policy. We proposed 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 several 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 proposed to add 
the three 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 proposed to add a new Sec.  422.52(g) 
to clarify that enrollees need only have one of the qualifying 
conditions for enrollment listed in the approved groupings in proposed 
Sec.  422.4(a)(1)(iv).\202\ This is consistent with current CMS 
operational practices regarding the current set of approved C-SNP 
groups.
---------------------------------------------------------------------------

    \202\ The December 2022 proposed rule inadvertently identified 
proposed Sec.  422.4(a)(1)(iv)(A) as addressing this proposal that 
an enrollee of a C-SNP that focuses on a grouping of conditions 
would be required to only have one of the conditions to be eligible 
to enroll in that C-SNP; we use the correct reference here. 87 FR 
79565.
---------------------------------------------------------------------------

    Lastly, CMS did not propose to codify a C-SNP plan application 
option that is currently available under sub-regulatory guidance in 
section 20.1.3.2 of Chapter 16B of the MMCM. In effect, this would 
remove this approach as an option for C-SNPs beginning 2025. 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 for this type of C-SNP 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 proposed 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 explained in the proposed rule that we believed 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.
    We received the following comments, and our responses follow:
    Comment: A commenter commended CMS for the changes to the list of 
severe or disabling chronic conditions under Sec.  422.2; however, the 
commenter expressed concern that the further expansion of chronic 
condition groupings in proposed Sec.  422.4(a)(1)(iv)(B) should be done 
in ways to minimize beneficiary and provider confusion, and to ensure 
conditions are clinically associated.
    Response: We agree with the commenter that chronic conditions

[[Page 30668]]

should be clinically associated for a C-SNP that addresses multiple 
chronic conditions to be approved. As proposed and finalized here (at 
Sec.  422.4(a)(1)(iv)(B)), consistent with current policy, a C-SNP may 
not be structured around multiple commonly co-morbid conditions that 
are not clinically linked in their treatment approaches and approved by 
CMS. As we noted in the December 2022 proposed rule, we believe that 
allowing a C-SNP to target a non-linked clinical arrangement results in 
a more general market product rather than a product that is tailored 
for a particular population. Further, as we stated in our proposed 
rule, 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 several 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. We believe the use of this process 
minimizes beneficiary and provider confusion and ensures that chronic 
condition groupings are clinically associated.
    After considering the comments received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing the revised definition of the term ``chronic condition 
special needs plan (C-SNP)'' at Sec.  422.2, the revisions to Sec.  
422.4(a)(1)(iv) to establish how C-SNPs may target specific and 
specific groupings of severe or disabling chronic conditions, and the 
special eligibility rule for C-SNPs at Sec.  422.52(g) as proposed.

D. Verification of Eligibility for C-SNPs (Sec.  422.52(f))

    Section 1859(b)(6) of the Act defines specialized MA plans for 
special needs individuals, as well as the term ``special needs 
individual.'' Section 1859(f)(1) of the Act provides that 
notwithstanding any other provision of Part C of the Medicare statute 
and in accordance with regulations of the Secretary, an MA special 
needs plan (SNP) may restrict the enrollment of individuals under the 
plan to individuals who are within one or more classes of special needs 
individuals. The regulation governing eligibility for MA SNPs is at 
Sec.  422.52. In addition to meeting the definition of a special needs 
individual in Sec.  422.2 and the general eligibility requirements for 
MA enrollment in Sec.  422.50, an individual must meet the eligibility 
requirements for the specific MA SNP in which the individual seeks to 
enroll. Currently, Sec.  422.52(f) provides that each MA SNP must 
employ a process approved by CMS to verify the eligibility of each 
individual enrolling in the SNP. CMS adopted this provision in 
paragraph (f) in the final rule with comment period ``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 1494). Historically, we have 
provided operational guidance related to eligibility criteria for 
enrollment in an MA SNP that exclusively enrolls individuals who meet 
the definition of special needs individual under Sec.  422.2 in our 
sub-regulatory manuals.\203\
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    \203\ This guidance can be found at https://www.cms.gov/files/document/cy2021-ma-enrollment-and-disenrollment-guidance.pdf and 
https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/mc86c16B.pdf.
---------------------------------------------------------------------------

    We proposed to revise paragraph Sec.  422.52(f) to codify, with 
minor modifications and clarifications, our longstanding guidance on 
procedural steps MA plans must take to verify an individual's 
eligibility for enrollment in a chronic condition SNP (C-SNP). C-SNPs 
are SNPs that restrict enrollment to special needs individuals with 
specific severe or disabling chronic conditions, defined at Sec.  
422.2. By codifying the verification requirements, we intend to provide 
transparency and stability for MA organizations offering C-SNPs and 
other interested parties about this aspect of the MA program. It will 
also clarify the SNP's roles and responsibilities and further assist MA 
organizations in meeting the requirements pertaining to verification of 
eligibility for C-SNPs.
    Specifically, we proposed in new Sec.  422.52(f)(1) to codify 
existing guidance stating that for enrollments into a C-SNP, the MA 
organization must contact the individual applicant's current physician 
to confirm that the enrollee has the specific severe or disabling 
chronic condition(s). Although the current sub-regulatory guidance in 
chapter 16B, section 40.2.1 refers only to the applicant's existing 
provider, we believe that a physician--either the applicant's primary 
care physician or a specialist treating the qualifying condition(s)--
should provide the required verification of the applicant's condition 
to ensure the accuracy and integrity of the verification process. 
Therefore, we proposed to use the term ``physician'' throughout 
proposed new Sec.  422.52(f).
    To further clarify the verification process, we also proposed in 
new Sec.  422.52(f)(1)(i) that the physician must be the enrollee's 
primary care physician or specialist treating the chronic condition, or 
conditions in the case of an individual seeking enrollment in a multi-
condition C-SNP. The MA organization may either 1) as proposed at new 
Sec.  422.52(f)(1)(i), contact the applicant's physician or physician's 
office and obtain verification of the condition prior to enrollment, or 
2) as proposed at new Sec.  422.52(f)(1)(ii), use a Pre-enrollment 
Qualification Assessment Tool (PQAT) prior to enrollment and 
subsequently (which can be after enrollment) obtain verification of the 
condition(s) from the enrollee's physician no later than the end of the 
individual's first month of enrollment in the C-SNP.\204\ Both proposed 
options are discussed in the current guidance. We continue to believe 
that these procedures will allow the MA organization to efficiently 
serve special needs populations while maintaining the integrity of SNP 
offerings under the MA program.
---------------------------------------------------------------------------

    \204\ CMS provides an outline of the Pre-enrollment 
Qualification Assessment Tool in section 40.2.1 of Chapter 16B of 
the MMCM. In 2017, CMS released a memo entitled, ``Discontinuation 
of CMS Approval Process for C-SNP Pre-Enrollment Qualification 
Assessment Tool,'' stating that we would no longer require chronic 
condition special needs plans (C-SNPs) to seek CMS approval prior to 
using a Pre-Enrollment Qualification Assessment Tool. CMS approval 
is granted for tools that meet the standards articulated in section 
40.2.1 of the MMCM and individual review and approval of plan-
specific tools is not required. Therefore, MA organizations are no 
longer required to submit these tools individually to CMS for 
approval so long as the standards outlined in the guidance are met.
---------------------------------------------------------------------------

    As part of this process, we proposed at new Sec.  422.52(f)(1)(i) 
that verification of the chronic condition(s) from the applicant's 
primary care physician or treating specialist must be in a form and 
manner authorized by CMS. Existing guidance states that this 
verification can be in the form of a note from a provider or the 
provider's office or documented telephone contact with the physician or 
physician's office confirming that the enrollee has the specific severe 
or disabling chronic condition. These would remain acceptable under 
this proposal. Performing this pre-enrollment verification with the 
applicant's primary care physician or specialist treating the 
qualifying condition will mean that the C-SNP may process the 
enrollment promptly.
    Use of the PQAT requires both pre-enrollment and post-enrollment 
actions by the C-SNP to conduct an assessment and subsequently confirm 
the information. The PQAT, per existing

[[Page 30669]]

guidance,\205\ would collect information about the chronic condition(s) 
targeted by the C-SNP directly from the enrollee and must include a 
signature line for a physician to confirm the individual's eligibility 
for C-SNP enrollment. In order for the PQAT to be complete, a physician 
must be the person who goes through the PQAT with the enrollee. The 
physician that goes through the PQAT with the enrollee can be either 
the enrollee's physician or a physician employed or contracted by the 
plan. A physician must later review the document to confirm that the 
information supports a determination that the enrollee is eligible for 
the C-SNP, even without their presence at the time of the determination 
by the physician. The physician providing the review and signature must 
be the enrollee's physician. Ultimately, a physician's review of and 
signature on the completed PQAT provide verification of the applicant's 
special needs status with regards to the applicable chronic 
condition(s). Currently, C-SNPs are not required to submit the PQAT to 
CMS for review and approval before the PQAT is used by the C-SNP and 
CMS proposed to codify that policy. The PQAT must meet the standards 
articulated in proposed Sec.  422.52(f)(1)(ii)(A), and therefore review 
and approval of plan-specific tools by CMS are not required.
---------------------------------------------------------------------------

    \205\ This guidance can be found in Chapter 16-B: Special Needs 
Plans, Section 40.2 of the Medicare Managed Care Manual.
---------------------------------------------------------------------------

     As proposed at Sec.  422.52(f)(1)(ii)(A)(1), the PQAT must 
include a set of clinically appropriate questions relevant to the 
chronic condition(s) on which the C-SNP focuses. For example, an MA 
organization sponsoring a Diabetes Mellitus C-SNP would perhaps include 
questions related to diagnoses of diabetes, such as blood glucose level 
or whether the enrollee is currently taking a medication for diabetes 
mellitus.
     As proposed at Sec.  422.52(f)(1)(ii)(A)(2), the PQAT must 
gather information on the applicant's past medical history, current 
signs and/or symptoms, and current medications sufficient to provide 
reliable evidence that the applicant has the applicable condition(s).
     As proposed at Sec.  422.52(f)(1)(ii)(A)(3), the PQAT must 
include the date and time of the assessment if completed during a face-
to-face interview with the applicant, or the receipt date if the C-SNP 
receives the completed PQAT by mail or by electronic means (if 
available).
     As proposed at Sec.  422.52(f)(1)(ii)(A)(4), the PQAT must 
include a signature line for and be signed by a physician to confirm 
the individual's eligibility for C-SNP enrollment. (We also proposed 
that this signature be from the applicant/enrollee's primary care 
physician or treating specialist.)
     As proposed at Sec.  422.52(f)(1)(ii)(B), the C-SNP must 
conduct a post-enrollment confirmation of each enrollee's information 
and eligibility using medical information (medical history, current 
signs and/or symptoms, diagnostic testing, and current medications) 
provided by the enrollee's primary care physician or the specialist 
treating the enrollee's chronic condition.
     As proposed at Sec.  422.52(f)(1)(ii)(C), the C-SNP must 
include the information gathered in the PQAT and used in this 
verification process in the records related to or about the enrollee 
that are subject to the confidentiality requirements in Sec.  422.118.
     As proposed at Sec.  422.52(f)(1)(ii)(D), the C-SNP must 
track the total number of enrollees and the number and percent by 
condition whose post-enrollment verification matches the pre-enrollment 
assessment and the data and supporting documentation must be made 
available upon request by CMS.
    In addition, we proposed to codify at Sec.  422.52(f)(1)(ii)(E) our 
longstanding guidance \206\ to MA organizations offering C-SNPs that 
choose to use a PQAT that the MA organization has until the end of the 
first month of enrollment to confirm that the individual has the 
qualifying condition(s) necessary for enrollment into the C-SNP. If the 
C-SNP cannot confirm that the enrollee has the qualifying condition(s) 
within that time, the C-SNP has the first seven calendar days of the 
following month (that is, the second month of enrollment) in which to 
send the enrollee notice of disenrollment for not having the qualifying 
condition(s). Disenrollment is effective at the end of the second month 
of enrollment; however, as also outlined in current guidance, the C-SNP 
must continue the individual's enrollment in the C-SNP if confirmation 
of the qualifying condition(s) is obtained at any point prior to the 
end of the second month of enrollment. We proposed to codify at Sec.  
422.52(f)(1)(ii)(F), consistent with existing guidance, that the C-SNP 
must continue the enrollment of the individual in the C-SNP if the C-
SNP confirms the qualifying condition(s) prior to the disenrollment 
effective date.
---------------------------------------------------------------------------

    \206\ This guidance can be found in Chapter 2, Section 20.10 and 
Chapter 16-B: Special Needs Plans, Section 40.2 of the Medicare 
Managed Care Manual.
---------------------------------------------------------------------------

    Lastly, we proposed to codify at Sec.  422.52(f)(1)(iii) that the 
C-SNP is required to have the individual's current physician (primary 
care physician or specialist treating the qualifying condition) 
administer the PQAT directly with the enrollee or provide confirmation 
(with or without the presence of the enrollee) that the information in 
the document supports a determination that the individual is eligible 
for the C-SNP. Once the physician has confirmed that the PQAT contains 
information that supports the applicant's chronic condition and signs 
it, the PQAT is complete. Without a physician's signature, the process 
is incomplete, and thus, the applicant must be denied enrollment if the 
enrollment has not yet happened or disenrolled by the end of the second 
month if the applicant had been enrolled. If the individual is 
disenrolled because the person's eligibility cannot be verified, SNPs 
must recoup any agent/broker compensation consistent with Sec.  
422.2274(d)(5)(ii).
    These proposals represent the codification of existing guidance 
outlining the procedural steps MA organizations currently take to 
verify an individual's eligibility for enrollment in a C-SNP, with 
minor modifications and clarifications. Therefore, we believe that this 
proposal would not result in a new or additional paperwork burden, as 
the policy to verify eligibility for C-SNPs has been in existence for 
some time. All burden impacts related to the SNP eligibility 
verification procedures have already been accounted for under OMB 
control number 0938-0753 (CMS-R-267). These requirements have been 
previously implemented and are currently being followed by MA 
organizations. Similarly, we do not believe the proposed changes would 
have any impact to the Medicare Trust Fund.
    We received the following comments, and our responses follow.
    Comment: Several commenters expressed general support but 
recommended using a term other than ``physician'' when referring to the 
activities that must be completed to confirm a beneficiary's 
eligibility for the C-SNP. Commenters noted that many individuals 
receive treatment for their chronic condition from other providers 
(e.g., nurse practitioners, physician assistants) and that by limiting 
the verification functions to the beneficiary's current physician, we 
were establishing a requirement that was too restrictive, would add 
operational

[[Page 30670]]

complexity, and create procedural barriers that obstruct beneficiaries' 
access to needed healthcare. Commenters also stated that physicians may 
not provide timely verification in response to a direct request or a 
PQAT which affects a C-SNPs' ability to swiftly seek data to verify 
beneficiaries' conditions.
    Commenters suggested that CMS codify a sufficiently broad term to 
allow a variety of healthcare professionals with requisite 
qualifications to confirm the applicant's specific severe or disabling 
chronic condition(s). Examples include the following terms: ``health 
care provider'' or ``practitioner'' to include those who work in clinic 
environments and any clinical staff in the physician's office, (e.g., 
registered nurses), which would align with existing verification 
protocols and will enable MA plans to offer and enroll beneficiaries 
with chronic conditions in plans best suited to meet their healthcare 
needs and preferences more efficiently. Another commenter further 
suggested that an alternate person at the provider practice be able to 
conduct this administrative function on behalf of the provider so as to 
not create more administrative burden and also facilitate enrollment. 
Another commenter stated that CMS uses the term ``provider'' for 
confirming the patient has a qualified condition in its existing 
guidance.
    Response: We appreciate the feedback and agree that the term 
``physician'' may be overly restrictive or may not accurately reflect a 
beneficiary's overall care team. As such, we are modifying Sec.  
422.52(f)(1) to replace the term ``physician'' with language describing 
the three types of health care providers we believe are appropriate to 
furnish confirmation that an enrollee has a severe or disabling chronic 
condition: (1) a physician, as defined in section 1861(r)(1) of the 
Act; (2) a physician assistant, as defined in section 1861(aa)(5)(A) of 
the Act and who meets the qualifications specified in Sec.  410.74(c); 
or (3) a nurse practitioner, as defined in section 1861(aa)(5)(A) of 
the Act and who meets the qualifications specified in Sec.  
410.75(b)(1)(i) and (ii). The modification will permit physician 
assistants and nurse practitioners who meet the specified qualification 
to provide the type of verification required under Sec.  422.52(f).
    The definition of physician in section 1861(r)(1) of the Act is 
defined to mean a doctor of medicine or osteopathy legally authorized 
to practice medicine and surgery by the State in which the individual 
performs such functions or actions. Although CMS proposed that all 
physicians within the scope of the definition of section 1861(r) of the 
Act would qualify for purposes of the proposed requirements for 
verifying eligibility to enroll in a C-SNP, we believe it is more 
appropriate to limit this to physicians as defined in section 
1861(r)(1) to be more consistent with and reflect our current 
subregulatory policies regarding chronic condition verification and our 
intent with codification of this policy. Because section 1861(r)(1) of 
the Act includes all doctors of medicine or osteopathy who are legally 
authorized to practice medicine and surgery by the State in which the 
individual performs such functions or actions, using ``physician'' as 
meaning this group is sufficiently broad for purposes of verifying that 
an individual has a specified severe or disabling chronic condition. 
Per section 1861(aa)(5)(A) of the Act, the terms ``physician 
assistant'' and ``nurse practitioner'' mean a physician assistant or 
nurse practitioner who performs such services as such individual is 
legally authorized to perform (in the State in which the individual 
performs such services) in accordance with State law (or the State 
regulatory mechanism provided by State law), and who meets such 
training, education, and experience requirements (or any combination 
thereof) as the Secretary may prescribe in regulations. Therefore, in 
addition to citing section 1861(aa)(5)(A) of the Act, we are also 
cross-referencing the additional Medicare regulations (Sec. Sec.  
410.74(c) and 410.75(b)(1)(i) and (ii)) that specify the qualifications 
for a physician assistants and nurse practitioners to define these 
providers.
    In addition to these changes we are finalizing in Sec.  
422.52(f)(1), we are also finalizing changes throughout Sec.  422.52(f) 
to replace the term ``physician'' with the phrase ``health care 
provider'' or ``health care provider specified in paragraph (f)(1)'' to 
be consistent with our final policy that physicians, physician 
assistants, and nurse practitioners may furnish the necessary 
verification. We use the term ``health care provider'' to avoid 
unintended ambiguity or confusion that Sec.  422.52(f) is using the 
term ``provider'' as it is defined broadly in Sec.  422.2. In addition, 
we are finalizing paragraph (f)(1)(iii) with revisions to specify that 
the PQAT must be signed by the enrollee's current health care provider 
as verification and confirmation that the enrollee is eligible for the 
C-SNP, especially as a provider employed or contracted by the plan may 
administer the PQAT with the enrollee. We believe allowing a SNP to use 
a provider employed or contracted by the plan permits operational 
flexibility without jeopardizing the independent verification of the 
applicant's condition. For example, a SNP may employ a registered nurse 
to administer the PQAT with the applicant that will then receive 
independent verification from the applicant's health care provider. CMS 
understands that establishing the same criteria for administering the 
PQAT under 422.52(f)(1)(ii)(B), as we propose under Sec.  422.52(f)(1) 
for health care provider verification, would likely create operational 
burdens for SNPs. We are finalizing the revised process at paragraph 
(f)(1)(iii) that both acknowledges the potential burden to plans, but 
also ensures that the applicant's health care provider is still 
verifying of the existence of the chronic condition.
    Comment: We received several comments pertaining to the PQAT. While 
commenters supported CMS' need to verify eligibility, several suggested 
the use of alternative data to support post-enrollment verification in 
lieu of the PQAT. For example, the use of existing institutional 
documentation, specifically the Minimum Data Set (MDS), to serve as 
documentation of a beneficiary's qualifying condition and the use of 
medical and pharmacy claims data to verify a C-SNP enrollee's chronic 
condition in cases where the enrollee's provider is unresponsive. Some 
commenters expressed concerns regarding the administrative challenges 
of acquiring a signature on the PQAT form, processing disenrollment due 
to a failure to obtain the required physician verification, and 
reliance on the information submitted by the beneficiary, which runs 
the risks of inaccuracies. Another commenter suggested that plans using 
the PQAT and post-enrollment verification process should be able to use 
the health care provider's verification via a recorded phone outreach, 
signature on the PQAT form, data from the enrollee's electronic health 
records, or other diagnoses received directly from the enrollee's 
provider. Some commenters were concerned that the proposal could 
disincentivize new or smaller MA organizations from establishing C-SNPs 
to offer coverage and care for this vulnerable population.
    Response: We appreciate the suggestions for alternative methods to 
verify that a C-SNP applicant has a qualifying severe or disabling 
chronic condition. However, the applicant's current health care 
provider plays a critical role in verifying the beneficiary's chronic 
condition. We

[[Page 30671]]

believe that review by the applicant's current health care provider is 
an important step to maintain C-SNP program integrity and the 
involvement of a health care provider who has a current relationship 
with the applicant and is not an employee of the C-SNP (or of the MA 
organization that offers the C-SNP) reduces burden when compared to 
alternatives such as seeking an independent evaluation of the applicant 
from another health care provider. We reiterate that the MA 
organization may contact the applicant's current health care provider 
or that provider's office to obtain verification of the condition prior 
to enrollment and that the use of the PQAT is an optional substitute 
prior to enrollment. The MA organization is allowed additional time 
(post-enrollment) to obtain verification from the applicant's current 
provider if the MA organization elects to use the PQAT prior to 
enrollment in lieu of getting confirmation from the applicant's current 
health care provider (or that provider's office), as further clarified 
in 422.52(f)(1)(iii) and 422.52(f)(1)(ii)(B). We believe limiting the 
verification confirmation process to this group of providers best 
aligns with those providers most likely to diagnose and treat the type 
of severe or disabling chronic condition listed in the definition of 
that term being adopted elsewhere in section VIII.C. of this rule. We 
note that the proposal is the codification of long-standing guidance in 
Chapter 16-B with minor modifications. The rule as finalized does not 
prohibit plans from consulting data or records of the type mentioned by 
the commenters, but data review alone cannot be a method of independent 
verification, which only the applicant's current provider's review and 
signature can impart. As further clarified in 422.52(f)(1)(ii)(A)(4), 
the completed PQAT must be signed by the applicant's current health 
care provider. We are including the phrase ``once completed'' in the 
regulation to clarify that the health care provider would be signing 
the PQAT as filled in with the applicant's information as a means to 
verify the PQAT; blank PQAT forms should not be signed in advance.
    Comment: A commenter expressed concerns that CMS' proposal created 
a requirement that plans must rely on a prior eligibility verification 
from another plan for purposes of enrollment in a C-SNP. The commenter 
preferred to conduct its own eligibility verification to ensure it has 
accurate and current information about beneficiaries.
    Response: We believe the commenter misunderstood the proposal as we 
did not propose to require and currently do not require C-SNPs to rely 
on a prior verification of eligibility information from a previous 
plan. The opposite is the case. Under the rule we are finalizing and 
our current policy, C-SNPs cannot use a previous plan's chronic 
condition verification for the purpose of verifying an applicant's 
eligibility into their plan. Each C-SNP must conduct its own 
verification that the applicant has a qualifying severe or disabling 
chronic condition as outlined in Sec.  422.52(f)(1).
    Comment: A commenter suggested making the proposed changes 
effective no sooner than the 2026 plan year to provide sufficient time 
to implement the operational changes which they deemed as significant.
    Response: We decline the suggestion to make the effective date 
later because the proposal is codifying longstanding guidance and plans 
should currently be performing these activities in compliance with our 
sub-regulatory guidance. To the extent that we are finalizing changes 
compared to our current guidance (for example, the expansion of the 
type of provider that can furnish the verification), we do not believe 
that these changes will add burden or make the process for verifying 
eligibility for new enrollees more difficult. The provisions we are 
finalizing at Sec.  422.52(f) regarding eligibility verification for C-
SNP enrollees are applicable with coverage beginning January 1, 2025.
    Comment: A commenter believed that the PQAT is a duplicative 
assessment and adds unnecessary reporting burden since plans already 
request and document similar information as part of conducting a Health 
Risk Assessment (HRA) after enrollment.
    Response: We agree that the HRA requirements under Sec.  
422.101(f)(1)(i) and the PQAT requirements being finalized under Sec.  
422.52(f)(1)(ii)(A)(1) may appear to collect similar health 
information. While there may be some similarities between the HRA and 
PQAT processes, the HRA is more specific in the categories of 
information collection (psychosocial, functional, etc.) and the PQAT is 
more specific to the severe or disabling chronic condition(s) the MA 
organization is required to verify prior to enrollment into a C-SNP. 
These tools serve different purposes, are not interchangeable, and are 
not duplicative, even if there is potential crossover in some of the 
information that is captured. We note that the PQAT is one of two ways 
to verify C-SNP eligibility prior to enrollment and that its use is 
optional.
    Comment: A commenter noted that many C-SNP applicants are not new 
to an MA plan, but they are instead transferring from a non-SNP plan 
offered by the same MA organization with the same provider network. The 
MA organization may already have medical professionals (such as nurse 
practitioners and physician assistants) working with the member on 
ongoing condition management through clinical programs available from 
the non-SNP and clinical program staff may already be coordinating with 
the member's primary care provider or other physicians. The commenter 
stated that requiring the member's physician to once again validate to 
the MA organization that the member has the qualifying condition for 
enrollment in the C-SNP seems unnecessary and an inefficient use of the 
physician's (or physician's staff) time. The commenter requested that 
CMS continue to allow confirmations from a ``plan provider qualified to 
confirm the condition.''
    Response: We believe that the review and sign-off by the 
applicant's current health care provider, who is already familiar with 
the MA organization's operational methods, will not add burden or 
create inefficiencies. The review by the applicant's current health 
care provider is a critical step in ensure program integrity of the C-
SNP verification process. As discussed in a prior response to a public 
comment, we are finalizing Sec.  422.52(f)(1) to permit the 
verification to be provided using the applicant's current health care 
provider, who is a physician (as defined in section 1861(r)(1) of the 
Act), physician assistant (as defined in section 1861(aa)(5)(A) of the 
Act and who meets the qualifications specified in Sec.  410.74(c) of 
this chapter), or a nurse practitioner (as defined in section 
1861(aa)(5)(A) of the Act and who meets the qualifications specified in 
Sec.  410.75(b)(1)(i) and (ii) of this chapter) to confirm that the 
applicant has the qualifying condition(s); by including physician 
assistants and nurse practitioners who are also currently treating the 
applicant, we believe that we are sufficiently addressing concerns 
about burden on physicians. In addition, as finalized, pre-enrollment 
verification may be provided by the C-SNP contacting the treating 
health care provider directly or the treating health care provider's 
office; we believe that the treating health care provider's office 
would be able to use information in the applicant's records to provide 
sufficient information to verify that the applicant has the qualifying 
severe or disabling chronic condition in many if not all cases. 
Further, although paragraphs (f)(1)(ii)(B) and (f)(1)(iii) require the

[[Page 30672]]

enrollee's current health care provider to sign the PQAT as 
verification of the information used to establish eligibility, the C-
SNP will have until the second month of enrollment to secure the 
signature as reflected in paragraphs (f)(1)(ii)(E) and (F), which we 
believe provides sufficient time post-enrollment to minimize the burden 
on the health care provider.
    Comment: A commenter requested that in situations where an 
individual is disenrolled due to an inability to verify their 
eligibility, the deadline for disenrollment deadline be extended from 
60 days to 90 days to align with the HRA completion deadline.
    Response: We disagree that the standard is too restrictive as the 
proposed timeline is consistent with long-standing guidance in Chapter 
16-B and C-SNPs have consistently shown the ability to meet this 
timeline. We also make the distinction that the verification process 
establishes the individual's eligibility, whereas the HRA completion 
assumes the applicant's eligibility and focuses on care coordination.
    Comment: A commenter noted that under Special Supplemental Benefits 
for the Chronically Ill (SSBCI), plans can provide health-related and 
non-health-related benefits targeted to enrollees with C-SNP conditions 
in non-SNP plans, with significantly less documentation of an 
enrollee's condition than required for C-SNP enrollment. The commenter 
stated that requirements that place significantly higher barriers for 
C-SNP enrollment versus SSBCI eligibility can be detrimental to an 
individual seeking to switch to a C-SNP plan because they want more 
comprehensive case management and clinical support. Further, when 
validations are not received and individuals are disenrolled, the 
stress and disruption in care experienced by members can also 
exacerbate their health issues, which is the opposite of what they are 
seeking when they apply for the C-SNP. Limiting the diagnosis 
validation requests made to physicians for those members who are new to 
the MA plan or who are new to Medicare, would be a more effective use 
of time and resources for both the plan and providers, and would reduce 
the number of members who are disenrolled for administrative reasons. 
The commenter encouraged CMS to consider whether those differences 
support optimal outcomes for members with ongoing chronic conditions.
    Response: We appreciate the comment. To the extent that an MA 
organization adopts a similar process for verifying eligibility for 
SSBCI under Sec.  422.102(f)(4) as what is required by Sec.  
422.52(f)(1) as finalized here, it may be possible to rely on the 
verification by the individual applicant's/enrollee's health care 
provider or on the PQAT and subsequent confirmation for both purposes 
if the verification of eligibility for the C-SNP and for the SSBCI 
occur very close in time. However, Sec.  422.102(f)(4) does not 
establish the same verification requirements as we are finalizing in 
Sec.  422.52(f)(1), so it is not appropriate to develop a sweeping 
exception from either Sec. Sec.  422.52(f)(1) or 422.102(f)(4). For 
more information on Sec.  422.102(f) and SSBCI, we refer readers to 
section I.B.4 of this final rule. A non-SNP MA plan is a more 
generalized MA product that can offer SSBCI under Sec.  422.102(f). CMS 
reviews whether an MA organization can deliver care under specific SNP 
regulations, including whether a plan can deliver care coordination and 
benefit arrangements for a specific chronic condition population. We 
believe it is critical to establish the specific processes of the C-SNP 
applicant verification to ensure the integrity of C-SNP plan 
operations.
    Comment: A couple of commenters were concerned that the burden 
ultimately falls on the beneficiary to ensure that the provider 
responds to a plan's verification request in order to ensure they are 
able to enroll in their chosen plan. Because some providers will not 
submit the pre-enrollment attestation without an office visit, the 
proposed requirement could mean that a beneficiary that has recently 
seen their physician might need to visit their physician again solely 
for pre-enrollment verification purposes.
    Response: We recognize that in some instances the applicant's 
health care provider could potentially ask the applicant to schedule an 
office visit before the health care provider will verify that the 
applicant has a qualifying severe or disabling chronic condition for 
the C-SNP. We believe that this is unlikely based on our knowledge of 
how this policy has played out historically and by the fact that the 
applicant's current health care provider's office will likely have 
information pertaining to the relevant medical history to verify the 
chronic condition.
    Comment: A commenter noted that when considering pre-enrollment 
verification requirements, CMS must guard against providers who 
potentially may be incentivized to use C-SNP pre-enrollment 
verification as a tool in steering the beneficiary to a plan associated 
with the provider but may not be in the best interest of the 
beneficiary. The commenter stated that under the pre-enrollment 
verification process, it would be difficult to ensure that an 
enrollee's current treating physician will verify that an enrollee has 
a qualifying severe or disabling chronic condition in a timely manner 
if they know the enrollee is considering enrollment in a plan with 
which the provider does not contract.
    Response: We appreciate the commenter's concern and acknowledge 
that such scenarios may occur. We believe that this is unlikely based 
on our knowledge of how this policy has played out historically.
    After consideration of all public comments and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing our proposal to add new paragraph (f)(1) to Sec.  422.52 
largely as proposed, but with modifications to specify that an 
applicant's current health care provider, who may be a physician, nurse 
practitioner or physician's assistant, provides the verification of the 
applicant's chronic condition. In addition, as described in our 
responses to public comments, we are finalizing revisions in paragraphs 
(f)(1)(i), (f)(1)(ii)(A)(4), (f)(1)(ii)(B) and (f)(1)(iii) to be 
consistent with the revisions in paragraph (f)(1) and to clarify the 
post-enrollment verification process when the C-SNP uses the PQAT.

E. I-SNP Network Adequacy

    In accordance with Sec.  422.116, CMS conducts evaluations of the 
adequacy of provider networks of all MA coordinated care plans to 
ensure access to covered benefits for enrollees. For MA coordinated 
care plans, which generally base coverage or cost sharing on whether 
the provider that furnishes services to an MA enrollee is in-network or 
out-of-network, these evaluations are particularly important. All MA 
special needs plans (SNP) are coordinated care plans and subject to the 
current requirements for network adequacy. Within the MA program, SNPs 
are classified into three distinct types: Chronic Care special needs 
plan (C-SNP), dual eligible special needs plan (D-SNP), and 
Institutional special needs plan (I-SNP). An I-SNP is a SNP that 
restricts enrollment to MA-eligible individuals who meet the definition 
of institutionalized and institutionalized-equivalent. One specific 
subtype of I-SNP is the facility-based I-SNP. Here, we use the term 
(``facility-based I-SNP'') to refer to an 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

[[Page 30673]]

definition of institutionalized in Sec.  422.2, for each county within 
the plan's county-based service area; and owns or has a contractual 
arrangement with each institutional facility serving enrollees in the 
plan. Historically, the I-SNP industry has stated that CMS's current 
network adequacy criteria under Sec.  422.116 create challenges for 
facility-based I-SNPs because facility-based I-SNP enrollees access 
services and seek care in a different way than enrollees of other plan 
types.
    In the December 2022 proposed rule, we explained in detail how I-
SNPs restrict enrollment to MA-eligible individuals who are 
institutionalized or institutionalized-equivalent, as those terms are 
defined in Sec.  422.2 and proposed new definitions for the different 
types of I-SNPs. As a result, the enrollees in I-SNPs are individuals 
who continuously reside in or are expected to continuously reside for 
90 days or longer in one of the specified facilities listed in the 
definition of ``institutionalized'' at Sec.  422.2 or individuals 
(``institutionalized-equivalent'') who are living in the community but 
require an institutional level of care. We refer readers to the 
December 2022 proposed rule (87 FR 79566 through 79568) and to section 
VIII.A of this final rule for a more detailed discussion of the 
eligibility requirements for I-SNPs and the final rule definitions for 
the different type of I-SNPs. See also Chapter 16b Section 20.3 of the 
Medicare Managed Care Manual.\207\ Our use of the term ``facility-based 
I-SNP'' in this rule aligns with the definition of ``Facility-based 
Institutional special needs plan (FI-SNP)'' adopted in section VIII.A 
of this rule.
---------------------------------------------------------------------------

    \207\ https://www.cms.gov/regulations-and-guidance/guidance/
manuals/downloads/mc86c16b.pdf.
---------------------------------------------------------------------------

    Per section 1859(f)(2) of the Act, I-SNPs restrict enrollment to 
MA-eligible individuals who, for 90 days or longer, have had or are 
expected to need the level of services provided in a long-term care 
(LTC) facility, which includes: a skilled nursing facility (SNF), a 
nursing facility (NF), an intermediate care facility for individuals 
with intellectual disabilities (ICF/IDD), an inpatient psychiatric 
hospital, a rehabilitation hospital, an LTC hospital, or a swing-bed 
hospital. See Sec.  422.2 for the definition of ``institutionalized'' 
for the details of the types of facilities. Facility-based I-SNPs (FI-
SNPs) serve a vulnerable cohort of Medicare beneficiaries with well 
over 95 percent of FI-SNP enrollees being eligible for both Medicare 
and Medicaid. Generally, FI-SNP enrollees reside either temporarily or 
permanently in an institution, therefore, these enrollees typically 
receive most of their health care services through or at the facility 
in which they reside, most often a SNF. As a result of the way that 
these enrollees receive covered services, CMS's established network 
adequacy time and distance standards under Sec.  422.116 may not be a 
meaningful way to measure provider network adequacy for and ensure 
access to covered benefits for enrollees of this plan type. Time and 
distance standards are created using several factors, including pattern 
of care. In order to comply with the network evaluation requirements in 
Sec.  422.116, a FI-SNP must contract with sufficient providers of the 
various specialties within the time and distance requirements specified 
in that regulation. The I-SNP industry has indicated through public 
comments and in prior correspondence to CMS that many FI-SNPs have 
difficulty contracting with providers outside their facilities, due to 
their model of care. This is because these providers know that 
enrollees of the I-SNP will not routinely seek care with these 
providers since they generally do not travel away from the facility for 
care.
    The MA organizations offering and those that are interested in 
offering FI-SNPs have raised questions about whether our network 
standards are appropriate considering the nature of the FI-SNP coverage 
model. The residential nature of this model creates inherent 
differences in patterns of care for FI-SNP enrollees as compared to the 
prevailing patterns of community health care delivery in other MA plan 
types. For example, most residents of a facility receive their care 
from a provider at the facility rather than traveling to a provider 
outside the facility whereas individuals who live at home in the 
community will need to travel to a provider to receive health care 
services.
    To address these concerns, CMS proposed to adopt a new exception 
for FI-SNP plans from the network evaluation requirements. This 
provision will apply only to FI-SNPs.
    CMS adopted minimum access requirements for MA coordinated care 
plans (which include all SNPs) in Sec.  422.112 and network evaluation 
criteria in Sec.  422.116 as means to implement and ensure compliance 
with section 1852(d)(1)(A) of the Act, which permits MA plans to limit 
coverage to items and services furnished by or through a network of 
providers subject to specific exceptions (such as emergency medical 
services) and so long as the MA organization makes benefits available 
and accessible to their enrollees. Currently, Sec.  422.116(f) allows 
an MA plan to request an exception to network adequacy criteria when 
both of the following occur: (1) certain providers or facilities are 
not available for the MA plan to meet the network adequacy criteria as 
shown in the Provider Supply file (that is, a cross-sectional database 
that includes information on provider and facility name, address, 
national provider identifier, and specialty type and is posted by state 
and specialty type); and (2) the MA plan has contracted with other 
providers and facilities that may be located beyond the limits in the 
time and distance criteria, but are currently available and accessible 
to most enrollees, consistent with the local pattern of care. In 
evaluating exception requests, CMS considers whether: (i) the current 
access to providers and facilities is different from the Health Service 
Delivery (HSD) reference file (as defined at 42 CFR 422.116(a)(4)(i)) 
and Provider Supply files for the year; (ii) there are other factors 
present, in accordance with Sec.  422.112(a)(10)(v), that demonstrate 
that network access is consistent with or better than the Traditional 
Medicare pattern of care; and (iii) the approval of the exception is in 
the best interests of beneficiaries.
    CMS has provided examples of situations that meet the first 
requirement for an exception to be requested in sub-regulatory 
guidance, specifically the Medicare Advantage and Section 1876 Cost 
Plan Network Adequacy Guidance.\208\ The following examples of 
situations where providers or facilities are not available to contract 
with the MA plan do not account for the issues that are unique to FI-
SNPs:
---------------------------------------------------------------------------

    \208\ https://www.cms.gov/files/document/medicare-advantage-and-section-1876-cost-plan-network-adequacy-guidance08302022.pdf.
---------------------------------------------------------------------------

     Provider is no longer practicing (for example, deceased, 
retired),
     Provider does not contract with any organizations or 
contracts exclusively with another organization,
     Provider does not provide services at the office/facility 
address listed in the supply file,
     Provider does not provide services in the specialty type 
listed in the supply file,
     Provider has opted out of Medicare, or
     Provider is sanctioned and on the List of Excluded 
Individuals and Entities.
    In addition, the use of Traditional Medicare telehealth providers 
or mobile providers and the specific patterns of care in a community 
that currently are

[[Page 30674]]

the basis for an approval exception do not account for the provider 
network issues unique to FI-SNPs that we proposed to address in this 
rule. Therefore, we proposed to amend our network adequacy regulations 
at Sec.  422.116(f) to establish an additional exception to the current 
CMS network adequacy requirements outlined in Sec.  422.116 and we 
proposed that this exception be specific to FI-SNPs. As proposed and 
finalized, the revisions to Sec.  422.116 provide that FI-SNPs will not 
be required to meet the current two prerequisites to request an 
exception from the network adequacy requirements in Sec.  422.116 but 
FI-SNPs must meet alternate bases on which to request an exception.
    With respect to the exceptions from the network adequacy process 
for FI-SNPs, CMS proposed to broaden the acceptable rationales for an 
exception from the requirements in Sec.  422.116(b) through (e) for FI-
SNPs. We proposed that a FI-SNP may request an exception from the 
network adequacy requirements in Sec.  422.116 when one of two 
situations occurs. To add these proposed new rationales to Sec.  
422.116(f)(1), we proposed to reorganize the current regulation text; 
the two current requirements for an exception request will be moved to 
new paragraphs (f)(1)(i)(A) and (B) and the proposed new rationales for 
an exception request will be in new paragraphs (f)(1)(ii)(A) and (B). 
Next, we proposed additional considerations CMS will use when 
determining whether to grant an exception under Sec.  422.116(f) that 
are specific to the additional acceptable rationales we proposed for an 
exception request. We proposed to add a new paragraph (f)(2)(iv) to 
specify the proposed new considerations that will apply to the new 
exceptions for FI-SNPs, which will be added to the existing 
considerations in Sec.  422.116(f)(2).
    This provision includes new bases on which only FI-SNPs may request 
an exception from the network adequacy requirements, additional 
considerations for CMS when deciding whether to approve an exception 
request from a facility-based I-SNP, and a new contract term for FI-
SNPs that receive the exception from the Sec.  422.116 network adequacy 
evaluation. Because we evaluate network adequacy and grant an exception 
at the contract level, this new exception is limited to contracts that 
include only FI-SNPs.
    The first new basis on which we proposed a FI-SNP could request an 
exception from Sec.  422.116(b) was that the FI-SNP is unable to 
contract with certain specialty types required under Sec.  422.116(b) 
because of the way enrollees in FI-SNPs receive care. For purposes of 
this first proposed new basis for an exception, the inability to 
contract means the MA organization offering the FI-SNP could not 
successfully negotiate and establish a contract with a provider, 
including individual providers and facilities. This new basis is 
broader than the existing condition for an exception that certain 
providers are unavailable for the MA plan (see current Sec.  
422.116(f)(1)(i), which we are redesignating to Sec.  422.116(f)(1)(A) 
in this final rule). The non-interference provision at section 
1854(a)(6) of the Act prohibits CMS from requiring any MA organization 
to contract with a particular hospital, physician, or other entity or 
individual to furnish items and services or require a particular price 
structure for payment under such a contract. As such, CMS cannot assume 
the role of arbitrating or judging the bona fides of contract 
negotiations between an MA organization and available providers or 
facilities. CMS does not regard an MA organization's inability to 
contract with a provider as a valid rationale for an exception from the 
network adequacy evaluation, but interested parties have indicated 
through public comments and in prior correspondence to CMS outside this 
particular rulemaking process that, historically, FI-SNPs have 
encountered significant struggles contracting with the necessary number 
of providers to meet CMS network adequacy standards due to their unique 
care model. In the proposed rule, we explained that we would add this 
new basis for an exception request to Sec.  422.116(f)(1)(ii)(A). CMS 
also proposed that its decision whether to approve an exception for a 
FI-SNP on this specific basis (that the I-SNP is unable to contract 
with certain specialty types required under Sec.  422.116(b) because of 
the way enrollees in FI-SNPs receive care) will be based on whether the 
FI-SNP submits evidence of the inability to contract with certain 
specialty types required under Sec.  422.116 due to the way enrollees 
in FI-SNPs receive care. For example, an organization could submit 
letters or emails to and from the providers' offices demonstrating that 
the providers were declining to contract with any FI-SNP. CMS proposed 
to add this requirement in a new paragraph (f)(2)(iv)(A). CMS will also 
consider the existing factors in addition to the new factors proposed 
here that are unique to the specific new exception proposed for FI-
SNPs. In the proposed rule, we solicited comment on this proposed new 
rationale for an exception from the network adequacy requirements in 
Sec.  422.116(b) through (e) and on the type of evidence we should 
consider in determining whether to grant an exception.
    We also proposed a second basis on which a FI-SNP may request an 
exception from the network adequacy requirements in Sec.  422.116(b) 
through (e) if:
    (1) A FI-SNP provides sufficient and adequate access to basic 
benefits through additional telehealth benefits (in compliance with 
Sec.  422.135 of this chapter) when using telehealth providers of the 
specialties listed in paragraph (d)(5) in place of in-person providers 
to fulfill network adequacy standards in paragraphs (b) through (e); 
and
    (2) Substantial and credible evidence that sufficient and adequate 
access to basic benefits is provided to enrollees using additional 
telehealth benefits (in compliance with Sec.  422.135 of this chapter) 
furnished by providers of the specialties listed in paragraph (d)(5) of 
this section and the FI-SNPs covers out-of-network services furnished 
by a provider in person when requested by the enrollee as provided in 
Sec.  422.135(c)(1) and (2) of this chapter, with in-network cost 
sharing for the enrollee.
    We believe it is appropriate to permit exceptions to the network 
evaluation standards in Sec.  422.116(b) through (e) in these 
situations because enrollees in FI-SNPs do not generally travel to 
receive care, so the time and distance standards that apply to other 
plan types are not appropriate for I-SNP plans. As part of this 
proposal, we proposed to add to the factors that CMS will consider 
whether to approve the exception request a new factor specifically 
related to this type of exception.
    Finally, we proposed new regulation text to ensure that the 
exception for FI-SNPs is used by and available only to FI-SNPs. We 
proposed a new paragraph (f)(3) at Sec.  422.116 to require any MA 
organization that receives the exception provided for FI-SNPs to agree 
to offer only FI-SNPs on the contract that receives the exception. To 
support the provision outlined at Sec.  422.116(f)(3), CMS also 
proposed to add, at Sec.  422.504(a)(21), a new contract provision that 
MA organizations must not establish additional plans (or plan benefit 
packages, called PBPs) that are not facility-based I-SNPs to a contract 
that is within the scope of proposed Sec.  422.116(f)(3). This will 
ensure MA organizations that have received the exception do not submit 
additional PBPs that are not FI-SNPs to their FI-SNP only contracts. 
CMS reviews

[[Page 30675]]

networks at the contract level which means if an MA organization were 
to add an MA plan (that is, a PBP) that is not a FI-SNP to a contract, 
the exception we proposed here will not be appropriate. We asked for 
comment on this aspect of our proposal and whether additional 
guardrails are necessary to ensure that the proposed new exception from 
network adequacy evaluations is limited to FI-SNPs consistent with our 
rationale for it.
    Under our proposal, FI-SNPs will still be required to adhere to 
Sec.  422.112 regarding access to covered benefits. For example, Sec.  
422.112(a)(1)(iii) requires an MA coordinated care plan to arrange for 
and cover 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. Because all SNPs, including FI-SNPs, are coordinated 
care plans, this beneficiary protection applies to them. Similarly, the 
timeliness of access to care requirements newly adopted at Sec.  
422.112(a)(6)(i) will apply. We believe that our proposal, as specified 
in the proposed rule, appropriately balanced the need to ensure access 
to covered benefits for enrollees in FI-SNPs while recognizing the 
unique way this type of MA plan furnishes benefits and how enrollees 
generally receive services at the institution where the enrollee 
resides. Expanding this proposed new exception from the Sec.  422.116 
network adequacy requirements to other I-SNPs that enroll special needs 
individuals that reside in the community or other SNPs or MA plans that 
are not designed to furnish services to institutionalized special needs 
individuals will not be appropriate or serve the best interests of the 
Medicare program or Medicare beneficiaries.
    Summaries of the comments we received on this proposal to amend 
Sec.  422.116(f) and our responses to them follow.
    Comment: Commenters overall were supportive of our efforts to 
broaden the bases of acceptable rationales for requesting an exception 
from the requirements in Sec.  422.116 for facility-based I-SNPs. 
Commenters also expressed support for CMS strengthening its general 
oversight of I-SNPs to ensure people are receiving the care they need. 
Specifically, commenters supported the proposal's expanded access to 
telehealth care to ease beneficiary access to care. Also, commenters 
believe this proposal is well-positioned to ensure individuals receive 
necessary supports across the continuum of their care needs without 
having to experience the disruption of changing Medicare coverage types 
should there be a need for more extensive long-term care.
    Response: CMS appreciates the support for our proposal, which we 
are finalizing, to establish two new exceptions from the network 
adequacy evaluations under Sec.  422.116(b) through (e) for certain FI-
SNPs, the factors and evidence CMS will consider in whether to grant 
the exceptions, and the new requirement that an MA organization that 
receives an exception for its FI-SNP(s) only offer FI-SNPs under the 
contract that receives the exception approval. CMS would like to thank 
all the commenters for their comments.
    After careful consideration of all comments received, and for the 
reasons set forth in the proposed rule and in our responses to the 
related comments, we are finalizing the revisions to Sec.  422.116(f) 
as proposed.

F. Increasing the Percentage of Dually Eligible Managed Care Enrollees 
Who Receive Medicare and Medicaid Services From the Same Organization 
(Sec. Sec.  422.503, 422.504, 422.514, 422.530, and 423.38)

    Dually eligible individuals face a complex range of enrollment 
options based on MA plan types (that is, HMOs, PPOs, private fee-for-
service plans, MA special needs plans, etc.), enrollment eligibility, 
and plan performance, but which do not consider the enrollee's Medicaid 
choice. Further, many of the coverage options available to dually 
eligible individuals--even including many dual eligible special needs 
plans (D-SNP)--do not meaningfully integrate Medicare and Medicaid, 
chiefly because the parent organization of the D-SNP does not also 
provide the enrollee's Medicaid services. The current managed care 
enrollment and eligibility policies have resulted in a proliferation of 
such D-SNPs and leave dually eligible individuals susceptible to 
aggressive marketing tactics from agents and brokers throughout the 
year.
    Over the last decade, we have taken numerous steps to improve the 
experiences and outcomes for dually eligible individuals through 
various forms of Medicare-Medicaid integrated care. Despite progress, 
there remain a significant number of enrollees who receive Medicare 
services through one managed care entity and Medicaid services through 
a different entity (misaligned enrollment), rather than from one 
organization delivering both Medicare and Medicaid services (aligned 
enrollment \209\). In the final rule titled Medicare and Medicaid 
Programs; Policy and Technical Changes to the Medicare Advantage, 
Medicare Prescription Drug Benefit, Programs of All-Inclusive Care for 
the Elderly (PACE), Medicaid fee-for-service, and Medicaid Managed Care 
Programs for Years 2020 and 2021 (CMS-4185-F) (hereinafter referred to 
as the April 2019 final rule), we expressed our belief that aligned 
enrollment, and especially exclusively aligned enrollment (when 
enrollment in a parent organization's D-SNP is limited to individuals 
with aligned enrollment), is a critical part of improving experiences 
and outcomes for dually eligible individuals.
---------------------------------------------------------------------------

    \209\ 42 CFR 422.2 (definition of ``aligned enrollment'').
---------------------------------------------------------------------------

    Longer term, for dually eligible individuals who are in Medicare 
and Medicaid managed care, we believe that we should continue to drive 
toward increasing aligned enrollment until it is the normative, if not 
only, managed care enrollment scenario. Our proposals represented an 
incremental step toward increasing aligned enrollment, balancing our 
long-term policy vision with our interest in limiting disruption in the 
short term. For dually eligible individuals that elect MA plans, we are 
focused on increasing enrollment in integrated D-SNPs: fully integrated 
dual eligible special needs plans (FIDE SNPs),\210\ highly integrated 
dual eligible special needs plans (HIDE SNPs),\211\ and applicable 
integrated plans (AIPs).\212\ These D-SNP types more meaningfully 
integrate Medicare and Medicaid services and administrative processes 
(such as unified appeals and grievances) than coordination-only D-SNPs 
\213\ that are not also AIPs.
---------------------------------------------------------------------------

    \210\ Effective 2025, FIDE SNPs as defined in Sec.  422.2 are 
required to have EAE and would therefore be AIPs by definition. To 
receive the FIDE designation, a D-SNP would be required to provide 
nearly all Medicaid services, including long-term services and 
supports, Medicaid behavioral health services, home health and DME.
    \211\ HIDE SNPs as defined in Sec.  422.2 are required to cover 
long-term services and supports or behavioral health services but 
may have more Medicaid services carved out relative to plans with 
the FIDE designation. HIDE SNPs that also operate with EAE would 
meet the definition of an AIP, but there is no requirement for EAE 
for the HIDE designation.
    \212\ AIPs as defined in Sec.  422.561 are D-SNPs with EAE, 
where the companion Medicaid MCO covers Medicaid benefits including 
primary care and acute care, Medicare cost-sharing, and at a minimum 
one of the following: home health services, medical supplies, 
equipment, and appliances (DME), or nursing facility services.
    \213\ Dual eligible special needs plans (D-SNPs) are defined at 
Sec.  422.2. ``Coordination-only'' D-SNPs are D-SNPs that neither 
meet the FIDE SNP nor HIDE SNP definition at Sec.  422.2 and for 
which there are no Federal requirements to cover any Medicaid 
benefits either directly or through an affiliated Medicaid managed 
care plan.

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[[Page 30676]]

    In the November 2023 proposed rule, we described interconnected 
proposals that would (1) replace the current quarterly special 
enrollment period (SEP) with a one-time-per month SEP for dually 
eligible individuals and other LIS eligible individuals to elect a 
standalone PDP, (2) create a new integrated care SEP to allow dually 
eligible individuals to elect an integrated D-SNP on a monthly basis, 
(3) limit enrollment in certain D-SNPs to those individuals who are 
also enrolled in an affiliated Medicaid managed care organization 
(MCO), and (4) limit the number of D-SNPs an MA organization, its 
parent organization, or an entity that shares a parent organization 
with the MA organization, can offer in the same service area as an 
affiliated Medicaid MCO in order to reduce ``choice overload'' of D-SNP 
options in certain markets. Affiliated Medicaid MCOs are Medicaid MCOs 
offered by the MA organization, the same parent organization, or 
another subsidiary of the parent organization. We noted that, in 
combination, our proposals would create more opportunities for dually 
eligible individuals to elect integrated D-SNPs, more opportunities to 
switch to Traditional Medicare, and fewer opportunities to enroll in 
MA-PD plans that do not integrate Medicare and Medicaid services. Table 
HC1 summarizes the combined effects of these proposals, then we 
describe each proposal in greater detail.
---------------------------------------------------------------------------

    \214\ We proposed that during AEP and other available enrollment 
periods, MA organizations would not be permitted to enroll dually 
eligible individuals into a D-SNP where such enrollment would not 
result in aligned enrollment with an affiliated Medicaid MCO offered 
in the same service area (that is, a Medicaid MCO offered by the MA 
organization, its parent organization, or another subsidiary of the 
parent organization).
[GRAPHIC] [TIFF OMITTED] TR23AP24.015


[[Page 30677]]


1. Proposed Changes to the Special Enrollment Periods for Dually 
Eligible Individuals and Other LIS Eligible Individuals
    Section 1860D-1(b)(3)(D) of the Act directs the Secretary to 
establish an SEP for full-benefit dually eligible individuals under 
Part D. The SEP, subsequently referred to as the continuous dual/LIS 
SEP, codified at Sec.  423.38(c)(4), was later extended to all other 
subsidy-eligible beneficiaries by regulation. The continuous dual/LIS 
SEP allowed eligible beneficiaries to make Part D enrollment changes 
(that is, enroll in, disenroll from, or change Part D plans, including 
Medicare Advantage Prescription Drug (MA-PD) plans) throughout the 
year, unlike other Part D enrollees who generally may switch plans only 
during the AEP or via other applicable SEPs each year.
    In the April 2018 final rule, we cited concerns with usage of the 
continuous dual/LIS SEP related to enrollees changing plans frequently, 
hindering care coordination efforts by D-SNPs; plans having less 
incentive to innovate and invest in serving high-cost enrollees who may 
disenroll at any time; and agents and brokers targeting dually eligible 
individuals due to their ability to make enrollment elections 
throughout the year (83 FR 16514). Ultimately, the April 2018 final 
rule amended the continuous dual/LIS SEP to allow usage once per 
calendar quarter during the first nine months of the year (that is, one 
election during each of the following time periods: January-March, 
April-June, July-September).
    The quarterly dual/LIS SEP reduced individuals moving from one Part 
D plan (including an MA-PD) to another Part D plan (including an MA-PD) 
as frequently. However, in the November 2023 proposed rule we discussed 
the ongoing concerns with the quarterly dual/LIS SEP:
     Marketing. We remain concerned about marketing 
opportunities, especially when they focus on dually eligible 
individuals who, as a group, have lower levels of education, health 
literacy, and access to resources that could help overcome sub-optimal 
coverage decisions. Because the quarterly dual/LIS SEP still allows the 
vast majority of dually eligible individuals to enroll in almost any 
MA-PD plan, they remain a target for marketing activities from all 
types of plans throughout the year.
     Ability to enroll in integrated D-SNPs. The quarterly 
dual/LIS SEP does not allow dually eligible individuals to enroll in 
integrated D-SNPs after those individuals have exhausted the 
opportunities allowed by the quarterly dual/LIS SEP.
     Complexity for States. The quarterly dual/LIS SEP has 
created some challenges related to aligning Medicare and Medicaid 
enrollment dates for dually eligible individuals seeking to enroll in 
integrated products. In the capitated financial alignment models of the 
Financial Alignment Initiative (FAI), we waived the quarterly dual/LIS 
SEP rules at State request to allow for monthly opportunities for 
individuals to enroll or disenroll. This alleviated the complexity of 
different Medicare and Medicaid enrollment periods and allows dually 
eligible individuals more opportunities to enroll in integrated 
products.
     Complexity for enrollment counselors and individuals. 
Enrollment counselors such as State Health Insurance Assistance 
Programs (SHIPs) and State ombudsman programs have also noted that the 
once-per-quarter rule is complicated and makes it difficult to 
determine the enrollment options available to dually eligible 
individuals.
    To further protect Medicare beneficiaries, reduce complexity for 
States and enrollment counselors, and increasingly promote integrated 
care, we proposed two SEP changes. Section 1860D-1(b)(3)(D) of the Act 
requires the Secretary to establish SEPs for full-benefit dually 
eligible individuals, although it does not specify the frequency or 
mechanics of those SEPs. Further, section 1860D-1(b)(3)(C) of the Act 
grants the Secretary the authority to create SEPs for individuals who 
meet other exceptional circumstances.\215\ Section 1859(f)(1) of the 
Act permits the Secretary to set forth regulations related to how MA 
organizations restrict the enrollment of individuals who are within one 
or more classes of special needs individuals. Section 1859(f)(6) 
establishes the authority to adopt a transition process to move dually 
eligible individuals out of SNPs when they are not eligible for the 
SNP. Section 1859(f)(8) of the Act also reflects an interest in and 
goal of furthering the integration of D-SNPs; the requirement for us to 
establish procedures for unified grievance and appeals processes and 
requirement, in section 1859(f)(8)(D), for a mandatory minimum level of 
integration illustrate how efforts to increase integration in 
implementing and adopting standards for the MA program further the 
goals of the program. Based on this, as outlined in detail in the 
November 2023 proposed rule (88 FR 78568 through 78569), we proposed to 
amend Sec.  423.38(c)(4)(i) to replace the quarterly dual/LIS SEP with 
a simpler new dual/LIS SEP. The proposed dual/LIS SEP would allow 
dually eligible and other LIS-enrolled individuals to enroll once per 
month into any standalone prescription drug plan.
    We noted that, functionally, the proposed revised dual/LIS SEP 
would mean that such individuals could, in any month, switch PDPs or 
leave their MA-PD for Traditional Medicare plus a standalone PDP (plans 
that only offer prescription drug coverage). However, as proposed, the 
dual/LIS SEP would no longer permit enrollment into MA-PD plans or 
changes between MA-PD plans, although such options would still be 
available where another election period permits.
    In conjunction, based on the statutory authorities described above, 
we also proposed to create a new integrated care SEP at Sec.  
423.38(c)(35) for dually eligible individuals. This new integrated care 
SEP would allow enrollment in any month into FIDE SNPs, HIDE SNPs, and 
AIPs for those dually eligible individuals who meet the qualifications 
for such plans.
    For dually eligible individuals, our two SEP proposals would allow 
a monthly election to:
     Leave an MA-PD plan for Traditional Medicare by enrolling 
in a standalone PDP,
     Switch between standalone PDPs, or
     Enroll in an integrated D-SNP such as a FIDE, HIDE, or 
AIP.
    If an eligible individual attempts to use, or uses, both the 
monthly dual/LIS SEP and the integrated care SEP within the same month, 
the application date of whichever SEP is elected last in time is the 
SEP effectuated the first of the following month.
    As a result of these proposals, dually eligible and other LIS-
eligible individuals, like other Medicare beneficiaries, would be able 
to enroll into non-AIP coordination-only D-SNPs \216\ or other MA plans 
only during the ICEP, AEP, or where another SEP permits. While the 
proposed changes constrain some enrollment options at certain times of 
the year, dually eligible individuals and other LIS-eligible 
individuals would never have fewer choices than people who are not 
dually or LIS eligible.
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    \216\ Dual eligible special needs plans (D-SNPs) are defined at 
Sec.  422.2. ``Coordination-only'' D-SNPs are D-SNPs that neither 
meet the FIDE SNP nor HIDE SNP definition at Sec.  422.2 and are not 
required to cover any Medicaid benefits.
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    In the November 2023 proposed rule we stated our belief that the 
proposed SEP changes would create more opportunity for dually eligible 
or LIS individuals to leave MA-PD plans if

[[Page 30678]]

MA is not working well for them; reduce the incentive for most plans to 
deploy aggressive sales tactics targeted at dually eligible individuals 
outside of the AEP; increase transparency for Medicare beneficiaries 
and enrollment counselors; create more opportunities for enrollment 
into integrated D-SNPs; reduce the burden on States working to align 
Medicaid MCO and D-SNP enrollment; and strengthen incentives for MA 
sponsors to also compete for Medicaid managed care contracts.
    We also noted some potential challenges of our proposal, including 
limiting dually eligible individuals' ability to change MA-PD plans 
outside of the AEP, MA-OEP, or other available SEPs in States with few 
or no integrated D-SNPs; less incentive for MA plans to innovate and 
invest in meeting the needs of high-cost dually eligible enrollees 
because such individuals can disenroll at any time; and dually eligible 
individuals changing between integrated care plans monthly, potentially 
hindering care coordination and case management efforts. In addition, 
since LIS individuals without Medicaid are ineligible for integrated D-
SNPs, our proposal limits how the dual/LIS SEP can be used for these 
individuals compared to the current scope of the SEP.
    Section 423.40(c) currently provides that the effective date of an 
enrollment change in Part D during a special enrollment period 
specified in Sec.  423.38(c), including the existing SEP for dually 
eligible and other LIS-eligible individuals, will be the first day of 
the calendar month following the month in which the election is made, 
unless otherwise noted. In the November 2023 proposed rule, we 
requested comments on using flexibilities at section 1851(f)(4) of the 
Act and at Sec.  423.38(c) to establish a Medicare enrollment effective 
date for the integrated care SEP at Sec.  423.38(c)(35) that differs 
from the effective date in the current quarterly dual/LIS SEP to better 
align with Medicaid managed care enrollment cut-off dates, as some 
States do not enroll individuals on the first of the month following an 
enrollment request after a certain cut-off date and delay the effective 
date until the first of the following month.
2. Enrollment Limitations for Non-Integrated Medicare Advantage Plans
    Aligned enrollment is a key feature of the FAI, PACE, and other 
long-standing integrated care programs such as the Massachusetts' 
Senior Care Options and Minnesota's Senior Health Options that started 
as demonstration programs that were precursors to D-SNPs. Individual 
States may also use their State Medicaid agency contracts (SMAC) to 
limit enrollment in a D-SNP to the enrollees in an affiliated Medicaid 
MCO. Further, we have adopted, as part of the definition in Sec.  
422.2, enrollment limits for FIDE SNPs that require, beginning January 
1, 2025, FIDE SNPs to have exclusively aligned enrollment.
    Separate from contracting with D-SNPs via SMACs, States have 
discretion in how they arrange their Medicaid managed care programs and 
may use Medicaid MCOs to cover a comprehensive scope of Medicaid 
benefits or use prepaid health plans to cover a smaller scope of 
Medicaid benefits.\217\ Many States with Medicaid managed care programs 
select a limited number of Medicaid MCOs through a competitive 
procurement process.
---------------------------------------------------------------------------

    \217\ See 42 CFR 438.2 for definitions of the terms managed care 
organization (MCO), prepaid ambulatory health plan, and prepaid 
inpatient health plan.
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    In many service areas, dually eligible individuals face complicated 
enrollment policies, overwhelming marketing, and an increasingly 
complex array of plans purportedly designed especially for them but 
that do not offer meaningful Medicare and Medicaid integration due to 
service area and enrollment misalignment.
    We noted in the November 2023 proposed rule that some States have 
utilized SMACs and selective contracting to limit the availability of 
D-SNPs in the State to those MA organizations that also have contracts 
with the State to cover Medicaid services. However, other D-SNP markets 
have grown without any limitations on non-integrated plans. In some 
markets, parent organizations of MA organizations have acquired 
multiple D-SNPs by purchasing smaller plans and have not consolidated 
the various plans, resulting in one parent organization operating 
multiple D-SNPs within a single State, often with overlapping service 
areas. For States that do not require parent organizations to 
consolidate their plans, multiple D-SNPs of this type may continue to 
operate indefinitely. This creates a market with a large number D-SNP 
options that often do not offer significantly different benefits or 
networks, which creates confusion for plan selection and could lead to 
individuals choosing unaligned Medicare and Medicaid plans.
    We recognize that States have policy interests and goals that shape 
their Medicaid managed care programs, and our intent is to help further 
support States interested in implementing EAE. We have historically 
deferred to States to use SMACs to align Medicare and Medicaid plan 
offerings consistent with State policy priorities. However, as the 
number of dually eligible individuals with misaligned enrollment and 
sheer number of D-SNPs have grown, we noted in the November 2023 
proposed rule that we now believe that Federal rulemaking is warranted 
to promote greater alignment of D-SNPs and Medicaid MCOs and to begin 
to simplify the array of choices.
    We have authority, per section 1857(e)(1) of the Act, to add MA 
contract terms and conditions not inconsistent with the MA statute 
(that is, Part C of Title XVIII of the Act) as the Secretary may find 
necessary and appropriate. Given how section 1859(f)(8) of the Act 
reflects a goal of furthering the integration of D-SNPs and how our 
proposal is designed to reduce choice overload situations for dually 
eligible individuals while furthering opportunities for enrollment in 
integrated D-SNPs (that is, FIDE SNPs, HIDE SNPs, and AIPs), we believe 
that the standard in section 1857(e)(1) is met. Further, section 
1854(a)(5) of the Act is clear that we are not obligated to accept any 
and every MA plan bid. Based on this, we proposed new regulations 
Sec. Sec.  422.503(b)(8), 422.504(a)(20), 422.514(h), and 
422.530(c)(4)(iii).
    At Sec.  422.503(b)(8), we proposed to establish a new 
qualification for an MA organization (or new applicant to be an MA 
organization) to offer D-SNP(s) while at Sec.  422.504(a)(20) we 
proposed to establish a new contract term for certain MA organizations. 
At Sec.  422.514(h), we proposed to establish conditions for how 
certain MA organizations and D-SNPs may enroll dually eligible 
individuals and limit the number of D-SNPs that may be offered by 
certain MA organizations. Finally, at Sec.  422.530(c)(4)(iii), we 
proposed to establish a new crosswalk exception to authorize MA 
organizations that are subject to these new enrollment limitations to 
crosswalk their enrollees to a single D-SNP to accomplish aligned 
enrollment.
    Together, our proposals at Sec. Sec.  422.503(b)(8), 
422.504(a)(20), and 422.514(h)(1) and (2) would require the following:
     Beginning in plan year 2027, when an MA organization, its 
parent organization, or an entity that shares a parent organization 
with the MA organization, also contracts with a State as a Medicaid MCO 
that enrolls dually eligible individuals in the same service area, D-
SNPs offered by the MA organization, its parent organization, or

[[Page 30679]]

an entity that shares a parent organization with the MA organization, 
must limit new enrollment to individuals enrolled in (or in the process 
of enrolling in) the D-SNP's affiliated Medicaid MCO. This would apply 
when any part of the D-SNP service area(s) overlaps with any part of 
the Medicaid MCO service area, even if the two service areas do not 
perfectly align. Additionally, only one D-SNP may be offered by an MA 
organization, its parent organization, or another MA organization with 
the same parent organization in the same service area as the aligned 
Medicaid MCO. We would only enter into a contract with one D-SNP for 
full-benefit dually eligible individuals in the same service area as 
that MA organization's affiliated Medicaid MCO (with limited exceptions 
as described below).
     Beginning in 2030, such D-SNPs must only enroll (or 
continue to enroll) individuals enrolled in (or in the process of 
enrolling in) the affiliated Medicaid MCO. Therefore, by 2030, 
integrated D-SNPs would be required to disenroll individuals who are 
not enrolled in both the D-SNP and Medicaid MCO offered under the same 
parent organization (that is, offered by the parent organization or any 
subsidiary), except that D-SNPs would still be able to use a period of 
deemed continued eligibility to retain enrollees who temporarily lost 
Medicaid coverage as described in Sec.  422.52(d). This also means that 
where an enrollee is temporarily disenrolled from the affiliated 
Medicaid MCO but is expected to be re-enrolled in the affiliated 
Medicaid MCO within the period of deemed continued eligibility, the D-
SNP would not be required to disenroll that enrollee during that 
period.
    Consistent with how we believe MA organizations under the same 
parent organization share operational and administrative functions, we 
proposed to apply the regulations at the parent organization level.
    To minimize enrollment disruption associated with achieving 
compliance with our other proposals, we proposed a corresponding new 
provision at Sec.  422.530(c)(4)(iii) that would provide a new 
crosswalk \218\ exception to allow one or more MA organizations that 
share a parent organization and offer D-SNPs subject to these proposed 
new limits to crosswalk enrollees (within the same parent organization 
and among consistent plan types) when the MA organization chooses to 
non-renew or consolidate its current D-SNPs to comply with the new 
rules in proposed Sec. Sec.  422.504(a)(20) and 422.514(h). The 
proposed new crosswalk exception would explicitly permit moving 
enrollments across contracts held by MA organizations with the same 
parent organization; because we are not including any explicit 
exception from the rule in Sec.  422.530(a)(2) prohibiting crosswalks 
to different plan types, the receiving D-SNP must be the same plan type 
as the D-SNP out of which the enrollees are crosswalked. We noted our 
expectation that MA organizations who offer D-SNPs would leverage Sec.  
422.530(c)(4)(iii)--as well as standard MA processes to add or remove 
service areas--to come into compliance with Sec.  422.514(h).
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    \218\ A crosswalk is the movement of enrollees from one plan (or 
plan benefit package (PBP)) to another plan (or PBP) under a 
contract between the MA organization and CMS. To crosswalk enrollee 
from one PBP to another is to change the enrollment from the first 
PBP to the second.
---------------------------------------------------------------------------

    In addition, we proposed to codify at Sec.  422.514(h)(3) two 
exceptions to our new proposed requirements at Sec.  422.514(h)(1) and 
(2) (the exceptions would carry over as part of the cross-references to 
compliance with Sec.  422.514(h) in Sec. Sec.  422.503(b)(8), 
422.504(a)(20), and 422.530(c)(4)(iii)). In certain circumstances, 
State D-SNP policy may require the need for more than one D-SNP for 
full-benefit dually eligible individuals to operate in the same service 
area. Under Sec.  422.514(h)(3)(i), we proposed to permit an MA 
organization, its parent organization, or an entity that shares a 
parent organization with the MA organization, offering more than one D-
SNP for full-benefit dually eligible individuals in the same service 
area. For example, where a SMAC limits enrollment for certain groups 
into certain D-SNPs (such as by age group), the MA organization may 
offer additional D-SNPs for different groups of full-benefit dually 
eligible individuals in the same service area accordingly. As proposed, 
the exception would only be available where the SMAC requires different 
eligibility groups for the different D-SNPs that are offered by the 
same MA organization, its parent organization, or another MA 
organization that shares the parent organization; this proposed 
exception would allow States the flexibility to design future 
integrated D-SNP programs with eligibility nuances should they so 
choose.
    To minimize enrollee disruption, our second proposed exception 
would not prohibit an MA organization, its parent organization, or 
another MA organization that shares a parent organization with the MA 
organization, from continuing to operate both an HMO D-SNP and a PPO D-
SNP in a State where the proposed new policy applies. To achieve the 
goals of the new regulation, including simplification of the D-SNP 
market and promotion of integrated care through aligned Medicare and 
Medicaid products, we proposed at Sec.  422.514(h)(3)(ii) that the MA 
organization, its parent organization, or another MA organization that 
shares a parent organization with the MA organization may offer (or 
continue to offer) both the HMO and PPO D-SNPs only if they no longer 
accept new full-benefit dually eligible enrollees in the same service 
area as the D-SNP affected by the new regulations at Sec. Sec.  
422.504(a)(20) and 422.514(h). Under this proposal, the MA 
organization, its parent organization, and another MA organization that 
shares a parent organization with the MA organization may only accept 
new enrollment in one D-SNP for full-benefit dually eligible 
individuals in the same service area as an affiliated Medicaid MCO, and 
such new enrollment is limited to the full-benefit dually eligible 
individuals who are enrolled (or are enrolling) in the affiliated 
Medicaid MCO.
    We also proposed at Sec.  422.503(b)(8) that in service areas in 
which a D-SNP limits enrollment to individuals enrolled in (or in the 
process of enrolling in) an affiliated Medicaid MCO, the MA 
organization, its parent organization, or entities that share a parent 
organization with the MA organization may not newly offer another D-SNP 
for full-benefit dually eligible individuals, if it would result in 
noncompliance with Sec.  422.514(h). Additionally, we proposed at Sec.  
422.504(a)(20) to establish a new contract term for MA organizations 
that offer D-SNPs to require compliance with the enrollment limits we 
are proposing to add to Sec.  422.514(h).
    Table HC2 summarizes enrollment scenarios to illustrate the 
combined effects of our proposed SEP changes and enrollment 
limitations. The term ``D-SNP's parent organization'' as used in the 
table includes the MA organization that offers the D-SNP, the MA 
organization's parent organization, and any other entity (MA 
organization or otherwise) that shares the parent organization with the 
MA organization that offers the D-SNP.

[[Page 30680]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.016

    We noted that our proposals on enrollment limitations for non-
integrated D-SNPs would apply based on an MA organization having an 
affiliated Medicaid MCO. However, we noted that we considered whether 
our proposals should apply where an MA organization has other 
affiliated Medicaid managed care plan options as well, including 
prepaid inpatient health plans (PIHPs) and prepaid ambulatory health 
plans (PAHPs). We expressed concern that applying our proposals to 
PIHPs and PAHPs could cause disruption without significantly furthering 
the goals of our proposals, but we solicited comments on the issue.
    We noted that our proposals would require updates to the systems 
and supports designed to aid individuals in making Medicare choices. 
This includes MPF, HPMS, and other resources that help to outline 
available plan choices and is important where dually eligible 
individuals have choices that would vary based on the type of plan and 
time of year. We noted that we would welcome recommendations on how the 
choice architecture could best support the proposals or objectives 
described in the November 2023 proposed rule.
    Overall, we noted our proposals at Sec. Sec.  422.503(b)(8), 
422.504(a)(20), 422.514(h), and 422.530(c)(4)(iii) would increase the 
percentage of D-SNP enrollees in aligned enrollment, and--over time--
exclusively aligned enrollment (EAE), increasing access to the 
comprehensive coordination of care, unified appeal processes across 
Medicare and Medicaid, continuation of Medicare services during an 
appeal, and integrated materials that come with enrollment in one or 
more of the various types of integrated D-SNPs; prompt MA organizations 
to consolidate PBPs down to a single PBP for full-benefit dually 
eligible individuals that is aligned with their Medicaid MCO that fully 
or partially overlaps the D-SNPs service area; reduce the number of D-
SNP options and reduce choice overload and market complexity where 
parent organizations offer multiple D-SNP options in the same or 
overlapping service areas; remove some incentives for agents and 
brokers to target dually eligible individuals lessening the assistance 
needed from advocates and SHIP counselors to correct enrollment issues; 
and simplify provider billing and lower the risk of inappropriate 
billing.
    While noting many benefits to our proposals, we acknowledged 
certain challenges:
     Our proposals would reduce the number of D-SNP options for 
Medicaid MCO enrollees in some States. It is plausible that some dually 
eligible individuals could benefit from the unique combinations of 
provider networks and supplemental benefits that could be possible only 
by enrolling in misaligned Medicare and Medicaid plans.
     Making plan choices clear under our proposals to dually 
eligible individuals, SHIP counselors and others would require changes 
to MPF, HPMS, and other CMS public materials explaining Medicare 
coverage options. Systems changes often present unknown challenges and 
a learning curve for users while they become accustomed to new updates.
     It also may seem that our proposal on limiting enrollment 
in D-SNPs offered by MA organizations with affiliated Medicaid MCOs, in 
isolation, would disadvantage parent organizations that choose to offer 
Medicaid MCOs as well as D-SNPs because such organizations would be 
limited in the number of D-SNP offerings and would be required to align 
their enrollment between D-SNP and MCO for full-benefit dually eligible 
individuals. However, our SEP proposals would have the opposite effect 
by permitting enrollment into integrated D-SNP options that cover both 
Medicare and Medicaid benefits using the new one-time-per month SEP. 
Therefore, we believe our proposals, in combination, would maintain a 
high level of competition and choice, even while imposing some new 
constraints.
     MA organizations that operate both D-SNPs and Medicaid 
MCOs might elect to participate in fewer competitive Medicaid 
procurements (or exit Medicaid managed care in ``any willing provider'' 
States) to be exempted from the proposed restrictions on plan 
enrollment and number of plan offerings. This could adversely affect 
competition and the minimum choice requirements in Sec.  438.52 for 
Medicaid managed care programs. However, our SEP proposals would have 
the opposite effect, since only integrated D-SNPs could benefit from 
the new integrated care SEP, and overall, we believe our proposals, in 
combination, maintain strong incentives for organizations to compete 
for Medicaid managed care contracts.
     The enrollment and eligibility restrictions--without the 
offsetting proposed SEP changes--could incentivize sponsors to create 
D-SNP look-alikes or other types of MA plans

[[Page 30681]]

to build enrollment of dually eligible individuals without being 
subject to the enrollment limits and integration requirements 
associated with D-SNPs (although we plan to mitigate this risk with 
proposed revisions to Sec.  422.514(d) and (e) in section VIII.G of the 
proposed rule). Finally, beginning in 2030, our proposal would no 
longer allow some enrollees to stay in their current D-SNPs, causing 
some enrollee disruption where the D-SNPs were unable to completely 
align their D-SNP and Medicaid MCO populations.
    We received the following comments on this proposal and respond to 
them below:
    Comment: Many commenters, including MedPAC and MACPAC, generally 
supported the proposals to increase the percentage of dually eligible 
individuals who receive Medicare and Medicaid services from the same 
organization. These commenters noted the proposals, taken together, 
would reduce administrative burden, support Medicaid agencies' ability 
to coordinate care, create more efficient program management, make it 
easier to navigate integrated care, and strengthen integrated care 
plans so that Medicare and Medicaid feel like one program. Some 
commenters stated the proposals would help to address marketing 
practices by MA organizations and agents and brokers that can be 
overwhelming and misleading, contributing to coverage decisions that do 
not meet enrollees' needs. A few commenters stated that the proposed 
changes may result in short-term disruptions to care but, in the long 
term, would significantly increase the percentage of dually eligible 
individuals receiving integrated care, which would likely result in 
improved care coordination, access to services, health outcomes, and 
enrollee experience. A commenter expressed support for the proposals, 
citing expanded access to integrated materials unified appeal processes 
across Medicare and Medicaid, and continued Medicare services during an 
appeal. A commenter also stated the proposals would improve the health 
care and social service needs of dually eligible individuals through 
the delivery of care and services that are coordinated through aligned 
enrollment in integrated Medicare and Medicaid plans. A commenter 
supported the proposal and noted navigating separate programs makes it 
extremely difficult for health care providers to deliver patient-
centered care and challenging for individuals and their families to 
navigate care, appeal a coverage decision, or determine who to call for 
help.
    Response: We appreciate the comments and support for increasing the 
percentage of dually eligible individuals in aligned enrollment. We 
agree with commenters that the proposal would reduce the volume of 
marketing activities, improve integration of Medicare and Medicaid 
services, and simplify navigation of complex programs for enrollees, 
their caregivers, and other groups supporting dually eligible 
individuals.
    Comment: Many other commenters generally opposed the interconnected 
SEP and enrollment limitation proposals. A number of commenters stated 
they understand--and in some cases support--CMS's goal to improve 
integrated care for dually eligible individuals but believe CMS's 
proposals would lead to unintended consequences and overly burdensome 
requirements that could ultimately lead to fewer plans in some service 
areas, reducing MA plan competition and beneficiary choice. Some 
commenters stated the proposals would increase burden and complexity 
for States. Some commenters recommended CMS consider and mitigate any 
negative impacts on access prior to adopting policies that would limit 
the number of D-SNPs offered by MA organizations. A commenter also 
expressed general concern with the proposals and urged CMS to not move 
forward with finalizing the proposed changes.
    Response: We acknowledge the commenters' perspectives on the 
proposals. As noted in the proposed rule (88 FR 78567), we believe our 
proposals represent an incremental step toward increasing aligned 
enrollment for dually eligible individuals who are in Medicare and 
Medicaid managed care, balancing our long-term policy vision with our 
interest in limiting disruption in the short term. We believe the 
combination of the SEP and enrollment limitation policies maintain 
strong incentives for organizations to compete for Medicaid managed 
care contracts while also reducing choice overload and incentives for 
agents and brokers that target dually eligible individuals. Further, we 
believe the opportunity to increase access to comprehensive 
coordination of care, unified appeal processes across Medicare and 
Medicaid, continuation of Medicare services during an appeal, and 
integrated materials outweighs any disadvantages in the shorter term.
    Comment: Numerous commenters, including MedPAC and MACPAC, 
supported the proposals that would (1) replace the quarterly dual/LIS 
SEP with a monthly dual/LIS SEP that allows individuals enroll in 
Traditional Medicare and a PDP, and (2) create the new monthly 
integrated care SEP. A number of commenters stated the changes to the 
dual/LIS SEP would reduce aggressive marketing tactics from agents and 
brokers targeting dually eligible individuals and simplify counseling 
and messaging for the monthly SEP. Some commenters noted the SEPs give 
individuals freedom of choice because they are not locked into a plan 
for months that does not work for them. Other commenters stated the 
SEPs create less complexity for Medicaid agencies to navigate since the 
quarterly SEP posed challenges in aligning Medicare and Medicaid 
enrollment. A number of commenters noted the integrated care SEP would 
give enrollees the ability to enroll monthly into an integrated plan to 
access needed services and address complex chronic care needs. Some 
commenters stated only allowing movement into integrated plans would 
lessen agents' and brokers' ability to enroll dually eligible 
individuals into coordination-only D-SNPs that create fragmentation and 
disintegration.
    Response: We thank the commenters for their support of the SEP-
related proposals. We agree these changes will help to address 
aggressive marketing, simplify messaging for dually eligible 
individuals and choice counselors, reduce complexity for States, and 
overall increase the percentage of dually eligible managed care 
enrollees who are in FIDE SNPs, HIDE SNPs, and AIPs. We continue to 
believe that aligned enrollment, and especially exclusively aligned 
enrollment, is a critical part of improving experiences and outcomes 
for dually eligible individuals and will continue to drive toward 
increasing aligned enrollment until it is the normative, if not only, 
managed care enrollment scenario.
    Comment: A number of commenters expressed concerns about the impact 
of the SEP proposals on partial-benefit dually eligible individuals and 
noted that partial-benefit dually eligible individuals would not be 
able to benefit from the integrated care SEP. Several commenters stated 
that partial-benefit dually eligible individuals experience similar 
health care needs as full-benefit dually eligible individuals and 
should have access to the same enrollment opportunities using SEPs. A 
commenter stated that partial-benefit dually eligible individuals may 
have greater health care needs since their health may worsen over time 
due to lack of State coverage and payment for necessary services and 
should have access to the same plan options.

[[Page 30682]]

    A number of commenters indicated that partial-benefit dually 
eligible enrollees in MA plans and D-SNPs benefit from lower cost 
sharing, greater coordination of care and services, and access to 
supplemental benefits that are not available in the Traditional 
Medicare environment, plus disease management for those with chronic 
illnesses. A few of these commenters stated that although these 
enrollees do not have access to and thus do not require coordination of 
Medicaid services, they can nevertheless benefit from the model of care 
provided by coordination-only D-SNP plans, which are not present in 
traditional MA-PD plans or Traditional Medicare. Another commenter 
requested that CMS reconsider how CMS's SEP proposals may result in 
greater dislocation, reduced care management, increased marketing, and 
reduced opportunities for partial-benefit dually eligible and LIS 
individuals.
    Some commenters urged CMS to either retain the quarterly dual/LIS 
SEP or create a corresponding SEP allowing partial-benefit dually 
eligible individuals to enroll in coordination-only D-SNPs. A commenter 
noted that a quarterly SEP for coordination-only D-SNP enrollment would 
ensure equity and parity between partial-benefit and full-benefit 
dually eligible individuals.
    A few commenters expressed concern about the impact of CMS's SEP 
proposal on dually eligible individuals who are not Qualified Medicare 
Beneficiaries (QMBs). The commenter noted that if these individuals 
needed to change coverage outside of the standard enrollment periods, 
due to the lack of comprehensive Federal Medigap protections, they may 
not be eligible for a Medigap plan. Even if they were able to enroll, 
most Medigap plans have unaffordable premiums or out-of-pocket costs 
making enrollment in Traditional Medicare unattractive.
    Response: We thank the commenters for their perspectives. We noted 
in the proposed rule (88 FR 78570) that our proposals at Sec.  
423.38(c)(4)(i) would allow partial-benefit dually eligible individuals 
and LIS eligible individuals the opportunity to disenroll from an MA-PD 
plan (to Traditional Medicare) in any month throughout the year and 
switch between standalone PDPs on a monthly basis. CMS regulations do 
not prohibit partial-benefit dually eligible individuals from enrolling 
in non-AIP HIDE SNPs; however, States may require more limited 
enrollment in HIDE SNPs via the SMAC.
    We acknowledge the SEP proposals limit opportunities for partial-
benefit dually eligible individuals and LIS eligible individuals to 
enroll in MA-PDs and coordination-only D-SNPs. Partial-benefit dually 
eligible individuals and LIS eligible individuals would still have the 
ability to make changes to their MA plan or non-integrated D-SNPs 
during the AEP, MA-OEP, or where another SEP permits.
    With regard to retaining the quarterly dual/LIS SEP or creating a 
new SEP for partial-benefit dually eligible individuals to enroll in 
coordination-only D-SNPs, we direct the commenter's attention to the 
proposed rule (88 FR 78571), where we expressed our belief that the 
current managed care enrollment and eligibility policies have resulted 
in a proliferation of coordination-only D-SNPs and leave dually 
eligible individuals susceptible to aggressive marketing tactics from 
agents and brokers throughout the year. Adopting a new SEP for partial-
benefit dually eligible individuals or extending the new integrated 
care SEP that we are adopting at Sec.  423.38(c)(35) would not address 
that concern and would not further our goals of increasing aligned 
enrollment in integrated D-SNPs.
    We recognize that non-QMB dually eligible individuals who enroll in 
Traditional Medicare may not be able to select a Medigap plan to cover 
cost-sharing, depending on the timing of that choice and State laws 
regarding Medigap enrollment. However, this is also true today, and we 
believe the benefits of the SEP proposals, including protecting 
Medicare enrollees from aggressive marketing tactics, reducing 
complexity for States and enrollment counselors, and promoting access 
to integrated care, outweigh the potential drawbacks.
    Comment: Several commenters believed the integrated care SEP would 
only allow for enrollment in AIPs. A few commenters raised concerns 
about the potential for continued enrollment in misaligned plans. A 
commenter identified a State that is implementing default enrollment to 
increase alignment between Medicaid and Medicare but does not require 
HIDE SNPs to operate with exclusively aligned enrollment (EAE). The 
commenter further stated that the integrated care SEP would undermine 
current enrollment alignment, citing that it does not take into account 
Medicaid MCO enrollment and would give dually eligible individuals more 
opportunities to misalign their Medicare and Medicaid coverages. 
Another commenter urged CMS to consider a bar on new enrollments 
without concurrent alignment. The commenter recommended limiting the 
use of the integrated care SEP only when it would result in aligned 
enrollment with the Medicaid MCO.
    Response: We share the concerns raised by commenters that, in 
certain instances, dually eligible individuals already enrolled in 
aligned plans could use the integrated care SEP as originally proposed 
at Sec.  423.38(c)(35) to misalign their Medicare and Medicaid 
coverage. In States that do not require EAE, default enrollment 
mechanisms authorized under Sec.  422.66(c)(2) can be used to enroll 
dually eligible individuals in a D-SNP that is affiliated with the 
Medicaid MCO in which the individual is enrolled for Medicaid coverage. 
However, without a State requiring D-SNPs to comply with EAE 
requirement as part of their SMAC, dually eligible individuals would 
theoretically be able to use the proposed integrated care SEP to elect 
a non-aligned HIDE SNP.
    In the proposed rule (88 FR 78567), we discussed the primary goals 
of the proposals to drive toward increasing aligned enrollment for 
dually eligible individuals who are in Medicare and Medicaid managed 
care. The SEP polices we proposed and are finalizing are intended to 
create more opportunities for enrollment in integrated D-SNPs so that 
dually eligible individuals can experience plans that more meaningfully 
integrate Medicare and Medicaid services. While the integrated care 
SEP, as proposed, would create more opportunities to elect integrated 
D-SNPs, it could potentially also allow opportunities to misalign 
enrollment to persist in limited situations, which is contrary to our 
policy goals or intent for this new SEP.
    After considering the comments received, we are finalizing the 
integrated care SEP with a narrower scope so that dually eligible 
individuals may use the SEP to enroll in a FIDE SNP, HIDE SNP, or AIP 
if they are enrolled in or in the process of enrolling in the sponsor's 
affiliated Medicaid managed care plan. We are finalizing Sec.  
423.38(c)(35) largely as proposed but with a modification that the SEP 
is available only to facilitate aligned enrollment, as that term is 
defined in Sec.  422.2. As a result of this limitation, this SEP will 
effectively be limited to full-benefit dually eligible individuals 
because ``aligned enrollment'' is defined by reference to full-benefit 
dual eligibility. Adding this limitation to the integrated care SEP 
creates less opportunity for full-benefit dually eligible individuals 
to misalign their Medicare and Medicaid plans. Because FIDE SNPs 
(starting in 2025) and AIPs feature exclusively aligned enrollment, the 
effect of this change from our

[[Page 30683]]

original proposal is specific to HIDE SNPs. Relative to our original 
proposal, the same range of plans can enroll people using the finalized 
SEP, but it can be used in fewer circumstances and only by full-benefit 
dually eligible individuals: the integrated care SEP may be used only 
when it achieves aligned enrollment.
    Comment: A few commenters expressed their belief that a monthly SEP 
would result in more marketing toward dually eligible individuals and 
would allow brokers to potentially take advantage of prospective 
enrollees.
    Response: We appreciate the perspective raised by commenters but 
disagree that the monthly SEP, in combination with our other proposals, 
would result in more marketing toward dually eligible individuals or 
would allow brokers to potentially take advantage of prospective 
enrollees. As we noted in the proposed rule (88 FR 78570), we believe 
the proposals would remove some incentives both for MA-PD plans to 
deploy aggressive sales tactics targeted at dually eligible individuals 
outside of the AEP and for agents and brokers to target dually eligible 
individuals (especially among employed or captive agents affiliated 
with plans that do not offer integrated D-SNPs). Based on our review of 
2023 plans, approximately 5 percent of the plans that can currently 
enroll dually eligible individuals using the quarterly dual/LIS SEP 
would be available as options for full-benefit dually eligible 
individuals using the proposed new monthly integrated care SEP at Sec.  
423.38(c)(35).
    Comment: A few commenters expressed concern that the proposed 
monthly integrated care SEP could negatively impact an MA 
organization's Star Ratings, stating that allowing dually eligible 
individuals to make enrollment decisions on a monthly basis would be 
disruptive and impact quality outcomes, making it more difficult for 
plans to maintain or improve Star Ratings. A commenter further stated 
that where State Medicaid managed care programs require minimum Star 
Ratings of D-SNPs with affiliated Medicaid MCOs, the monthly integrated 
care SEP could result in non-compliance with that standard and 
jeopardize their ability to provide Medicaid coverage. Another 
commenter suggested that if CMS finalizes the monthly integrated care 
SEP proposal, CMS should make changes to the Members Choosing to Leave 
the Plan measure to exclude individuals who disenroll under the monthly 
SEP to move into a plan with a higher level of integration or from one 
D-SNP type to another, given the enrollment change is driven by 
something other than dissatisfaction with the plan, similar to the 
current exclusion for individuals enrolling in an employer group plan. 
Another commenter suggested that the SEP proposals, if finalized, could 
result in an increase in complaints by dually eligible individuals due 
to a lack of understanding of the changes to the SEPs and encouraged 
CMS to consider updating its practices around the Complaint Tracking 
Module (CTM) for disenrollments accordingly (see section III.O of the 
final rule for a discussion on codification of complaints resolution 
timelines and other requirements related to CTMs).
    Response: We appreciate the commenters' perspective on this issue. 
We do not currently have evidence to suggest allowing full-benefit 
dually eligible individuals the opportunity to enroll into integrated 
D-SNPs in any month would negatively impact Star Ratings; in fact, we 
have reason to believe that the totality of the SEP proposals may 
actually benefit integrated D-SNPs on Star Ratings, including the 
Members Choosing to Leave the Plan measure. In 2023, a study published 
in Health Affairs noted that nearly one-third of dually eligible 
individuals in ``D-SNP look-alike plans,'' which the authors defined as 
MA plans that are marketed toward and primarily enroll dually eligible 
individuals but are not subject to Federal regulations requiring 
coordination with Medicaid, were previously enrolled in integrated care 
programs.\219\ Such look-alike plans would no longer be able to accept 
enrollments from beneficiaries using the dual/LIS SEP at Sec.  
423.38(c)(4)(i) with our proposed and finalized changes. The dual/LIS 
SEP at Sec.  423.38(c)(4)(i) would dramatically reduce the total array 
of options available outside of the AEP while the integrated care SEP 
at Sec.  423.38(c)(35) allows enrollment by full-benefit dually 
eligible individuals into integrated D-SNPs, which together may improve 
integrated D-SNP performance on measures such as Members Choosing to 
Leave the Plan. Further, in the CY 2025 Advance Notice, we discussed a 
non-substantive update to that measure to exclude any enrollment into a 
plan designated as an AIP from the numerator of this measure, which 
could address the concerns if finalized; under the non-substantive 
update, CMS would treat a change in enrollment to an AIP from a non-
integrated MA plan as an involuntary disenrollment.\220\ We are 
committed to monitoring the impact of these policy changes and to 
considering necessary changes in the future as appropriate.
---------------------------------------------------------------------------

    \219\ Ma Y., Frakt A., Roberts, E., Johnston K., Phelan J., and 
Figueroa J. Rapid Enrollment Growth in `Look-Alike' Dual-Eligible 
Special Needs Plans: A Threat to Integrated Care. Health Affairs 
July 2023 [cited February 2024] https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2023.00103.
    \220\ Advance Notice of Methodological Changes for Calendar Year 
(CY) 2025 for Medicare Advantage (MA) Capitation Rates and Part C 
and Part D Payment Policies, p127-128. CMS explained that there are 
two exceptions to this: (1) If the plan in the old contract is also 
an Applicable Integrated Plan, then the enrollment is not excluded 
from the numerator; and (2) Any switch between D-SNPs in Florida is 
not excluded because all D-SNPs in Florida are directly capitated by 
the State for Medicaid services and therefore already provide 
aligned Medicare and Medicaid coverage.
---------------------------------------------------------------------------

    Comment: Numerous commenters stated the SEP proposals would 
increase movement in plans that could undermine care coordination and 
continuity of care. Some commenters expressed concern that D-SNPs would 
not be able to set up effective models of care if individuals could 
switch plans monthly. A few commenters stated changing plans monthly 
could lead to a delay in care if enrollees have to change providers or 
ask for new referrals for specialists or medications. A commenter 
stated that using a monthly SEP could cause disruption for dually 
eligible individuals if they are already receiving ongoing services 
such as home health, particularly if the new plan does not have the 
same provider network. A commenter noted that the SEPs would limit 
plans' ability to address social determinants of health (SDoH). Another 
commenter stated allowing individuals to change plans monthly creates 
less effective medication therapy management (MTM) programs.
    Response: We thank commenters for their feedback and agree that 
coordination of care is an important element of integrated care plans. 
While we acknowledge changing plans monthly could impact coordination 
of care, we believe the benefits of reduced agent and broker marketing, 
improved transparency for enrollment counselors and individuals, and 
increased access to integration of Medicare and Medicaid benefits and 
administration outweigh the downsides. In addition, for individuals 
that are receiving an ongoing course of treatment and make an 
enrollment change, the April 2023 final rule (88 FR 22206) amended 
Sec.  422.112(b)(8)(i)(B) to require MA organizations offering 
coordinated care plans, including D-SNPs, to have prior authorization 
policies that provide for a minimum 90-day transition period for any 
ongoing course(s) of treatment even if the course of treatment was for 
a service that commenced with an out-of-

[[Page 30684]]

network provider. We do not expect the volume of transitions to 
increase based on this rulemaking, and noted in the proposed rule (88 
FR 78570), that approximately 5 percent of the MA-PD plans that can 
currently enroll dually eligible individuals using the quarterly dual/
LIS SEP would be available as options for full-benefit dually eligible 
individuals using the once per month integrated care SEP.
    As discussed in the proposed rule (88 FR 78570), we believe the 
integrated care SEP at Sec.  423.38(c)(35) will create more 
opportunities for full-benefit dually eligible individuals to enroll in 
integrated plans, promoting coordination of Medicare and Medicaid 
services from the same organization. This includes plans addressing 
enrollees' SDoH needs and ensuring effective MTM programs are in place. 
In addition, we noted in the proposed rule (88 FR 78570) that the dual/
LIS SEP at Sec.  423.38(c)(4)(i) allows dually eligible individuals to 
disenroll from their MA-PD plan if MA is not working well for them. 
This would allow individuals to access providers that accept Medicare 
FFS that may not be in the MA plan's network, including providers that 
may be able to better address SDoH needs. We also note that dually 
eligible individuals leaving MA-PDs for Traditional Medicare and a PDP 
would still have access to an MTM program as this is a requirement of 
Part D plans at Sec.  423.153(d). We do not anticipate the SEP changes 
will lead to dually eligible individuals making continuous changes to 
their enrollment or a major increase in SEP usage overall.
    We will continue to monitor dual/LIS SEP usage as it transitions to 
monthly once again and can revisit in future policy making if issues 
arise.
    Comment: Some commenters recommended the integrated care SEP be 
limited to allow dually eligible individuals in Traditional Medicare or 
MA-PDs to enroll in integrated D-SNPs but not permit switching between 
integrated D-SNPs on a monthly basis. Other commenters suggested 
allowing monthly enrollment into FIDE SNPs, HIDE SNPs, and AIPs but 
only allowing disenrollment during the AEP and MA-OEP to reduce changes 
between plans. A commenter supported the integrated care SEP but was 
concerned it created opportunities for providers to influence 
individuals' Medicare enrollment choices and recommended permitting 
dually eligible individuals to enroll into integrated care plans once 
per month but not allow disenrollments from an integrated care plan to 
Traditional Medicare.
    Response: We thank commenters for the recommendations. We 
acknowledge the concern that a monthly SEP can disrupt coordination of 
care. While we acknowledge that there is a risk that full-benefit 
dually eligible individuals in integrated care plans could use the new 
integrated care SEP to switch monthly, we think the likelihood is low 
and the benefits (reduced marketing, improved transparency, and greater 
access to integrated care) outweigh potential risks.
    We will continue to monitor dual/LIS SEP usage as it transitions to 
once per month again and can revisit in future policy making if issues 
arise.
    Comment: Several commenters recommended limiting use of the 
integrated care SEP to only allow enrollment into integrated plans with 
quality ratings that are equal to or higher than the enrollee's current 
plan. Another commenter suggested only allowing use of the integrated 
care SEP to enroll in a FIDE SNP, HIDE SNP, or AIP with a Star Rating 
of four or greater.
    Response: We appreciate the recommendations from commenters 
regarding the importance of high-quality integrated care plans. While 
we understand commenters' concerns, we do not currently prevent 
Medicare beneficiaries from enrolling in plans that do not have a 
quality rating equal to or higher than their current plan's rating when 
making new enrollment elections. Star Ratings are important indicators 
of plan performance, but other factors--such as supplemental benefits 
or participation of certain providers in-network--may make a 4-Star 
plan a better option for someone currently in a 4.5-Star plan. We do 
not intend to impose this limitation on the integrated care SEP.
    Individuals wishing to enroll in a plan with 5 Stars will continue 
to have access to the 5-Star SEP at Sec.  423.38(c)(20).
    Comment: Other commenters suggested there may be countervailing 
incentives between the goal of increased integration and CMS's proposal 
to allow dually eligible individuals to move from an MA plan to 
Traditional Medicare and change between standalone Part D plans on a 
monthly basis. A few of these commenters noted that the proposal 
contradicts the goal of managing the care of an underserved and needy 
population. A commenter stated that MA plans, regardless of D-SNP 
integration status, provide a level of coordination that would be lost 
if enrollees reverted to Traditional Medicare. A commenter stated that 
potential changes in benefits, personalized care plans, providers, and 
care coordinators could lead to greater enrollee confusion, treatment 
errors, and care transition failures resulting in worsening health 
outcomes. The commenter stated that the core value proposition of 
integrated D-SNP coverage is the improved and seamless coordination of 
their Medicare and Medicaid benefits by a single insurer and believed 
monthly SEPs would damage the aligned enrollment in integrated plans 
that CMS is trying to accomplish because changes between plans or to 
Traditional Medicare undermine coordination of care. Another commenter 
opined that permitting dually eligible individuals to disenroll from MA 
plans in any month increases opportunities for adverse selection in 
Traditional Medicare and favorable selection in MA, especially if 
individuals are disenrolling from MA when they develop complex health 
needs. The commenter continued that such selection issues could further 
distort payments to MA plans and increase overall Medicare spending.
    Response: We appreciate the commenters' perspectives on this issue. 
As we discussed in the proposed rule (88 FR 78567), we believe that 
aligned enrollment and especially exclusively aligned enrollment is a 
critical part of improving experiences and outcomes for dually eligible 
individuals because it allows States and plans to achieve greater 
levels of integration in the provision and coverage of benefits and 
plan administration for enrollees. Further, in the longer term, we 
believe that dually eligible individuals who are in Medicare and 
Medicaid managed care should receive services through the same 
organization and therefore our proposed and finalized SEPs are designed 
to incentivize enrollments into integrated D-SNPs to facilitate aligned 
enrollment as defined in Sec.  422.2 while maintaining an SEP for LIS-
eligible and dually eligible individuals to change their Part D 
coverage.
    We acknowledge that under our proposals dually eligible individuals 
would have more opportunities to enroll in Traditional Medicare 
compared to opportunities to change enrollment to non-D-SNP MA-PDs and 
non-integrated D-SNPs. As we noted in the proposed rule (88 FR 78570), 
the SEP proposal at Sec.  423.38(c)(4)(i) could mean that MA plans have 
marginally less incentive to innovate and invest in meeting the needs 
of high-cost dually eligible enrollees when these enrollees may 
disenroll at any time, thus exacerbating the phenomenon of higher-cost 
dually eligible individuals disenrolling from MA. However, we believe 
the benefits of the SEP proposals

[[Page 30685]]

outweigh the potential downsides, and we project in section XI of the 
final rule that our SEP and enrollment limitation policies will result 
in over $2 billion in Medicare savings over the ten-year projection 
period. We will continue to monitor dual/LIS SEP usage and can consider 
future policy options if issues arise.
    Comment: Some commenters expressed concern that the SEP proposals 
may increase burden on States and plans. Several commenters noted the 
monthly SEPs would be administratively challenging for State Medicaid 
agencies to operationalize, putting further strain on States that 
already have limited capacity and budgetary challenges. Others noted a 
monthly SEP could lead to increased misalignment between Medicare and 
Medicaid plans because of monthly SEP usage or differences in 
enrollment effective dates for Medicare and Medicaid causing States to 
do extra work to continuously align enrollment into Medicaid managed 
care plans whenever enrollees change between D-SNPs. A few commenters 
stated the monthly SEPs could increase administrative costs on MA 
organizations having to track and manage enrollment that is changing 
monthly, including issuing ID cards, mailing materials, and the like.
    Response: We appreciate the commenters' perspectives on this issue. 
While commenters stated the monthly SEPs would increase State burden, 
we noted in the proposed rule (88 FR 78570) our perspective that 
changing the SEPs to monthly would reduce burden on States as they work 
to align Medicaid MCO enrollment to D-SNP enrollment. We still believe 
this to be the case, even if it is not currently true for all States. 
This is particularly important for States transitioning their FAI 
demonstrations to integrated D-SNPs, all of which operated with monthly 
opportunities to change enrollment after requesting that CMS waive the 
quarterly dual/LIS SEP when it was initially established. We will 
continue to support States in their integration efforts by providing 
technical assistance, including education and support in implementing 
provisions of this final rule.
    We acknowledge the concerns raised on enrollment effective date 
challenges and MA organizations having to manage a changing enrollment 
monthly. However, we do not anticipate the SEP changes, in combination 
with other policies finalized in this rulemaking, will cause a major 
increase in SEP usage, because, based on our review of 2023 
information, only approximately 5 percent of the MA-PD plans that can 
currently enroll dually eligible individuals using the quarterly dual/
LIS SEP would be available as options for full-benefit dually eligible 
individuals using the proposed new monthly integrated care SEP (88 FR 
78750). Therefore, we do not believe our finalized changes will worsen 
existing challenges States and plans face around misaligned Medicare 
and Medicaid enrollment effective dates.
    We will continue to monitor dual/LIS SEP usage and can consider 
future policy making if issues arise.
    Comment: Some commenters raised concerns about the potential for 
increased provider burden as a result of the SEP proposals. A commenter 
noted, for example, that there are data lags in providers being 
notified of changes in payer source and coverage information, and more 
frequent changes in enrollment could result in delays to access to care 
for individuals and additional billing challenges for providers. A 
commenter further stated that frequent changes disrupt continuity of 
care, leading to administrative challenges like new referrals and 
authorizations, and an increase in administrative tasks like tracking 
eligibility and billing adding additional costs to providers. 
Commenters urged CMS to ensure accurate and timely information is 
available to providers so operations are not disrupted by frequent 
insurance changes.
    Response: Changes in coverage often come with some administrative 
challenges for enrollees, providers, and health plans. As proposed, our 
policies would allow some people to change coverage more times per year 
than our rules permit today. However, our proposals also limit options 
for changing coverage in other situations, such that we do not expect 
an increase in total changes in coverage. Furthermore, one way in which 
we allow more coverage changes per year--changes among PDPs for people 
in Traditional Medicare--generally does not trigger any changes in 
provider networks as they would if they were changes from one MA-PD 
plan to another. The providers seen by dually eligible individuals and 
LIS-eligible individuals are likely to be enrolled in Medicare and 
Medicaid; in the unlikely situation that an individual receives 
treatment from an MA plan network provider that is not enrolled in 
Medicare, the ability to transition to another healthcare provider that 
is enrolled in Medicare is significantly easier than identifying a 
provider in a different MA plan network. Therefore, we are not 
persuaded by the argument that the SEP proposals would result in 
significantly more plan changes leading to increased provider burden. 
As noted in the proposed rule (88 FR 78750) and in previous responses, 
a relatively small percentage (approximately 5 percent) of the MA-PD 
plans would be available as options for dually eligible individuals 
using the proposed new monthly integrated care SEP. As a result, we do 
not believe that monthly changes would increase under the new SEPs. We 
also believe that the SEP proposals in combination with those proposed 
at Sec. Sec.  422.503(b)(8), 422.504(a)(20), 422.514(h), and 
422.530(c)(4)(iii) would simplify provider billing and lower the risk 
of inappropriate billing, because more enrollees would be in D-SNPs 
with aligned enrollment, which generally means that providers would 
submit one bill to one organization, rather than (a) billing a D-SNP 
for Medicare covered services and the Medicaid plan (or State) for the 
Medicare cost sharing amount, or (b) having to determine which plan 
should be the primary payer for services covered in both programs, such 
as home health or medical equipment.
    Comment: Many commenters were concerned that the new SEP proposals 
would result in confusion among Medicare beneficiaries and allow agents 
and brokers to continue using aggressive marketing and sales tactics to 
push optional or supplemental benefits instead of core coverage and/or 
incentivize them to sign up as many individuals as possible to increase 
commissions. Another commenter indicated the proposals would lead to 
greater choice overload and suboptimal coverage decisions. Another 
commenter stated that the ability to change plans monthly may generate 
more confusion as to what coverage is available and what providers they 
can and cannot see for specialized services. Commenters noted that 
dually eligible individuals often do not understand that a prior 
authorization does not move with them if they change carriers.
    Response: We acknowledge the concerns raised by these commenters; 
increasing dually eligible individuals' understanding of available 
coverage options and limiting the use of aggressive marketing tactics 
by agents and brokers are among the primary goals of these proposals. 
However, we do not agree that the SEP proposals would create additional 
confusion and choice overload relative to the status quo. As we noted 
in the proposed rule (88 FR 78570), we believe the SEP proposals would 
reduce the incentive for plans to deploy aggressive sales tactics 
targeted at dually eligible individuals outside of

[[Page 30686]]

the AEP and would increase transparency for Medicare beneficiaries and 
enrollment counselors on opportunities to change plans. We are 
committed to exploring updates to the systems and supports designed to 
aid individuals in making Medicare choices in conjunction with the 
final rule. Finally, with respect to commenters' concerns about prior 
authorizations, we note that the April 2023 final rule (88 FR 22206) 
amended Sec.  422.112(b)(8)(i)(B) to require MA organizations offering 
coordinated care plans to have prior authorization policies that 
provide for a minimum 90-day transition period for any ongoing 
course(s) of treatment for new enrollees even if the course of 
treatment was for a service that commenced with an out-of-network 
provider. While this does not fully guarantee coverage of services 
authorized through prior authorization by another plan, it does provide 
some protection against repetitive prior authorization processes as a 
result of a change to a new MA (or MA-PD) plan.
    Comment: Several commenters recommended CMS consider exceptions or 
modifications to the SEP proposals to allow enrollment into additional 
MA-PDs outside of the AEP or MA-OEP. A few commenters noted dually 
eligible individuals should be able to choose between any MA plan 
during a Medicaid MCO open enrollment period, when a Medicare enrollee 
is newly eligible for Medicaid, and in States that do not have any 
Medicaid managed care or carve dually eligible individuals out of 
Medicaid managed care. Some commenters suggested maintaining the 
quarterly dual/LIS SEP in States that do not have D-SNPs or integrated 
D-SNPs so that individuals can enroll in other types of MA-PDs and have 
continued access to supplemental benefits and coordination of care and 
services. A commenter suggested keeping the quarterly SEP but allowing 
two changes during the quarter of Medicaid renewal to allow dually 
eligible individuals an additional opportunity to algin their Medicare 
and Medicaid coverage. A commenter suggested allowing dually eligible 
individuals to elect any MA-PD plan that is offered by an integrated 
delivery system or maintains a provider network in which the majority 
of physicians do not accept, or serve very few, Traditional Medicare 
enrollees. A commenter also requested that CMS consider applying the 
SEP changes on a State-by-State basis to take into account unique 
situations for States where enrollees would be adversely limited in 
choice and access.
    Response: We appreciate commenters' suggestions to modify the SEP 
proposals. While we acknowledge that States may have their own 
enrollment policies and election periods, we believe the benefits of 
the SEP proposals, including the opportunity to protect Medicare 
enrollees from aggressive marketing tactics, reduce complexity for 
States and enrollment counselors, and promote access to integrated 
care, outweigh the potential drawbacks. Further, dually eligible 
individuals would still have the ability to make changes to their MA 
plan or non-integrated D-SNPs during the AEP, MA-OEP, or where another 
SEP permits. For example, dually eligible individuals that have a 
change in their Medicaid status--including newly gaining Medicaid 
eligibility--continue to have access to an SEP at Sec.  423.38(c)(9).
    We recognize dually eligible individuals will not be able to use 
the integrated care SEP in States that currently do not have Medicaid 
managed care plans, carve dually eligible individuals out of Medicaid 
managed care, or do not have integrated D-SNPs (that is, do not have 
Medicaid MCOs that are affiliated with D-SNPs or opportunities for 
aligned enrollment). Allowing exceptions to the proposed SEPs for 
certain plans or on a State-by-State basis would increase complexity 
for dually eligible individuals and enrollment counselors in 
understanding eligibility for the SEP and pose challenges for CMS to 
monitor usage.
    Comment: Some commenters recommended that CMS monitor and publicly 
report SEP utilization. A commenter recommended that CMS create a 
transparent, accessible central data source on SEP usage and 
availability that would be available to SHIPs, State ombudsman 
programs, and State Medicaid agencies to support administration and 
oversight of SEP usage by MA plans. The commenter opined that making 
such data available would improve transparency for parties that support 
Medicare beneficiaries and dually eligible individuals to understand 
their Medicare enrollment options and increase visibility into 
potentially aggressive or misleading marketing behaviors, including 
targeting by D-SNP look-alikes. A commenter urged CMS to monitor SEP 
utilization patterns to ensure that plans are not dissuading 
individuals from staying enrolled and that there are no other issues 
that may be causing an individual to switch plans or leave MA. Another 
commenter encouraged CMS to collect monthly SEP utilization data and 
publicly report it at least annually. A commenter advised CMS to 
closely monitor for unintended effects on D-SNP enrollees who make 
multiple plan switches within a year. Citing potential challenges 
associated with the CMS SEP proposal in States with few or no 
integrated D-SNPs, a commenter requested that CMS conduct and release 
an analysis of the proposal's impact on States and individuals on a 
State-by-State basis.
    Response: We thank commenters for their perspectives on this issue. 
In the proposed rule (88 FR 78569), we discussed concerns with the 
quarterly dual/LIS SEP creating complexity for SHIP and State ombudsman 
programs as they do not have access a central data source to determine 
if someone has already used the quarterly dual/LIS SEP, making it 
difficult to determine what enrollment options are truly available to 
dually eligible individuals. Changing the SEP to allow once-per-month 
usage will reduce complexity for enrollment counselors and individuals. 
In addition, if both the dual/LIS SEP and integrated care SEP are used 
in the same month, the application date of whichever SEP was elected 
last will be the enrollment effectuated the first of the following 
month.
    We are considering making updates to systems and supports, 
including MPF and HPMS, that help individuals make Medicare choices. 
One of the considerations is how to show plans available to individuals 
along with options that align with their Medicaid enrollment.
    We will work with States on implementing the policies finalized in 
this rule and will continue to monitor all aspects and consider future 
updates as appropriate.
    Comment: Many commenters expressed significant concerns about 
limiting enrollment outside of the AEP to Traditional Medicare and 
PDPs. A few commenters suggested a revision to the dual/LIS SEP 
proposal so that dually eligible and LIS eligible individuals who use 
the SEP to disenroll from an MA-PD and enroll in Traditional Medicare 
and a PDP would have the ability to return to their former MA-PD within 
90 days if they are dissatisfied with their choice.
    Response: We appreciate the suggestion to allow individuals to 
return to their MA-PD plan within 90 days of disenrollment, but we are 
declining to incorporate it into the final rule. We believe 
incorporating a change like this could increase complexity for 
enrollment counselors, plans, and CMS to determine when someone was 
eligible to go back to their MA-PD plan and cause an increase in churn 
and disruption with individuals making frequent enrollment changes. 
However,

[[Page 30687]]

individuals may re-enroll where another SEP allows, such as for 5-Star 
plans. In addition, under current rules, dually eligible individuals 
can re-enroll into their former MA-PD plan or otherwise make a 
different plan selection during the AEP, MA-OEP, or where another SEP 
permits.
    We acknowledge that the SEP changes will limit enrollment 
opportunities in MA-PDs and non-integrated D-SNPs during certain times 
of the year. We believe the benefits of the SEP proposals will do more 
to protect Medicare enrollees from aggressive marketing tactics, reduce 
complexity for States and enrollment counselors, and promote access to 
integrated care.
    Comment: A few commenters raised concerns regarding the integrated 
care SEP and how it would apply in Oregon where some D-SNPs have a 
unique ownership model with Coordinated Care Organizations (CCO) to 
provide Medicaid managed care services. The D-SNPs aligned with some 
CCOs are not considered HIDE SNPs because they are not owned or 
controlled by the same parent organization as the CCO. The commenters 
noted many dually eligible individuals would not be able to use the 
integrated care SEP to enroll in the coordination-only D-SNPs aligned 
with a CCO. Another commenter suggested allowing dually eligible 
individuals in Oregon the ability to use the integrated care SEP to 
enroll in coordination-only D-SNPs that are aligned with a CCO or for 
CMS to expand the definition of AIP to include coordination-only D-SNPs 
within a CCO.
    Response: We thank the commenters for the additional information 
and acknowledge that some States have unique Medicaid managed care 
arrangements. We recognized in the proposed rule (88 FR 78570) there 
would be some challenges in States with few or no integrated D-SNPs 
because the lack of FIDE SNPs, HIDE SNPs, and AIPs would limit dually 
eligible individuals' ability to change their MA-PD plan outside of the 
AEP, MA-OEP, or as other SEPs permit. We believe the benefits of the 
SEP proposals nationwide outweigh the potential drawbacks, including 
that in some States the integrated care SEP we are finalizing at Sec.  
423.38(c)(35) may not be fully accessible, in order to protect Medicare 
enrollees from aggressive marketing tactics, reduce complexity for 
States and enrollment counselors, and promote access to integrated 
care.
    Expanding the definition of HIDE SNP is beyond the scope of this 
current rulemaking, and we believe that changes of the type recommended 
by the commenter should be carefully considered and subject to notice 
and an opportunity for comment by other interested parties, but we will 
consider the Oregon example for potential future rulemaking.
    Comment: Many commenters requested clarification on current SEPs 
available to dually eligible individuals. Several commenters requested 
confirmation that the PACE SEP in Part D would still be available for 
individuals wishing to enroll in or disenroll from a PACE organization. 
A commenter also noted that PACE participants have been targeted in 
recent years by some MA-PD plans and D-SNPs encouraging them to 
disenroll from PACE and requested confirmation the PACE SEP would still 
be available for beneficiaries to re-enroll in PACE in these 
situations.
    A commenter opposed the SEP changes and requested an exclusion for 
people who reside in institutions as their needs change frequently, as 
do the providers who see them. Another commenter suggested keeping the 
quarterly dual/LIS SEP but allowing individuals to use an SEP if they 
receive inaccurate information about a plan prior to enrollment or an 
agent enrolls them without their knowledge. Another commenter requested 
CMS confirm that D-SNPs with a 5-Star Rating will still be able to 
enroll individuals using the 5-Star SEP. Finally, a commenter supported 
the dual/LIS SEP and integrated care SEP and appreciated that CMS noted 
in the proposal that access to other SEPs will not change.
    Response: We appreciate the commenters' request for clarity on the 
continued availability of current SEPs. We proposed to change the 
current dual/LIS SEP at Sec.  423.38(c)(4)(i) but otherwise did not 
propose changes to the existing SEPs specifically mentioned by the 
commenters and that are available in the Part D program outlined in 
Sec.  423.38(c). The PACE SEP for Part D enrollees at Sec.  
423.38(c)(14) will continue to be available for individuals wishing to 
enroll in or disenroll from a PACE organization. The institutional SEP 
at Sec.  423.38(c)(15) will continue to be available when an individual 
moves into, resides in, or moves out of an institution. The exceptional 
circumstances SEP at Sec.  423.38(c)(36) will continue to be available 
when a plan or agent of the plan materially misrepresents information 
to entice enrollment. The 5-Star SEP at Sec.  423.38(c)(20) will 
continue to be available for individuals to use once per contract year 
to enroll in a plan with a Star Rating of 5 Stars. (Corresponding MA 
SEPs and open enrollment periods for each of these examples are at 
Sec.  422.62(b)(7), (a)(4), (b)(3)(ii), and (b)(15) respectively.)
    We appreciate the commenters' support for the SEP proposals and 
confirm that our decision to finalize these proposed revisions to the 
existing dual/LIS SEP and to adopt a new integrated care SEP will not 
affect the ability of individuals to access other applicable SEPs 
provided in CMS regulations.
    Comment: A commenter questioned whether the proposed dual/LIS SEP 
changes would limit access for dually eligible and LIS eligible 
individuals since it would limit enrollment outside of the ICEP or AEP 
to standalone PDPs. The commenter, citing broader changes to Part D, 
expressed concern about many plans losing LIS benchmark status in 2025, 
leaving few PDPs (or only one PDP) per county qualifying as an LIS 
benchmark plan. The commenter further noted that, if the number of LIS 
benchmark PDPs is small, our SEP proposals could significantly disrupt 
enrollee care and lead to negative health consequences for high-need 
LIS individuals who have limited options among plans that may not cover 
their prescription drugs or impose new utilization management 
requirements.
    Response: We thank the commenter for their perspective on this 
issue. While we acknowledge the commenter's concerns, we believe 
protecting Medicare enrollees from aggressive marketing tactics and 
reducing complexity for States and enrollment counselors outweigh the 
potential downsides. Our proposed improvements to the Part D risk 
adjustment model in the CY 2025 Advance Notice \221\ would improve 
payment accuracy for Part D plans, including those that 
disproportionately serve enrollees with LIS, and we believe this will 
help foster a competitive market of PDPs. We will continue to monitor 
the availability of LIS benchmark PDPs over time. Further, dually 
eligible individuals would still be able to make changes to their MA 
plan or non-integrated D-SNPs during the AEP, MA-OEP, or where another 
SEP permits.
---------------------------------------------------------------------------

    \221\ Advance Notice of Methodological Changes for Calendar Year 
(CY) 2025 for Medicare Advantage (MA) Capitation Rates and Part C 
and Part D Payment Policies.
---------------------------------------------------------------------------

    Comment: A few commenters raised concerns about the impact of the 
SEPs on access to providers and services. Other commenters noted that 
many dually eligible individuals need to change plans due to a change 
or loss in provider participation during the year or due to a change in 
need for a service

[[Page 30688]]

that not all plans may cover and would use the quarterly dual/LIS SEP 
to make midyear changes in enrollment. They further stated that in some 
service areas there may be a limited number of certain types of 
providers, resulting in in long waiting lists for individuals; as such, 
the proposed dual/LIS SEP would limit the ability to change plans 
outside of the AEP and could result in a lack of access to adequate 
care.
    Response: We acknowledge the commenters' concerns and agree that 
continuity of care and mitigating disruption associated with plan 
changes is important for dually eligible individuals. However, we are 
not persuaded that the SEP proposals themselves increase the risk for 
service or provider disruptions compared to what is currently in place.
    Comment: Some commenters responded to our solicitation in the 
proposed rule for comments on whether to use our flexibilities at 
section 1851(f)(4) of the Act (as cross-referenced at section 1860D-
1(b)(1)(B)(iv) of the Act) and at Sec.  423.40(c) to establish a 
Medicare enrollment effective date for the proposed integrated care SEP 
at Sec.  423.38(c)(35) that differs from the effective date in the 
current quarterly dual/LIS SEP at Sec.  423.38(c)(4). A few commenters 
supported the SEP changes but encouraged CMS not to make further 
adjustments to enrollment effective dates. One commenter acknowledged 
the real confusion misaligned enrollment dates present but believed the 
obstacles do not outweigh the benefits of current policy. The commenter 
believed that harm from misaligned enrollment dates today is mitigated 
by the fact that most individuals make their enrollment choices prior 
to the Medicaid cut-off dates, and suggested CMS work with States, 
SHIPs, D-SNPs, agents and brokers, and State enrollment vendors 
(including enrollment brokers that meet the requirements at section 
1903(b)(4) of the Act and Sec.  438.810) to clearly convey effective 
enrollment dates. Another commenter supported changes to the enrollment 
effective dates, noting it would more effectively support exclusively 
aligned enrollment. The commenter asked if States may direct specifics 
of enrollment date alignment via SMAC contracts. Another commenter 
recommended aligning enrollment dates between Medicare and Medicaid 
when feasible, while another commenter noted it may be additionally 
burdensome for States to align Medicaid enrollment effective dates with 
Medicare under a monthly SEP. Another commenter noted that misaligned 
enrollment effective dates between Medicare and Medicaid cause delays 
for enrollees in accessing LTSS but acknowledged that aligning start 
dates would be difficult to achieve. The commenter suggested CMS work 
with States, enrollment brokers, and plans to clearly convey effective 
enrollment dates so States can make Medicaid cut-off dates closer to 
Medicare enrollment effective dates.
    Response: We thank the commenters for their thoughts on the option 
to use our statutory authority at section 1851(f)(4) of the Act (as 
cross-referenced at section 1860D-1(b)(1)(B)(iv) of the Act) to 
establish a different enrollment effective date for the proposed 
integrated care SEP at Sec.  423.38(c)(35). Upon further consideration, 
we have decided that, as of now, we will not establish a Medicare 
enrollment effective date for the proposed integrated care SEP at Sec.  
423.38(c)(35) that differs from the effective date in the current 
quarterly dual/LIS SEP at Sec.  423.38(c)(4). We will continue to work 
with States, D-SNPs, SHIPs, and other parties to strengthen 
communication to dually eligible individuals with respect to enrollment 
start dates of Medicare and Medicaid plans. Further, we note that such 
enrollment flexibilities may not be specified through the SMAC, as 
Federal regulation supersedes State flexibility in the SMAC, and as no 
such flexibility is adopted through Federal regulation, the option to 
change or delay Part D enrollment effective dates is not available to 
States through the SMAC.
    Comment: One commenter noted the potential for increased 
complaints--including marketing misrepresentation complaints--in the 
HPMS Complaint Tracking Module (CTM) under the SEP proposals. The 
commenter noted it is possible dually eligible individuals will 
disenroll from an MA-PD plan, change their minds after enrolling in the 
new Part D plan before the next available open enrollment period, and 
subsequently open a CTM with their current integrated D-SNP in order to 
receive an SEP to disenroll (enrollees who open a marketing 
misrepresentation CTM against a plan may receive an SEP to disenroll if 
they received misleading or incorrect information leading them to 
enroll in a new plan). The commenter contends this creates a loophole 
to our SEP policy such that dually eligible enrollees can elect a non-
integrated plan outside the AEP and, therefore, the commenter requests 
that CMS update the CTM to ensure only valid complaints result in a 
marketing misrepresentation SEP.
    Response: We thank the commenter for raising the potential 
increases to CTMs. We appreciate the concern this commenter raises, and 
we will monitor whether the proposed SEPs lead to increased complaints 
to D-SNPs in the CTM to determine whether we need to make further 
adjustments to the CTM in response. However, we do not agree that 
marketing misrepresentation CTMs--a narrow but important protection for 
enrollees who receive misleading or incorrect information causing them 
to make an enrollment change--create a loophole to our SEP proposals 
sufficiently large enough to undermine their intent. Indeed, the vast 
majority of MA and Part D enrollees do not qualify for the dual/LIS 
SEP. Therefore, if marketing misrepresentation CTMs are as manipulable 
as the commenter suggests, we likely would be experiencing such 
manipulation on a widespread basis currently among non-dually eligible 
individuals. However, we do not believe this to be the current reality.
    Comment: Many commenters offered support for the D-SNP enrollment 
limitation proposals at Sec. Sec.  422.503(b)(8), 422.504(a)(20), 
422.514(h), and 422.530(c)(4)(iii). Commenters appreciated CMS's 
efforts to align enrollment between integrated D-SNPs and Medicaid 
MCOs, and to limit the number of D-SNP offerings per service area where 
a D-SNP, its parent organization, or a related MA organization under 
the same parent organization offers a Medicaid MCO. Commenters noted 
that integrated models that operate with exclusively aligned enrollment 
are better equipped to ensure true integration for full-benefit dually 
eligible individuals. Some of these commenters also appreciated the 
phased approached offered in the proposed rule. Additional commenters 
noted that the proposal to limit the number of D-SNPs offered by a 
parent organization would simplify plan options, reduce confusion for 
individuals, make it easier for States to track enrollment, and perform 
oversight and quality improvement with their plans. Commenters noted a 
reduction in D-SNPs would also reduce harmful marketing practices. 
Other commenters expressed appreciation for the proposed requirement 
that parent organizations only offer one D-SNP in a service area where 
the parent organization also offers a Medicaid MCO, as it would 
simplify options counseling to individuals, improve provider billing, 
and reduce barriers to Medicaid covered services like LTSS, dental, and 
transportation.
    Response: We thank the commenters for the support. We similarly 
believe our proposals would increase the percentage of D-SNP enrollees 
who are in aligned

[[Page 30689]]

arrangements, reduce the number of D-SNP options overall and mitigate 
choice overload, remove some incentives for agents and brokers to 
target dually eligible individuals, simplify provider billing and lower 
the risk of inappropriate billing, and promote integrated care and the 
benefits it affords, like improved care coordination, integrated 
materials, and unified appeals and grievance processes.
    Comment: Numerous commenters supported the proposal at Sec.  
422.514(h)(1)(i) intended to reduce choice overload and create more 
clear and meaningful plan options for dually eligible individuals. One 
commenter noted this policy would simplify plan options, reduce 
confusion for individuals, and make it easier for States to track 
enrollment, coordinate care, and perform quality improvement with their 
plans. Another commenter noted the removal of duplicative plans from 
the market would increase the likelihood that an individual will select 
a D-SNP. Another commenter felt that multiple plans operated by the 
same company is not only confusing for individuals dually eligible for 
Medicare and Medicaid, but also are very difficult for care 
coordinators assisting those individuals. Another commenter supported 
the limitation and noted that while this would limit dually eligible 
individuals' choice of plans, individuals currently struggle with the 
number of choices and often lack the resources to discern amongst 
numerous coverage options. They further stated that limiting the number 
of plans with meaningful differences would incentivize companies to 
build up their D-SNPs' networks and benefits and make it easier for 
individuals to make an enrollment choice.
    Response: We thank the commenters for their support. We agree that 
the proposals would simplify D-SNP options, reduce confusion among 
dually eligible individuals and the options counselors that support 
them, and generally make plan choices more meaningful for dually 
eligible individuals, their families, advocates, and enrollment 
counselors. We similarly agree that a reduction in the overall number 
of D-SNP options will incentivize MA sponsors to invest in their 
integrated D-SNPs across markets.
    Comment: Numerous commenters opposed the enrollment limitation 
proposals. Several of these commenters acknowledged or agreed with 
CMS's efforts to facilitate better alignment of enrollment between 
Medicare and Medicaid and simplify Medicare options for dually eligible 
individuals but had concerns with the details of the proposals. Many 
commenters were concerned about the potential of the proposal to limit 
the number of D-SNPs offered by the same parent organization in a given 
service area to negatively impact individual choice. A commenter 
expressed particular concern regarding the effects of this policy in 
States that have D-SNPs and Medicaid managed care, but no current 
requirements for EAE. The commenter believed that, unless CMS's intent 
is that all MA organizations must offer an affiliated Medicaid MCO and 
move to EAE, narrowing choices would adversely limit dually eligible 
individuals' choices, and by 2030 would limit the number of 
supplemental benefits offered by D-SNPs. Another commenter asked that 
CMS assess impact on SMACs and whether D-SNP relationships are 
positively or negatively impacted. Finally, another commenter noted 
that plans offer multiple PBPs to allow them to tailor benefits for a 
particular population, and the proposal would remove a plan's ability 
to do so.
    Response: We thank the commenters for their perspective. We 
acknowledge that the enrollment limitations--both as proposed and as 
finalized at Sec.  422.514(h) in this rule--may reduce the number of 
available D-SNP options for dually eligible individuals. As noted in 
the proposed rule (88 FR 78575), this is by design and a way to address 
the choice overload faced by dually eligible individuals, their 
families, and enrollment counselors. We clarify that these policies 
only apply to an MA organization where it, its parent organization (as 
defined in Sec.  422.2), or any entity that shares a parent 
organization with an MA organization also contract with a State as a 
Medicaid MCO that enrolls full-benefit dually eligible individuals in 
the same service area (that is, in a service area that overlaps in full 
or in part with the service area of the MA organization's D-SNP(s)). In 
applying the enrollment limitations in Sec.  422.514(h), we will follow 
corporate ownership to the highest level, rather than looking only to 
the immediate owner of an MA organization or other, related entity, 
consistent with the definition of parent organization as meaning the 
entity that is not a subsidiary of any other legal entity. MA 
organizations that offer D-SNPs where the MA organization, its parent 
organization or any entity that shares a parent organization with the 
MA organization do not offer an MCO are unaffected by the new 
proposals; such MA organizations may continue to offer coordination-
only D-SNPs. Further, even after this final rule takes effect, dually 
eligible individuals will continue to have more Medicare coverage 
choices (including Traditional Medicare with a Part D plan, MA-PDs, 
SNPs, and PACE) relative to their Medicare-only peers.
    As noted in the proposed rule (88 FR 78575), we believe the 
enrollment limitations will have the greatest impact in States that 
have Medicaid managed care but do not have EAE requirements already, as 
MA organizations operating D-SNPs in those States will likely choose to 
consolidate their PBPs down to a single PBP for full-benefit dually 
eligible individuals that is aligned with their affiliated Medicaid MCO 
(that is, the MCO that is offered by the MA organization, its parent 
organization, or any entity that shares a parent organization with the 
MA organization) that fully or partially overlaps the D-SNPs service 
area. We will work closely with States in the event they wish to adjust 
their State Medicaid agency contracts to require EAE as a result of 
these policies.
    We acknowledge this final rule will limit an MA organization's 
ability to offer multiple PBPs with tailored benefits, unless one of 
the exceptions we are finalizing applies. (We discuss the exceptions in 
detail in response to other public comments later in this section.) We 
also recognize that plan sponsors offering D-SNPs may also choose to 
adjust their supplemental benefit offerings as a result of these 
policies, though we do not believe operating fewer plans to be more 
administratively burdensome relative to offering many plans. We will 
monitor the policies' impact to D-SNP supplemental benefits.
    Finally, we note we are finalizing Sec.  422.514(h)(1) with a 
technical modification to correct the terminology to use the term 
``full-benefit dual eligible individual(s)'' instead of the more 
general ``dually eligible individuals'' to match the cross-reference to 
Sec.  423.772.
    Comment: A number of commenters suggested that the enrollment 
limitations could create barriers for dually eligible individuals in 
States where they are not required to be in or are explicitly carved 
out from Medicaid managed care. For example, in New York, only dually 
eligible individuals with significant long-term care needs are required 
to enroll in Medicaid managed care, with the majority of dually 
eligible individuals remaining in Medicaid fee-for-service (FFS). These 
commenters noted that D-SNPs that also contract with States as Medicaid 
MCOs can currently enroll individuals

[[Page 30690]]

in Medicaid FFS but, under the proposals, those D-SNPs would not be 
able to enroll these individuals beginning in 2027 and would be 
required to disenroll them as of 2030. Commenters indicated that these 
individuals are better served in D-SNPs where they receive coordination 
of their Medicare and FFS Medicaid benefits. The commenters offered 
several suggestions for how CMS should address these concerns: (a) 
limiting the proposal to States that require mandatory enrollment for 
dually eligible individuals, including those who do not receive long-
term care services, (b) implementing a limited exception process for 
States that would allow MA organizations with an affiliated Medicaid 
MCO to offer at least one D-SNP PBP that is not exclusively aligned and 
that can enroll dually eligible individuals who maintain FFS Medicaid 
coverage and (c) phasing in the proposal over time. Another commenter 
asked CMS to clarify whether dually eligible individuals in States with 
voluntary Medicaid managed care would be disenrolled from coordination-
only D-SNPs beginning in 2027.
    Response: We appreciate the commenters' perspectives but continue 
to believe that the policy we proposed is appropriate and a practicable 
means to achieve our goals of furthering integrated coverage for 
individuals who are dually eligible for Medicare and Medicaid. Applying 
the D-SNP enrollment limitations to only States that require mandatory 
enrollment for dually eligible individuals, while not something we 
explicitly considered in the proposed rule, has some potential 
drawbacks and we do not think it would further our policy goals as well 
as proposed Sec.  422.514(h). This alternative would narrow the number 
of States in which these policies would apply, thus reducing the extent 
to which we would achieve the benefits described in the proposed rule. 
It would also raise potential complexity in States where certain 
subpopulations of dually eligible individuals are mandatorily enrolled, 
but others are not. Allowing each MA organization with an affiliated 
Medicaid MCO to offer at least one D-SNP that is not exclusively 
aligned with its affiliated Medicaid MCO for the purpose of enrolling 
dually eligible individuals who are enrolled Medicaid FFS would 
similarly reduce the extent to which we would achieve the benefits 
described in the proposed rule, create more additional operational 
complexity for States and CMS to administer and monitor, and would 
likely be more complicated to explain from a beneficiary communications 
and messaging perspective compared to the current proposal. Finally, we 
believe the phase-in outlined in the proposed rule provides ample time 
for transition; our proposal, which we are finalizing, limits new 
enrollment to individuals enrolled in both D-SNP and affiliated 
Medicaid MCO offered under the same parent organization starting in 
2027 and then disenrolling those enrollees who do not have aligned 
enrollment in the D-SNP's affiliated Medicaid MCO in 2030. From the 
time of issuance of this final rule in 2024, there are two bid cycles 
and contract years (2025 and 2026) during which D-SNPs with affiliated 
Medicaid MCOs may prepare for the first phase of enrollment 
limitations. We decline to incorporate these suggestions in the final 
rule.
    Comment: A commenter stated that the enrollment limitation 
proposals would seem to have the perverse effect of penalizing MA plans 
that are aligned with an MCO, while MA plans that are not aligned with 
an MCO may enroll any dually eligible individual. They further stated 
that there would be individuals enrolled in Medicaid MCOs that are not 
eligible for integrated care and requested that CMS clarify the 
definition of a ``Medicaid contract'' so it refers to only an 
integrated plan contract since CHIP, TANF, foster care, and other 
unrelated benefits offered under Medicaid should not be considered 
contracts for this purpose.
    Response: We thank the commenter for their perspective and 
suggestion. As we described in the proposed rule (88 FR 78575) it may 
seem that our proposal on limiting enrollment in D-SNPs offered by MA 
organizations with affiliated Medicaid MCOs, in isolation, would 
disadvantage parent organizations that choose to offer Medicaid MCOs as 
well as D-SNPs because such organizations would be limited in the 
number of D-SNP offerings and would be required to align their 
enrollment between D-SNP and MCO for full-benefit dually eligible 
individuals. However, our SEP proposals were designed to have the 
opposite effect by permitting enrollment into integrated D-SNP options 
that cover both Medicare and Medicaid benefits using the new one-time-
per month SEP while removing the option to use the dual/LIS SEP to 
enroll into MA-PDs--including coordination-only D-SNPs. The integrated 
care SEP would incentivize MA organizations to offer integrated D-SNPs 
as a means to take advantage of the monthly integrated care SEP that is 
available to full-benefit dually eligible individuals to facilitate 
aligned enrollment (that is, for these individuals to enroll only into 
integrated D-SNPs that are affiliated the Medicaid MCO in which the 
individual also enrolls).
    While the proposals at Sec. Sec.  422.503(b)(8), 422.504(a)(20), 
and 422.514(h)(1) and (2) apply (and therefore limit the ability of an 
MA organization to offer multiple D-SNPs) when an MA organization, its 
parent organization, or an entity that shares a parent organization 
also contracts with a State as a Medicaid MCO, the limitation in these 
regulations applies only when the affiliated Medicaid MCO enrolls 
dually eligible individuals. Medicaid MCOs that solely enroll other 
Medicaid populations will not be impacted by this rule. We proposed 
that dually eligible individuals for purposes of this provision means 
``dually eligible individuals as defined in Sec.  423.772,'' but in 
retrospect realized that we should have used the term ``full-benefit 
dual eligible individuals'' as defined in Sec.  423.772. Therefore, we 
have revised Sec.  422.514(h)(1) to clarify that this provision applies 
only when a Medicaid MCO enrolls full-benefit dual eligible individuals 
as defined in Sec.  423.772. We have made similar edits to Sec.  
422.514(h)(3)(i) and (ii) to specify that we are referring to full-
benefit dual eligible individuals as defined in Sec.  423.772. These 
clarifying edits to the regulatory text have no impact to the 
enrollment limitations as originally proposed or finalized in this 
rulemaking at Sec.  422.514(h).
    We acknowledge that some Medicaid MCOs may enroll full-benefit 
dually eligible individuals even when certain Medicaid services, such 
as long-term supports and services, are carved out. In such scenarios, 
the rules we are finalizing here will apply, facilitating better access 
for full-benefit dually eligible individuals to care coordination, 
unified appeals processes across Medicare and Medicaid, continuation of 
Medicare services during an appeal, and integrated materials that come 
from aligned enrollment, even if some Medicaid benefits are carved-out. 
As such, we decline to incorporate these suggestions in the final rule.
    Comment: A few commenters expressed concern regarding the impact of 
our enrollment limitation proposals on partial-benefit dually eligible 
individuals. They acknowledged that some States permit integrated D-
SNPs to enroll both full-benefit and partial-benefit dually eligible 
individuals; in such cases, our proposal would mean that the full-
benefit enrollees are also enrolled in the D-SNP's related

[[Page 30691]]

Medicaid MCO while the partial-benefit dually eligible individuals are 
enrolled only in the D-SNP. These commenters were concerned that 
partial-benefit dually eligible individuals may experience disruption 
if they are no longer able to stay in D-SNPs affected by Sec.  
422.514(h) after 2030.
    Response: We thank the commenters for raising this issue and would 
like to clarify the impact of the new regulations proposed at 
Sec. Sec.  422.503(b)(8), 422.504(a)(20), and 422.514(h)(1) and 
422.514(h)(2) for partial-benefit dually eligible individuals. We 
proposed at Sec.  422.514(h)(1)(i) that, beginning in 2027, an MA 
organization, its parent organization, or any entity sharing a parent 
organization with the MA organization that also contracts with a State 
as a Medicaid MCO may only offer one D-SNP for full-benefit dually 
eligible individuals. Functionally this means that an MA organization 
can continue to offer one or more D-SNPs for partial-benefit dually 
eligible individuals when it meets all other applicable requirements 
(including having a SMAC) even if the MA organization, its parent 
organization, or another entity (or entities) that share a parent 
organization with the MA organization offers an affiliated Medicaid MCO 
in the same service area. While proposed Sec. Sec.  422.514(h)(1)(ii) 
and 422.514(h)(2) go on to limit enrollment in the D-SNP to individuals 
enrolled in, or in the process of enrolling in the Medicaid MCO, the MA 
organization that offers the D-SNP for full-benefit dually eligible 
individuals is not prohibited by Sec.  422.514(h)(1)(i), (h)(1)(ii), or 
(h)(2) from offering additional D-SNPs solely for partial-benefit 
dually eligible individuals. We illustrate the differential impact on 
D-SNPs serving partial-benefit dually eligible individuals in the 
hypothetical example provided in Tables HC3 and HC4 in the proposed 
rule (88 FR 78574) where we noted that MA Organization Gamma could 
convert HIDE D-SNP Gamma 001 to coordination-only D-SNP Gamma 001 and 
keep that plan open for partial-benefit dually eligible individuals.
    Comment: A few commenters suggested that CMS provide more 
information on how our proposals would impact States that have Medicaid 
managed care programs that only cover a subset of Medicaid services, 
such as long-term services and supports (these are often called 
partially capitated Medicaid managed care programs). A commenter 
further expressed concern that the requirement for MA organizations to 
limit D-SNP enrollment to only those individuals also enrolled in the 
affiliated Medicaid MCO may adversely impact individuals in specific 
States, particularly those that also have partially capitated Medicaid 
programs, such as New York. The commenter recommended that CMS 
explicitly clarify partially capitated models as another affiliated 
Medicaid managed care plan option or allow flexibility for State 
Medicaid agencies to determine Medicaid plan types that should be 
aligned with D-SNPs. Another commenter requested CMS clarify whether 
the exception proposed at Sec.  422.514(h)(3)(i) extends to situations 
in which full-benefit dually eligible individuals are only enrolled in 
Medicaid managed care plans if they receive LTSS.
    Response: We thank the commenters for raising the issue of 
partially capitated Medicaid managed care programs. As we noted in the 
proposed rule (88 FR 78574), while the enrollment limitations proposals 
for non-integrated D-SNPs would apply based on an MA organization 
having an affiliated Medicaid MCO, we were considering whether they 
should also apply where an MA organization has other affiliated 
Medicaid managed care plan options as well, including prepaid inpatient 
health plans (PIHPs) and prepaid ambulatory health plans (PAHPs). We 
described how some States use PIHPs or PAHPs to deliver specific 
categories of Medicaid-covered services, like behavioral health, or a 
single benefit, such as non-emergency medical transportation, using a 
single contractor. As we noted in the proposed rule, to the extent the 
enrollment limitation provisions incentivize an organization to end its 
Medicaid managed care contracts rather than offer D-SNPs that are 
subject to the new limitations, that incentive would be stronger for a 
PIHP or PAHP than an MCO. We continue to believe that applying these 
proposals to PIHPs and PAHPs could create incentives that are 
disruptive yet do not significantly further the goals of our proposals. 
As a result, we do not intend to extend the enrollment limitation 
policies in Sec.  422.514(h)(1) and (2) beyond Medicaid MCOs or beyond 
D-SNPs that enroll full-benefit dually eligible individuals. This would 
mean that an MA organization offering a D-SNP in the same area that it, 
its parent organization, or an entity (or entities) that share a parent 
organization with the MA organization contracts with the State only as 
a PIHP or PAHP would not be subject to the enrollment limitations at 
Sec. Sec.  422.503(b)(8), 422.504(a)(20), or 422.514(h). (We direct 
readers to Sec.  438.4 for definitions of the terms PIHP and PAHP; 
these types of Medicaid managed care plans cover less comprehensive 
benefits than Medicaid MCOs.)
    We acknowledge, however, that there may be situations where a State 
Medicaid agency operates multiple Medicaid managed care programs that 
enroll full-benefit dually eligible individuals. For example, New York 
currently operates a fully integrated care program using Medicaid MCOs, 
plus a separate partially capitated program through which the State 
pays Medicaid capitation to PIHPs to cover long-term services and 
supports and ancillary benefits but not primary or acute care. If the 
MA organization, its parent organization, or any entity that shares a 
parent organization with the MA organization has a Medicaid MCO 
contract with the State, the provisions at Sec. Sec.  422.503(b)(8), 
422.504(a)(20), and 422.514(h)(1)(i) would apply in this example to 
limit the MA organization's ability to offer D-SNPs in that State to 
full-benefit dual eligible individuals. However, the exception proposed 
and finalized at Sec.  422.514(h)(3)(i) would allow the MA organization 
in this example to offer one D-SNP for full-benefit dually eligible 
individuals affiliated with the Medicaid MCO and a second D-SNP for 
full-benefit dually eligible individuals affiliated with the partially 
capitated PIHP if the State requires this arrangement in the SMAC.
    Proposed Sec.  422.514(h)(3)(i) established State flexibility to 
use the SMAC to ``limit enrollment [into D-SNPs] for certain groups'' 
based on ``age group or other criteria.'' However, upon reviewing 
comments, we believe the proposed exception at Sec.  422.514(h)(3)(i) 
was insufficiently clear and warrants clarification for scenarios like 
those in New York. Therefore we are revising Sec.  422.514(h)(3)(i) to 
clarify that we will allow an MA organization, its parent organization, 
or an entity that shares a parent organization with the MA 
organization, to offer more than one D-SNP for full-benefit dually 
eligible individuals in the same service area as that MA organization's 
affiliated Medicaid MCO only when a SMAC requires it in order to 
differentiate enrollment into D-SNPs either (i) by age group or (ii) to 
align enrollment in each D-SNP with the eligibility criteria or benefit 
design used in the State's Medicaid managed care program(s). We believe 
this revised text better explains our intent for the exception at 
paragraph (h)(3)(i). As described in the proposed rule (88 FR 78572), 
this exception allows for States that currently have different 
integrated D-SNP programs based on age or Medicaid managed program 
design to continue to operate

[[Page 30692]]

these programs and allows States the flexibility to design future 
integrated D-SNPs with State-specific nuances as to D-SNP eligibility 
and/or benefit design should the State choose. In the New York context, 
for example, Sec.  422.514(h)(3)(i) as finalized would give the State 
the ability to allow an MA organization with which it contracts as both 
a Medicaid MCO and as a Managed Long Term Care Plan (MLTCP) (the name 
for NY's PIHP-based program), to operate more than one D-SNP for full-
benefit dually eligible individuals in the same service area--one 
affiliated with the Medicaid MCO and another with the MLTCP--as long as 
the State specifies this in the SMAC.
    Comment: A few commenters expressed concern regarding the potential 
impact of the enrollment limitation proposals in rural areas. A 
commenter noted that network adequacy requirements make it challenging 
for health plans to offer D-SNPs in rural communities. The commenter 
further stated that Medicaid managed care is not always available in 
rural areas and was unsure how the proposed rules would impact the 
coordination-only D-SNPs that may operate there. A commenter also 
suggested that CMS should do more to ensure that rural communities have 
improved access to D-SNPs.
    Response: We appreciate the perspectives of the commenters and 
agree that it can be challenging for States and plans to implement 
managed care in rural communities. Depending on the State, the 
enrollment limitation proposals may not be applicable or may have a 
limited impact, particularly in rural areas where both Medicaid and 
Medicare managed care may be limited. The proposals at Sec. Sec.  
422.503(b)(8), 422.504(a)(20), and 422.514(h) apply only when an MA 
organization, its parent organization, or an entity that that shares a 
parent organization with the MA organization also contracts with a 
State as a Medicaid MCO that enrolls full-benefit dually eligible 
individuals in the same service area. Coordination-only D-SNPs offered 
by an MA organization that does have an affiliated Medicaid MCO would 
not be prevented by the rules we are finalizing at Sec. Sec.  
422.503(b)(8), 422.504(a)(20), and 422.514(h)--in rural communities or 
other locations--from continuing to operate as they do today.
    Other policies designed to improve access to D-SNPs in rural 
communities are beyond the scope of this current rulemaking, but we 
will consider exploring opportunities for potential future rulemaking.
    Comment: Some commenters expressed concern about the impact of the 
proposals that limit the number of D-SNPs available in a service area 
on plan competition and availability. A commenter cautioned CMS against 
implementing overly burdensome integration requirements that could 
ultimately lead to fewer plans in a particular service area, reducing 
competition and innovation. A few commenters questioned whether 
proposals that limit the number of D-SNPs available in a service area 
could force high-performing D-SNPs and/or those with expertise in 
specialized areas such as MLTSS and behavioral health out of State 
markets. Commenters further noted that there are plans that serve the 
dually eligible population through D-SNPs that have not historically 
served the Medicaid managed care population and that most State 
Medicaid managed care procurements do not evaluate the quality of 
available D-SNPs in the State, resulting in a situation where 4- or 5-
Star plans are prohibited from offering a D-SNP without a Medicaid 
managed care contract even when those plans have a higher quality 
rating than D-SNPs or MA plans offered by entities that also offer 
Medicaid MCOs. The commenter further stated that higher rated D-SNPs 
typically offer more robust supplemental benefits, including those 
designed to address health-related social needs. Another commenter 
similarly suggested that the proposals could result in lower-quality 
Medicaid plans gaining new D-SNP enrollees. Another commenter suggested 
that increased market consolidation related to Medicaid procurements 
could eliminate coordination-only D-SNPs that can serve as pathways to 
integration for States and offer care coordination for partial-benefit 
and full-benefit dually eligible individuals who do not meet criteria 
for enrollment in integrated Medicaid MCOs. A commenter further stated 
the impact of the proposals would likely vary depending on whether the 
markets and procurements drive more competition for Medicaid contracts 
or drive less competition for Medicaid contracts if it becomes easier 
to be a coordination-only D-SNP in certain markets. They went on to 
state that larger organizations already offering D-SNPs may have more 
capacity to respond to a State Medicaid MCO request for proposals (that 
is, a procurement solicitation) compared to smaller organizations and 
that States may favor plans with whom they have existing relationships. 
Another commenter was concerned that the proposals would incentivize 
States to further limit the number of D-SNPs or other integrated plans 
with which they contract, either through procurements requiring 
statewide coverage or other criteria that may make it less possible for 
smaller and/or local/regional plans to participate, particularly in 
rural communities. They further state that, in accordance with the July 
2021 Executive Order on Promoting Competition in the American Economy 
(#14036), CMS should evaluate whether these proposals will preserve ``a 
fair, open and competitive marketplace.''
    Response: We appreciate the comments on the potential impact of our 
proposals on plan competition. We noted in the proposed rule (88 FR 
78575) the theoretical possibility that MA organizations that operate 
both D-SNPs and Medicaid MCOs might elect to participate in fewer 
competitive Medicaid procurements (or exit Medicaid managed care in 
``any willing provider'' States), to be exempted from the proposed 
restrictions on D-SNP enrollment and on the number of D-SNP offerings 
permitted in the MA program, which could adversely affect competition 
and the minimum choice requirements in Sec.  438.52 for Medicaid 
managed care programs. However, our SEP proposals would have the 
opposite effect, since only integrated D-SNPs could benefit from the 
new integrated care SEP, and we believe our proposals, in combination, 
maintain strong incentives for organizations to compete for Medicaid 
managed care contracts. Nothing in our proposals or this final rule 
fundamentally changes the opportunity to compete for State Medicaid 
managed care contracts or the annual opportunity to apply for an MA 
contract. While national organizations have certain advantages, our 
observation has been that many of the organizations that have 
successfully created fully integrated D-SNPs with EAE--the types of 
plans relatively advantaged by the policies we are adopting in Sec.  
422.514(h) and with the SEPs--are local organizations with community 
roots. As such, we do not believe this rulemaking will result in 
excessive consolidation or anticompetitive outcomes. Nonetheless, we 
will monitor the market over time to ensure it sustains a fair, open 
and competitive marketplace.
    We do not expect our policies, as proposed or as finalized, to 
drive out high-performing D-SNPs or Medicaid MCOs with specialized 
experience. While Sec. Sec.  422.503(b)(8), 422.504(a)(20), 422.514(h), 
and 422.530(c)(4)(iii), as finalized in this rule, in combination are 
intended to result in a reduction in the number of D-SNP options 
overall, we

[[Page 30693]]

are not persuaded that it would necessarily result in loss of high-
performing D-SNPs or Medicaid MCOs with specialized experience. MA 
organizations that have an affiliated MCO and that offer multiple D-
SNPs available to full-benefit dually eligible individuals in the same 
area will have some flexibility in choosing how to consolidate its D-
SNPs under this final rule. We believe that this final rule offers 
significant incentives to ensure high-performing MA and Medicaid 
managed care plans continue. States that operate specialized Medicaid 
managed care programs focusing on MLTSS or behavioral health, for 
example, may be able to utilize the exception at Sec.  422.514(h)(3)(i) 
to allow more than one D-SNP to be available in the State for full-
benefit dually eligible individuals in the same service area by 
including in the State's SMAC with the MA organization that each D-SNP 
align enrollment with the eligibility criteria and/or benefit design 
used in the State's Medicaid managed care program(s). In finalizing our 
proposal at Sec.  422.514(h) (with modifications discussed throughout 
this section of the final rule), we are clarifying that the final 
regulation applies based on an MA organization having an affiliated 
Medicaid MCO in the same service area; it would not apply to other 
affiliated Medicaid managed care plan options such as prepaid inpatient 
health plans (PIHPs) and prepaid ambulatory health plans (PAHPs) which 
States use to deliver specific categories of Medicaid-covered services, 
like behavioral health, or a single benefit, such as non-emergency 
medical transportation (see further discussion in the proposed rule at 
88 FR 78574). As a result, we believe the risk of specialized plans 
leaving the market is low.
    As noted in the proposed rule (88 FR 78751), States have discretion 
in how they structure their Medicaid managed care programs. This 
includes whether and how they select Medicaid MCOs to participate in 
such programs, whether that is through competitive procurements or an 
``any willing provider'' approach. As noted in prior response, under 
our proposals an MA organization, its parent organization or any entity 
that shares a parent organization with the MA organization that also 
contracts with a State as a Medicaid MCO could continue to offer one or 
more D-SNPs for partial-benefit dually eligible individuals.
    Overall, we agree with commenters who stated that the impact will 
vary based on the market. As noted in the proposed rule (88 FR 78575), 
we believe the impact of these final policies will be concentrated in 
those States that have Medicaid MCOs but do not have EAE requirements 
already. We acknowledge that this rulemaking may impact organization 
decisions about whether and how to participate in certain markets but 
believe that, on the whole, the policies we are finalizing in this 
section of the final rule will better serve the dually eligible 
individuals by furthering opportunities for these individuals to enroll 
in integrated plans.
    Comment: A commenter noted that the enrollment limitation proposals 
could lead to more D-SNP-only contracts, which may result in lower Star 
Ratings than other contract structures. The commenter further requested 
CMS consider the impacts of more D-SNP-only contracts on the Star 
Ratings program, noting that should D-SNP-only contracts have lower 
Star Ratings, D-SNPs would have less funds to invest in supplemental 
benefits that address important health related social needs.
    Response: We appreciate the commenter's perspective and agree that 
the proposals could potentially lead to more States requiring D-SNP-
only contracts after 2030, as aligned enrollment and service areas for 
D-SNPs with affiliated Medicaid MCOs would be Federally required, 
allowing States to receive the benefits of D-SNP-only contracts. For 
example, Sec.  422.107(e) provides that States with D-SNP-only MA 
contracts may have HPMS access for oversight and information sharing, 
greater transparency on Star Ratings specific to D-SNP enrollees in 
their State, and increased transparency on health care spending. With 
regard to concerns that D-SNP-only contracts may result in lower Star 
Ratings than other MA contracts, we direct the commenter's attention to 
the April 2023 final rule (87 FR 27765 through 27766) where we 
addressed similar issues. While we understand the concern that D-SNP-
only contracts are rated in comparison to MA contracts that may have 
few or no dually eligible enrollees, the Star Ratings methodology 
addresses accuracy of measurement by case-mix adjusting some individual 
measures in accordance with measure specifications and applying CAI for 
other measures that are not case-mix adjusted to ensure that factors 
outside a contract's control are not captured in Star Ratings. In 
addition, beginning with the 2027 Star Ratings, the HEI reward will be 
added to incentivize and reward relatively high performance among 
enrollees with specified SRFs including LIS/DE and disability among 
contracts, like D-SNP-only contracts, that serve relatively high 
percentages of these enrollees.
    Comment: A commenter requested that CMS assess whether the proposed 
enrollment limitations for non-integrated D-SNPs could lead to more D-
SNP look-alikes as MA organizations try to avoid application of Sec.  
422.514(h) and, if so, inquired about the strategies CMS would employ 
to mitigate such a risk. Another commenter noted that increasing 
requirements on D-SNPs and States before D-SNP look-alikes are 
addressed may promote enrollment into less integrated plan options.
    Response: We appreciate the commenters' perspectives but do not 
expect our proposed limitations on enrollment into non-SNP MA plans to 
increase the number of D-SNP look-alikes. As we stated in the proposed 
rule (88 FR 78575), under our proposals MA organizations that have 
multiple D-SNP PBPs available to full-benefit dually eligible 
individuals and that also have affiliated Medicaid MCOs in the same 
service area (that is, MCOs offered by the MA organization, its parent 
organization, or an entity that shares the same parent organization) 
would likely choose to consolidate their D-SNP PBPs down to a single D-
SNP that is aligned with their Medicaid MCO that fully or partially 
overlaps the D-SNP service area and therefore available to full-benefit 
dual eligible individuals. Such MA organizations could operate non-AIP 
coordination-only D-SNPs both for service areas where the MA 
organization does not have an affiliated Medicaid MCO and for partial-
benefit dually eligible individuals. Thus, we expect robust 
availability of D-SNP options for dually eligible individuals, 
including partial-benefit dually eligible individuals, to remain and 
not lead to establishment of additional D-SNP look-alikes. In addition, 
we proposed (and are finalizing in this rule) a reduction in the 
threshold for identifying and phasing out D-SNP look-alikes (see 
section VIII.J). As the final rule is implemented over the transition 
periods and deadlines specified in Sec.  422.514, we will monitor the 
D-SNP landscape and enrollment transitions and consider future 
rulemaking as needed.
    Comment: A few commenters urged CMS to monitor the impacts of this 
rule over time. Several commenters suggested CMS examine the impact of 
these proposals on individuals and availability of viable plan options 
over time. A commenter specifically suggested including whether the 
quality of D-SNPs is impacted positively or negatively by these 
proposals. Another commenter suggested CMS monitor the

[[Page 30694]]

impacts of the changes on the availability of Medicaid managed care 
plans to better understand if the enrollment limitations encourage, or 
potentially discourage MA sponsors from applying to offer aligned 
Medicaid plans, creating an unintended effect on access to or choice 
among Medicaid managed care plans and by extension, aligned integrated 
plans. Another commenter asked CMS to monitor trends associated with 
the SEP proposals to ensure there are no adverse impacts on dually 
eligible individuals.
    Response: We appreciate these comments underscoring the importance 
of monitoring the impact our rulemaking has on Medicare and Medicaid 
managed care plans. We agree and will pay close attention to the impact 
on sponsors as well as States and, most importantly, on dually eligible 
individuals.
    Comment: Several commenters highlighted the potential impact of 
proposals to limit the number of and align enrollment in D-SNPs in 
certain service areas on State Medicaid policy. A few commenters 
expressed concern with what they characterized as the one-size-fits-all 
and/or top-down approach taken in these proposals and indicated that 
States need both direction and flexibility to innovate in a way that is 
appropriate to State-specific landscapes. Another commenter requested 
CMS consider how these proposals would impact ongoing State efforts to 
advance integration. Another commenter similarly noted that State 
autonomy in program design is a cornerstone of the Medicaid program and 
that aspects of the proposal may not account for the unique structure 
of certain Medicaid programs, including dually eligible individuals 
crossing multiple eligibility categories, State choice in benefit 
inclusion, voluntary vs. mandatory Medicaid managed care, and State 
procurement timelines. A few commenters acknowledged that States may 
not be aware of or planning ahead for how current State procurements 
may impact or be impacted by proposed new requirements for aligned 
enrollment applicable beginning 2027 and 2030, particularly when 
Medicaid procurement timelines do not align with MA service area 
expansion and bid filing timelines. The commenter further expressed 
concern that the proposed changes could result in unanticipated 
disruptions where States are making progress toward integration, 
including those States moving from the Financial Alignment Initiative 
to D-SNP models.
    Response: We appreciate these perspectives. We agree that States 
have policy interests and goals that shape their unique Medicaid 
managed care programs; as noted in the proposed rule (88 FR 78571), our 
intent is to help further support States in their integration efforts 
while also addressing the significant recent growth in both the number 
of D-SNPs and the number of dually eligible individuals with misaligned 
enrollment. We believe the opportunities to reduce choice overload and 
market complexity where parent organizations offer multiple D-SNP 
options in the same service area and to provide a truly integrated 
experience for a greater number of dually eligible individuals by 
requiring plans to align enrollment outweigh incremental constraints on 
State flexibility. We also again note the exception to accommodate 
State policy choices, described in Sec.  422.514(h)(3)(i). We are in 
close communication with the States planning to transition from the FAI 
to integrated D-SNPs and will continue to work closely with all States 
directly and through the Integrated Care Resource Center to provide 
technical assistance and support for States.
    Comment: A number of commenters acknowledged limited capacity and 
resources at the State level to support integration efforts for dually 
eligible individuals. Some commenters were concerned that the 
increasing complexity of Federal regulations, including these 
proposals, could lead to greater State burden, while others, including 
MACPAC, recommended CMS offer more technical assistance and educational 
opportunities to support States, particularly those with limited 
expertise with Medicare and/or expertise with enrolling dually eligible 
individuals in managed care. Examples from these commenters included 
for CMS to work with States to share best practices for building 
infrastructure needed to facilitate alignment and to facilitate 
engagement between States, CMS, health plans, and other stakeholders to 
ensure a seamless transition. Another commenter expressed concern that 
the proposals combined with limited Medicare expertise among States 
could dissuade States from pursuing managed LTSS programs as part of 
the Medicaid programs in the future. Another commenter suggested CMS 
provide targeted resources to Medicaid agencies that would allow for 
systems upgrades to implement exclusively aligned enrollment. Another 
commenter suggested that a portion of the $2 billion CMS estimates in 
savings from these proposals could be allocated to support States 
including technical assistance, staffing, and modernization of systems 
to support integration. A commenter similarly noted that States need 
investments, both up front and through shared savings models, to invest 
in staff and systems changes necessary to integrated care.
    Response: We appreciate and agree with the comments highlighting 
the need to support State Medicaid agencies in their efforts to 
integrate care for dually eligible individuals. We will continue to 
engage with States to promote integration, including through 
implementation of this final rule. Our technical assistance vendor, the 
Integrated Care Resource Center,\222\ also provides a range of written 
and live resources targeted to State Medicaid staff, such as sample 
contract language for State Medicaid agency contracts with D-SNPs, tip 
sheets describing exclusively aligned enrollment and other operational 
processes that support Medicare and Medicaid integration, educational 
materials and webinars about D-SNPs and highlighting State strategies 
for integrating Medicare and Medicaid, and one-on-one and small group 
technical assistance.
---------------------------------------------------------------------------

    \222\ http://www.integratedcareresourcecenter.com.
---------------------------------------------------------------------------

    Comment: Numerous commenters highlighted the impact of the 
enrollment limitation proposals on coordination-only D-SNPs. Several 
commenters noted that the proposals do not impact D-SNPs that do not 
also, directly or through an affiliated organization, contract with a 
State as a Medicaid MCO. These commenters expressed concern that this 
would afford unintegrated D-SNPs more flexibility than integrated D-
SNPs, undermining CMS's goal to increase enrollment in integrated D-
SNPs and may promote the proliferation of coordination-only D-SNPs. 
Many of these commenters encouraged CMS to extend the proposal to non-
integrated D-SNPs by limiting the number of coordination-only D-SNPs 
offered by the same parent organization operating in the same service 
area. A commenter suggested that the enrollment limitation proposals 
could create churn between unaligned and aligned D-SNPs. Another 
commenter suggested CMS take steps to reduce the availability of non-
integrated D-SNPs, particularly in service areas where integrated D-
SNPs are available, by requiring that non-integrated D-SNPs only enroll 
people who are not enrolled in a Medicaid MCO. Another commenter 
expressed support for discontinuing coordination-only D-SNPs in 2027. 
In contrast, another commenter noted the role coordination-only D-SNPs 
play in providing a starting point for States on which to

[[Page 30695]]

build integrated care programs. They further requested CMS require 
States to support coordination-only D-SNPs as an option for partial-
benefit dually eligible individuals as a condition of application of 
these requirements in order to ensure access for partial-benefit dually 
eligible individuals and to enable enrollment in coordination-only D-
SNPs throughout the transition.
    Response: We appreciate the commenters' perspectives. We clarify 
that we did not propose to eliminate coordination-only D-SNPs in 2027. 
As we described in the proposed rule (88 FR 78575), it may seem that 
our proposal on limiting enrollment in D-SNPs offered by MA 
organizations with affiliated Medicaid MCOs, in isolation, would 
disadvantage parent organizations that choose to offer Medicaid MCOs as 
well as D-SNPs because such organizations would be limited in the 
number of D-SNP offerings and would be required to align their 
enrollment between D-SNP and MCO for full-benefit dually eligible 
individuals. However, our SEP proposals would have the opposite effect 
by permitting enrollment into integrated D-SNP options that cover both 
Medicare and Medicaid benefits using the new integrated care SEP. 
Therefore, we believe our proposals, in combination, would maintain a 
high level of competition and choice, even while imposing some new 
constraints. While we thank the commenters for the suggestions on 
limiting the availability of unintegrated D-SNPs, we believe that they 
are beyond the scope of this current rulemaking and that such policies 
should be subject to advance notice and an opportunity to comment by 
all interested parties before we implement such changes. Finally, as 
noted in other comment responses, our proposals still would allow for 
parent organizations with an affiliated Medicaid MCO to continue 
offering (or newly offer) coordination-only D-SNPs for partial-benefit 
dually eligible individuals.
    Comment: Some commenters expressed support for the exception to the 
D-SNP enrollment limitation proposed at Sec.  422.514(h)(3)(i). Several 
of the commenters stated that the proposed exception preserves Medicaid 
agencies' ability to design D-SNP programs to meet specific 
populations' needs and requested CMS preserve this administrative 
flexibility. Another commenter agreed but cautioned this exception 
should be limited in scope. The commenter also recommend CMS consider 
adding another exception related to partial-benefit dually eligible 
enrollees.
    Response: We thank the commenters for the support. We believe the 
exception at Sec.  422.514(h)(3)(i), with the changes discussed in our 
responses to prior comments in this section, allows for States that 
currently have multiple integrated D-SNP programs based on age or 
benefit design in their Medicaid managed care programs to continue to 
operate these programs and allows States the flexibility to design 
future population-specific integrated D-SNP programs should they so 
choose. We agree that the exception should be limited in scope while 
allowing for this continued State flexibility.
    We acknowledge commenters' concerns about the applicability to 
partial-benefit dually eligible individuals and, as addressed in a 
previous response, we reiterate that the limitations proposed and 
finalized at Sec. Sec.  422.514(h)(1)(ii) and 422.514(h)(2) are 
specific to enrollment of full-benefit dually eligible individuals and 
D-SNPs that are open to enrollment by full-benefit dually eligible 
individuals. An MA organization can continue to offer one or more D-
SNPs for partial-benefit dually eligible individuals when it has a SMAC 
and meets all other applicable requirements even if the MA 
organization, its parent organization, or another entity (or entities) 
that share a parent organization with the MA organization offer an 
affiliated Medicaid MCO in the same service area. Therefore, we do not 
believe that an additional exception to the enrollment limitations in 
Sec.  422.514(h)(1) and (2) is necessary to ensure D-SNP enrollment 
opportunities for partial-benefit dually eligible individuals.
    Comment: Several commenters raised questions regarding the timing 
of the proposals to increase the percentage of dually eligible 
individuals in aligned plans for Medicare and Medicaid (that is, when 
the D-SNP limitations will first apply). A few commenters recommended 
that provisions to limit D-SNP enrollment be implemented before the 
proposed date of 2027, while several commenters requested that 
implementation of these provisions, and specifically the proposed SEPs, 
be delayed. Another commenter indicated that it was unclear when the 
proposed changes would go into effect.
    Response: We thank the commenters for their questions and 
suggestions regarding the timing of the proposals related to increasing 
aligned enrollment for dually eligible individuals. As finalized, the 
SEP policies in Sec. Sec.  423.34(c)(4)(i) and (c)(35) will be 
applicable for enrollments that take effect on or after January 1, 
2025, while the D-SNP limitation policies will apply as follows:
     The restriction on an MA organization offering more than 
one D-SNP for full-benefit dual eligible individuals in the same area 
where the MA organization has an affiliated Medicaid MCO will apply to 
contract years beginning on and after January 1, 2027 under Sec.  
422.514(h)(1)(i) (see also Sec. Sec.  422.503(b)(8) and 422.504(a)(20), 
which require compliance with Sec.  422.514(h)).
     The limit on new enrollment in a D-SNP offered by an MA 
organization with an affiliated Medicaid MCO in the same service area 
to individuals who are enrolled in or in the process of enrolling in 
the affiliated Medicaid MCO will apply to contract years beginning on 
and after January 1, 2027 under Sec.  422.514(h)(1)(ii) (see also 
Sec. Sec.  422.503(b)(8) and 422.504(a)(20), which require compliance 
with Sec.  422.514(h)). This provision will apply to new enrollments 
and will not require the D-SNP to disenroll previously enrolled 
individuals (whether partial-benefit dually eligible individuals or 
full-benefit dually enrolled individuals) who are not also enrolled in 
the affiliated MCO.
     The limit on enrollment and continued enrollment or 
coverage for a D-SNP that is subject to Sec.  422.514(h)(1) to only 
full-benefit dual eligible individuals who are also enrolled in or in 
the process of enrolling in the affiliated Medicaid MCO will apply to 
contract years beginning on and after January 1, 2030 under Sec.  
422.514(h)(2) (see also Sec. Sec.  422.503(b)(8) and 422.504(a)(20), 
which require compliance with Sec.  422.514(h)). This provision will 
require the D-SNP to disenroll individuals who do not meet the 
enrollment limitation requirements beginning January 1, 2030.
     The exceptions in Sec.  422.514(h)(3) will apply on the 
same schedule as the new limitations and restrictions in Sec.  
422.514(h)(1) and (2).
    We believe these timelines give CMS, States, and MA organizations 
an appropriate amount of time to make necessary policy and operational 
updates.
    Comment: Many commenters raised operational concerns on, or 
provided suggestions for, our proposed enrollment limitations. Several 
commenters requested that CMS confirm the applicability of the 
proposals to integrated D-SNPs in ``direct capitation arrangements.'' 
One commenter suggested that in 2027, the alignment proposal would 
require States to change their processes and would require CMS to 
create a new process

[[Page 30696]]

that links D-SNPs with their affiliated Medicaid MCOs in order to 
implement the new enrollment limitations. Another commenter raised 
concerns with respect to State Medicaid auto-assignment processes, 
stating that dually eligible individuals could find themselves enrolled 
in a Medicaid plan and a D-SNP from the same organization without 
making any choice under our proposal. Another commenter expressed 
concern about the States transitioning the Financial Alignment 
Initiative (FAI) to D-SNPs in 2026, suggesting those States will be 
aligning enrollment based on the organization that provides Medicare 
coverage. The commenter requested that we adjust the timing of the 
implementation of the proposals to better align with the sunsetting of 
the FAI demonstrations. Finally, a commenter expressed concerns with 
the proposed Sec.  422.514(h)(2) based on the commenter's belief that 
the rule would require certain individuals to be disenrolled both from 
their D-SNP and Medicaid MCO in 2030 and requested that CMS provide 
more clarity that D-SNP deeming would occur before a disenrollment.
    Response: We thank the commenters for their questions and 
suggestions. First, we clarify that Sec.  422.514(h), both as 
originally proposed and as finalized, applies to MA organizations that 
offer a D-SNP and where the MA organization, its parent organization, 
or any entity that shares a parent organization with the MA 
organization also contracts with a State as a Medicaid MCO and receives 
capitation payments from the State. This would include what a commenter 
referred to as ``direct capitation arrangements.''
    We also clarify that we did not propose (and are not finalizing) 
any changes to the process or mechanism for how a dually eligible 
individual may elect a D-SNP. There is no passive enrollment of 
individuals into MA plans--including D-SNPs--aside from what is 
described at Sec.  422.60(g). We did not propose (and are not 
finalizing) changes to default enrollment provisions or any other 
passive enrollment provisions for D-SNPs. In addition, we did not 
propose (and are not finalizing) any changes to the regulation at Sec.  
438.54 governing the enrollment process States must use for their 
Medicaid managed care plans (which may include passive and/or default 
enrollment procedures).
    We clarify that our enrollment limitations at Sec.  422.514(h) 
apply to D-SNPs regardless of integration status--including HIDE, FIDE, 
and coordination-only D-SNPs--so long as that D-SNP has an affiliated 
Medicaid MCO that serves full-benefit dually eligible enrollees in the 
same service areas as the D-SNP. We acknowledge that the policy will 
likely mostly apply to D-SNPs with HIDE and FIDE designations, but 
there are also examples of coordination-only D-SNPs achieving AIP 
status despite Medicaid benefit carve-outs, as is the case in 
California. See Sec.  422.561, paragraph (2)(ii).
    We understand commenters' concerns with respect to the potential 
need for States to change operations in reaction to the new D-SNP 
enrollment restrictions proposal, but we believe the requirements are 
broad enough that they may accommodate a variety of operational 
strategies for aligning enrollment between D-SNPs and Medicaid MCOs. 
For example, we do not believe changes to Medicaid auto-assignment 
processes will be uniformly required. However, because alignment of new 
enrollments is not required under Sec.  422.514(h) until 2027 and full 
alignment is not required until 2030, we believe there is adequate lead 
time for States and D-SNPs to consider implications of the proposals 
and adjust operations as needed.
    We acknowledge commenters' concerns with respect to the 
regulation's impact in 2030, when D-SNPs impacted by Sec.  422.514(h) 
will only be permitted to cover enrollees who are full-benefit dually 
eligible individuals and enrolled in an affiliated Medicaid MCO. We 
clarify that there is no requirement that an unaligned enrollee be 
disenrolled from a Medicaid MCO in either 2027 or 2030 as a result of 
these proposals. The required disenrollment would be from the D-SNP, 
beginning January 1, 2030. In a scenario where a full-benefit dually 
eligible individual has unaligned enrollment (meaning enrollment in a 
Medicaid managed care plan other than the Medicaid MCO that is 
affiliated with the D-SNP), the D-SNP would be required to disenroll 
the individual, who would remain enrolled in the unaffiliated 
(unaligned) Medicaid managed care plan, subject to the enrollment rules 
for the State's Medicaid program. The D-SNP disenrollment must comply 
with existing rules on disenrollment due to a loss of eligibility. We 
anticipate D-SNPs will work to align as many enrollees in their 
affiliated Medicaid MCOs as soon as possible in advance of 2030 but 
acknowledge that the subsequent disenrollment of unaligned enrollees 
from the D-SNP may be disruptive. We believe the long-term benefits of 
these provisions--which will increase the number of enrollees in 
aligned Medicare and Medicaid plans--outweigh the potential disruptions 
the proposals may cause.
    We also note that Sec.  422.514(h) permits D-SNPs to implement 
periods of deemed continued eligibility to retain enrollees who 
temporarily lose Medicaid coverage as described in Sec.  422.52(d). 
These deeming periods are optional unless a State directs a D-SNP to 
offer a minimum deeming period (which must not exceed 6 months) in the 
SMAC contract.
    We appreciate the comments about States actively working to 
transition their FAI demonstrations to integrated D-SNPs in 2026. We 
are working closely with each of these States to keep as many Medicare-
Medicaid Plan enrollees as possible connected with integrated care in 
2026. Many of these States are currently working on operational 
processes for exclusively aligned enrollment for their new integrated 
D-SNP programs, and we do not expect that State operational choices for 
this program will conflict with any provisions at Sec.  422.514(h). We 
do not agree that adjustments to the timeline of the D-SNP enrollment 
restrictions policy are necessary to effectively transition the 
demonstrations to integrated D-SNPs in 2026.
    Comment: Another commenter supported CMS's goal to align D-SNPs 
with Medicaid MCOs for greater integration but expressed concerns that 
the rulemaking may negatively affect enrollees if the service areas or 
provider networks of the Medicare and Medicaid plans are not fully 
congruent and strongly urged CMS to require full network alignment and 
transparency before considering a plan to be integrated.
    Response: We appreciate the comment. While we agree that completely 
aligned service areas may provide better transparency to enrollees and 
options counselors, we clarify that--aside from the service area 
alignment requirement for FIDE SNP and HIDE SNP designations for 2025 
as articulated in the definitions in Sec.  422.2--there is no current 
requirement nor are we finalizing any requirement that parent 
organizations offering D-SNPs adjust their service areas to exactly 
match the service areas of the affiliated Medicaid MCOs. Neither our 
enrollment limitation proposals nor the enrollment limitation policies 
we are finalizing have any direct impact on current Medicare or 
Medicaid network requirements. Nonetheless, we will monitor 
implementation and assess opportunities to further improve enrollee 
experiences.
    Comment: Numerous commenters raised questions on the operations of

[[Page 30697]]

aligning enrollment in Medicare and Medicaid coverage under proposed 
Sec. Sec.  422.514(h)(1)(ii) and 422.514(h)(2). A few commenters asked 
CMS to clarify how these proposals would be implemented in States where 
exclusively aligned enrollment (EAE) is already in place. In some of 
these States, dually eligible individuals elect AIP D-SNPs and the 
State matches the aligned Medicaid plan to the D-SNP; commenters asked 
CMS to clarify whether that arrangement would remain acceptable under 
the proposed rule, or if CMS was proposing that the Medicaid MCO be the 
``lead'' plan. A few other commenters asked if CMS would use passive 
enrollment authority to align dually eligible individuals into 
integrated D-SNPs as a result of this policy. Finally, another 
commenter requested CMS allow States to implement Medicaid plan 
enrollment policies, including matching policies, that allow for 
disenrollment or switching Medicaid plans when a dually eligible 
individual is electing to enroll in a D-SNP. The commenter also 
requested that CMS clarify whether D-SNPs could outreach to and 
encourage unaligned enrollees to enroll in that organization's aligned 
Medicaid MCO.
    Response: We thank the commenters for the questions on the 
operational impacts of the proposals at Sec. Sec.  422.514(h)(1)(ii) 
and 422.514(h)(2). We clarify that we are not requiring that the 
Medicaid MCO be the ``lead'' plan for the purposes of operationalizing 
aligned enrollment or EAE, and we believe the requirements as proposed 
are broad enough that they may accommodate a variety of operational 
strategies for aligning enrollment between D-SNPs and Medicaid MCOs. 
Our intent is to strive toward aligned enrollment in D-SNPs--
particularly in States that have Medicaid managed care but no EAE 
requirements--without significantly disrupting current State policies, 
operations, and program design. This rule does not amend or revise the 
Medicaid managed care enrollment and disenrollment requirements in 
Sec. Sec.  438.54 and 438.56, so the existing flexibilities States have 
for their Medicaid managed care programs are undisturbed.
    With respect to States that have already implemented EAE by 
``matching'' Medicaid managed care plan enrollment to an enrollee's D-
SNP selection, we confirm that this approach is compatible with the 
policies proposed and finalized at Sec. Sec.  422.514(h)(1)(ii) and 
422.514(h)(2). For States that have yet to implement EAE but wish to 
set up systems and operations that would allow their D-SNPs to operate 
with EAE, we are committed to collaborate on finding feasible 
operational processes that work best for them, with the aim of being as 
flexible as possible with the least disruption for dually eligible 
individuals.
    We confirm there is no passive enrollment of individuals into MA 
plans--including D-SNPs--aside from what is described at Sec.  
422.60(g). We did not propose (nor are we finalizing) changes to 
default enrollment provisions at Sec.  422.66(c) or any other passive 
provisions in conjunction with our proposals.
    Finally, we confirm that no Medicare regulations prohibit D-SNPs 
from outreach to their current unaligned enrollees. However, there may 
be additional restrictions to this type of outreach regarding 
enrollment in a Medicaid managed care plan in State statute, 
regulations, or SMAC provisions.
    Comment: A few commenters raised concerns about the applicability 
of the enrollment limitations policies on unique Medicaid managed care 
programs like in Oregon and Puerto Rico. A few commenters raised 
Oregon's CCOs that consist of a partnership of payers, providers, and 
community organizations that work at the community level with a 
community-based governance structure to provide coordinated health care 
for Oregon Medicaid enrollees. The commenter noted that this model does 
not currently allow the State to adopt integrated D-SNPs in all 
circumstances, because in some cases the CCO that holds the Medicaid 
contract is not under the same parent organization as the D-SNP, which 
is required for a D-SNP to achieve HIDE or FIDE status. Commenters 
suggested that CCOs currently provide the level of coordination and 
integration that CMS is seeking to encourage under this proposed rule 
and asked CMS to apply the enrollment limitations policy at the CCO 
level in Oregon. Another commenter questioned whether the proposal that 
requires an MA organization, its parent organization, or an entity that 
shares a parent organization with the MA organization to only offer one 
D-SNP for full-benefit dually eligible individuals in a service area 
would impact the Medicare Platino program in Puerto Rico. The commenter 
notes this program has four MA organizations contracted, and these 
organizations typically offer six D-SNP options each.
    Response: We appreciate comments with respect to the applicability 
of the policy in unique markets like Oregon and Puerto Rico. It is our 
understanding that most D-SNPs in Oregon already qualify as HIDE SNPs, 
however we acknowledge there are regulatory barriers for some Oregon D-
SNPs to achieve greater integration statuses as defined by CMS and as 
such cannot be considered affiliated with a Medicaid MCO for the 
purposes of the proposed requirements at Sec. Sec.  422.514(h)(1)(ii) 
and 422.514(h)(2). We will consider future rulemaking to take into 
account unique organizational structures that may hinder integration 
efforts as in the case of Oregon.
    We understand that Puerto Rico directly contracts with 26 AIP HIDE 
SNPs, operated by four parent organizations for 2024, with a great deal 
of service area overlap between these D-SNPs. As is the case in the 
Platino program, wherever an MA organization that offers a D-SNP, its 
parent organization, or any entity that shares a parent organization 
with the MA organization also contracts with a State as a Medicaid MCO 
for full-benefit dually eligible individuals and receives capitation 
payments from the State, we consider the D-SNP and Medicaid MCO to be 
``affiliated'' under Sec.  422.514(h). MA organizations that offer 
multiple D-SNPs participating in the Platino program in Puerto Rico 
will be required to only offer one D-SNP starting in 2027 for full-
benefit dually eligible individuals in a service area where the MA 
organizations, their parent organizations, and entities that share 
parent organizations with the MA organizations also offer an affiliated 
Medicaid MCO unless those D-SNPs meet the exception proposed at Sec.  
422.514(h)(3)(i). We acknowledge that MA organizations operating in 
Puerto Rico may choose to consolidate D-SNPs in order to comply with 
Sec.  422.514(h) and are finalizing the proposed crosswalk exception at 
Sec.  422.530(c)(4)(iii) to minimize enrollee disruption in connection 
with such contract consolidations.
    Comment: A few commenters raised concerns about the proposed 
enrollment limitations resulting in negative impacts to the provider 
community. One commenter urged CMS to explore further how the proposals 
around integration affect physician and provider communities, 
specifically providers that serve a significant number of dually 
eligible individuals. The commenter noted that if there are changes in 
an individual's enrollment in and alignment with their Medicare and 
Medicaid benefits, their provider could also change and potentially 
disrupt continuity of care if that provider does

[[Page 30698]]

not have a relationship both with the MCO and the MA plan.
    Response: We thank the commenters for their perspectives, but we 
believe that--because they are designed to increase the percentage of 
dually eligible enrollees who receive their Medicare and Medicaid 
benefits through the same organization--the enrollment limitations will 
ultimately simplify provider billing and lower the risk of 
inappropriate billing of dually eligible individuals which alleviates 
provider burden. We will continue to work with health plans, States, 
and the provider community to ensure providers have timely and accurate 
eligibility and enrollment information, which we acknowledge is crucial 
to providing effective and accurate care delivery and coverage for 
dually eligible individuals.
    Comment: A number of commenters expressed support for, or provided 
questions about, the crosswalk exception proposed at Sec.  
422.530(c)(4)(iii) for MA organizations affected by the policies at 
Sec. Sec.  422.514(h) and 422.504(a)(20). A few commenters noted the 
crosswalk exception would help maintain continuity and minimize 
confusion for enrollees. One commenter requested clarification 
regarding whether MA organizations can leverage the exception to 
crosswalk enrollees from a HIDE SNP to a FIDE SNP. The commenter also 
recommended CMS provide clarifications on the crosswalk methodology and 
criteria, including if enrollees can only be crosswalked from the 
affiliated Medicaid plan or if enrollees from another organization's 
Medicaid plan could also be crosswalked. Another commenter requested 
clarification regarding whether the crosswalk exception could be used 
to transition enrollees between D-SNPs that are ``cost-share protected 
and non-cost share protected.'' This commenter also requested CMS 
consider expanding the crosswalk flexibility to allow MA organizations 
to crosswalk enrollees--including full-benefit and partial-benefit 
dually eligible individuals--across different types of D-SNPs. Another 
commenter encouraged CMS to ease crosswalk opportunities to better 
capture the evolving needs of enrollees and State programs. The 
commenter recommended that CMS allow eligible enrollees from an 
existing unaligned D-SNP to be crosswalked to another existing 
unaligned D-SNP of the same plan type offered by the same parent 
organization but on a different contract to create additional interest 
from health plans to immediately reduce the volume of plan offerings, 
eliminating some marketplace confusion as States move along the path to 
integration.
    Response: We appreciate the comments and requests for clarification 
on the proposed crosswalk exception. We clarify that the crosswalk 
exception at Sec.  422.530(c)(4)(iii) will allow an MA organization, 
its parent organization, or an entity that shares a parent organization 
to crosswalk enrollees from one D-SNP to another across MA contracts, 
and not just plan benefit packages within a single MA contract, but 
only when the D-SNPs are being consolidated to a single D-SNP for a 
service area in order to comply with Sec. Sec.  422.514(h) and 
422.504(a)(20). We emphasize here that this crosswalk exception is 
about MA enrollment and will not change the Medicaid enrollment of any 
individual. The new crosswalks may be across contracts (that is, from 
one contract to another) and across related entities (that is, entities 
that share a parent organization) but must be of the same plan type; an 
MA organization may cross enrollees from one D-SNP PPO to another D-SNP 
PPO but may not crosswalk those enrollees to a D-SNP HMO under new 
Sec.  422.530(c)(4)(iii). In addition, because this is a new crosswalk 
exception, the MA organization(s) involved in the crosswalk must 
request the crosswalk exception from CMS, which will review the request 
for compliance with the applicable regulation(s). The crosswalk 
exception is intended to promote continuity for enrollees when an 
organization consolidates D-SNP offerings in the same service area to 
comply with Sec. Sec.  422.514(h) and 422.504(a)(20). If compliance 
with Sec.  422.514(h) is not the basis for the crosswalk and the MA 
organization is not consolidating D-SNPs as part of that compliance, it 
will not be within the scope of new Sec.  422.530(c)(4)(iii). Further 
the new crosswalk exception is not available until coverage for 2027.
    Provided that the preconditions for the crosswalk exception at 
Sec.  422.530(c)(4)(iii) are met, enrollees may be crosswalked from 
HIDE SNPs to FIDE SNPs, for example. We would not allow a D-SNP to 
crosswalk unaligned enrollees, or partial-benefit dually eligible 
enrollees, into a D-SNP required to operate with EAE, or into a D-SNP 
subject to the enrollment alignment requirements at Sec.  422.514(h). 
Additionally, while plan types are taken into account for the purposes 
of enrollee crosswalks, plan benefit nuances like cost-sharing and 
supplemental benefits are not considered. Enrollees who are crosswalked 
into a D-SNP PBP with more cost-sharing responsibilities or different 
supplemental benefits than their prior D-SNP PBP would be notified of 
this change through the plan's Annual Notice of Change.
    We note that all crosswalk and crosswalk exception requirements in 
Sec.  422.530 still apply to MA organizations. We believe the new 
crosswalk exception and current crosswalk requirements offer sufficient 
flexibility and incentive for D-SNP sponsors to consolidate plan 
offerings and promote continuity for enrollees in D-SNP types that best 
meet their needs.
    Comment: A few commenters opposed the proposal at Sec.  
422.514(h)(3)(ii), which states that an MA organization, its parent 
organization, or another MA organization that shares a parent 
organization with the MA organization may offer (or continue to offer) 
both an HMO and PPO D-SNP only if they no longer accept new enrollments 
from full-benefit dually eligible individuals in the same service area 
as the D-SNP affected by the new proposals at Sec. Sec.  422.504(a)(20) 
and 422.514(h). The commenters note that the limitation does not 
consider product and service area differences that result from having 
two different D-SNP product types in the same State. Another commenter 
similarly argued that rural enrollees may need D-SNP PPO access as a 
result of provider scarcity and suggested that active travelers may 
value PPO coverage. Finally, another commenter believes that 
integration, care coordination, and financial alignment can occur even 
when an MA organization is operating both plan types in a service area, 
and that the policy unnecessarily limits enrollee plan choice and 
access to benefits.
    Response: We thank the commenters for their perspectives. We 
recognize MA organizations may choose to adjust service areas as a 
result of this rulemaking and are not prohibited from providing PPO D-
SNPs in more rural areas. As noted in the proposed rule (88 FR 78573), 
our goals include simplifying the D-SNP market for dually eligible 
individuals and promoting integrated care through aligned Medicare and 
Medicaid products. We believe Sec.  422.514(h)(3)(ii), as finalized 
with clarifications, furthers longer term policy goals while minimizing 
enrollee disruption in the short term, particularly given that we are 
not changing the longstanding crosswalk limitations that prohibit 
enrollee crosswalks between plan types. An MA organization may 
encourage enrollees in its unaligned D-SNP to join the MA 
organization's integrated D-SNP and affiliated Medicaid MCO, as allowed 
in Sec.  422.2264(b)(1) and

[[Page 30699]]

consistent with State marketing rules. To improve the clarity of the 
proposed exception at Sec.  422.514(h)(3)(ii), we are revising the 
language to specify that if the MA organization, its parent 
organization, or an entity that shares a parent organization with the 
MA organization offers both HMO D-SNP(s) and PPO D-SNP(s), and one or 
more of the HMO D-SNPs is subject to Sec.  422.514(h)(1), the PPO D-
SNP(s) not subject to Sec.  422.514(h)(1) may continue if they no 
longer accept new enrollment of full-benefit dual eligible individuals 
in the same service area as the plan (or plans) subject to Sec.  
422.514(h)(1). Likewise, if the MA organization, its parent 
organization, or an entity that shares a parent organization with the 
MA organization offers both HMO D-SNP(s) and PPO D-SNP(s), and one or 
more of the PPO D-SNPs is subject to Sec.  422.514(h)(1), the HMO D-
SNP(s) not subject to Sec.  422.514(h)(1) may continue if they no 
longer accept new enrollment of full-benefit dual eligible individuals 
in the same service area as the plan (or plans) subject to Sec.  
422.514(h)(1).
    Comment: A number of commenters recommended that CMS consider 
updates to MPF as part of implementing the SEP and enrollment 
limitation proposals. A few commenters encouraged CMS to develop a 
strategic communications plan for SEP changes affecting dually eligible 
individuals. The commenters suggested that CMS work with beneficiary 
advocates and consider how information is displayed on MPF and relayed 
through the Medicare call center(s) to make it easy to identify which 
plans are sufficiently integrated, both in general and for those using 
this SEP. Since the MA plan selections available during the SEP will 
differ significantly from open enrollment, other commenters suggested 
that CMS make updates to MPF that clearly delineate the integrated D-
SNPs available based on the enrollee's service area, so they are easily 
recognizable for dually eligible individuals, caregivers, and SHIPs 
throughout the year. A commenter urged that CMS do more to convey the 
value and meaning of integrated D-SNP coverage options to ensure that 
potential enrollees do not feel they are being punished or limited by 
the narrower plan choice available when using the SEP but are getting 
an added benefit--the ability to enroll in a superior plan.
    Related to the CMS's proposed enrollment limitations, a commenter 
noted the need for adding language to MPF explaining why individuals 
cannot choose a D-SNP listed on MPF, citing Medicare's history of 
ensuring choice in the Medicare program. Another commenter noted that 
the enrollment limitation on certain D-SNPs could result in increased 
confusion among individuals and enrollment counselors. Another 
commenter emphasized that if CMS adopts the proposal restricting FIDE 
SNPs to only enroll individuals enrolled in the affiliated Medicaid 
plan, it is critical for MPF to indicate which benefits are available 
through the affiliated Medicaid plans.
    Response: We welcome the commenters' perspectives on the need for 
updates to MPF and other means of communication as we implement the SEP 
and enrollment limitations policies finalized in this rulemaking. As we 
noted in the proposed rule (88 FR 78574 through 78575), we will 
consider updates to the systems and supports designed to aid 
individuals in making Medicare choices. This will include MPF, 1-800-
Medicare, HPMS, and other resources to help outline available choices 
to individuals, SHIP counselors, and others. We recognize such updates 
will be especially important where dually eligible individuals have 
choices that vary based on the type of plan and time of year and to 
clearly show only plans available to individuals along with MA plan 
options that align their MA coverage with their Medicaid enrollment. We 
plan to seek input from beneficiary advocates in these endeavors.
    As we discuss further in section VIII.G of this final rule on our 
comment solicitation regarding improvements in MPF, for contract year 
2025 we are working to add specific Medicaid-covered benefits to AIPs 
displayed on MPF.
    Comment: A few commenters suggested CMS consider embarking on 
additional stakeholder engagement work prior to finalizing these 
proposals. A commenter recommended that CMS convene a diverse set of 
stakeholders, including consumer advocates and dually eligible 
individuals, States, and health plans, to minimize potential unintended 
consequences of the proposals, more robustly consider the unique 
experiences of Medicaid beneficiaries, and to fully account for the 
complexities of State Medicaid programs. Another commenter requested 
that CMS consult further with stakeholders regarding disenrollment 
processes for integrated plans since States may have different 
requirements than CMS and with which integrated plans must also align.
    Response: We thank the commenters for their suggestion and 
appreciate the value of robust stakeholder engagement. As noted in the 
proposed rule (88 FR 78569 through 78571), the SEP and enrollment 
limitations proposals stemmed from feedback from States, advocacy 
organizations, health plans, and Medicare options counselors serving 
dually eligible individuals, among others. The proposals are also in 
line with previously suggested approaches from MedPAC. We will continue 
to collect feedback from stakeholders iteratively as we work alongside 
States and D-SNPs to implement these proposals and may consider future 
adjustments to the policies if unintended consequences arise.
    Comment: Many commenters raised the need to provide technical 
assistance, funding, and/or sufficient time for training on the 
proposals to options counselors, SHIPs, and agents and brokers. Another 
commenter suggested CMS look for ways to enhance Medicare beneficiary 
education. Finally, a commenter raised the need for CMS to provide 
better education on the difference in FIDE SNPs and HIDE SNPs and how 
Medicaid programs cover cost sharing.
    Response: We thank the commenters for their suggestions, and we 
agree it is important that dually eligible individuals understand their 
enrollment options. Options counselors as well as agents and brokers 
often play a critical role in assisting this population in making the 
critical health coverage choices. With respect to the SEP changes and 
education of SHIP counselors and agents and brokers, we believe that 
the proposals offer simplified choice options for dually eligible 
individuals throughout the calendar year, as there will no longer be a 
need to track quarterly SEP usage. We believe these changes increase 
transparency and reduce confusion for all parties. We are also 
considering updates to systems and supports designed to aid individuals 
in making Medicare choices, including Medicare Plan Finder. 
Additionally, we often conduct direct beneficiary research to improve 
our communication approaches with dually eligible individuals and plan 
to continue to do so in the future to help ensure information available 
to support individuals' choice of plans is accurate and understandable. 
We are committed to continuing to develop improved communication 
strategies and terminology that best resonates with this population as 
it relates to enrollment options and D-SNP benefits.
    Comment: A few commenters stated there is a lack of data that shows 
integrated plans lead to better results for the populations they serve. 
A commenter cited a study from the JAMA Health Forum that examined the 
results

[[Page 30700]]

of several years of MA CAHPS surveys. When non-SNP plans were compared 
to FIDE SNPs, the study found that FIDE SNPs did not perform any better 
than coordination-only D-SNPs. The commenter also cited an additional 
study in JAMA Health Forum that compared outcomes between dually 
eligible enrollees in integrated plans to Traditional Medicare and did 
not find differences in the reduction of hospitalizations or 
improvements in care coordination and care management. The commenter 
indicated, citing these studies, the interconnected proposals would 
force dually eligible individuals into integrated D-SNPs that could 
cause harm to enrollees. They additionally cite a study from NORC on 
behalf of MACPAC where enrollees expressed greater satisfaction with 
coordination-only D-SNPs compared to those receiving higher levels of 
integration.
    Another commenter acknowledged that the integrated model presents 
an opportunity for better outcomes and satisfaction but that isn't 
always the case. They cited MACPAC survey results conducted with 
enrollees in both integrated and coordination-only D-SNPs and found 
enrollees in ``highly integrated plans'' rated their plans slightly 
lower than those in the coordination-only D-SNPs and there were no 
meaningful differences between the experiences of dually eligible 
enrollees in plans with higher and lower levels of integration. The 
commenter added that there is a plethora of data to both support and 
refute integrated plans leading to better outcomes and without clear 
data, there can only be assumptions.
    Response: We thank the commenters for their thoughts on the issue. 
While there is limited published research on the benefits of integrated 
care for dually eligible beneficiaries, we can point to published 
research from MedPAC, MACPAC, and other research bodies.\223\ While 
some of this research states that evidence for integrated care is 
currently mixed, we noted in the proposed rule (88 FR 78567), we share 
MedPAC's belief ``that D-SNPs should have a high level of integration 
so they have the proper incentives to coordinate care across Medicare 
and Medicaid'' \224\ and MACPAC's ``long-term vision is for all dually 
eligible beneficiaries to be enrolled in an integrated model.'' \225\
---------------------------------------------------------------------------

    \223\ See for example: MACPAC. 2020. Evaluations of Integrated 
Care Models for Dually Eligible Beneficiaries: Key Findings and 
Research Gaps. https://www.macpac.gov/wp-content/uploads/2019/07/Evaluations-of-Integrated-Care-Models-for-Dually-Eligible-Beneficiaries-Key-Findings-and-Research-Gaps.pdf; Anderson, W.Z. 
Feng, and S. Long. 2016 Minnesota Managed Care Longitudinal Data 
Analysis. Report to Office of Disability, Aging, and Long-Term Care 
Policy, Assistant Secretary for Planning and Evaluation, U.S. 
Department of Health and Human Services. https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//146501/MNmclda.pdf.
    \224\ MedPAC response to Congressional request for information 
on dual-eligible beneficiaries, page 2, January 13, 2023.
    \225\ MACPAC response to proposed rule on policy and technical 
changes to Medicare Advantage and Medicare Part D for contract year 
2024 (CMS-4201-P), page 1, February 13, 2023.
---------------------------------------------------------------------------

    We look forward to more analysis on the experiences of dually 
eligible individuals and will continue to monitor the growing body of 
research, as well as continue to carry out our own monitoring, 
regarding integrated care so that dually eligible individuals have 
access to seamless, high quality health care.
    Comment: A few commenters recommended CMS include an Ombudsman 
program in the proposal to help navigate the plan landscape for dually 
eligible individuals. A commenter requested additional flexibility and 
regulatory changes that would enable Medicaid services to be provided 
during a D-SNP's period of deemed continued eligibility. Another 
commenter noted that exclusively aligned enrollment does not address 
all organizational barriers and silos to system integration and care 
coordination. The commenter encouraged CMS to consider regulatory 
action that requires more substantial and meaningful changes to align 
Medicare and Medicaid to improve outcomes such as one joint health 
assessment, one personal care plan, one care coordinator, and one 
interdisciplinary care team across D-SNP and affiliated Medicaid MCO as 
well as total IT system integration. A commenter highlighted that State 
Medicaid programs differ, and CMS should establish guardrails and 
guidance, based on successful initiatives and best practices, to assist 
States in developing programs going forward. Another commenter was 
extremely concerned that CMS seems to be prioritizing private MCOs as 
the primary method of integrating care for dually eligible individuals.
    A commenter cited MedPAC's 2013 report that noted I-SNPs perform 
better than other D-SNPs and other MA Plans on the majority of quality 
measures and had lower hospital re-admission rates that D-SNPs and C-
SNPs. They recommend CMS consider I-SNPs when exploring opportunities 
for integration with a nursing facility population and provided several 
factors that could be attributed to I-SNPs achieving better outcomes 
compared to D-SNPs. Another commenter suggested CMS should enhance 
awareness of and access to PACE, which offers a truly integrated care 
option for dually eligible individuals. Another commenter encouraged 
States use LTSS accreditation programs to meet care coordination 
requirements for Medicare and Medicaid integration. A commenter 
recommended CMS implement process and outcome measures for D-SNP 
enrollee advisory committees (EAC), as increased transparency will help 
to ensure aspects of proposed regulations such as SSBCI and monthly 
SEPs have the impact they are intended to have. Another commenter 
expressed concern that there is a disparity in MA benchmark rates in 
Puerto Rico, as well as a lack of Medicare Savings Program and LIS 
benefits for dually eligible individuals in Puerto Rico.
    Response: We appreciate the support from commenters who wish to 
further integrate Medicare and Medicaid benefits via integrated D-SNPs 
and note that CMS has made progress toward this goal in collaboration 
with State partners. We received a number of comments not strictly 
related to the proposals in the proposed rule. We acknowledge and 
appreciate the suggestions of commenters to include an Ombudsman 
program in our proposal, make additional regulatory changes around 
deemed continued eligibility when an individual loses Medicaid, 
incorporate additional ways to integrate care other than EAE, establish 
programs based on best practices, and implement process and outcome 
measures for D-SNP EACs. We also understand that I-SNPs play an 
important part for individuals receiving care in an institutional 
setting, the importance of PACE programs for individuals, and the role 
played by LTSS accreditation programs to meet care coordination 
requirements for Medicare and Medicaid integration. We recognize that 
there are lower MA benchmark rates in Puerto Rico and a lack of 
Medicare Savings Program and LIS benefits for dually eligible 
individuals. In addition, we acknowledge this final rule focuses 
largely on improving alignment for dually eligible individuals in 
Medicare and Medicaid managed care, but we point the commenter to the 
dual/LIS SEP (88 FR 78569) that allows dually eligible individuals to 
make a one-time per month election to leave an MA-PD for Traditional 
Medicare and a PDP. We truly appreciate all of these recommendations; 
however, these comments are outside the scope of this rulemaking. We 
will consider exploring opportunities for potential future

[[Page 30701]]

rulemaking to address some of these issues.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing without modification our proposed amendment at Sec.  
423.38(c)(4) on the dual/LIS SEP. We are finalizing with modifications 
our proposed amendment at Sec.  423.38(c)(35) to add a new integrated 
care SEP; based on the comments we received we are narrowing the scope 
so that the SEP is available only to facilitate aligned enrollment as 
defined at Sec.  422.2 (this limitation is reflected in a new paragraph 
at Sec.  423.38(c)(35)(ii)) and clarifying in Sec.  423.38(c)(35)(i) 
that the SEP is available only for full-benefit dually eligible 
individuals. Table HC3 summarizes the combined effects of the final SEP 
proposals.
---------------------------------------------------------------------------

    \226\ During AEP and other available enrollment periods, MA 
organizations would not be permitted to enroll dually eligible 
individuals into a D-SNP where such enrollment would not result in 
aligned enrollment with an affiliated Medicaid MCO offered in the 
same service area (that is, a Medicaid MCO offered by the MA 
organization, its parent organization, or another subsidiary of the 
parent organization).
---------------------------------------------------------------------------

BILLING CODE P
[GRAPHIC] [TIFF OMITTED] TR23AP24.017

BILLING CODE C
    We are also finalizing without modification our proposed amendments 
at Sec. Sec.  422.503(b)(8), 422.504(a)(20), and 422.530(c)(4)(iii) 
related to how MA organizations offer and enroll eligible individuals 
into D-SNPs. We are finalizing Sec.  422.514(h)(1) with a modification 
to correct the terminology to use the term ``full-benefit dual eligible 
individual(s)'' where necessary. We are finalizing Sec.  422.514(h)(2) 
with a modification to clarify that any D-SNP(s) subject to enrollment 
limitations in Sec.  422.514(h)(1) may only enroll (or continue 
coverage of people already enrolled) individuals also enrolled in (or 
in the process of enrolling in) the Medicaid MCO beginning in 2030. We 
are finalizing with modifications our proposed amendment at Sec.  
422.514(h)(3)(i) to permit an MA organization, its parent organization, 
or an entity that shares a parent organization with the MA 
organization,

[[Page 30702]]

to offer more than one D-SNP for full-benefit dual eligible individuals 
in the same service area as that MA organization's affiliated Medicaid 
MCO only when a SMAC requires it in order to differentiate enrollment 
into D-SNPs by age group or to align enrollment in each D-SNP with the 
eligibility criteria or benefit design used in the State's Medicaid 
managed care program(s). We are also finalizing with technical 
modifications our proposed amendment at Sec.  422.514(h)(3)(ii) to 
permit an MA organization, its parent organization, or an entity that 
shares a parent organization with the MA organization that offers both 
HMO D-SNP(s) and PPO D-SNP(s) to continue to offer both the HMO and PPO 
D-SNPs only if the D-SNP(s) not subject to the enrollment limitations 
at Sec.  422.514(h)(1) no longer accepts new full-benefit dual eligible 
enrollment in the same service area as the D-SNP affected by the new 
regulations at Sec. Sec.  422.504(a)(20) and 422.514(h).

G. Comment Solicitation: Medicare Plan Finder and Information on 
Certain Integrated D-SNPs

    Medicare Plan Finder (MPF) is an online searchable tool located on 
the Medicare.gov website that allows individuals to compare options for 
enrolling in MA or Part D plans. Medicare beneficiaries can also enroll 
in a plan using MPF. Each year, we work to improve its functionality by 
implementing enhancements to MPF. We solicited comment to inform our 
intent to improve MPF functionality in the future to make it easier for 
dually eligible MPF users to assess MA plans that cover their full 
array of Medicare and Medicaid benefits.
    In the November 2023 proposed rule, we described at 88 FR 78576 how 
MPF displays benefits offered by MA and Part D plans, only displaying 
benefits that are included in the MA plan benefit package (PBP) (that 
is, Medicare Parts A and B benefits, Part D coverage, approved Medicare 
supplemental benefits, and Value Based Insurance Design (VBID)/Uniform 
Flexibility (UF)/Supplemental Benefits for Chronically Ill (SSBCI)). 
For most MPF users, this represents the totality of their coverage.
    We noted that for applicable integrated plans (AIPs), as defined at 
Sec.  422.561, D-SNP enrollment is limited to those individuals who 
also receive Medicaid benefits through the D-SNP or an affiliated 
Medicaid managed care organization (MCO) under the same parent 
organization. For these D-SNPs, the benefits listed in MPF accurately 
reflect those covered by Medicare but do not reflect all the benefits 
available to all enrollees in the D-SNP.
    We provided an example that in most States, all dually eligible 
individuals who qualify to enroll in an AIP would have access to 
Medicaid-covered non-emergency medical transportation (NEMT). However, 
MPF currently only displays NEMT as a covered benefit for any MA plan 
if it is also covered as an MA supplemental benefit. As such, all other 
things equal, an MA plan that offers NEMT as an MA supplemental benefit 
appears in MPF to have more generous coverage than an AIP that does not 
cover NEMT as an MA supplemental benefit but does cover it under the 
affiliated Medicaid MCO contract.
    We noted in the proposed rule that information about only Medicare 
benefits covered by MA plans available to the individual, although 
accurate, may not provide as much information to dually eligible MPF 
users as would be beneficial, since the combination of available 
Medicare and Medicaid benefits available through some integrated D-SNPs 
may be greater than the Medicare benefits reflected in MPF. It may also 
create a perverse incentive for D-SNPs to offer certain types of 
supplemental benefits for Medicare marketing purposes even when the 
same services are already available to all enrollees in the plan 
through Medicaid.
    We described our belief that there is an opportunity to better 
inform dually eligible MPF users. For AIPs, we noted that we were 
considering adding a limited number of specific Medicaid-covered 
benefits (for example, dental, NEMT, certain types of home and 
community-based services, or others) to MPF when those services are 
available to enrollees through the D-SNP or the affiliated Medicaid 
MCO. We indicated that we would limit this functionality to AIPs, 
because in such plans all enrollees--by definition--receive Medicaid 
benefits through the AIP.
    We noted that we would not include in the MPF display any Medicaid 
benefits that are available but only through a separate carve-out. 
Consider, for example, a State in which NEMT is available to dually 
eligible individuals but through a Statewide vendor separate from the 
AIP. In this instance, displaying NEMT in MPF would accurately 
represent that all D-SNP enrollees have coverage for NEMT in Medicaid, 
but it would not accurately characterize the D-SNP's role (or the role 
of the affiliated Medicaid MCO offered by D-SNP parent organization) in 
delivering the service.
    We continue to consider whether to indicate which services are 
Medicare supplemental benefits and which are Medicaid, weighing whether 
the additional information would be worth the added complexity.
    We noted at 88 FR 78576 that displaying Medicaid benefits in MPF, 
even with the limitations described above, would present new 
operational challenges for CMS. We have not historically captured the 
necessary information for AIPs or other D-SNPs in a systematic manner 
to populate MPF with information about Medicaid benefits covered by D-
SNPs, although we could potentially capture the necessary information 
by providing a mechanism for States or D-SNPs to report it to us 
annually using HPMS. We solicited comment on the practicality and means 
for accomplishing this. We also expressed interest in stakeholders 
submitting comments about any features from the My Care My Choice 
website at https://mycaremychoice.org/en that are particularly helpful 
for individuals in understanding and making plan choices.
    Such enhancements to MPF would not require rulemaking. We solicited 
comments on the concepts described above to inform our decision about 
whether and how to implement changes to MPF along these lines.
    We are not responding to each specific comment submitted on this 
comment solicitation, but we appreciate all the comments and interest 
on this topic. We will continue to take all concerns, comments, and 
suggestions into account as we work to address and develop policies on 
these topics and may reach out to commenters for further discussion. We 
provide a high-level summary of comments submitted regarding key topics 
raised by commenters.
    Comment: Numerous commenters expressed support for improving MPF 
functionality for dually eligible MPF users, specifically by displaying 
Medicaid benefits on MPF. A few commenters recommended that CMS not 
exclude in the MPF display any Medicaid benefits that are available but 
only through a separate carve-out. A commenter requested that 
information added to the MPF for AIPs also include benefits available 
through Medicaid fee-for-service, such as dental. Another commenter 
agreed with CMS excluding carved-out Medicaid benefits from MPF.
    Response: We appreciate the widespread support we received from 
commenters related to the concept of adding specific Medicaid-covered 
benefits to integrated D-SNPs displayed on MPF when those services are 
available to enrollees through the D-SNP or an affiliated Medicaid MCO. 
We are working on this for contract year

[[Page 30703]]

2025 and intend to include a limited number of specific Medicaid 
covered benefits on MPF when those services are available to enrollees 
through the D-SNP or the affiliated Medicaid MCO. We continue to 
improve functionality in MPF for dually eligible individuals, 
appreciate all the commenters' perspectives on improving their 
experience, and will consider them as we discuss future updates.
    We also appreciate the commenters sharing their concerns about not 
displaying on MPF any carved out Medicaid benefits and including 
Medicaid FFS benefits. We will consider these suggestions as we discuss 
future updates to further enhance MPF functionality.
    Comment: Several commenters expressed concern about the accuracy of 
the Medicaid benefit data and the ability to update it off-cycle. Some 
commenters also provided suggestions on the process for collecting the 
Medicaid benefits data. A commenter suggested that CMS consider 
developing, maintaining, and updating a list of Medicaid benefits 
covered by Medicaid MCOs in each State from State Medicaid agencies.
    Response: We appreciate the commenters for sharing their concerns. 
Starting for contract year 2025, we plan to collect the Medicaid 
benefit data from the States using HPMS and will work with the States 
to verify its accuracy. In late summer each year, we provide two 
opportunities for MA plans to preview their upcoming contract year drug 
pricing and plan benefits prior to the data going live on MPF in 
October. We expect these to be opportunities to ensure accuracy of the 
Medicaid benefit data. We agree with the need to ensure the Medicaid 
benefit information is accurate and will consider the commenters 
concerns when implementing this process.
    Comment: Several commenters believed that it was necessary to 
distinguish between Medicare supplemental and Medicaid benefits while a 
few did not. A commenter believed that dually eligible beneficiaries 
probably do not distinguish between the benefits they receive under 
Medicare and Medicaid.
    Response: We appreciate the commenters sharing their perspectives. 
We will take the comments into consideration when weighing whether this 
additional information to distinguish whether benefits are covered 
under Medicare versus Medicaid is worth the added complexity.
    Comment: Several commenters provided positive feedback on the My 
Care My Choice website saying that it was user-friendly and clearly 
conveyed complex information. A commenter did provide feedback from a 
study their organization conducted that indicated the tool was not 
being heavily used in the three focus group States and that the 
information it contained could be obtained through other resources.
    Response: We appreciate commenters taking the time to provide 
feedback on their experiences with the My Care My Choice website and 
will consider the feedback as we discuss future updates to further 
enhance MPF's functionality.
    Comment: Commenters also recommended:
     Updating the search and filtering options/functionality in 
MPF to prioritize D-SNPs over non-D-SNP MA plans when displayed on MPF.
     That the level of integration for D-SNPs be designated, 
defined, and/or prioritized for dually eligible users when using MPF to 
search for plans.
     Adding the ability for users to select more than one 
option on the ``Help with your costs'' MPF web page and concern that 
the results page still displayed Part B premiums for which dually 
eligible users may not be responsible.
     Providing definitions or explanations of terms and/or 
using more simplified language in general on MPF and specifically when 
describing D-SNPs and integrated plans.
     That MPF include functionality for more information about 
cost sharing and protections for dually eligible beneficiaries, for 
example by including the State Pharmaceutical Assistance Program in 
MPF.
     Including information about provider networks, Medicaid 
eligibility for D-SNPs, home and community-based alternatives like 
PACE.
     Displaying SHIP and/or state Medicaid agency contact 
information.
    Response: We appreciate the commenters for sharing their 
perspectives. We will consider them as we discuss future updates to 
further enhance MPF's functionality.

H. Comment Solicitation: State Enrollment Vendors and Enrollment in 
Integrated D-SNPs

    We, along with our State partners, have worked to create integrated 
care options for dually eligible individuals. When individuals choose 
to enroll, we want the enrollment process to be easy to navigate. 
Unfortunately, there remain technical challenges that can impede the 
ease of enrollment in integrated D-SNPs, including misalignment of 
Medicare and Medicaid enrollment processes, start dates, and related 
operational challenges for States and plans, as well as potentially 
confusing non-integrated enrollee communication materials.
    In the November 2023 proposed rule, we described at 88 FR 78576 
how, in the FAI, CMS delegated eligibility and enrollment functions for 
Medicare-Medicaid Plans (MMPs) to States by waiving regulations at 42 
CFR 422, Subpart B, and how many States have leveraged their State 
Medicaid enrollment vendors (including enrollment brokers subject to 
the limitations in section 1903(b)(4) of the Act) to operationalize 
enrollment, eligibility, or both. The proposed rule outlined the 
multiple purposes State enrollment vendors serve within the FAI, 
including effectuating Medicare and Medicaid enrollment simultaneously, 
serving as an unbiased source of information, and reducing the risk of 
real or perceived conflicts of interest when plans initiate enrollment 
directly.
    We also described how, outside of the FAI, dually eligible 
individuals elect MA plans, including D-SNPs, by enrolling directly 
with the plan, or through agents or brokers, or via 1-800-Medicare and 
the Medicare Online Enrollment Center. We noted how this creates 
special challenges for D-SNPs that have exclusively aligned enrollment 
(EAE) with affiliated Medicaid MCOs because these D-SNPs then need to 
separately coordinate enrollment of the dually eligible individual into 
the D-SNP's affiliated Medicaid MCO. We described how some States have 
expressed interest in leveraging State enrollment vendors, including 
enrollment brokers as described in section 1903(b)(4) of the Act, to 
effectuate EAE for integrated D-SNPs and their affiliated Medicaid 
MCOs.
    We noted that we are assessing ways to promote enrollment in 
integrated D-SNPs, work toward an integrated D-SNP enrollment process 
that is operationally practical for CMS and States, create alignment--
to the extent feasible--between Medicare and Medicaid managed care 
enrollment start and end dates, protect beneficiaries from abusive 
enrollment practices, and streamline beneficiary messaging and 
communication related to enrollment.
1. Current Opportunity for Use of State Enrollment Vendors for 
Enrollment in Integrated D-SNPs
    In the proposed rule, we described at 88 FR 78577 how States can 
utilize Medicaid enrollment vendors for enrollment in integrated D-SNPs 
through requirements in the SMAC required by Sec.  422.107. We use the 
term ``enrollment vendor'' as meaning

[[Page 30704]]

enrollment brokers that meet the requirements at section 1903(b)(4) of 
the Act and Sec.  438.810. We noted that States may thus require D-SNPs 
to contract directly with the State's enrollment vendor to verify D-SNP 
eligibility and effectuate D-SNP enrollment transactions. We noted that 
while these contracts could govern the respective obligations of the 
broker and the D-SNP, they would have to be uniform for all D-SNPs in 
the State, and noted that in order to avoid a violation of section 
1903(b)(4) of the Act and Sec. Sec.  438.71(c)(2) and 438.810 regarding 
a broker having a financial interest in a provider or managed care plan 
in the State, the State (instead of the plan) would have to compensate 
its enrollment broker for performing these functions. We also noted how 
D-SNPs would still be subject to existing regulations at Sec.  
422.504(i), maintaining ultimate responsibility for adhering to and 
complying with all terms and conditions of their contract with CMS.
    We described how States can implement, and require of D-SNPs, 
specific messaging directing dually eligible individuals to take 
enrollment actions via the State's enrollment vendor only, and how 
States could choose which functions to direct the D-SNPs to contract 
with the enrollment vendor for via the SMAC. We also described the 
process States could require of D-SNPs to verify eligibility and 
effectuate enrollment. We noted how requiring D-SNPs to contract with a 
State's enrollment vendor for enrollment and eligibility functions 
could create a simpler, streamlined enrollment experience for dually 
eligible individuals and may reduce the risk of misaligned Medicare and 
Medicaid enrollment. We described how, as in the FAI demonstrations, 
the State's enrollment vendor would need to implement Medicare managed 
care eligibility and enrollment policies. We also noted how, like the 
FAI demonstrations, States can prohibit D-SNPs, via SMACs, from using 
agents and brokers to perform the activities described in Sec. Sec.  
422.2274 and 423.2274.
    We solicited comment on the feasibility of requiring integrated D-
SNPs to contract with State enrollment brokers, as well as any specific 
concerns about States implementing it. We also solicited feedback on 
any concerns we should consider with States requiring (using the SMAC) 
D-SNPs to route enrollment through the State enrollment vendor, as well 
as whether there are any Federal regulations, other than or in addition 
to the limitations on enrollment brokers under section 1903(b)(4) and 
Sec. Sec.  438.71(c) and 438.810, that interested parties view as an 
impediment to this option.
    We are not responding to each specific comment submitted on this 
comment solicitation, but we appreciate all the comments and interest 
on this topic. We will continue to take all concerns, comments, and 
suggestions into account as we work to address and develop policies on 
these topics and may reach out to commenters for further discussion. We 
provide a high-level summary of comments submitted on a few key topics, 
including those we believe require clarification.
    Comment: Several commenters expressed concern with requiring 
integrated D-SNPs to contract with State enrollment vendors and 
believed that CMS was proposing a Federal requirement to do so. A 
commenter stated that requiring D-SNPs to contract directly with State 
enrollment vendors would add administrative burden for plans, vendors, 
and enrollees and recommended that CMS not pursue this requirement. 
Another commenter expressed a belief that this proposal would restrict 
independent brokers from enrolling beneficiaries in D-SNPs. Another 
commenter encouraged caution and robust oversight if CMS decides to 
permit States to use enrollment vendors to enroll individuals dually 
eligible into D-SNPs.
    Response: We clarify that we did not propose any new policy to 
impose a Federal requirement for D-SNPs to contract directly with State 
enrollment vendors. Rather, in the November 2023 proposed rule, we 
sought input on the feasibility of existing opportunities for States to 
require, through their SMACs, that D-SNPs contract with the State's 
enrollment vendors.
    Comment: A number of commenters expressed support for the idea of 
States requiring D-SNPs to contract with State enrollment vendors for 
enrollment in integrated D-SNPs. Several commenters believed this 
approach could better align enrollment between a D-SNP and an 
affiliated Medicaid managed care plan and reduce the potential for 
misalignment. Some commenters emphasized that such an approach would 
require robust oversight, monitoring, and training for State enrollment 
vendors. A commenter recommended that CMS provide technical assistance 
to States to ensure vendors receive education on working with dually 
eligible individuals. Other commenters suggested that additional 
resources be invested in State Health Insurance Assistance Programs 
(SHIPs) as an alternative to requiring D-SNPs to contract with State 
enrollment vendors. A commenter noted that SHIPs are uniquely 
positioned to help dually eligible individuals understand their 
enrollment choices, and recommended CMS require SHIP contact 
information be included on all plan outreach to beneficiaries. Another 
commenter suggested that CMS work with States to create State-specific 
Medicare information.
    Response: We thank the commenters for their support and feedback on 
this approach. These comments will help inform our work with State 
partners to promote enrollment in integrated care.
2. Medicaid Managed Care Enrollment Cut-Off Dates
    The proposed rule described a challenge of applying FAI enrollment 
processes outside the demonstration context: alignment of Medicaid and 
Medicare managed care enrollment start and end dates. Sections 
1851(f)(2) and 1860D-1(b)(1)(B)(iv) of the Social Security Act, and 
regulations codified at Sec. Sec.  422.68 and 423.40(c) respectively, 
generally require that Medicare enrollments become effective on the 
first day of the first calendar month following the date on which the 
election or change is made, although section 1851(f)(4) of the Act and 
Sec. Sec.  422.68(d) and 423.40(c) allow CMS flexibility to determine 
the effective dates for enrollments that occur in the context of 
special enrollment periods. Medicaid managed care regulations at Sec.  
438.54 do not specify the timelines or deadlines by which any 
enrollment must be effective.
    We described how some States have cut-off dates after which 
enrollment in a Medicaid managed care plan is not effectuated until the 
first calendar day of the next month after the following month. If a 
dually eligible individual is trying to enroll in an integrated D-SNP 
at the end of a month in a State with a Medicaid managed care 
enrollment cut-off date, there could be a monthlong lag between their 
Medicare managed care effective date and Medicaid managed care 
effective date. We noted how the lag in start dates between Medicare 
and Medicaid services for an integrated D-SNP can be confusing to 
enrollees, operationally challenging for integrated plans, and 
difficult to describe in plan materials.
    We noted our interest in learning more about reasons for 
implementing Medicaid managed care enrollment cut-off dates and the 
barriers, as well as potential solutions, to aligning Medicare and 
Medicaid managed care enrollment start and end dates. We solicited 
comment from interested parties, including States, D-SNPs, and Medicaid 
managed care plans, about their specific operational challenges related 
to

[[Page 30705]]

potential changes to Medicaid cut-off dates to align them with the 
Medicare start date. We also solicited comment on States' reasons for 
having a specific Medicaid managed care enrollment cut-off date in 
place.
    We solicited comments on challenges individuals face when trying to 
enroll in integrated D-SNPs, as well as potential concerns stakeholders 
would have about CMS using flexibilities at section 1860D-
1(b)(1)(B)(iv) of the Act and Sec.  423.40(c) to determine effective 
dates for Medicare enrollments that occur in the context of our 
proposed special enrollment period for integrated care. We solicited 
comment on operational or systems barriers for States and Medicaid 
managed care plans to align disenrollment dates with Medicare. In 
addition to the above topics, we also solicited feedback on what type 
of technical assistance related to effectuating MA plan and D-SNP 
enrollment and eligibility processes would be helpful to States, what 
concerns should we consider about potential abusive enrollment 
practices, and on States' current requirements and policies related to 
agents and brokers. Finally, we solicited comments on whether other 
aspects of the integrated enrollment and disenrollment processes in FAI 
should apply to D-SNPs.
    Comment: Several commenters believed that States have Medicaid 
managed care enrollment cut-off dates because of operational barriers. 
A commenter believed that cut-off dates allow for efficient planning 
and resource allocation, ensuring States can effectively manage and 
process a high volume of enrollments within a designated period. Some 
commenters expressed support for the idea of aligning Medicare and 
Medicaid enrollment effective dates, pointing out the challenges 
created by misaligned enrollment between D-SNPs and Medicaid managed 
care plans. However, most of these commenters cautioned that an 
approach would create substantial implementation challenges, including 
the need for system updates and training, as well as the potential for 
beneficiary confusion. Other commenters opposed the idea of aligning 
enrollment effective dates. A commenter did not believe this approach 
was feasible and believed it could harm consumers. Another commenter 
believed that if Medicare enrollment effective dates were aligned with 
Medicaid effective dates only in the context of AIPs, the commenter 
would be concerned about the added complexity this would create for 
organizations that operate additional D-SNP types (like coordination-
only D-SNPs) alongside the AIPs. The commenter noted that having 
different enrollment effective dates for a subset of dually eligible 
individuals could also make it difficult for individuals to move 
seamlessly between D-SNP types when there are changes in eligibility.
    Response: We thank the commenters for their input on these topics. 
While we are not responding to all specific comments submitted in 
response to this comment solicitation, we appreciate all of the 
comments and interest on these topics. These comments will inform our 
collaboration with States on D-SNP integration, and we will take them 
into consideration for potential future rulemaking.

I. Clarification of Restrictions on New Enrollment Into D-SNPs via 
State Medicaid Agency Contracts (SMACs) (Sec. Sec.  422.52 and 422.60)

    To elect a specialized MA plan for special needs individuals as 
defined at Sec.  422.2 (special needs plans or SNPs), an individual 
must meet the eligibility requirements for the specific type of SNP in 
which the individual wishes to enroll. At Sec.  422.52(b), we define 
the eligibility requirements for individuals to enroll in a SNP. These 
eligibility requirements indicate that an individual must meet the 
regulatory definition of a special needs individual at Sec.  422.2, 
meet the eligibility requirements for the specific SNP they elect to 
enroll in, and be eligible to elect an MA plan under Sec.  422.50. For 
D-SNPs, we also require at Sec.  422.107(c)(2) that the categories and 
criteria for eligibility for dually eligible individuals to enroll in 
the SNP be included in the SMAC between the State and the D-SNP. D-SNPs 
must restrict enrollment eligibility categories or criteria consistent 
with the SMAC.
    Currently, numerous States add eligibility categories and criteria 
to their SMACs that restrict new D-SNP enrollment to prioritize and 
promote integrated care. For example, some States only allow D-SNPs to 
enroll full-benefit dually eligible individuals. Other States only 
allow D-SNPs to enroll individuals who are also in an affiliated 
Medicaid managed care plan, creating exclusively aligned enrollment. 
State restrictions serve an important purpose in maximizing the number 
of dually eligible individuals who receive coordinated services through 
the same organization for both Medicare and Medicaid; minimizing 
disruption for enrollees currently served by existing D-SNPs; and 
allowing for the creation of D-SNP benefit packages that are tailored 
to certain subsets of dually eligible individuals.
    State limitation of D-SNP enrollment to certain populations has 
been a feature throughout the history of D-SNPs. Nonetheless, we 
proposed regulatory amendments to further clarify our regulations.
    We proposed to revise Sec.  422.52(b)(2) to be explicit that to be 
eligible to elect a D-SNP, an individual must also meet any additional 
eligibility requirements established in the SMAC. We also proposed to 
revise Sec.  422.60(a)(1) and add Sec.  422.60(a)(3) to be more 
explicit that MA organizations may restrict enrollment in alignment 
with Sec.  422.52(b)(2). Neither proposal is intended to change our 
longstanding policy. We do not expect any new burden associated with 
these proposed changes because States are already including eligibility 
categories and criteria in their SMACs and we are reviewing those 
accordingly.
    We received the following comments on this proposal and respond to 
them below:
    Comment: Several commenters expressed support for our proposed 
revisions at Sec. Sec.  422.52(b)(2) and 422.60(a)(1). In outlining 
their support, a commenter requested that CMS be cognizant of State 
Medicaid procurement practices, timeframes, and underlying State 
regulations and noted that compliance with new Federal requirements may 
take time given reprocurement timeframes, contract amendment processes, 
and State regulatory policies that may need to be updated. A commenter 
indicated that describing the intersection with Medicaid coverage and 
State Medicaid requirements in MA rulemaking is an important step 
toward improved clarity and alignment for integrated programs. In 
supporting CMS's proposed clarifications, another commenter encouraged 
CMS to better educate States on MA enrollment requirements to avoid the 
inclusion of enrollment restrictions within the SMAC that would put a 
D-SNP at odds with MA enrollment requirements. This commenter noted 
that many States have shared their limited expertise and capacity to 
manage complex D-SNP policies and additional technical assistance and 
education are needed.
    Another commenter noted that it did not object to CMS's proposal to 
make explicit that, to be eligible to elect a D-SNP, an individual must 
also meet any additional eligibility requirements established in the 
SMAC.
    Response: We appreciate the commenters' support for our proposed 
clarifications. CMS provides technical assistance to States on 
enrollment related topics, including through the

[[Page 30706]]

Integrated Care Resource Center (see https://www.integratedcareresourcecenter.com/), and we will consider these 
comments as our technical assistance approaches evolve.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing without modification our proposed amendment at Sec.  
422.52(b)(2) to be explicit that, to be eligible to elect a D-SNP, an 
individual must also meet any additional eligibility requirements 
established in the SMAC. We are also finalizing without modification 
our proposed amendment to Sec.  422.60(a)(1) and addition at Sec.  
422.60(a)(3) to be more explicit that MA organizations may restrict 
enrollment in alignment with Sec.  422.52(b)(2).

J. Contracting Standards for Dual Eligible Special Needs Plan Look-
Alikes (Sec.  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), we 
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 \227\ and subsequent years, as provided in Sec.  
422.514(d)(1), CMS does 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.
---------------------------------------------------------------------------

    \227\ We amended Sec.  422.514(d)(1) in the April 2023 final 
rule, so the regulation text now refers to plan year 2024 and 
subsequent years; however, the regulation was in effect, with the 
reference to 2022 and subsequent years, as described here.
---------------------------------------------------------------------------

    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), and evidence-based models of 
care. In addition, we noted how limiting these D-SNP look-alikes would 
address beneficiary confusion stemming from potentially misleading 
marketing practices by brokers and agents that market D-SNP look-alikes 
to dually eligible individuals. 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 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 (85 FR 9018 through 
9021) (also known as the February 2020 proposed rule).
    In the April 2023 final rule, we finalized amendments to close 
unforeseen loopholes in the scope of the regulation adopted to prohibit 
D-SNP look-alikes. Specifically, we finalized language at Sec.  
422.514(g) to apply the prohibitions on contracting with D-SNP look-
alikes to individual segments of an MA plan. We also finalized language 
at Sec.  422.514(d)(1) to apply the D-SNP look-alike contracting 
limitation to both new and existing (that is, renewing) MA plans that 
are not 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.
1. Reducing Threshold for Contract Limitation on D-SNP Look-Alikes
    Our contracting limitations at Sec.  422.514(d) mean that we do not 
contract with non-SNP MA plans that have enrollment consisting of 80 
percent or more of enrollees who are entitled to Medicaid. We set the 
threshold at 80 percent or higher based on a 2019 MedPAC analysis that 
showed the proportion of dually eligible individuals in most geographic 
areas did not exceed the 80-percent threshold; \228\ at that time, no 
MA plan service area had more than 50 percent dually eligible 
beneficiaries, and therefore dually eligible enrollment of 80 percent 
or greater would not be the result of any plan that had not intended to 
achieve high enrollment of dually eligible individuals (85 FR 33812). 
The 80-percent threshold also captured almost three-quarters of the 
non-SNP MA plans with more than 50 percent dually eligible enrollees 
(85 FR 33812).
---------------------------------------------------------------------------

    \228\ See June 2019 MedPAC Report to Congress, Chapter 12 at 
https://www.medpac.gov/wp-content/uploads/impart_data/scrape_files/docs/default-source/reports/jun19_ch12_medpac_reporttocongress_sec.pdf.
---------------------------------------------------------------------------

    In the June 2020 final rule, we stated that we would monitor for 
potential gaming after implementation of the final rule by reviewing 
plan enrollment data and consider future rulemaking as needed (85 FR 
33812).
    In response to our proposals to close unforeseen D-SNP look-alike 
loopholes in the April 2023 final rule, some commenters again 
recommended we lower the threshold to less than 80 percent (88 FR 
22131). A few commenters recommended we lower the threshold below 80 
percent without recommending a specific percentage, and other 
commenters recommended we lower the threshold to 50 percent. The 
commenters suggested that lowering the threshold further would promote 
integrated care and minimize beneficiary confusion. As one of these 
commenters, MACPAC noted that it ``remains concerned that while CMS's 
focus on plans where 80 percent or more of all enrollees are dually 
eligible addresses the most egregious instances, there could still be a 
real risk of growth in non-SNP MA plans falling below the 80-percent 
threshold and thus continuing to detract from Federal and State efforts 
to integrate care.'' We analyzed the percentage of non-SNP MA plans' 
dually eligible enrollment as a percentage of total enrollment from 
plan years 2017 through 2023. Our analysis shows that the number of 
non-SNP MA plans with high levels of dually eligible individuals has 
grown substantially.
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    The rate of growth from 2017 to 2023 in the number of non-SNP MA 
plans with 50 to 60 percent (544 percent increase), 60 to 70 percent 
(900 percent), and 70 to 80 percent dually eligible individuals as a 
percent of total enrollment (1,400 percent) \229\ exceeded the rate of 
enrollment growth for all MA-PD plans (109 percent) over the same 
period of time.\230\ The increased growth in non-SNP MA plans with 
dually eligible individuals between 50

[[Page 30708]]

and 80 percent of total enrollment suggests to us that MA organizations 
are offering plans for dually eligible individuals but circumventing 
rules for D-SNPs, including requirements from the Bipartisan Budget Act 
of 2018, and detracting from Federal and State efforts to better 
integrate Medicare and Medicaid benefits. This growth in enrollment in 
these non-SNP plans is likely also drawing enrollment from integrated 
care D-SNPs and similar integrated programs. Recent analysis found that 
almost one-third of dually eligible individuals newly enrolled in D-SNP 
look-alikes were previously enrolled in fully integrated dual eligible 
SNPs (FIDE SNPs), other D-SNPs, PACE plans, or MMPs.\231\
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    \229\ CMS analysis of Integrated Data Repository (IDR) data for 
January of each respective year. Analysis conducted in April 2023, 
as shown in Table 1.
    \230\ CMS data from the Contract Year 2021 and 2023 Landscape 
Plan shows the total number of MA-PD plans in 2017 was 2,332 and the 
total number of MA-PD plans in 2023 is 4,875.
    \231\ Ma, Y., Frakt, A., Roberts, E., Johnston, K., Phelan, J., 
and Figueroa, J. ``Rapid Enrollment Growth In `Look-Alike' Dual-
Eligible Special Needs Plans: A Threat To Integrated Care'' Health 
Affairs (July 2023) 919-927. Retrieved from https://www.healthaffairs.org/doi/epdf/10.1377/hlthaff.2023.00193.
---------------------------------------------------------------------------

    We also conducted analysis with 2023 data mimicking MedPAC's 2019 
analysis showing the share of dually eligible individuals enrolled in 
non-SNP MA plans against the share of beneficiaries in a plan service 
area who are dually eligible individuals.\232\ MedPAC's analysis showed 
that in most MA markets, the share of beneficiaries in a plan service 
area who are dually eligible was clustered in the 10 to 25 percent 
range and in no county exceeded 50 percent. Their analysis showed that 
dually eligible individuals generally represented 30 percent or less of 
non-SNP MA plans' total enrollment. MedPAC's analysis informed our 
decision to set the threshold for dually eligible enrollment at 80 
percent of a non-SNP MA plan's enrollment because it far exceeded the 
share of dually eligible individuals in any given market (by 30 
percentage points or more) at that point in time and, therefore, would 
not be the result for any plan that had not intended to achieve high 
dually eligible enrollment. Similar to the earlier MedPAC analysis, our 
analysis of 2023 data shows the share of beneficiaries in a plan 
service area who are dually eligible is clustered in the 10 to 30 
percent range and does not exceed 49 percent except in one county (at 
56 percent).\233\ Also like MedPAC, we found that for most non-SNP MA 
plans, dually eligible individuals generally represent 30 percent or 
less of the plan's total enrollment. However, whereas MedPAC found 13 
non-SNP MA plans with dually eligible enrollment between 50 percent and 
80 percent for 2017,\234\ we found 128 non-SNP MA plans with enrollment 
in that range for 2023.\235\
---------------------------------------------------------------------------

    \232\ See June 2019 MedPAC Report to Congress, Chapter 12 at 
https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun19_ch12_medpac_reporttocongress_sec.pdf.
    \233\ CMS analysis of 2023 non-SNP MA plan data in the IDR. 
Analysis conducted in April 2023, as shown in Table 1.
    \234\ June 2019 MedPAC Report to Congress, Chapter 12, 
calculated from Table 12-9 at https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun19_ch12_medpac_reporttocongress_sec.pdf.
    \235\ CMS analysis of 2023 non-SNP MA plan data in the IDR. 
Analysis conducted in April 2023, as shown in Table 1.
---------------------------------------------------------------------------

    To address the substantial growth in non-SNP MA plans with 
disproportionately high enrollment of dually eligible individuals, we 
proposed lowering the D-SNP look-alike threshold from 80 percent to 60 
percent incrementally over a two-year period. We proposed to lower the 
threshold for dually eligible enrollment to 60 percent of a non-SNP MA 
plan's enrollment because it exceeds the share of dually eligible 
individuals in any given MA plan service area currently and, therefore, 
would not be the result for any plan that simply reflected the 
concentration of dually eligible enrollees in its service area.
    We proposed a limitation on non-SNP MA plans with 70 or greater 
percent dually eligible individuals for contract year 2025. For 
contract year 2026, we proposed to reduce the threshold from 70 percent 
to 60 percent or greater dually eligible enrollment as a share of total 
enrollment. This incremental approach would minimize disruptions to 
dually eligible individuals and allow MA organizations and CMS to 
operationalize these transitions over a two-year period. As discussed 
in more detail below, we would maintain processes to minimize 
disruption for the enrollees in plans affected by this proposed change.
    Based on 2023 data, we stated in the November 2023 proposed rule 
that we expect the lower threshold would impact 30 non-SNP MA plans 
with dually eligible individuals representing 70 to 80 percent of total 
enrollment and 40 non-SNP MA plans with dually eligible individuals 
representing 60 to 70 percent of total enrollment. Some of the plans 
that could be affected by our proposal are offered in States (that is, 
California, Massachusetts, Minnesota) that limit contracting to 
integrated D-SNPs, such as FIDE SNPs and AIPs. Based on 2023 plan data, 
12 non-SNP MA plans in California, Massachusetts, and Minnesota have 
shares of dually eligible enrollment between 60 and 80 percent. These 
States have chosen to limit their markets to certain D-SNPs to 
integrate Medicare and Medicaid for dually eligible individuals. 
Lowering the D-SNP look-alike contracting limitation to 60 percent will 
help to simplify choices for dually eligible individuals in these 
States and promote Medicare and Medicaid integration objectives.
    We proposed revisions to the rule on dually eligible enrollment at 
Sec.  422.514(d)(1) to apply the lower thresholds to new and existing 
non-SNP MA plan bids. Specifically, we proposed amending paragraph 
(d)(1)(ii) such that CMS would not enter into or renew a contract for a 
new or existing non-SNP MA plan that projects enrollment in its bid of 
80 percent or more dually eligible individuals for plan year 2024 (as 
is already the case under current regulations); 70 percent or more 
dually eligible individuals for plan year 2025; and 60 percent or more 
dually eligible individuals for plan year 2026 and subsequent years. 
Consistent with our current practice, we would apply the proposed 
changes at Sec.  422.514(d)(1)(ii) to all bids for the next plan year, 
including any bids for non-SNP MA plans projected to exceed the 
threshold even if the actual enrollment for the current plan year is 
under the threshold at Sec.  422.514(d)(1).
    Similarly, we proposed revisions to paragraph (d)(2) to apply the 
lower thresholds to non-SNP MA plan enrollment. Specifically, we 
proposed to amend paragraph (d)(2)(ii) to state that we will not renew 
a contract with a non-SNP MA plan that has actual enrollment, using 
January enrollment of the current year, in which dually eligible 
individuals constitute 80 percent or more dually eligible individuals 
for plan year 2024 (as is already the case under current regulations); 
70 percent or more dually eligible individuals for plan year 2025; or 
60 percent or more dually eligible individuals for plan year 2026 or 
subsequent years. In operationalizing these proposed changes, for 
example, we would use January 2024 enrollment data to identify non-SNP 
MA plans that exceed the proposed 70-percent threshold, for purposes of 
determining whether to renew contracts with these plans for plan year 
2025. We would use January 2025 enrollment data to identify non-SNP MA 
plans that exceed the proposed 60-percent threshold for purposes of 
determining whether to renew contracts with these plans for plan year 
2026. Consistent with existing rules, we would not apply the 
contracting limitation in Sec.  422.514(d)(2) to any non-SNP MA plan 
that has been active for less than one year and has enrollment of 200 
or fewer individuals.

[[Page 30709]]

    We solicited comments on whether an alternative to reduce the 
threshold to 50 percent is more appropriate to protect against plans 
circumventing the requirements for D-SNPs while enrolling a 
disproportionate number of dually eligible individuals.
2. Amending Transition Processes and Procedures for D-SNP Look-Alikes
    Section 422.514(e) establishes parameters for transitioning 
individuals who are enrolled in a D-SNP look-alike to another MA-PD 
plan (or plans) offered by the MA organization to minimize disruption 
as a result of the prohibition on contract renewal for existing D-SNP 
look-alikes. Under the existing processes and procedures, an MA 
organization with a non-SNP MA plan determined to meet the enrollment 
threshold in proposed paragraph (d)(2) could transition enrollees into 
another MA-PD plan (or plans) offered by the same MA organization, as 
long as any such MA-PD plan meets certain proposed criteria. This 
transition process allows MA enrollees to be transitioned at the end of 
the year from one MA plan offered by an MA organization to another MA-
PD plan (or plans) without having to complete an election form or 
otherwise indicate their enrollment choice as typically required, but 
it also permits the enrollee to make an affirmative choice for another 
MA plan or standalone Part D plan of his or her choosing during the 
annual election period (AEP) preceding the year for which the 
transition is effective. Consistent with our description of the 
transition process in the June 2020 final rule (85 FR 33816), if a 
transitioned enrollee elects to enroll in a different plan during the 
AEP, enrollment in the plan the enrollee selected would take precedence 
over the plan into which the MA organization transitioned the enrollee. 
Transitioned enrollees would also have additional opportunities to 
select another plan through the Medicare Advantage Open Enrollment 
Period described in Sec.  422.62(a)(3) from January 1 through March 31. 
Affected individuals may also qualify for a SEP, depending on the 
circumstances.
    Existing provisions at paragraphs (e)(1)(i) through (iv) outline 
specific criteria for any MA plan to receive enrollment through this 
transition process to ensure that enrollees receive coverage under 
their new MA plan that is similarly affordable as the plan that would 
not be permitted for the next year. At existing paragraph (e)(1)(i), we 
allow a non-renewing D-SNP look-alike to transition that plan's 
enrollment to another non-SNP plan (or plans) only if the resulting 
total enrollment in each of the MA plans receiving enrollment consists 
of less than the threshold established in paragraph (d)(2)(ii) (now, 80 
percent but with the proposed amendment, this would refer to the 
scheduled change in the threshold). SNPs receiving transitioned 
enrollment are not subject to this proposed limit on dually eligible 
individual enrollment. Under existing paragraph (e)(1)(ii), we require 
that any plan receiving transitioned enrollment be an MA-PD plan as 
defined in Sec.  422.2. Under existing paragraph (e)(1)(iii), any MA 
plan receiving transitioned enrollment from a D-SNP look-alike is 
required to have a combined Part C and D beneficiary premium of $0 
after application of the premium subsidy for full subsidy eligible 
individuals described at Sec.  423.780(a). Finally, paragraph 
(e)(1)(iv) requires that the receiving plan be of the same plan type 
(for example, HMO or PPO) of the D-SNP look-alike out of which 
enrollees are transitioned.
    At existing paragraph (e)(2)(ii), the current transition process 
requires MA organizations to describe changes to MA-PD benefits and 
provide information about the MA-PD plan into which the individual is 
enrolled in the ANOC that the MA organization must send, consistent 
with Sec.  422.111(a), (d), and (e) and Sec.  422.2267(e)(3). 
Consistent with Sec.  422.111(d)(2), enrollees receive this ANOC 
describing the change in plan enrollment and any differences in plan 
enrollment at least 15 days prior to the first day of the AEP.
    At existing paragraph (e)(4), the regulation addresses situations 
where the prohibition on contracting or renewing a D-SNP look alike is 
applied and the D-SNP look alike is terminated. In such situations 
where an MA organization does not transition some or all current 
enrollees from a D-SNP look-alike to one or more of the MA 
organization's other plans as provided in proposed paragraph (e)(1), 
the MA organization is required to send affected enrollees a written 
notice consistent with the non-renewal notice requirements at Sec.  
422.506(a)(2).
    This transition process is conceptually similar to ``crosswalk 
exception'' procedures at Sec.  422.530(c). However, in contrast to the 
crosswalk exceptions, our transition process at Sec.  422.514(e) 
permits transition across contracts and across MA organizations under 
the same parent organization, as well as from non-SNP plans to SNPs.
    We proposed to apply the existing transition processes and 
procedures at Sec.  422.514(e) to non-SNP MA plans that meet the 
proposed D-SNP look-alike contracting limitation of 70 percent or more 
dually eligible individuals effective plan year 2025 and 60 percent or 
more dually eligible individuals effective plan year 2026. Consistent 
with the initial years of implementation of the D-SNP look-alike 
contract limitations with the 80-percent threshold, maintaining these 
transition processes and procedures will help to minimize disruption as 
a result of the prohibition on contract renewal for existing D-SNP 
look-alikes. However, for plan year 2027 and subsequent years, we 
proposed to limit the Sec.  422.514(e) transition processes and 
procedures to D-SNP look-alikes transitioning dually eligible enrollees 
into D-SNPs. Based on our experience with D-SNP look-alike transitions 
effective plan year 2023, the vast majority of enrollees are 
transitioned to other MA-PDs under the same parent organization as the 
D-SNP look-alike. Based on our review of D-SNP look-alike transition 
plans thus far, we expect the experience for transitions effective plan 
year 2024 to follow a similar pattern. We proposed this new limitation 
on the transition process at new paragraph (e)(1)(v).
    MA organizations can utilize other CMS processes to transition D-
SNP look-alike enrollees to non-D-SNPs. For a more detailed discussion 
of these other CMS processes, we direct readers to the November 2023 
proposed rule (88 FR 78582 through 78583).
    While multiple options exist for MA organizations to transition D-
SNP look-alike enrollees to other non-SNP MA plans, these pathways are 
not available for moving enrollees from D-SNP look-alikes to D-SNPs. 
Consistent with the November 2023 proposed rule, we believe it is 
appropriate to limit the transition process in Sec.  422.514(e) since 
although other options remain available to transition enrollees from 
the D-SNP look-alike, MA organizations do not have other options to 
transition D-SNP look-alike enrollees into D-SNPs, and movement into D-
SNPs encourages enrollment in integrated plans. Furthermore, we are 
concerned that if D-SNP look-alikes continue to be allowed to 
transition enrollees into non-D-SNPs indefinitely, there is little 
incentive for MA organizations to avoid non-compliance with the D-SNP 
look-alike thresholds. Thus, for plan year 2027 and subsequent years, 
we proposed to add new paragraph Sec.  422.514(e)(1)(v) to limit the 
existing D-SNP look-alike transition pathway to MA organizations with 
D-SNP look-alikes transitioning enrollees into D-SNPs.
    We are solicited comment on an alternative to our proposal that 
would

[[Page 30710]]

eliminate the 70-percent threshold applying for plan year 2025 but 
would involve additional conditions and changes related to the 
transition authority Specifically, this alternative would:
     Apply the 60-percent threshold beginning in plan year 
2026;
     Permit use of the transition authority into non-SNP MA 
plans (as currently permitted under Sec.  422.514(e)) for plan year 
2025; and
     Limit use of transition authority under Sec.  422.514(e) 
to transition D-SNP look-alike enrollees into D-SNPs for plan year 2026 
and beyond.
    Relative to our proposal, this alternative would give plans with 
dually eligible individual enrollment between 70 and 80 percent of 
total enrollment (based on January 2024 enrollment data) one additional 
year to apply for a new D-SNP or service area expansion to an existing 
D-SNP, such that these plans could transition enrollees into a D-SNP 
for plan year 2026. The alternative would balance the additional year 
using the existing 80-percent enrollment threshold to identify 
prohibited D-SNP look-alikes with an earlier limitation on the Sec.  
422.514(e) transition authority to enrollees transitioning into non-
SNPs. We solicited comment on whether this alternative is a better 
balance of the goals of our policy to prohibit circumvention of the 
requirements for D-SNPs and to encourage and incentivize enrollment in 
integrated care plans. Among the factors we that stated that we would 
consider in adopting the alternative instead of our proposal is the 
extent to which plans with between 70 and 80 percent dually eligible 
enrollment in plan year 2024 expect to be able to establish a D-SNP in 
the same service area as the D-SNP look-alike if given an additional 
year (that is, 2026) to transition enrollees.
    We also proposed a technical edit at Sec.  422.514(e)(1)(i) to make 
the term ``specialized MA plan for special needs individuals'' 
lowercase, consistent with the definition of D-SNPs at Sec.  422.2.
    We received the following comments on this proposal and respond to 
them below:
    Comment: Numerous commenters, including MACPAC and MedPAC, 
supported the proposal overall to lower the threshold used to identify 
D-SNP look-alikes to 70 percent dually eligible individuals for plan 
year 2025 and 60 percent dually eligible individuals for plan year 2026 
and subsequent years and limit the D-SNP look-alike transition pathway 
to D-SNPs starting in plan year 2027.
    A number of commenters emphasized the importance of dually eligible 
individuals having access to integrated care and that the D-SNP look-
alikes interfere with those efforts. MedPAC referenced their June 2018 
and June 2019 reports that discussed D-SNP look-alikes and expressed 
concern that D-SNP look-alikes undermine efforts to develop integrated 
plans for dually eligible individuals by encouraging them to enroll 
instead in plans that provide many of the same extra benefits as D-SNPs 
but do not integrate Medicaid coverage. MACPAC articulated that D-SNP 
look-alikes act at cross purposes to State and Federal efforts to 
integrate care by drawing dually eligible individuals away from 
integrated products and avoiding the additional requirements that D-
SNPs must meet. Other commenters conveyed similar points in favor of 
CMS's proposal; D-SNP look-alikes work against the promotion of 
Medicare and Medicaid integration for dually eligible individuals, thus 
inhibiting improvements in coordination of care and attracting dually 
eligible individuals away from coordinated plan options. Other 
commenters supported the CMS proposal because it would further 
incentivize the enrollment of dually eligible individuals into D-SNPs, 
which are specifically designed for the population. A commenter did not 
believe that D-SNP look-alikes were a widespread phenomenon across 
regions but characterized them as substantial barriers to coordination 
of care for individuals in those regions where they exist. Another 
commenter stated that D-SNP look-alikes place responsibility on an 
enrollee to navigate two separate delivery systems.
    In outlining their support for CMS's proposal, a number of 
commenters noted that D-SNP look-alikes are designed to attract dually 
eligible individuals but are not subject to the same requirements as a 
D-SNP, such as the model of care, coordination of Medicare and Medicaid 
benefits, and requirements for enrollee advisory input, designed 
specifically for dually eligible individuals. A commenter indicated 
that the contracting standards for D-SNP look-alikes should be 
consistent with the requirements for D-SNPs.
    A number of commenters based their support for the CMS proposal on 
the expectation that it would simplify choices for dually eligible 
individuals and reduce aggressive marketing of D-SNP look-alikes. A 
commenter stated that D-SNP look-alikes introduce another layer of 
complexity and confusion for dually eligible individuals when selecting 
their plans, while not providing the coordination necessary for their 
enrollees to navigate Medicare and Medicaid programs. Other commenters 
noted that the proposed additional contract limitations for D-SNP look-
alikes would ultimately help reduce confusion over plan offerings. 
Another commenter shared anecdotal evidence that marketing of D-SNP 
look-alikes, especially in nursing facilities, is confusing to 
potential enrollees. The commenter noted that D-SNP look-alikes may use 
aggressive marketing tactics and have zero-premium plans with many 
supplemental benefits, and thus these plans can look like a good deal 
to individuals. A few commenters stated that dually eligible 
individuals are often the least informed about their health insurance 
and that MA organizations exploit these individuals with D-SNP look-
alikes when they would qualify for a D-SNP, which provides more 
comprehensive coverage. In advocating its support for the CMS proposal, 
another commenter indicated it had assisted dually eligible individuals 
who were targeted by D-SNP look-alikes, many of whom experienced 
complications related to Medicaid payment and crossover billing issues. 
A commenter advocated that third-party marketing agencies should be 
banned from marketing to dually eligible individuals and State Medicaid 
programs should prohibit using the enrollee list from different 
products for sales and outreach within the same company.
    Other commenters shared CMS's concerns regarding the rapid growth 
of non-SNP MA plans with high levels of dually eligible individuals. 
Referencing their review of MA bid data for 2020, MACPAC noted that 
enrollment in non-SNP MA plans with more than 50 percent projected 
dually eligible enrollment grew by 23.4 percent from 2019 to 2020, but 
enrollment in D-SNPs grew by 13.9 percent over the same period. MACPAC 
expressed concern that enrollment growth in D-SNP look-alikes exceeded 
that of D-SNPs because many States rely on D-SNPs aligned with Medicaid 
managed care plans to integrate care for dually eligible individuals. 
Another commenter suggested that CMS's proposal is an essential step 
toward directly addressing concerns over the substantial growth in non-
SNP MA plans with disproportionately high enrollment of dually eligible 
individuals. Another commenter indicated MA plans have continued to 
target dually eligible individuals by retaining enrollment just below 
80 percent dually eligible enrollment.
    A commenter indicated that CMS's phased approach would provide 
plans a

[[Page 30711]]

helpful ramp to carefully plan enrollee transitions. In addition, the 
commenter indicated that reducing the D-SNP look-alike threshold all at 
once could disrupt the marketplace and impact beneficiary coverage, 
which should be avoided.
    Response: We appreciate the widespread support we received for our 
proposal to lower the D-SNP look-alike threshold over two years to 60 
percent and to limit the D-SNP look-alike transition pathway to D-SNPs. 
Our proposal builds on the policies finalized in the June 2020 final 
rule to limit entering into or renewing contracts with non-SNP MA plans 
with high percentages of dually eligible enrollees and addresses the 
substantial growth in non-SNP MA plans with disproportionately high 
enrollment of dually eligible individuals. We believe the lower 
thresholds and restriction on D-SNP look-alike transitions under Sec.  
422.514(e) that we are finalizing in this rule will enable us to more 
effectively implement Medicare-Medicaid integration requirements under 
the BBA of 2018 along with other State and Federal requirements. Our 
proposal will support 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 HRAs, and 
evidence-based models of care. We agree with the commenters that our 
proposal will simplify beneficiary choices, reduce beneficiary 
confusion stemming from potentially misleading marketing practices by 
brokers and agents that market D-SNP look-alikes to dually eligible 
individuals, and further promote enrollment in integrated care plans.
    Comment: Numerous commenters supported the CMS proposal to lower 
the threshold and recommended that CMS lower the D-SNP look-alike 
threshold further below the proposed threshold of 70 percent for plan 
year 2025 and 60 percent for plan year 2026 and subsequent years.
    A number of commenters suggested lowering the D-SNP look-alike 
threshold to 50 percent. A few commenters emphasized that a 50-percent 
threshold would be a more effective threshold for deterring MA plans 
from soliciting dually eligible individuals into non-SNP MA plans and 
ensure plans are not designed to target dually eligible individuals and 
circumvent statutory requirements for D-SNPs. Another commenter 
recommended the D-SNP look-alike threshold be lowered in subsequent 
years to 50 percent, with further reductions considered as the plan 
landscape and D-SNP integration continue to shift. Another commenter 
opined that any plan where more than 50 percent of the enrollment is 
comprised of people who are dually eligible should be subject to the 
same additional requirements and oversight as D-SNPs to protect 
enrollees. In referencing a recent study,\236\ a commenter noted that 
there were more dually eligible individuals enrolled in the non-SNP MA 
plans where 50 percent or more of enrollees are dually eligible than 
there were enrolled in FIDE SNPs in 2020, and county level availability 
of non-SNP MA plans where 50 percent or more of enrollees are dually 
eligible also increased dramatically, from just 75 counties (fewer than 
3 percent of U.S. counties) in 2013 to 1,318 counties (more than 40 
percent of U.S. counties) in 2020. The commenter suggested that these 
data support lowering the D-SNP look-alike threshold to 50 percent. 
Citing prior MedPAC analysis, MACPAC explained that it considers D-SNP 
look-alikes to be plans where more than 50 percent of enrollees are 
dually eligible.\237\
---------------------------------------------------------------------------

    \236\ Ma, Y., Frakt, A., Roberts, E., Johnston, K., Phelan, J., 
and Figueroa, J. ``Rapid Enrollment Growth In `Look-Alike' Dual-
Eligible Special Needs Plans: A Threat To Integrated Care'', Health 
Affairs (July 2023) 919-927. Retrieved from https://www.healthaffairs.org/doi/epdf/10.1377/hlthaff.2023.00103.
    \237\ See June 2020 MACPAC Report to Congress on Medicaid and 
CHIP, Chapter 2 at https://www.macpac.gov/publication/chapter-2-integrating-care-for-dually-eligible-beneficiaries-policy-issues-and-options June 2019 MedPAC Report to Congress, Chapter 12 at 
https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun19_ch12_medpac_reporttocongress_sec.pdf.
---------------------------------------------------------------------------

    Several commenters suggested lowering the threshold to 40 percent. 
A commenter suggested that CMS lower the D-SNP look-alike threshold to 
50 percent in plan year 2025 and 40 percent in plan year 2026 and 
subsequent years, noting that the lower thresholds would make it more 
difficult for an MA organization to create a PBP that could undermine 
Medicare-Medicaid integration. A commenter recommended that CMS reduce 
the D-SNP look-alike threshold to 40 percent by 2026, emphasizing that 
the establishment of D-SNP look-alikes does not appear to be 
unintentional because these plans are often in areas where their ratios 
of enrollees do not mirror the general population ratio and many of D-
SNP look-alike enrollees were previously enrolled in integrated D-SNPs. 
The commenter further supported a reduction to 40 percent since D-SNP 
look-alike growth has continued despite CMS' previous efforts to 
curtail the growth in D-SNP look-alikes, and these plans seem to just 
come under the threshold CMS sets. Another commenter requested that CMS 
consider lowering the threshold to 40 percent by 2030.
    A few other commenters recommended that CMS consider D-SNP look-
alike thresholds below 70 percent in plan year 2025 and 60 percent in 
plan year 2026 and subsequent years but did not specify a percentage.
    A commenter specifically noted that it did not support lowering the 
D-SNP look-alike threshold to 50 percent since plans at or near 50 
percent dually eligible enrollment may reflect the distribution of 
eligibility in the service area which is outside of MA organization's 
control. The commenter emphasized that the plan may appeal to both 
dually and non-dually eligible individuals equally, indicating the plan 
is not intentionally designed to attract dually eligible enrollees 
while circumventing D-SNP requirements.
    Response: We appreciate the commenters' perspectives and 
acknowledge the substantial growth in the number of non-SNP MA plans 
with dually eligible individuals comprising 50 to 60 percent of total 
enrollment. Similar to the earlier MedPAC analysis, our analysis of 
2023 data shows the share of individuals in a plan service area who are 
dually eligible is clustered in the 10 to 30 percent range and does not 
exceed 49 percent except in one county (at 56 percent). However, we 
proposed to lower the threshold for dually eligible enrollment to 60 
percent of a non-SNP MA plan's enrollment for plan year 2026 and 
subsequent years because 60 percent exceeds the share of dually 
eligible individuals in any given MA plan service area currently and, 
therefore, would not be the result for any plan that simply reflected 
the concentration of dually eligible individuals in its service area. 
For these reasons, we are finalizing our proposal to lower the D-SNP 
look-alike threshold at Sec.  422.514(d) to 70 percent for plan year 
2025 and 60 percent for plan year 2026 and subsequent years, as 
proposed. We will continue to monitor non-SNP MA plans below the 60-
percent threshold for potential gaming after implementation of the 
final rule and consider future rulemaking, as needed.
    Comment: Other commenters expressed general opposition to the CMS 
proposal to lower the D-SNP look-alike threshold from 80 percent to 60 
percent over a two-year period and, for plan year 2027 and subsequent 
years, limit the Sec.  422.514(e) transition processes and procedures 
to D-SNP look-alikes transitioning dually eligible

[[Page 30712]]

enrollees into D-SNPs. Some of these commenters noted that certain 
States do not contract with D-SNPs that enroll partial-benefit dually 
eligible individuals, which could reduce plan choices and benefits 
available to these beneficiaries. A commenter highlighted that many 
States have an inadequate number of SNPs in rural areas. A commenter 
noted that partial-benefit dually eligible individuals have similar 
levels of medical and social needs as full-benefit dually eligible 
individuals but are not being given the same level of support in 
navigating their health care choices. A few of these commenters 
indicated that partial-benefit dually eligible beneficiaries would 
either need to enroll in a different MA plan or enroll in Traditional 
Medicare, where they would not receive care coordination or valuable 
supplemental benefits. A commenter identified Arizona and Illinois as 
States where partial-benefit dually eligible individuals would need to 
enroll in products that are often designed to be attractive to those 
aging into the Medicare program and have fewer clinical and/or 
socioeconomic needs. This commenter raised concern that partial-benefit 
dually eligible beneficiaries could receive lower overall benefits, as 
rebates that would have been used to offer them lower Medicare Part C 
cost sharing or improved supplemental benefits would instead be 
directed to Part D drug cost-sharing reductions that are duplicative 
with their Part D Extra Help to attract enough non-dually eligible 
individuals to enroll in the non-SNP MA plan. Another commenter stated 
that Massachusetts and New Jersey are States that limit D-SNP 
enrollment to full-benefit dually eligible individuals and non-SNP MA 
plans would be further incentivized not to enroll partial-benefit 
dually eligible individuals if the threshold were lowered. That 
commenter recommended that CMS work with Congress to mandate such 
States to require their D-SNPs to have a separate PBP for partial-
benefit dually eligible individuals as Pennsylvania and Virginia have 
done. A commenter recommended that CMS consider additional enrollment 
options for partial-benefit dually eligible individuals, such as 
modifications to the proposed monthly SEP. Another commenter indicated 
that the CMS proposal would force plans to avoid enrolling select 
categories of dually eligible individuals in their non-SNP MA plans 
where no D-SNPs are available and could create a vacuum where some 
dually eligible individuals no longer receive the benefits of MA, 
including the defined cost-sharing amounts, D-SNP model of care, and 
supplemental benefits designed to support SDOH.
    Response: We appreciate the commenters' perspectives but do not 
find them to be sufficiently persuasive to change our position.
    We agree that partial-benefit dually eligible individuals can 
benefit from enrollment in D-SNPs. As we stated in the June 2020 final 
rule (85 FR 33811 through 33812), partial-benefit dually eligible 
individuals benefit from the requirements that SNPs, including D-SNPs, 
have a MOC that addresses enrollees' needs and perform periodic HRAs 
precisely because these individuals have greater social, functional, 
and health needs than non-dually eligible Medicare beneficiaries. 
States, through their contracts with D-SNPs, can enhance these care 
coordination requirements, including for partial-benefit dually 
eligible individuals. Second, QMBs without full Medicaid benefits, who 
constitute roughly half of partial-benefit dually eligible individuals 
nationally, can benefit when D-SNPs, or the Medicaid managed care plans 
offered under the same parent company in which these individuals are 
enrolled, pay providers for Medicare cost sharing under a capitation 
agreement with the State. Such direct and seamless payment of cost 
sharing can result in an improved experience for providers serving 
these individuals, which itself may improve access to care for 
beneficiaries.
    Of course, partial-benefit dually eligible individuals cannot 
benefit from these features of the D-SNP program if the State Medicaid 
agency contract with the D-SNP (that is, the SMAC) excludes these 
individuals from enrollment, and we recognize that some States using 
managed care as a platform for integration exclude partial-benefit 
dually eligible individuals from D-SNPs and other managed care plans. 
While some States are using the D-SNP platform for integration only to 
allow full-benefit dually eligible individuals to enroll in D-SNPs, 
others allow partial-benefit dually eligible individuals to enroll in 
separate D-SNP plan benefit packages.
    Based on 2024 plan data, D-SNPs are widely available with 547 
coordination-only D-SNP PBPs offered across 39 States,\238\ and 457 of 
these coordination-only D-SNPs allow enrollment of partial-benefit 
dually eligible individuals.\239\ In 2021, 54 percent of dually 
eligible beneficiaries were enrolled in a D-SNP and the majority were 
enrolled in coordination-only-SNPs.\240\ The number of States with D-
SNPs limited to partial-benefit dually eligible individuals has grown 
over recent years. For contract year 2024, D-SNPs that only enroll 
partial-benefit dually eligible individuals existed in 19 States and 
the District of Columbia, which is up from 11 States and the District 
of Columbia for contract year 2023.\241\ We continue to think, as we 
conveyed in the May 2020 final rule (85 FR 33812), that allowing D-SNP 
look-alikes to continue to enroll partial-benefit dually eligible 
individuals with no limit would discourage States from taking this 
approach. As we stated in the June 2020 final rule (85 FR 33809), 
section 164(c)(4) of MIPPA does not in any way obligate States to 
contract with a D-SNP; therefore, CMS does not have the authority to 
mandate States to contract with D-SNPs, and States have significant 
control over the availability of D-SNPs. We will continue to work with 
States to identify ways to integrate Medicare and Medicaid benefits in 
a way that best serves the States' dually eligible population.
---------------------------------------------------------------------------

    \238\ Integration Status for Contract Year 2024 D-SNPs available 
at: https://www.cms.gov/medicaid-chip/medicare-coordination/qualified-beneficiary-program/d-snps-integration-unified-appeals-grievance-requirements.
    \239\ CMS analysis of contract year 2024 SMACs.
    \240\ MedPAC, State Medicaid Agency Contracts: Interviews with 
Key Stakeholders, January 25, 2024. Slides available at https://www.macpac.gov/wp-content/uploads/2024/01/04_January-Slides_State-Medicaid-Agency-Contracts-SMACs_-Interviews-with-Key-Stakeholders.pdf.
    \241\ States with partial-benefit only D-SNPs in CY 2024: 
Alabama, Connecticut, District of Columbia, Delaware, Florida, 
Georgia, Iowa, Idaho, Indiana, Kentucky, Maryland, Michigan, 
Mississippi, North Carolina, New York, Ohio, Tennessee, Virginia, 
Washington, and Wisconsin. States with partial-benefit only D-SNPs 
in CY 2023: Connecticut, District of Columbia, Delaware, Florida, 
Idaho, Michigan, Mississippi, New York, Ohio, Virginia, Washington, 
and Wisconsin.
---------------------------------------------------------------------------

    As discussed in the November 2023 proposed rule (88 FR 78600), most 
of the non-SNP MA plans with dually eligible enrollment between 60 
percent and 80 percent of total enrollment have a D-SNP within the same 
service area or nearly the same service area as the non-SNP MA plans, 
providing a potential opportunity for transitioning D-SNP look-alike 
enrollees. We reviewed a sample of the 70 non-SNP MA plans with dually 
eligible individuals representing 60 to 79.9 percent of total 
enrollment (based on January 2023 enrollment data). While some of these 
non-SNP MA plans have services areas composed of a majority of Counties 
with Extreme Access Considerations, rural, and or/micro counties, most 
of the enrollment in the

[[Page 30713]]

sample we reviewed was is concentrated in urban areas.\242\
---------------------------------------------------------------------------

    \242\ CMS analysis of January 2023 enrollment data and 2023 
Individual Plan Service Area Data retrieved from HPMS.
---------------------------------------------------------------------------

    While coordination-only D-SNPs are widely available, we acknowledge 
they are not available in every market and there is potential that 
lowering the D-SNP look-alike threshold will result in some enrollees, 
including partial-benefit dually eligible individuals, not being able 
to transition into a D-SNP. Based on our experience with D-SNP look-
alike transitions effective plan years 2023 and 2024 through MA 
organizations using the transition authority at Sec.  422.514(e) or the 
crosswalk authority at Sec.  422.530, in situations where the MA 
organization is not able to transition D-SNP look-alike enrollees into 
a D-SNP, the vast majority of enrollees transitioned to other MA-PDs 
under the same parent organization as the D-SNP look-alike.
    Comment: A commenter suggested that CMS's proposal might eliminate 
competition in the MA program for established D-SNPs and raised concern 
that these established D-SNPs might delay or avoid offering some 
additional benefits and instead increase provider payment or health 
plan profit margins.
    Response: We acknowledge the commenter's concern. The D-SNP and MA 
markets remain robust. Plan bidding signaled strong interest in the D-
SNP market for CY 2024, with the number of D-SNPs increasing by 
approximately 8 percent. Additionally, plans projected in their bids 
that MA enrollment overall is expected to grow over 7 percent, with D-
SNPs enrollment expected to grow by approximately 13 percent.\243\ 
Given that D-SNP look-alikes represent a relatively small share of MA-
PDs overall, we do not expect our proposal to reduce the D-SNP look-
alike threshold to 60 percent over two years and limit the D-SNP look-
alike threshold pathway to D-SNPs starting in plan year 2027 to have a 
substantial impact on the competitiveness of the MA program.
---------------------------------------------------------------------------

    \243\ CMS, 2025 Medicare Advantage and Part D Advance Notice 
Fact Sheet, January 31, 2024. Retrieved from: https://www.cms.gov/newsroom/fact-sheets/2025-medicare-advantage-and-part-d-advance-notice-fact-sheet.
---------------------------------------------------------------------------

    Comment: Numerous commenters, but far fewer than the number of 
commenters expressing strong support for CMS's proposal, suggested that 
CMS exclude partial-benefit dually eligible individuals when 
calculating the percent threshold at Sec.  422.514(d). A few of these 
commenters stated that only full-benefit dually eligible individuals 
benefit from enrollment in a FIDE SNP or HIDE SNP available in their 
county of residence and emphasized that since FIDE SNPs and HIDE SNPs 
generally are not an enrollment option for partial-benefit dually 
eligible individuals, the threshold should exclude partial-benefit 
dually eligible enrollees. Some commenters noted that D-SNPs serving 
partial-benefit dually eligible individuals are less widely available, 
and some States do not contract with coordination-only D-SNPs at all, 
limiting beneficiary choice and meaningful access to benefits.
    Recognizing that some States choose not to contract with D-SNPs 
enrolling partial-benefit dually eligible individuals, a few commenters 
suggested that CMS not count partial-benefit dually eligible 
individuals toward the threshold in States that exclude partial-benefit 
dually eligible individuals from enrolling in D-SNPs. A commenter 
indicated that some States, like Massachusetts, limit D-SNP enrollment 
to full-benefit dually eligible enrollment, which restricts Medicare 
options to Traditional Medicare and regular MA plans. MA plans designed 
to support low-income Medicare beneficiaries by offering zero-dollar 
premiums and supplemental benefits that support functional and social 
needs risk meeting or exceeding the D-SNP look-alike threshold.
    A commenter found CMS's proposal unclear regarding which 
enrollees--full-benefit dually eligible individuals, partial-benefit 
dually eligible individuals, and/or LIS eligible individuals--would 
count toward the D-SNP look-alike threshold under the proposed rule and 
recommended that only full-benefit dually eligible individuals be 
counted.
    A commenter urged CMS to exclude partial-benefit dually eligible 
individuals who are not QMBs from the calculation of the D-SNP look-
alike threshold since these beneficiaries do not qualify for full 
Medicaid benefits. The commenter believed that CMS's proposal, if 
applied strictly and rapidly, could stifle health plan efforts to 
create plans for the partial-benefit dually eligible individuals who 
are not QMBs.
    Response: We welcome the commenters' perspectives, but we do not 
find them to be persuasive enough to outweigh other considerations that 
motivated our proposal.
    Coordination-only D-SNPs are widely available with 547 such plans 
offered across 39 States in contract year 2024.\244\ Of these 547 
coordination-only D-SNPs, 457 enroll partial-benefit dually eligible 
individuals.\245\ Also, 19 States contract with D-SNPs that limit 
enrollment of partial-benefit dually eligible individuals in contract 
year 2024. Partial-benefit dually eligible individuals are enrolling in 
these plans in high volume.
---------------------------------------------------------------------------

    \244\ Integration Status for Contract Year 2024 D-SNPs available 
at: https://www.cms.gov/medicaid-chip/medicare-coordination/qualified-beneficiary-program/d-snps-integration-unified-appeals-grievance-requirements.
    \245\ CMS analysis of contract year 2024 SMACs.
---------------------------------------------------------------------------

    We recognize that some of the MA plans that could be affected by 
our proposal to lower the D-SNP look-alike threshold are offered in 
States that do not contract with D-SNPs that enroll partial-benefit 
dually eligible individuals. Such States include Arizona, California, 
Idaho, Massachusetts, Minnesota, and New Jersey. Based on January 2023 
enrollment data, only ten of the 70 non-SNP MA plans with 60 to 79.9 
percent dually eligible enrollment exist in States that only contract 
with D-SNPs that enroll full-benefit dually eligible individuals. These 
include five non-SNP MA plans in Arizona, three non-SNP MA plans in 
Massachusetts, and one non-SNP MA plan each in Idaho and Minnesota. 
These data indicate that partial-benefit dually eligible individuals 
are not congregating in non-SNP MA plans at high rates and do not 
suggest a need to remove partial-benefit dually eligible individuals 
from the D-SNP look-alike threshold calculation. We will monitor 
enrollment of partial-benefit dually eligible individuals, especially 
in service areas where they are not eligible for D-SNPs, to gauge 
whether enrollment of partial-benefit dually eligible individuals is 
causing non-SNP MA plans to cross the D-SNP look-alike threshold.
    We acknowledge that the benefits provided under a D-SNP look-alike 
can be helpful to partial-benefit dually eligible individuals who do 
not have a D-SNP available to them. As articulated in the June 2020 
final rule (85 FR 33805 through 33806), in contrast to non-SNP MA 
plans, D-SNPs and D-SNP look-alikes allocate a lower percentage of MA 
rebate dollars received under the bidding process at Sec.  422.266 to 
reducing Medicare cost sharing and a higher percentage of rebate 
dollars to supplemental medical benefits such as dental, hearing, and 
vision services. However, because most dually eligible individuals are 
QMBs who are not required to pay Medicare cost sharing under sections 
1848(g)(3) and 1866(a)(1)(A) of the Act, we believe they are not 
dissuaded from enrolling in these non-D-SNPs by the relatively higher 
cost sharing. A similar dynamic

[[Page 30714]]

exists for Part D premiums and high deductibles, both of which are 
covered by the Part D low-income subsidy that dually eligible 
individuals receive. We believe that such benefit designs are 
unattractive for Medicare beneficiaries who are not dually eligible 
individuals because they would need to cover these costs out-of-pocket. 
Despite the similarities with D-SNPs in terms of level of dually 
eligible enrollment and benefits and cost-sharing design, D-SNP look-
alikes are regulated as non-SNP MA plans and are not subject to the 
Federal regulatory and State contracting requirements applicable to D-
SNPs.
    As we outlined earlier in this section and in the November 2023 
proposed rule, the rate of growth in non-SNP MA plans with 60 to 70 
percent and 70 to 80 percent dually eligible individuals as a percent 
of total enrollment exceeded the rate of enrollment growth for all MA-
PD plans over the same period of time. The increased growth in non-SNP 
MA plans with such levels of dually eligible individuals suggests to us 
that MA organizations are offering plans for dually eligible 
individuals but circumventing rules for D-SNPs, including requirements 
from the Bipartisan Budget Act of 2018, and detracting from Federal and 
State efforts to better integrate Medicare and Medicaid benefits. This 
growth in enrollment in these non-SNP plans is likely also drawing 
enrollment from integrated care D-SNPs and similar integrated 
programs.\246\
---------------------------------------------------------------------------

    \246\ Ma, Y., Fakt, A., Roberts, E., Johnston, K., Phelan, J., 
and Figueroa, J. ``Rapid Enrollment Growth In `Look-Alike' Dual-
Eligible Special Needs Plans: A Threat To Integrated Care'', Health 
Affairs (July 2023) 919-927. Retrieved from https://www.healthaffairs.org/doi/epdf/10.1377/hlthaff.2023.00103.
---------------------------------------------------------------------------

    Removing partial-benefit dually eligible individuals from the D-SNP 
look-alike threshold calculation would render our existing D-SNP look-
alike policy less effective. For contract year 2023, only two of the 12 
non-SNP MA plans that met the 80 percent threshold calculated based on 
all dually eligible individuals would have been identified as D-SNP 
look-alikes under the 80 percent threshold calculated with only full-
benefit dually eligible individuals. For contract year 2022, 31 of the 
47 non-SNP MA plans that met the 80 percent threshold calculated based 
on all dually eligible individuals would have been identified as D-SNP 
look-alikes under the 80 percent threshold calculated with only full-
benefit dually eligible individuals. Of these 31 plans, 26 were in 
California, which has very few partial-benefit dually eligible 
individuals. Of the estimated 70 non-SNP MA plans with dually eligible 
enrollment of 60 percent to 79.9 percent that would be affected by our 
proposal, only 10 of those plans have full-benefit dually eligible 
individuals comprising 60 to 79.9 percent of their total enrollment. 
Changing the D-SNP look-alike threshold calculation to only include 
full-benefit dually eligible individuals would allow 60 of these non-
SNP MA plans to continue, reducing the ability of CMS and States to 
meaningfully implement the BBA of 2018 requirements.
    Consistent with our position articulated in the June 2020 final 
rule (85 FR 33811), our proposed regulatory language uses the 
terminology from section 1859(f) of the Act and in Sec.  422.2 to 
define the population of special needs individuals that D-SNPs may 
exclusively enroll. This language includes both full- and partial-
benefit dually eligible individuals. Exclusion of partial-benefit 
dually eligible individuals from the threshold would allow any MA 
organization to design a benefit package and target enrollment for an 
MA plan that exclusively enrolled partial-benefit dually eligible 
individuals. Section 1859 of the Act, however, only allows D-SNPs to 
exclusively enroll dually eligible individuals.
    We appreciate the commenters' suggestions for CMS to encourage 
States to contract with D-SNPs that enroll partial-benefit dually 
eligible individuals. We reiterate that section 164(c)(4) of MIPPA does 
not in any way obligate States to contract with a D-SNP; therefore, CMS 
does not have the authority to mandate States to contract with D-SNPs, 
and States have significant control over the availability of D-SNPs in 
their State using the SMAC. Nonetheless, the number of partial-benefit-
only D-SNPs is increasing, and we will provide technical assistance to 
States interested in developing SMACs for such plans.
    Comment: A commenter requested that CMS consider setting different 
dually eligible enrollment thresholds for full-benefit and partial-
benefit dually eligible enrollees. The commenter suggested such 
thresholds could be consistent nationwide for both groups, a threshold 
determined by the percentage of full-benefit and partial-benefit dually 
eligible beneficiaries in a State, or a threshold that accounts for 
whether partial-benefit dually eligible beneficiaries can enroll in D-
SNPs in the State. The commenter advised that this would allow CMS to 
set a lower threshold for full-benefit dually eligible beneficiaries 
and encourage their enrollment into integrated D-SNPs while allowing a 
higher percentage of partial-benefit dually eligible beneficiaries to 
remain enrolled in their plan. Another commenter recommended that CMS 
remove from the calculation of the percent threshold at Sec.  
422.514(d) any dual eligibility category for which D-SNPs are not 
available in the service area. The commenter indicated that as the D-
SNP landscape becomes more complicated, the threshold calculation 
should incorporate additional nuances to avoid penalizing non-SNP MA 
plans for enrolling dually eligible individuals when there are not 
suitable D-SNP options available for every eligibility type.
    Response: We appreciate the suggestions although we are not 
incorporating them into the final regulation. For the reasons 
articulated elsewhere in this section in response to comments 
suggesting that we limit the D-SNP look-alike calculation to full-
benefit dually eligible individuals, we are retaining the current 
approach of using both full-benefit and partial-benefit dually eligible 
individuals in determining which non-SNP MA plans meet the D-SNP look-
alike threshold at Sec.  422.514(d). The other suggested approach would 
require CMS to calculate D-SNP look-alike thresholds specific to each 
county given the type of D-SNPs offered, and which dually eligible 
individuals they enroll could differ from one county to another within 
a State. In addition to the reasons articulated in response to comments 
recommending that we limit the D-SNP look-alike threshold calculation 
to full-benefit dually eligible individuals, we believe it would be 
challenging for CMS to operationalize a policy that requires county-
specific D-SNP look-alike threshold. We also believe a more complicated 
D-SNP look-alike threshold would require data analysis that could be 
less transparent and more challenging for MA organizations to replicate 
in making their business decisions about plan consolidations and bids.
    Comment: A commenter requested that CMS consider changing the D-SNP 
look-alike definition in future rulemaking, noting that the current 
definition is overly broad and captures MA plans that are not 
intentionally enrolling large percentages of dually eligible 
individuals. The commenter opined that the high dually eligible 
enrollment in these plans is often due to the lack of plan options in 
an area, especially for partial-benefit dually eligible individuals for 
whom these plans provide robust benefits that they would not receive in 
Traditional Medicare. The commenter

[[Page 30715]]

recommended that CMS consider updating the definition of D-SNP look-
alikes to plans that exceed the dually eligible enrollment threshold 
and have a Part D basic premium set under the low-income premium 
subsidy amount as their only premium because such plans are structured 
to attract dually eligible individuals and draw them away from D-SNPs.
    Another commenter suggested that defining D-SNP look-alikes solely 
based on the percentage of dually eligible enrollees promotes continued 
evasion, even after lowering the D-SNP look-alike threshold to 60 
percent. As an example, that commenter indicated that MA organizations 
could increase the number of PBPs within a contract while enrolling 
slightly lower percentages of dually eligible individuals in each. To 
address this concern, the commenter suggested that CMS consider: 1) the 
D-SNP look-alike threshold is met when dually eligible individual 
penetration rates exceed the designated threshold at either the 
contract number or at the PBP level; and 2) revise the definition of D-
SNP look-alikes to be plans that exceed--or that exceed by a certain 
amount--the average dually eligible individual penetration rate across 
non-SNP MA plans in each State. The comment provides the example that 
as of September 2023, approximately 14 percent of Massachusetts non-SNP 
MA enrollment came from full-benefit dually eligible individuals. A 
threshold set at even twice this Statewide penetration rate would fall 
significantly below the 60-percent threshold CMS proposed for 2026. The 
commenter explained that since markets MA plan markets vary widely 
across the country, establishing a range based on Statewide averages 
for dually eligible individual penetration in non-SNP MA plans would 
more accurately identify outlier plans. The commenter suggested another 
alternative which would tie the D-SNP look-alike threshold to the 
percent of Medicare beneficiaries who are full-benefit dually eligible 
individuals in each State. The commenter noted that in Massachusetts, 
25 percent of Medicare beneficiaries are full-benefit dually eligible 
individuals, and, of these, 15 percent of Massachusetts' full-benefit 
dually eligible individuals were enrolled in a non-SNP MA plan in 
September 2023.
    Response: We thank the commenters for sharing these ideas but we 
are not incorporating them into the final regulation.
    As we stated earlier in this section, D-SNPs and D-SNP look-alikes 
allocate a lower percentage of MA rebate dollars received under the 
bidding process at Sec.  422.266 to reducing Medicare cost sharing and 
a higher percentage of rebate dollars to supplemental medical benefits 
such as dental, hearing, and vision services. Because most dually 
eligible individuals are QMBs who are not required to pay Medicare cost 
sharing under sections 1848(g)(3) and 1866(a)(1)(A) of the Act, or 
other full-benefit dually eligible individuals who are protected under 
42 CFR 422.504(g)(1)(iii) from paying any in-network cost sharing when 
the State is responsible for paying such amounts, we believe they are 
not dissuaded from enrolling in these non-D-SNPs by the relatively 
higher cost sharing. A similar dynamic exists for Part D premiums and 
high deductibles, both of which are covered by the Part D low-income 
subsidy that dually eligible individuals receive. We believe that such 
benefit designs are unattractive for Medicare beneficiaries who are not 
dually eligible individuals because they would need to cover these 
costs out-of-pocket. Thus, we do not believe that adding an additional 
criterion to the D-SNP look-alike definition of having a Part D basic 
premium set under the low-income premium subsidy amount as their only 
premium would be helpful or necessary in identifying D-SNP look-alikes.
    While we appreciate the commenter's suggestion to revise the D-SNP 
look-alike threshold based on contract, PBP, and State dually eligible 
individual penetration rates, we believe it would be challenging for 
CMS to operationalize a D-SNP look-alike threshold that requires 
different dually eligible individual penetration rate across non-SNP MA 
plans in each State. As articulated earlier in this section, we believe 
a more complicated D-SNP look-alike threshold would require data 
analysis that could be less transparent and more challenging for MA 
organizations to replicate in making their business decisions about 
plan consolidations and bids.
    Comment: A few commenters recommended that CMS encourage States to 
allow D-SNPs that enroll partial-benefit dually eligible individuals 
and educate States on the benefits of D-SNPs for partial-benefit dually 
eligible individuals, especially if CMS does not exclude partial-
benefit dually eligible individuals from the D-SNP look-alike threshold 
at Sec.  422.514(d). A commenter emphasized that, while partial-benefit 
dually eligible individuals are ineligible for most Medicaid services, 
these individuals have similar clinical, functional, and social needs 
as full-benefit dually eligible individuals and can benefit from access 
to stronger care management models available in D-SNPs.
    Response: We appreciate the comments. As we have articulated in the 
June 2020 final rule (85 FR 33811 through 33812), we agree that 
partial-benefit dually eligible individuals can benefit from D-SNPs. 
First, partial-benefit dually eligible individuals benefit from the 
requirements that SNPs, including D-SNPs, have a MOC that addresses 
enrollees' needs and perform periodic HRAs precisely because these 
individuals have greater social, functional, and health needs. States, 
through their contracts with D-SNPs, can enhance these care 
coordination requirements, including for partial-benefit dually 
eligible individuals. Second, QMBs without full Medicaid benefits, who 
constitute roughly half of partial-benefit dually eligible individuals 
nationally, can benefit when D-SNPs, or the Medicaid managed care plans 
offered under the same parent company in which these individuals are 
enrolled, pay providers for Medicare cost sharing under a capitation 
agreement with the State. Such direct and seamless payment of cost 
sharing can result in an improved experience for providers serving 
these individuals, which itself may improve access to care for 
beneficiaries.
    We emphasize that nothing about the proposals would discourage 
States from contracting with D-SNPs that enroll partial-benefit dually 
eligible individuals. Section 164(c)(4) of MIPPA does not in any way 
obligate States to contract with a D-SNP; therefore, CMS does not have 
the authority to mandate States to contract with D-SNPs, and States 
have significant control over the availability of D-SNPs. Nonetheless, 
we will continue to provide technical assistance to States interested 
in establishing SMACs with D-SNPs that serve partial-benefit dually 
eligible individuals.
    Comment: A commenter suggested that CMS increase the number of 
enrollees permitted in the exemption under the current rules that a 
non-SNP MA plan that has been active for less than one year and has 
enrollment of 200 or fewer individuals.
    Response: The commenter is correct that the current requirements at 
Sec.  422.514(d)(2)(ii) exempt any non-SNP MA plan that has been active 
for less than one year and has enrollment of 200 or fewer individuals 
at the time of such determination based on January enrollment. We 
explained in the June 2020 final rule (85 FR 33813) that an appropriate 
comparison for D-SNP look-alikes is the minimum enrollment threshold 
for low enrollment SNPs,

[[Page 30716]]

which is 100 enrollees for plans in existence for three or more years; 
CMS applies this threshold and other considerations to identify MA 
plans that are not viable independent plan options to terminate the 
plans under Sec.  422.510(a)(4)(xv).\247\ We codified a minimum 
enrollment standard of 200 in Sec.  422.514 to allow some additional 
flexibility for initial enrollment patterns that may not be 
representative of the longer term enrollment pattern for the plan. Once 
the initial enrollment period has passed or the number of enrollees 
during that first year of operation exceeds 200 enrollees, we continue 
to believe the enrollment profile accurately reflects whether or not 
the plan was design to exclusively enroll dually eligible individuals. 
We are not making any changes in response to this comment.
---------------------------------------------------------------------------

    \247\ CMS has consistently used the 100 enrollee threshold for 
several years to identify low enrollment plans for termination under 
Sec.  422.510(a)(4)(xv); see HPMS memo dated April 14, 2023, ``Final 
Contract Year (CY) 2024 Standards for Part C Benefits, Bid Review, 
and Evaluation,'' p. 4 (available online at https://www.cms.gov/https/editcmsgov/research-statistics-data-and-systems/computer-data-and-systems/hpms/hpms-memos/hpms-memos-wk-2-april-10-14) and Final 
CY 2020 Call Letter, available online at: https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf.
---------------------------------------------------------------------------

    Comment: A commenter did not notice any limitation on the number of 
D-SNP look-alikes in a service area. Based on that observation, the 
commenter opined that MA organizations could offer more than one non-
SNP MA plan in a service area and manage the level of dually eligible 
enrollment among these multiple plans such that none of them meets the 
D-SNP look-alike threshold, circumventing the policies to protect 
dually eligible individuals. This commenter recommended that CMS add 
additional language to limit MA plans in service areas where there are 
D-SNP options available, in service areas where D-SNPs are not an 
option, or in States where there are no D-SNPs, allowing dually 
eligible individuals to access supplemental benefits. Another commenter 
advocated that CMS provide States with the authority to prevent any MA 
organization from having D-SNP look-alikes, regardless of whether an MA 
organization offers D-SNPs in that State. A commenter recommended that 
the proposal should not apply in States that do not contract with D-
SNPs and make that statement clearly in the rule.
    Response: We appreciate the comments. We confirm that there is no 
current limitation on the number of non-SNP MA plans allowed in a 
service area. We will monitor the implementation of this final rule for 
unintended consequences or potential gaming by MA organizations.
    As we stated in the November 2023 proposed rule (88 FR 78580 
through 78581) and earlier in this section, the rate of growth from 
2017 to 2023 in the number of non-SNP MA plans below the 80-percent D-
SNP look-alike threshold substantially exceeded the rate of enrollment 
growth for all MA-PD plans over the same period of time. The increased 
growth in non-SNP MA plans with dually eligible individuals between 50 
and 80 percent of total enrollment suggests to us that MA organizations 
are offering plans for dually eligible individuals but circumventing 
rules for D-SNPs. As a result, we are finalizing, as proposed, a 
reduction in the D-SNP look-alike threshold at Sec.  422.514(d) to 70 
percent for plan year 2025 and 60 percent for plan year 2026 and 
subsequent years.
    We clarify that the existing contracting limitations on D-SNP look-
alikes at Sec.  422.514(d) only apply in any State where there is a D-
SNP or any other plan authorized by CMS to exclusively enroll 
individuals entitled to Medicaid, such as an MMP. This remains true 
despite the changes we are finalizing to the D-SNP look-alike 
threshold.
    Comment: A commenter proposed that CMS limit further reductions to 
the D-SNP look-alike threshold calculation to States and counties where 
there exist at least eight integrated D-SNP offerings. The commenter 
explained that this approach would enhance choice and ensure States 
issue SMACs to qualified entities.
    Response: We appreciate the importance of beneficiaries having 
enrollment options. As discussed in the November 2023 proposed rule (88 
FR 78600), most of the non-SNP MA plans with dually eligible enrollment 
between 60 percent and 80 percent of total enrollment have a D-SNP 
within the same (or nearly the same) service area as the non-SNP MA 
plans, providing a potential opportunity for transitioning D-SNP look-
alike enrollees. We also discussed earlier in this section that D-SNPs 
are widely available. Thus, we do not think it is necessary to limit 
further reductions in the D-SNP look-alike threshold to States and 
counties where there exist at least eight integrated D-SNP offerings.
    Comment: A few commenters specifically signaled their support for 
the proposal to limit transition options available to identified D-SNP 
look-alikes. A commenter noted that eliminating the option to 
transition enrollees into traditional MA plans would immediately reduce 
incentives to transfer dually eligible individuals into an MA plan that 
in future years may reach the D-SNP look-alike threshold. A commenter 
expressed support for the proposal to limit the transition options, as 
the current scheme of allowing transition into non-D-SNPs does not 
provide any incentive for MA organizations to eliminate D-SNP look-
alikes. Another commenter welcomed allowing D-SNP look-alike 
transitions only to D-SNPs since it would be a pathway of opportunity 
for partial-benefit dually eligible enrollment into coordination-only 
D-SNPs and bolster coordination-only D-SNPs as a conduit and platform 
for increased integration efforts with States.
    Response: We appreciate the widespread support we received to limit 
transition options available to identified D-SNP look-alikes. We 
believe this amendment will support our goal to encourage the 
enrollment of dually eligible individuals into integrated plans. We 
acknowledge that not all States contract with D-SNPs that serve 
partial-benefit dually eligible individuals, and partial-benefit dually 
eligible individuals would not be eligible to transition to non-D-SNPs 
under the Sec.  422.514(e) transition pathway starting with coverage 
for plan year 2027. In those situations, MA organizations can continue 
to utilize CMS crosswalk and crosswalk exception processes at Sec.  
422.530 provided all requirements for a crosswalk or crosswalk 
exception are met. The provisions we are finalizing at Sec.  422.514(d) 
and (e) do not change the existing crosswalk processes.
    Comment: Many commenters discussed their concerns about transitions 
of D-SNP look-alike enrollees into other plans. A few commenters noted 
that these transitions could cause potential disruptions in continuity 
of care among enrollees. Other commenters recommended that CMS continue 
the existing transition authority into non-SNP MA plans. Several 
commenters suggested that CMS continue to make existing crosswalk 
exceptions available to transition dually eligible individuals from D-
SNP look-alikes into D-SNPs. In support of this approach, a commenter 
stated that CMS has regulations in place via the bid submissions 
process whereby plan crosswalking and consolidation does not negatively 
affect beneficiaries. Another commenter encouraged CMS to continue to 
permit the use of existing transition authority into non-SNP MA plans 
for plan years 2025 and 2026 to minimize beneficiary disruptions. That

[[Page 30717]]

commenter stated that delaying the proposed change to limit transitions 
of D-SNP look-alike enrollees into only D-SNPs until plan year 2027 and 
beyond would grant MA organizations additional time to adjust to these 
changes and preserve beneficiary choice during that process, minimizing 
disruption for dually eligible enrollees that affirmatively selected 
their existing MA plans to meet their provider network and benefit 
preferences.
    Response: We thank the commenters for their perspectives. We agree 
with the commenters that it is important to monitor for any gaps in 
coverage that may occur as enrollees are transitioned or crosswalked 
out of D-SNP look-alikes. The current process at Sec.  422.514(e) 
allows D-SNP look-alikes to transition enrollees into an MA plan or 
plans meeting certain criteria within the same parent organization to 
promote continuity of care. Under our proposal and Sec.  422.514(e) as 
finalized with the amendments we proposed, we continue these policies 
through plan year 2026, which will help provide continuity of care for 
individuals who are required to transition from D-SNP look-alikes under 
the initial years of implementing the lower thresholds. Based on our 
experience with D-SNP look-alike transitions effective plan years 2023 
and 2024, MA organizations transition the vast majority of D-SNP look-
alike enrollees into other MA-PDs under the same parent organization as 
the D-SNP look-alike, and the vast majority of the plans receiving 
these D-SNP look-alike enrollees are non-SNP MA plans. Thus, we do not 
expect limiting the Sec.  422.514(e) transition pathway to D-SNPs 
beginning in 2027 to negatively affect the ability of MA organizations 
to transition D-SNP look-alike enrollees. Also, as we discussed in the 
November 2023 proposed rule (88 FR 78582 through 78583), MA 
organizations can continue to utilize CMS crosswalk and crosswalk 
exception processes at Sec.  422.530 provided all requirements for a 
crosswalk or crosswalk exception are met. The provisions we are 
finalizing at Sec.  422.514(d) and (e) do not change the existing 
crosswalk processes.
    As we explained in the November 2023 proposed rule (88 FR 78583), 
while multiple options exist for MA organizations to transition D-SNP 
look-alike enrollees to other non-SNP MA plans, these pathways are not 
available for moving enrollees from D-SNP look-alikes to D-SNPs. We 
believe it is appropriate to limit the transition process in Sec.  
422.514(e) to D-SNPs since MA organizations do not have other options 
to transition D-SNP look-alike enrollees into D-SNPs and movement into 
D-SNPs encourages enrollment in integrated plans. We are also concerned 
that if D-SNP look-alikes continue to be allowed to transition 
enrollees into non-D-SNPs indefinitely under Sec.  422.514(e), there is 
little incentive for MA organizations to avoid non-compliance with the 
D-SNP look-alike thresholds. Thus, for plan year 2027 and subsequent 
years, we are finalizing our proposal to add new paragraph Sec.  
422.514(e)(1)(v) to limit the existing D-SNP look-alike transition 
pathway to MA organizations with D-SNP look-alikes transitioning 
enrollees into D-SNPs.
    Comment: A commenter noted that the plan crosswalk examples 
outlined by CMS in the November 2023 proposed rule require the 
transition of all plan enrollees into a single plan or segments of a 
single plan and do not permit enrollees to be crosswalked to separate 
PBPs based on Medicaid eligibility, which could result in enrollee 
disruption. The commenter inquired whether CMS intended for MA 
organizations to use the transition process at Sec.  422.514(e) 
concurrently with crosswalks permitted at Sec.  422.530, and, if so, 
requested that CMS update the regulatory text accordingly and provide 
detailed implementation instructions through sub-regulatory guidance. 
Another commenter requested that CMS consider some specific transition 
options. These options included allowing dually eligible enrollees from 
the D-SNP look-alike to transition to another plan but allow non-dually 
eligible enrollees to remain in the D-SNP look-alike; allowing dually 
eligible enrollees who qualify for a C-SNP to transition to a C-SNP; 
and allowing dually eligible enrollees from the D-SNP look-alike to 
transition into D-SNPs and/or default to Traditional Medicare. Another 
commenter recommended that CMS consider allowing D-SNP look-alikes to 
convert into ``all dually eligible plans'' and crosswalk any non-dually 
eligible enrollees into other MA plans. A commenter also encouraged CMS 
to automatically approve crosswalk exceptions that were previously 
approved by CMS as part of the D-SNP look-alike transition proposal 
process.
    Response: We welcome the comments and appreciate the opportunity to 
clarify our proposal. Under our proposal, MA organizations with non-SNP 
MA plans meeting the 70 percent D-SNP look-alike threshold for plan 
year 2025 or 60 percent D-SNP look-alike threshold for plan year 2026 
can use the existing D-SNP look-alike transition process at Sec.  
422.514(e), which allows transition of D-SNP look-alike enrollees to 
one or more MA plans, including a D-SNP, C-SNP, or I-SNP, if they meet 
eligibility criteria. This approach allows the D-SNP look-alikes 
meeting the lower threshold in the first years of implementation to 
transition enrollees under the existing D-SNP look-alike transition 
pathway at Sec.  422.514(e) for 2026.
    Our proposal limits the transition pathway to D-SNP look-alike 
enrollees transitioning into D-SNPs in plan year 2027 and future years. 
Thus, MA organizations have time to execute SMACs for new D-SNPs in 
service areas where they anticipate their non-SNP MA plans may meet or 
exceed the revised D-SNP look-alike threshold at Sec.  422.514(d). For 
D-SNP look-alike transitions in plan year 2027 and subsequent years, MA 
organizations could use the revised Sec.  422.514(e) transition pathway 
to move eligible D-SNP look-alike enrollees into a D-SNP, and any 
remaining D-SNP look-alike enrollees would default into Traditional 
Medicare. Alternatively, MA organizations can continue to utilize CMS 
crosswalk and crosswalk exception processes at Sec.  422.530 provided 
all requirements for a crosswalk or crosswalk exception are met. The 
provisions we are finalizing at Sec.  422.514(d) and (e) do not change 
the existing crosswalk or crosswalk exception processes. We clarify 
that MA organizations cannot use the Sec.  422.514(e) transition 
pathway concurrently with a crosswalk or crosswalk exception pathway at 
Sec.  422.530.
    Under the existing requirements at Sec.  422.514(d)(2), we do not 
renew a contract with a D-SNP look-alike that meets or exceeds the 80-
percent threshold. Thus, D-SNP look-alikes cannot retain any enrollment 
in the D-SNP look-alike. As we explained in the June 2020 and April 
2023 final rules (85 FR 33812 and 88 FR 22130, respectively), 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, we 
will sever the D-SNP look-alike from the overall contract using our 
authority under Sec.  422.503(e) to sever a specific MA plan from a 
contract and terminate the deemed contract for the D-SNP look-alike. 
This policy will remain in effect upon finalizing our proposals to 
reduce the D-SNP look-alike threshold to 60 percent over two years and 
limit the D-SNP look-alike transition process to D-SNPs starting in 
plan year 2027.
    Under the existing provision at Sec.  422.514(e), MA organizations 
can transition D-SNP look-alike enrollees into C-SNPs. The revisions we 
are

[[Page 30718]]

finalizing at Sec.  422.514(e)(1)(v) will--for plan year 2027 and 
subsequent years--limit the existing D-SNP look-alike transition 
pathway to MA organizations with D-SNP look-alikes transitioning 
enrollees into D-SNPs. Thus, for plan year 2027 and subsequent years, 
MA organizations will not be able to transition D-SNP look-alike 
enrollees into C-SNPs.
    We clarify that none of the D-SNP look-alike transitions previously 
approved under Sec.  422.514(e) were automatically approved or confer 
any automatic approvals by CMS for future transitions under Sec.  
422.514(e). CMS reviews all D-SNP look-alike transitions to ensure they 
meet the regulatory requirements.
    Comment: A few commenters suggested an inconsistency in CMS's 
proposals to lower the D-SNP look-alike threshold and limit the D-SNP 
look-alike transition pathway at Sec.  422.514(e) to D-SNPs starting in 
plan year 2027. These commenters believed that the calculation of the 
D-SNP look-alike threshold would include both full-benefit and partial-
benefit dually eligible individuals whereas CMS's proposed revisions to 
the D-SNP look-alike transition process would limit that transition 
process to full-benefit dually eligible individuals.
    Response: We appreciate the opportunity to clarify our proposal. 
The commenters are correct that we include both full-benefit and 
partial-benefit dually eligible individuals in the calculation of the 
D-SNP look-alike threshold at Sec.  422.514(d) and will continue that 
policy in the reduction to that threshold that we are finalizing in 
this rule. We clarify that our proposed limitation at Sec.  422.514(e) 
on the D-SNP look-alike transition process starting in plan year 2027 
would permit transition of full-benefit and partial-benefit dually 
eligible individuals from a D-SNP look-alike into a D-SNP, if those 
individuals meet the eligibility criteria for the receiving D-SNP and 
all requirements at Sec.  422.514(e).
    Comment: Several commenters suggested that more information be 
provided to dually eligible individuals to help them understand their 
enrollment options. A commenter recommended informing individuals when 
they enroll in a non-integrated model where an integrated model exists. 
The commenter explained that these disclosures would shift the 
education burden from the individual, where it sits today, to entities 
providing the coverage. Another commenter advocated that CMS require 
outlier or all non-SNP MA plans to regularly send notices and 
information to their dually eligible enrollees about the State's 
integrated and coordinated care options, including integrated D-SNPs 
and PACE plans, and such information could be defined in a CMS template 
and/or provided by the State Medicaid agency. The commenter also 
encouraged that CMS clarify in regulation and/or in sub-regulatory 
marketing guidance that MA organizations offering both non-SNP and D-
SNP products must clearly identify the specific contract numbers and 
PBPs contracted in each State as D-SNPs on plan websites and in 
marketing materials as well as clearly disclose the States in which 
their Medicare plans do not operate as D-SNPs.
    Another commenter suggested that the ANOC language sent to dually 
eligible enrollees being transitioned into another MA plan should be 
plain and straightforward and include contact information for SHIPs.
    Response: We appreciate recommendations for improved education on 
the availability and benefits of integrated products. Under the 
requirements at Sec.  422.111(a)(2), an MA organization must disclose 
information specified in Sec.  422.111(b), which includes service area, 
benefits, supplemental benefits, and other information, in a clear, 
accurate, and standardized form. This Sec.  422.111(b) requirement 
applies to ANOCs. We also require that MA plans include the contact 
information for SHIPs in all ANOCs. We appreciate the other 
recommendations for improved education on the availability of 
integrated plans. We will consider ways to strengthen this information 
through future rulemaking and our current authority, such as by 
considering an update to the pre-enrollment checklist at Sec.  
422.2267(e)(4) to require that MA organizations inform enrollees about 
available integrated plan options.
    Comment: A commenter requested information about the future of 
enrollees in D-SNP look-alikes and whether community-based 
organizations will maintain their service provision capabilities. The 
commenter expressed concern about the sustainability of the home health 
program if all providers became managed care organizations.
    Response: We welcome the opportunity to respond to this comment. As 
we described earlier in this section, CMS will not renew a contract 
with a D-SNP look-alike, but that D-SNP look-alike can transition its 
enrollment to one or more MA plans using the D-SNP look-alike 
transition pathway at Sec.  422.514(e) or crosswalk or crosswalk 
exception pathways at Sec.  422.530, if requirements are met. MA plans, 
including D-SNPs, are widely available with 761 MA plan contracts with 
approximately 33 million total enrollees based on January 2024 
data,\248\ and we do not expect lowering the D-SNP look-alike threshold 
at Sec.  422.514(d) and limiting the D-SNP look-alike transition 
pathway at Sec.  422.514(e) to D-SNPs to have a substantial effect on 
the extent to which beneficiaries can enroll in MA or community-based 
organizations can contract with MA organizations.
---------------------------------------------------------------------------

    \248\ CMS Medicare Advantage, Cost, PACE, Demo, and Prescription 
Drug Plan Contract Report--Monthly Summary Report (Data as of 
January 2024) retrieved from https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/mcradvpartdenroldata/monthly/contract-summary-2024-01.
---------------------------------------------------------------------------

    Comment: A few commenters encouraged CMS to consider providing 
plans more time before implementing its proposal. A commenter noted 
that using January 2024 enrollment data to identify D-SNP look-alikes 
for plan year 2025 may be problematic for some plans given that CMS 
would not finalize the rule until later in 2024. This commenter 
recommended that CMS implement the proposed reduction in the D-SNP 
look-alike threshold starting with plan year 2026, consistent with the 
June 2020 final rule in which CMS finalized the D-SNP look-alike 
threshold to begin two years later in 2022. Other commenters 
acknowledged that plans must secure State Medicaid agency contracts to 
offer D-SNPs, which can take several years depending on the State 
legislative framework and procurement schedules. Another commenter 
suggested that CMS consider allocating an extra one or two years for 
plans that reduce cost sharing by material amounts for Medicare covered 
services and have made a good faith effort to avoid D-SNP look-alike 
status but might also provide benefits such as non-emergency 
transportation, Part D co-pay reductions, and benefits that assist with 
housing, utilities, and food that appeal to individuals receiving Part 
D LIS and dually eligible individuals. Another recommended that CMS 
consider adding one-to-two standard deviations to the D-SNP look-alike 
thresholds, in addition to providing one-or-two extra years, to give 
start-up plans time to make adjustments.
    Response: We acknowledge the commenters' requests that we consider 
a delay in lowering the D-SNP look-alike threshold but we do not find 
them persuasive. MA organizations have had opportunities to work with 
States to execute SMACs for new D-SNPs. In finalizing the existing 
contracting limitation on D-SNP look-alikes in the June 2020 final 
rule, we delayed implementation of the contracting

[[Page 30719]]

limitation by one year from plan year 2022 to plan year 2023 but 
allowed MA organizations that volunteered to transition enrollees out 
of D-SNP look-alikes for plan years 2021 or 2022 to do so. Providing 
more time for implementation and application of the new contracting 
standard when it was first adopted was appropriate then to give MA 
organizations time to adjust. However, the D-SNP look-alike prohibition 
and contracting standard have been in place for several years at this 
point and MA organizations are familiar with it. We do not believe 
additional delay before implementing the lower threshold is necessary. 
Of the D-SNP look-alike enrollees that MA organizations voluntarily 
transitioned for plan years 2021 and 2022, more than 90 percent of 
these enrollees transitioned to D-SNPs. For D-SNP look-alikes that CMS 
would no longer contract with for plan years 2023 and 2024, MA 
organizations transitioned less than 30 percent of enrollees to D-SNPs, 
other SNPs, or MMPs. Despite having additional time to establish D-
SNPs, these MA organizations did not establish new D-SNPs as the 
replacements for existing D-SNP look-alikes.
    Since November 2023, MA organizations have been aware of our 
proposal to lower the D-SNP look-alike threshold to 70 percent for plan 
year 2025 and 60 percent for plan year 2026 and subsequent years. We 
explained in the November 2023 proposed rule (88 FR 78581) that in 
operationalizing the proposed changes, we would use January 2024 
enrollment data to identify non-SNP MA plans that exceed the proposed 
70-percent threshold, for purposes of determining whether to renew 
contracts with these plans for plan year 2025. We articulated that we 
would use January 2025 enrollment data to identify non-SNP MA plans 
that exceed the proposed 60-percent threshold for purposes of 
determining whether to renew contracts with these plans for plan year 
2026. Consistent with the existing rules, we will not apply the 
contracting limitation in Sec.  422.514(d)(2) to any non-SNP MA plan 
that has been active for less than one year and has enrollment of 200 
or fewer individuals. Thus, MA organizations have had time to start 
working with State Medicaid agencies on SMACs, and they have additional 
time to continue to work with State Medicaid agencies after this rule 
is finalized and before contract year 2025 SMACs are due in July 2024.
    With respect to new plans, the current requirements at Sec.  
422.514(d)(2)(ii) already exempt any non-SNP MA plan that has been 
active for less than one year and has enrollment of 200 or fewer 
individuals at the time of such determination based on January 
enrollment. As stated earlier in this section, once this initial 
enrollment period has passed, we continue to believe the enrollment 
profile accurately reflects whether or not the plan was designed to 
attract enrollment of dually eligible individuals.
    For these reasons, we are finalizing the reduction in the D-SNP 
look-alike threshold as proposed without delay in implementation.
    Comment: Several commenters, who all supported the CMS proposal, 
recommended that CMS continue to analyze and monitor D-SNP look-alikes. 
MACPAC urged continued rigor and analysis around D-SNP look-alike plan 
growth. Citing its April 2020 comments on the February 2020 proposed 
rule, MACPAC expressed support for CMS's efforts to restrict D-SNP 
look-alikes and encouraged CMS to pay particular attention to the set 
of plans where dually eligible beneficiaries account for between 50 and 
80 percent of total enrollment. MACPAC also suggested that CMS monitor 
growth in enrollment of dually eligible beneficiaries in other types of 
SNPs, including C-SNPs and I-SNPs, and identify any potential effects 
on integration efforts. A commenter emphasized the need for CMS to 
continue to monitor and address potential loopholes in prohibiting D-
SNP look-alikes. A commenter advocated that CMS monitor plans' actions 
and provide public information on compliance and enforcement with the 
D-SNP look-alike regulations. Another commenter noted that States have 
invested time and resources to implement, operate, and monitor 
integrated care models to better serve dually eligible individuals, and 
allowing sponsors to circumvent D-SNP requirements and oversight wastes 
Federal and State resources and dilutes the effectiveness of this work. 
To that end, the commenter suggested that CMS further collaborate with 
States, including sharing oversight responsibilities of the MA market 
with State regulators and proactively publicizing how to report 
concerns about misleading and potentially exploitative marketing 
behavior by agents and brokers. A commenter requested that CMS apply 
stronger penalties for MA plans that States, SHIPs, ombudsman programs, 
or dually eligible individuals identify as potentially misleading or 
exploitative marketing behavior.
    Response: We agree with the commenters' concerns. As we have done 
since codifying the D-SNP look-alike contract limitations at Sec.  
422.514(d) in the June 2020 final rule, we will continue to monitor for 
potential gaming, review plan enrollment data, and consider future 
rulemaking as needed. We shared a list of the D-SNP look-alikes 
identified for plan years 2022 and 2023 and will post lists for 
subsequent years under ``Information about D-SNP Look-Alikes'' on the 
CMS website.\249\
---------------------------------------------------------------------------

    \249\ https://www.cms.gov/medicaid-chip/medicare-coordination/qualified-beneficiary-program/d-snps-integration-unified-appeals-grievance-requirements.
---------------------------------------------------------------------------

    We encourage stakeholders to contact 1-800-Medicare to report 
concerns about marketing behavior. We appreciate the suggestion that 
CMS share oversight responsibilities of the MA market with State 
regulators, but that issue is beyond the scope of this rulemaking.
    Comment: A commenter recommended that CMS add new data reporting 
requirements to assist in monitoring non-SNP MA plans. In particular, 
the commenter encouraged CMS to require non-SNP MA plans to provide 
administrative data and encounters to States for their dually eligible 
enrollees, which would help State Medicaid agencies. The commenter 
noted these data would also act as a counter incentive to MA 
organizations developing D-SNP look-alikes and targeting dually 
eligible individuals for enrollment to avoid D-SNP coordination and 
integration requirements. The commenter further suggested that CMS 
require MA organizations to consult with States on new applications and 
renewals for non-SNP MA plans that would exceed the monitoring 
threshold or that include benefit design that would likely be less 
attractive to non-dually eligible Medicare beneficiaries. Finally, the 
commenter advocated that CMS share detailed data with States on dually 
eligible enrollment in MA plans, including relative to total 
enrollment, to support State awareness and ability to monitor non-SNP 
MA plans.
    Response: We appreciate the commenter's concerns and suggestions 
and will consider them for future action. The recommendation to require 
non-SNP MA plans to provide administrative data and encounter data 
directly to States would likely require additional rulemaking and is 
outside the scope of this proposal. Prior to implementation of new 
program-wide Part C reporting requirements (under OMB control number 
0938-1054), we make them available to the public for review and comment 
in complying with

[[Page 30720]]

the standard PRA process, which includes publication of 60- and 30-day 
Federal Register notices. We will also consider sharing additional data 
with States on dually eligible enrollment in MA plans. As stated 
earlier in this section, we currently post annual lists of D-SNP look-
alikes online.
    Comment: In submitting comments about CMS's D-SNP look-alike 
proposal, a commenter indicated that an MA plan's Star Rating may be 
negatively impacted if an enrollee stays with the same parent 
organization but elects to enroll in a D-SNP, which better serves the 
enrollees' needs than a non-SNP MA plan. This commenter suggested that 
CMS include flexibilities to establish exclusion criteria for the Star 
Ratings measure monitoring disenrollment from the MA plan to exclude 
enrollees from the disenrollment calculation if they enroll in the MA 
organization's FIDE SNP.
    Response: We thank the commenter for raising this issue. As we 
state in section VIII.F. of this rulemaking, we do not currently have 
evidence to suggest allowing dually eligible individuals the 
opportunity to enroll into integrated D-SNPs in any month would 
negatively impact Star Ratings; in fact, we have reason to believe that 
the totality of the SEP proposals may actually benefit integrated D-
SNPs, such as FIDE SNPs, on Star Ratings, including the Members 
Choosing to Leave the Plan measure. In 2023, a study published in 
Health Affairs noted that nearly one-third of dually eligible 
individuals in ``D-SNP look-alike plans,'' were previously enrolled in 
integrated care programs.\250\ Such D-SNP look-alikes would no longer 
be able to accept enrollments using the dual/LIS SEP with the changes 
we are finalizing in this rulemaking. The revised duals/LIS SEP that we 
are finalizing in this rulemaking will dramatically reduce the total 
array of options available outside of the AEP while the integrated SEP 
that we are finalizing in this rulemaking will allow full-benefit 
dually eligible individuals to enroll in integrated D-SNPs, which 
together may improve integrated D-SNP performance on measures such as 
Members Choosing to Leave the Plan. Further, in the CY 2025 Advance 
Notice, we discussed a non-substantive update to that measure to 
exclude any enrollment into a plan designated as an AIP from the 
numerator of this measure, which could address the commenter's concerns 
here if that measure update is finalized; under the non-substantive 
update, CMS would treat a change in enrollment to an AIP, including 
FIDE SNPs, from a non-integrated MA plan as an involuntary 
disenrollment.
---------------------------------------------------------------------------

    \250\ Ma, Y., Frakt, A., Roberts, E., Johnston, K., Phelan, J., 
and Figueroa, J. ``Rapid Enrollment Growth In `Look-Alike' Dual-
Eligible Special Needs Plans: A Threat To Integrated Care'', Health 
Affairs (July 2023) 919-927. Retrieved from https://www.healthaffairs.org/doi/epdf/10.1377/hlthaff.2023.00103.
---------------------------------------------------------------------------

    As we described in the June 2020 final rule (85 FR 33817), the 
specifications for the Members Choosing to Leave the Plan Star Rating 
measure allow individuals transitioned because of a PBP termination to 
be excluded from the calculation of this Star Rating measure. The vast 
majority of D-SNP look-alike enrollees transitioned into another MA 
plan or plans, including a D-SNP, will be identified in MARx as 
disenrollment reason code 09, termination of a contract (CMS-
initiated), or disenrollment reason code 72, disenrollment due to a 
plan-submitted rollover. Neither disenrollment reason code 72 nor 09 
are counted toward the calculation of the Members Choosing to Leave the 
Plan Star Rating measure. As described in the Collection of Information 
section of this rulemaking, based on our experience with D-SNP look-
alike transitions through plan year 2024, we estimate that 14 percent 
of transitioned D-SNP look-alike enrollees would make a Medicare choice 
other than the MA plan into which they are transitioned. MARx will 
identify these transitions as disenrollment code 13, disenrollment 
because of enrollment into another plan, and these transactions will be 
counted toward the calculation of the Members Choosing to Leave the 
Plan Star Rating measure. Since the measure specifications do not 
penalize a plan for involuntary disenrollment that may be caused by 
this rulemaking, we do not believe a change to the Star Rating measure 
specifications is warranted.
    Comment: A commenter expressed opposition to CMS's D-SNP look-alike 
proposals by citing potentially contradictory policies related to the 
enrollment of dually eligible individuals in MA plans, specifically the 
interaction between the current and proposed D-SNP look-alike policies 
and the Health Equity Index (HEI). The commenter noted that under the 
HEI, an MA contract may be eligible for an increase in its Star Rating 
if the contract performs well on a set of measures for enrollees with 
social risk factors (SRFs), and CMS identifies enrollees with SRFs as 
those who are (i) dually eligible individuals or receive the Part D 
LIS, or (ii) are eligible for Medicare due to a disability. The 
commenter explained that a contract is eligible for the maximum reward 
if enrollment of beneficiaries with SRFs is greater than the median 
across all contracts and opined that setting such a threshold would 
likely create an incentive for MA organizations to enroll more dually 
eligible individuals into MA-PDs. In contrast, CMS proposed to 
disenroll dually eligible individuals from a non-SNP MA plan with 
dually eligible enrollment of at least 60 percent of total enrollment.
    Response: We appreciate the commenter raising this concern. We 
agree that there is potential for countervailing incentives between our 
proposal to lower the D-SNP look-alike threshold and the HEI 
calculation of enrollees with SRFs, which includes dually eligible 
individuals. However, we believe lowering the D-SNP look-alike 
threshold to 60 percent will not interfere with the HEI reward. In 
calculations of the HEI using data from the 2023 and 2024 Star Ratings 
that we released via HPMS in December 2023, the median percentage of 
dually eligible, LIS, and disabled enrollees was 41.8 percent. This 
median percent is well below the thresholds we are finalizing at Sec.  
422.514(d), even as it counts non-dually eligible individuals who do 
not count toward the look-alike threshold.
    Comment: A few commenters requested clarity on the data CMS uses to 
calculate dually eligible individuals as a percent of total enrollment 
to determine which non-SNP MA plans are D-SNP look-alikes and the 
timing of this calculation. A commenter sought clarification on when 
CMS uses projected enrollment versus actual enrollment. Another 
commenter stated that the MMR that CMS uses to calculate the percent of 
dually eligible individuals does not always have the most up-to-date 
information, which may result in an incorrect calculation of dually 
eligible enrollment. The commenter encouraged CMS to consider using 
real-time State data to assess this percentage instead of relying 
solely on the MMR. A commenter noted that CMS reviewing the percentage 
of dually eligible enrollment as of January 1 of a plan year is 
challenging for new PBPs and instead recommended that CMS review the 
percentage at the time of bid submission using May or June enrollment 
percentages to allow plans the opportunity to account for both OEP and 
age-in enrollments.
    Response: We thank the commenters for the opportunity to clarify 
the data we use to calculate the D-SNP look-alike threshold at Sec.  
422.514(d) and related timing. As outlined in existing requirements at 
Sec.  422.514(d)(1), we do not enter into or renew a contract for a 
non-SNP MA plan that projects in its

[[Page 30721]]

bid under Sec.  422.245 that 80 percent or more of the plan's total 
enrollment is comprised of dually eligible enrollees. Per Sec.  
422.514(d)(1)(ii), we use enrollment projections submitted by the MA 
organization as part of its bid to make that determination. To make 
these determinations, in June we review enrollment projections in bids 
submitted in June for the following plan year. For example, we reviewed 
enrollment projections in bids submitted in June 2023 for plan year 
2024 to determine whether 80 percent or more of the plan's total 
projected enrollment is comprised of dually eligible enrollees. The 
proposal that we are finalizing in this rulemaking will lower the 
percent at Sec.  422.514(d)(1)(ii) to 70 percent for plan year 2025 and 
60 percent for plan year 2026 and subsequent years. For example, we 
will review enrollment projections in bids submitted in June 2024 for 
plan year 2025 to determine whether 70 percent or more of the plan's 
total projected enrollment is comprised of dually eligible enrollees.
    Per existing requirements at Sec.  422.514(d)(2), we do not renew a 
contract for an MA plan that has actual enrollment consisting of 80 
percent or more enrollees who are dually eligible, unless that MA plan 
has been active for less than one year and has enrollment of 200 or 
fewer individuals at the time of such determination. Per Sec.  
422.514(d)(2)(ii), we use January enrollment of the current year to 
make that determination. The proposal that we are finalizing in this 
rulemaking will lower the percent at Sec.  422.514(d)(2)(ii) to 70 
percent for plan year 2025 and 60 percent for plan year 2026 and 
subsequent years but would continue to use actual enrollment as of 
January of the current year. For example, we will review January 2024 
enrollment data to identify non-SNP MA plans that exceed the proposed 
70-percent threshold, for purposes of determining whether to renew 
contracts with these plans for plan year 2025. We would use January 
2025 enrollment data to identify non-SNP MA plans that exceed the 
proposed 60-percent threshold for purposes of determining whether to 
renew contracts with these plans for plan year 2026.
    We currently obtain the January enrollment data through the 
February MMR, which reflects enrollment through early January. For 
example, we use the February 2024 MMR to reflect January 2024 
enrollment in a non-SNP MA plan. We believe the MMR file accurately 
represents a plan's enrollment and includes necessary dually eligible 
status indicators. While we appreciate the suggestion to supplement the 
MMR data with real-time State data, we do not believe that the added 
benefit outweighs the operational complexity of obtaining such real-
time data from States. We note that the MMR file is the data source 
that CMS currently uses to determine D-SNP look-alikes, but we may 
change the data source(s) as necessary to identify accurate and 
reliable information about January enrollment in plans. We will 
continue to assess the accuracy of the data we use to calculate the D-
SNP look-alike threshold at Sec.  422.514(d)(2)(ii), but we are not 
making any changes to the data or timing of these calculations in the 
final rule and are finalizing as proposed.
    As discussed earlier in this section, we believe the exemption for 
an MA plan that has been active for less than one year and has 
enrollment of 200 or fewer individuals (based on January enrollment 
data of the current year) provides a new plan sufficient start-up time 
before being subject to the contracting limitation at Sec.  
422.514(d)(2). We decline to change the timing for determining D-SNP 
look-alike status based on actual enrollment because we believe 
clarifying D-SNP look-alike status and use of the transition process 
may affect the ways in which MA organizations structure their plan 
benefit packages; making such determinations later in the year would 
make it impractical to complete the determinations and ensure plans' 
requests to use the transition process meet the requirements of Sec.  
422.514(e) before bids are due on the first Monday in June.
    Comment: We only received a few comments on the alternative we 
described in the November 2023 proposed rule of eliminating the 70-
percent threshold applying for plan year 2025 but would involve 
additional conditions and changes related to the transition authority. 
Specifically, this alternative would apply the 60-percent threshold 
beginning in plan year 2026; permit use of the transition authority 
into non-SNP MA plans (as currently permitted under Sec.  422.514(e)) 
for plan year 2025; and limit use of transition authority under Sec.  
422.514(e) to transition D-SNP look-alike enrollees into D-SNPs for 
plan year 2026 and beyond. Some of these commenters opposed the 
alternative consistent with their opposition to CMS's proposal to lower 
the D-SNP look-alike threshold and revise the D-SNP look-alike 
transition process. A commenter welcomed the alternative providing 
plans an additional year to apply for new D-SNPs or service area 
expansions for existing D-SNPs. Another commenter believed the 
additional time provided by the alternative would be unnecessary 
because MA organizations have had the opportunity to apply for a D-SNP 
when they applied for a D-SNP look-alike and did not.
    Response: We thank the commenters for responding to our request for 
comments on an alternative proposal. Our alternative proposal would 
delay lowering the D-SNP look-alike threshold by one year--to plan year 
2026 rather than plan year 2025, as proposed--but would apply the 60-
percent threshold starting with plan year 2026 rather than the 70-
percent threshold. The alternative would also limit use of transition 
authority under Sec.  422.514(e) to transition D-SNP look-alike 
enrollees into D-SNPs for plan year 2026 and beyond, which is one year 
earlier than our proposal.
    Our reasons for not implementing the alternative are consistent 
with our reasons for not delaying implementation of our proposal. As we 
articulated earlier in this section, the D-SNP look-alike prohibition 
and contracting standard have been in place for several years at this 
point and MA organizations are familiar with it. We do not believe 
additional delay before implementing the lower threshold is necessary. 
We agree with the commenter about MA organizations having had time to 
apply for a D-SNP although--as discussed earlier in this section--we 
recognize that some States do not contract with D-SNPs that enroll 
partial-benefit dually eligible individuals. In our experience with 
implementation of the existing D-SNP look-alike prohibition and 
contracting standard, despite having additional time to establish D-
SNPs MA organizations did not establish new D-SNPs as the replacements 
for existing D-SNP look-alikes. Since November 2023, MA organizations 
have been aware of our proposal to lower the D-SNP look-alike threshold 
to 70 percent for plan year 2025 and 60 percent for plan year 2026 and 
subsequent years. MA organizations have had time to start working with 
State Medicaid agencies on SMACs, and they have additional time to 
continue to work with State Medicaid agencies after this rule is 
finalized and before contract year 2025 SMACs are due in July 2024. We 
are not finalizing the alternative approach in this rulemaking.
    Comment: A few commenters, while supportive of the changes proposed 
throughout the rule, noted that there is limited or mixed published 
research on whether or not enrollment in integrated care for dually 
eligible individuals leads to improved outcomes. A commenter expressed 
concern that the model of

[[Page 30722]]

integration may fall short of potential and fail to ultimately make 
meaningful change in health outcomes for enrollees.
    Response: We appreciate the commenters' thoughts on the issue, and 
we look forward to more analysis on the experiences of dually eligible 
individuals. While there is limited published research on the benefits 
of integrated care for dually eligible beneficiaries, we find value in 
the published research that currently exists through MedPAC, MACPAC, 
and other research bodies. While many of these research papers note 
that evidence for integrated care is currently mixed, we share MedPAC's 
position of being ``supportive of integrated plans as a way to address 
the misaligned incentives between Medicare and Medicaid, improve care 
coordination, and improve outcomes for dual-eligible beneficiaries.'' 
\251\ We will continue to monitor the growing body of research, as well 
as continue to carry out our own monitoring, regarding integrated care 
so that dually eligible individuals have access to seamless, high 
quality health care.
---------------------------------------------------------------------------

    \251\ MedPAC, Congressional Request for Information on Dual-
Eligible Beneficiaries, January 13, 2023. Retrieved from: https://www.medpac.gov/wp-content/uploads/2023/01/01132023_DualEligibles_RFI_MedPAC_Comment_SEC_v2.pdf.
---------------------------------------------------------------------------

    Comment: A commenter suggested that CMS consider excluding dually 
eligible individuals from enrolling in non-SNP MA plans, including by 
reassignment, when any of the Part C, Part D, or overall Star Ratings 
fall below average, which the commenter identified as 3.0. The 
commenter offered data specific to Massachusetts, citing that within 
the four non-SNP MA plans with the highest rates of dually eligible 
enrollment (as of February 2023), 69 percent of dually eligible 
individuals were enrolled in a plan that received 2024 Part C, Part D, 
and/or overall Star Ratings of 2.5 or less and 31 percent of dually 
eligible individuals were enrolled in a plan rated 4.0 or higher. To 
target additional monitoring or exclusion of non-SNP MA plans with 
stratified low Star Ratings for its dually eligible enrollees, the 
commenter urged CMS to review Star Rating data stratified by full-
benefit dually eligible individuals versus other Medicare beneficiaries 
within non-SNP MA plans disproportionately serving dually eligible 
individuals.
    Response: We thank the commenter for sharing these perspectives. 
The comments are outside the scope of this rulemaking, but we will 
consider them for future rulemaking.
    Comment: A commenter recommended that CMS take steps to put C-SNPs 
into the category of D-SNP look-alikes. The commenter described C-SNPs 
as restrictive in the level of coordination and services they provide, 
which exemplifies C-SNPs acting more like D-SNP look-alikes than true 
SNPs.
    Response: We appreciate the comment, but it is outside the scope of 
this rulemaking. As we stated in the June 2020 final rule (85 FR 
33813), we excluded SNPs from evaluation against the prohibition on D-
SNP look-alikes to allow for the predominant dually eligible enrollment 
that characterizes D-SNPs, I-SNPs, and some C-SNPs by virtue of the 
populations that the statute expressly permits each type of SNP to 
exclusively enroll. Nonetheless, we will monitor enrollment in other 
types of SNPs to assess whether such plans are structured primarily to 
serve dually eligible enrollees without meeting D-SNP requirements.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing revisions to Sec. Sec.  422.514(d)(1)(ii), 
422.514(d)(2)(ii), and 422.514(e), as proposed.

K. For D-SNP PPOs, Limit Out-of-Network Cost Sharing (Sec.  422.100(o))

    MA organizations offer a range of health plan options including 
Medicare savings account (MSA) plans, private fee-for-service (PFFS) 
plans, preferred provider organizations (PPOs), health maintenance 
organizations (HMOs) and health maintenance organizations with point of 
services benefits (HMO/POS). (See Sec.  422.4.) The most common health 
plan options are HMOs and PPOs. HMOs generally require enrollees to use 
network providers. PPOs have a network of providers but also pay for 
services delivered by providers not contracted with the MA organization 
as a network provider. PPOs can be attractive to Medicare beneficiaries 
who want a broader choice of providers than would be available through 
an HMO or who have a specific preferred provider, like a psychiatrist, 
who is not in network. MA organizations offer PPOs that are open to all 
Medicare beneficiaries as well as D-SNP PPOs that enroll only 
individuals dually eligible for Medicare and Medicaid.\252\
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    \252\ There are currently no D-SNP PFFS plans. MSA plans are 
prohibited from enrolling dually eligible individuals. HMO/POS plans 
have 1,423,000 enrollees as of July 2023.
---------------------------------------------------------------------------

    We noted in the proposed rule that enrollment in D-SNP PPOs has 
increased in recent years, rising to approximately 925,000 enrollees as 
of May 2023, accounting for about 17 percent of total D-SNP enrollment. 
D-SNP PPO enrollment has increased by 38 percent from May 2022 to May 
2023.\253\ Four national MA sponsors account for over 98 percent of D-
SNP PPO enrollment.\254\
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    \253\ D-SNP PPO enrollment was at approximately 668,000 as if 
May 2023.
    \254\ The four sponsors are UnitedHealth Group (69 percent of 
national D-SNP PPO enrollment), Humana (23 percent), Centene (4 
percent), and Elevance (2 percent).
---------------------------------------------------------------------------

    Like PPOs offered primarily to Medicare beneficiaries not entitled 
to Medicaid benefits, D-SNP PPOs generally have higher cost sharing for 
out-of-network services than for the same services obtained from 
network providers. For non-D-SNP PPOs, the higher out-of-network cost 
sharing is meant to incentivize use of in-network providers. In D-SNP 
PPOs, however, the large majority of enrollees are protected from being 
billed for covered Medicare services delivered by Medicare providers, 
including out-of-network providers. Instead, when these enrollees 
access services, either State Medicaid agencies pay the cost sharing 
or, if State payment of cost sharing is limited by a Medicaid rate for 
the service that is lower than the amount the D-SNP paid the provider, 
the provider must forego receipt of the cost sharing amounts.
    Those cost sharing amounts for out-of-network services in D-SNP 
PPOs are often significantly higher than the cost sharing for the same 
services under original Medicare, including for physician services, 
Part B prescription drugs, DME, home health, dialysis, and stays in 
SNFs, acute and psychiatric inpatient hospitals.
    This higher cost sharing for out-of-network services in D-SNP PPOs 
raises several concerns. First, when State Medicaid agencies pay the 
cost sharing for out-of-network services, these levels of cost sharing 
raise costs for State Medicaid programs.
    Second, certain dually eligible enrollees, specifically full-
benefit dually eligible enrollees who are not Qualified Medicare 
Beneficiaries (QMBs), are liable for cost sharing if they go out of 
network to providers not enrolled in Medicaid, as services from these 
providers are not covered by Medicaid unless the provider is enrolled 
in Medicaid.
    Third, the higher out-of-network cost sharing disadvantages out-of-
network safety net providers serving D-SNP PPO enrollees in States 
where limits established by Medicaid rates for the service result in no 
State payment of cost sharing.\255\ A more detailed

[[Page 30723]]

discussion of the impact of higher out-of-network cost sharing in D-SNP 
PPOs can be found in the November 2023 proposed rule beginning on page 
88 FR 78584.
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    \255\ For example, if the Medicare (or MA) rate for a service is 
$100, of which $20 is beneficiary coinsurance, and the Medicaid rate 
for the service is $90, the State would only pay $10. If the 
Medicaid rate is $80 or lower, the State would make no payment. This 
is often referred to as the ``lesser of'' policy. Under the ``lesser 
of'' policy, a state caps its payment of Medicare cost-sharing at 
the Medicaid rate for a particular service.
---------------------------------------------------------------------------

    In addition to the potential impact of this cost sharing structure 
on States, safety net providers, and dually eligible individuals, we 
believe such higher cost sharing for out-of-network services may result 
in situations that are inconsistent with the policy goals underlying 
section 1852(a)(2) of the Act. Section 1852(a)(2)(A) of the Act 
describes how MA organizations can satisfy the requirement to cover 
Traditional Medicare services (that is, Part A and B benefits, with 
limited exceptions) under section 1852(a)(1)(A) when covered services 
are furnished by non-contracted (that is, out-of-network) providers. 
This statute provides that the MA organization has satisfied its 
coverage obligation for out-of-network services if the plan provides 
payment in an amount ``so that the sum of such payment and any cost 
sharing provided for under the plan is equal to at least the total 
dollar amount for payment for such items and services as would 
otherwise be authorized under parts A and B (including any balance 
billing permitted under such parts).''
    For a non-D-SNP PPO, in which the majority of plan enrollees must 
pay plan cost sharing, the total dollar amount for a service paid at 
the Medicare rate will equal the total dollar amount under parts A and 
B, even if the cost sharing exceeds the cost sharing under Traditional 
Medicare.
    For a D-SNP PPO, however, the vast majority of plan enrollees are 
not liable for cost sharing for out-of-network services, just as they 
are not liable for such cost sharing under Traditional Medicare.\256\ 
Therefore, whenever State Medicaid limits on payment of Medicare cost 
sharing result in no payment of cost sharing or payment of only a 
portion of cost sharing, the total dollar amount of payment received by 
the out-of-network provider for these covered services is less than the 
provider would collect under Traditional Medicare whenever the plan 
out-of-network cost sharing exceeds the cost sharing for those services 
under Traditional Medicare.
---------------------------------------------------------------------------

    \256\ For more information on cost sharing protections 
applicable to dually eligible individuals, see: https://www.cms.gov/medicare-medicaid-coordination/medicare-and-medicaid-coordination/medicare-medicaid-coordination-office/qmb.
---------------------------------------------------------------------------

    This lesser net out-of-network provider payment in a D-SNP PPO 
undermines the balance of obligations and benefits among MA 
organizations and Medicare providers that the statute creates to 
regulate out-of-network payments and beneficiary access for the MA 
program. While section 1852(a)(2)(A) of the Act requires the total 
dollar amount to be at least as much as would be authorized under 
Traditional Medicare, Medicare providers are required by sections 
1852(k)(1) and 1866(a)(1)(O) of the Act to accept such amounts as 
payment in full. When a D-SNP PPO imposes cost sharing greater than 
Traditional Medicare and that cost sharing is unpaid by the State and 
uncollectable from the beneficiary, the MA organization has, in effect, 
failed to fulfill the spirit of its side of this statutory scheme and 
the providers are in effect forced to accept less than they would 
receive under Traditional Medicare if they agree to treat the D-SNP PPO 
enrollee.
    In a D-SNP PPO, therefore, we are concerned that the combination of 
these issues results in a situation frustrating the underlying intent 
of section 1852(a)(2)(A) of the Act because, for services furnished to 
many (if not all) enrollees in the D-SNP PPO, the out-of-network 
provider potentially receives a total payment that is less than the 
total payment available under Traditional Medicare. To address these 
concerns, we proposed new limits on out-of-network cost sharing under 
D-SNP PPOs. We have authority under section 1856(b)(1) of the Act to 
establish standards for MA organizations and MA plans to carry out the 
MA statute (that is, Part C of Title XVIII of the Act) in addition to 
authority, under section 1857(e)(1) of the Act, to adopt additional 
terms and conditions for MA contracts that are not inconsistent with 
the Part C statute and that are necessary and appropriate for the MA 
program. Further, CMS is not obligated to accept any and every bid from 
an MA organization and is authorized to negotiate MA bids under section 
1854(a)(5)(C) and (a)(6)(B) of the Act. We proposed regulatory 
amendments that would establish minimum standards for D-SNP PPO plans 
that are consistent with and necessary and appropriate for the MA 
program to address our concerns.
    We proposed at Sec.  422.100(o)(1) that an MA organization offering 
a local PPO plan or regional PPO plan that is a dual eligible special 
needs plan (that is, a D-SNP) cap out-of-network cost sharing for 
professional services at the cost sharing limits for such services 
established at Sec.  422.100(f)(6) when such services are delivered in 
network starting in 2026. The term ``professional services'' as used 
here means the same thing as it does in existing Sec.  
422.100(f)(6)(iii) and includes but is not limited to primary care 
services, physician specialist services, partial hospitalization, and 
rehabilitation services. Under this proposal, a D-SNP PPO with a 
catastrophic limit set at the mandatory MOOP limit in 2026 and 
subsequent years must have cost sharing for a visit with an out-of-
network psychiatrist or other specialist (that is, cost sharing subject 
to paragraph (f)(6)(iii)) that is capped at 30 percent coinsurance. If 
the catastrophic limit is set at the intermediate MOOP limit in 2026 
and subsequent years, the coinsurance cap would be set at 40 percent. 
If the catastrophic limit is set at the lower MOOP limit in 2026 and 
subsequent years, the coinsurance cap would be 50 percent. Under our 
proposal, the rules in Sec.  422.100(f)(6) and (j)(1) about how we 
assess that copayments that are actuarially equivalent to coinsurance 
would apply to new Sec.  422.100(o) as well.
    Our proposal at Sec.  422.100(o)(1) also would require that cost 
sharing for out-of-network acute and psychiatric inpatient services be 
limited by the cost sharing caps under Sec.  422.100(f)(6) that now 
apply only to in-network benefits. Using the same methodology to 
calculate comparable FFS cost sharing in Sec.  422.100(f)(6)(iv), the 
cost sharing limit for a D-SNP PPO with a catastrophic limit set at the 
mandatory MOOP limit could not exceed 100 percent of estimated Medicare 
FFS cost sharing, including the projected Part A deductible and related 
Part B costs, for each length-of-stay scenario in an out-of-network 
inpatient or psychiatric hospital. For catastrophic limits equivalent 
to the intermediate and lower MOOP amounts, higher cost sharing for 
out-of-network cost sharing for inpatient and psychiatric stays could 
be charged as described at Sec.  422.100(f)(6)(iv)(D)(2) and (3), 
respectively.
    We also proposed at Sec.  422.100(o)(2), by cross-referencing Sec.  
422.100(j)(1), that cost sharing for out-of-network services under D-
SNP PPOs be limited to the existing cost sharing limits now applicable 
to specific in-network services for all MA plans. For a more detailed 
discussion of these proposed limitations, which apply to chemotherapy/
radiation services, Part B drugs, renal dialysis, SNF care, home

[[Page 30724]]

health and DME, please see 88 FR 78585.
    For regional PPO D-SNPs, we proposed to exclude paragraph 
(j)(1)(i)(C)(2) and the last sentence of paragraph (j)(1)(i)(E) 
regarding overall actuarial equivalence requirements to avoid conflict 
with section 1852(a)(1)(B)(ii) of the Act.
    We believe our proposed uniform application of out-of-network cost 
sharing limits for all PPO D-SNPs is the appropriate way to address our 
concerns about section 1852(a)(2)(A), the shifting of costs to States, 
the reduction in net payments to safety net providers, and the 
potential for excessive cost sharing for those dually eligible 
individuals, who, while low income, do not benefit from cost sharing 
protections out-of-network.
    To provide the industry time to adjust to and for CMS to 
operationalize these new requirements, we proposed to implement these 
new limits starting for the 2026 plan year.
    Currently, D-SNP PPOs already submit out-of-network benefits for a 
limited review to ensure that cost sharing does not exceed 50 percent 
of the costs (as required by Sec.  422.100(f)(6)(i)) and in-network 
benefits for a review to ensure compliance with the cost sharing limits 
we propose to apply to out-of-network cost sharing. In the proposed 
rule (88 FR 78586), we stated that we do not believe this rule creates 
substantial information collection requirements. We received no 
comments on our burden estimates. In this final rule, we are 
finalizing, as proposed, that this rule does not create substantial 
information collection requirements.
    In the proposed rule at 88 FR 78586, we discussed our burden 
estimate for this proposal, stating that we did not expect any new 
burden to be associated with these requirements. We did not receive any 
comments on burden estimates for this proposal and are finalizing the 
proposed burden estimates without change.
    We received the following comments on this proposal and respond to 
them below:
    Comment: Numerous commenters, including the vast majority who 
commented on this topic, supported our proposal to impose limits on the 
out-of-network cost sharing for Parts A and B benefits in the benefit 
packages offered by D-SNP PPOs.
    Response: We thank the commenters for their support.
    Comment: A few commenters asked CMS to require the new cost sharing 
limits for plan year 2025 rather than for the 2026 plan year, as we had 
proposed.
    Response: We decline to accelerate the timetable for implementation 
of this proposal. The additional time is necessary for changes to bid 
review systems and industry training on bid submission to enable 
implementation of the proposed requirements.
    Comment: Several commenters supported the alternative proposal we 
had considered: capping all D-SNP PPO out-of-network cost sharing to 
levels consistent with Traditional Medicare. Several other commenters 
warned that imposing such limits, which are stricter than those imposed 
for in-network services, could result in an increase in cost sharing 
levels for in-network services.
    Response: We appreciate the comments on the alternative we had 
considered in the proposed rule. We share the concerns raised from a 
variety of commenters on the potential to lead to higher in-network 
cost sharing and decline at this time to finalize these more stringent 
limits on out-of-network cost sharing for D-SNP PPOs.
    Comment: MedPAC expressed support for policy remedies to address 
the cost sharing issues described in the proposed rule. However, citing 
CMS's finding that the cost sharing imposed by D-SNP PPOs is often 
higher than Traditional Medicare for out-of-network services and 
similar to Traditional Medicare for in-network services, MedPAC 
questioned how such plans are meeting the requirement that aggregate 
cost sharing be actuarially equivalent to the cost sharing charged 
under Traditional Medicare. MedPAC encouraged CMS to provide additional 
detail about how actuarial equivalence is assessed and enforced for D-
SNP PPOs, and to provide evidence that the benefit packages of D-SNP 
PPOs charging high out-of-network cost sharing are meeting actuarial 
equivalence standards. MedPAC encouraged CMS to clarify whether cost 
sharing for in-network services can be reasonably expected to increase 
under the rule for plans seeking to maintain their current actuarial 
value and whether such an outcome is an intended consequence of the 
proposed policy.
    Response: CMS regulations at Sec. Sec.  422.100(f)(5) and 
422.101(d)(3) require that all MA PPO plans have a maximum out-of-
pocket (MOOP) amount. Because of the level of flexibility in these MOOP 
and cost sharing limit requirements, an MA plan could comply with the 
MOOP limit requirements, have cost sharing that is more generous on 
certain highly-utilized Part A or B benefits, and have cost sharing for 
other benefits that is higher than cost sharing in Original Medicare to 
design a benefit package that is actuarially equivalent to Original 
Medicare without offering reductions in cost sharing for Part A and B 
benefits as a supplemental benefit. However, most MA plans do offer 
supplemental benefits in the form of reductions in cost sharing for 
services under Parts A and B compared to Original Medicare. We consider 
the effect of the MOOP in evaluating the plan benefit packages for 
Medicare Parts A and B benefits to ensure actuarial equivalence. Where 
the MA organization's decision as to which MOOP level to use in 
combination with the other cost sharing requirements for basic benefits 
causes the basic benefit (that is, the Part A and B benefit package) to 
be actuarially more generous than Traditional Medicare, we treat that 
excess value as a mandatory supplemental benefit. Where an MA 
organization has elected to use cost sharing that is exactly like 
Original Medicare--where there is not a MOOP limit--for all Part A and 
Part B benefits, the MA organization has not balanced the actuarial 
value of the MOOP against other cost sharing in the MA plan to achieve 
a plan design that is actuarially equivalent to Original Medicare 
without any supplemental benefits. Using higher cost sharing for out-
of-network services may provide a means to balance the actuarial value 
of the MOOP limit without resulting in the MA plan offering 
supplemental benefits in the form of cost sharing reductions for Part A 
and B benefits. Because the enrollees in a D-SNP PPO are generally 
protected from the cost sharing, the competitive incentives for a D-SNP 
to elect to offer cost sharing reductions as a supplemental benefit is 
reduced or eliminated in favor of the D-SNP covering additional items 
and services, which dually eligible individuals are more likely to 
perceive as more beneficial and useful.
    Mathematically, under our final rule, the plan sponsor could 
increase the in-network cost sharing while decreasing the out-of-
network cost sharing and still meet the actuarial equivalence 
requirements. However, there is a business disincentive associated with 
this action. If the in-network cost sharing were to increase, this 
could lead to lower payments for their network providers and future 
difficulties establishing networks. Therefore, we do not expect our 
proposed regulation limiting out-of-network cost sharing for D-SNP PPOs 
to increase in-network cost sharing.
    In addition, section 1852(a)(1)(B)(ii) of the Act provides that in 
applying the requirement that MA plans cover Traditional Medicare 
benefits with

[[Page 30725]]

actuarially equivalent cost sharing does not apply to out-of-network 
services covered by MA regional plans; therefore, in evaluating whether 
the plan design--and cost sharing--of an MA regional plan complies with 
section 1852(a)(1)(B) of the Act, we do not consider out-of-network 
cost sharing. This is also reflected in Sec.  422.100(j)(2), which 
excludes the out-of-network benefits covered by a regional MA plan from 
the cost sharing evaluations specified in Sec.  422.100(j)(2)(i).
    Comment: A few commenters expressed concern that the proposal would 
eliminate D-SNP PPOs which provide access to covered benefits outside 
of the plan's network while a few other commenters urged CMS to use its 
authority not to allow any D-SNP PPOs.
    Response: We do not believe the requirements for increased cost 
sharing will force D-SNP PPOs to exit the markets. We note that, 
compared to non-D-SNP PPOs and to non-PPO D-SNPs, D-SNP PPOs had higher 
financial margins in the bids submitted for both the 2023 and 2024 plan 
years. And our final rule will not result in major changes to benefit 
design or other features that would cause disruption in the market. Not 
allowing any D-SNP PPOs is beyond the scope of this rulemaking.
    Comment: Several commenters requested that CMS monitor the impact 
of finalizing and implementing the proposal, including on access to 
other supplemental benefits and on in-network cost sharing under D-SNP 
PPOs.
    Response: We thank the commenters for this suggestion and will 
continue to monitor the offerings of D-SNP PPOs.
    Comment: We received a number of comments that were beyond the 
scope of this rulemaking. These include several requests from 
commenters for CMS to improve access to in-network services, including 
for DME, teaching hospitals, and home care. A few commenters noted that 
the lesser-of policies employed by State Medicaid agencies can impede 
access to services for dually eligible individuals and disadvantage the 
providers who serve them. Several commenters noted that the materials 
used by D-SNP PPOs should provide an accurate picture of the cost 
sharing enrollees will face out-of-network. A few commenters requested 
that the proposed out-of-network cost sharing limits for D-SNP PPOs be 
applied to non-D-SNP PPOs as well.
    Response: We thank the commenters for this input and will take it 
into consideration in our ongoing oversight of the MA program.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing our proposed amendment at Sec.  422.100(o)(1) that, starting 
in 2026, for an MA organization offering a local PPO plan or regional 
PPO plan, cost sharing for out-of-network services under D-SNP PPOs 
will be limited to the existing cost sharing limits now applicable to 
specific in-network services for all MA plans, as described in Sec.  
422.100(f)(6). We are also finalizing, with minor technical edits, our 
proposed amendment at Sec.  422.100(o)(2) to limit out-of-network cost 
sharing to the cost sharing limits for such services established at 
Sec.  422.100(j)(1) when such services are delivered in network by 
cross-referencing Sec.  422.100(j)(1).
    We also note that some of the public comments received for the 
provisions related to the integration of Medicare and Medicaid were 
outside of the scope of the proposed rule. These comments covered 
topics such as: opportunities for States to share in savings from 
integrated care and aligned enrollment; modernizing identification 
cards for dually eligible enrollees; impact of Medicare and Medicaid 
policies on rural areas; long term care pharmacy services for dually 
eligible enrollees eligible for institutional care; default enrollment; 
and private equity. We appreciate the input. However, as these comments 
are outside the scope of this rulemaking, they are not addressed in 
this final rule.

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

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

    Sections 1894(e)(4) and 1934(e)(4) of the Act establish CMS's 
authority to oversee the PACE program. To strengthen CMS's oversight of 
the PACE program, we proposed 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 will be a criterion CMS will 
use to review a PACE organization's application. The addition of this 
evaluation criterion at Sec.  460.18(c) will permit CMS to deny 
applications from PACE organizations based on the organization's past 
performance. We also proposed to establish at Sec.  460.18(d) that CMS 
may deny a PACE application if the PACE organization's agreement was 
terminated by CMS or not renewed during the 38 months preceding the 
date the application was first submitted to CMS.
    The performance history of an organization is an important 
criterion for CMS to consider when evaluating a PACE application 
because the past performance of an organization may be a valuable 
predictor of an organization's ability to effectively operate a new 
PACE program or expand an existing program. Organizations that have 
performed well are more likely to continue their high performance while 
organizations that have not performed well may have even greater 
difficulty meeting regulatory requirements when operating a new or 
expanded PACE program in addition to their existing PACE program. CMS 
believes that adding the consideration of an organization's past 
performance will guard against poor-performing organizations expanding 
their footprint and putting the health and safety of future PACE 
participants they enroll at risk. It is important for CMS to ensure 
that the legal entities with whom we hold program agreements can 
safely, effectively, and appropriately provide health care services and 
benefits to PACE participants, who are frail and elderly and among the 
most vulnerable Medicare beneficiaries.
    In the Medicare Advantage (MA) and Part D programs, CMS considers 
an organization's past performance during the evaluation of its 
application. We modeled the proposed PACE past performance review 
regulations after the MA and Part D past performance review regulations 
at 42 CFR parts 422 and 423, using applicable evaluation criteria. 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 initial and expansion applications of poorly 
performing organizations. As with its reviews of MA and Part D 
applications, CMS seeks through its review of PACE applications to 
identify poorly performing organizations and to prevent such 
organizations from entering into new agreements or expanding their 
service area in the program.
    As explained in the proposed rule, we believe modeling past 
performance

[[Page 30726]]

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 Part D regulations at 42 CFR part 423, except for those 
regulations CMS has waived in accordance with Sec.  423.458(d). In 
addition, modeling after past performance reviews in MA and Part D 
reduces burden for PACE organizations 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 PACE entities that submit Part D applications.
    In the January 2021 final rule (86 FR 5864), we 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 noncompliance 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, we adopted the 
following factors as the basis 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's threshold for compliance 
actions (see 86 FR 6000 and 87 FR 27704). Each of these factors, on its 
own, represents significant noncompliance 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.
    In the December 2022 proposed rule, we proposed to apply a past 
performance methodology to entities that seek to offer a new PACE 
program or expand an existing program. We proposed to modify the PACE 
regulations at 42 CFR 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. Our proposed 
methodology for taking into account past performance when evaluating 
PACE applications is similar to the methodology we use 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 the 
proposed PACE past performance reviews is to prevent organizations from 
expanding their PACE operations in circumstances 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 
the welfare of 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 discussed in the 
December proposed rule beginning on page 79637, we proposed that CMS 
would have the authority to 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. We did not propose to include Star Ratings in the past 
performance reviews for PACE because we do not calculate these measures 
for PACE organizations.
    We accept applications on designated quarterly submission dates 
from entities seeking to either establish a PACE program or expand an 
existing program. Like 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, we 
approve the application.
    We proposed 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 the statutory not-for-profit restriction 
no longer being applied beginning in May 2015, which allowed for-profit 
entities to operate PACE programs (see sections 1894(h) and 1934(h) of 
the Act).
    From 2012 to 2013, Mathematica Policy Research, under contract with 
CMS, conducted a study to address the quality of and access to care for 
participants of for-profit PACE programs. Based on the 2012 Mathematica 
study and a prior study in 2008, HHS prepared and submitted the report 
to the Congress on May 19, 2015. Based on the findings in the report to 
Congress, we determined that under sections 1894(a)(3)(B) and 
1934(a)(3)(B) of the Act, the requirement that a PACE program be a not-
for profit entity would no longer apply after May 19, 2015 (the 
submission date of the report to Congress).
    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 2022, we 
received 35 initial applications and 29 expansion applications. As of 
August 2023, there were 154 PACE organizations serving 70,209 
participants in 32 States and the District of Columbia.
    PACE participants are some of the most vulnerable Medicare 
beneficiaries. 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 chronic 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)).
    As discussed in the proposed rule given the recent and anticipated 
future growth in PACE and the vulnerable populations that PACE 
organizations serve, we believe that the past performance of a PACE 
organization should be reviewed as part of the application process. 
Past performance evaluations ensure CMS only approves

[[Page 30727]]

initial PACE applications and applications for service area expansions 
from existing PACE organizations that have a strong and positive record 
of performance. 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 finalized 
rules 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's 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's 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. We proposed to use a 12-
month review period for PACE past performance, which is the same 
lookback period that applies to MA and Part D past performance reviews. 
Under our proposal, CMS would review an organization's past performance 
for the 12 months preceding the deadline established by CMS for the 
submission of PACE applications. We proposed that, if CMS sends a 
Request for Additional Information (RAI) to the organization, the 12-
month look-back review period would apply upon receipt of the 
applicant's response to CMS's RAI. As explained in the proposed rule, 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 proposed to specify at Sec.  460.18(c)(1)(i) that CMS would 
evaluate the following components of an applicant organization's past 
performance, starting with the March 2025 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's proposed 13-point 
threshold for compliance actions with respect to the PACE program 
agreement. We proposed that, if any of those circumstances applies to 
the applicant organization, CMS may deny its initial or expansion 
application.
    Specifically, we proposed 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 
we may deny a PACE application, as noted in the previous paragraph. 
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's regulations have either admitted they failed to comply with 
PACE requirements or have appealed and a third party has upheld CMS's 
determination that the PACE organization 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 proposed 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), we require 
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 our 
evaluation of past performance because we have a responsibility to 
ensure the organizations that provide health care services to Medicare 
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

[[Page 30728]]

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 its PACE physical site, 
leaving PACE participants without PACE access to their PACE 
organization. Based on this, we believe it 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 proposed 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. Like an organization that 
lacks fiscal soundness, an organization that has filed for or currently 
is in State bankruptcy proceedings is at great risk of having 
insufficient funds to cover costs associated with administering 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, lack of care 
coordination, loss of access to providers (especially primary care 
providers who are employed by the PACE organization), and loss of the 
social and emotional support the PACE organization provides to 
participants. Thus, permitting an organization to expand while under 
bankruptcy proceedings is not in the best interest of the PACE program, 
and as CMS is responsible for oversight of PACE, we believe it is 
appropriate for us to have the authority to deny an application from 
any organization that has filed for or is in State bankruptcy 
proceedings.
    Finally, we proposed 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. We proposed to specify at new 
Sec.  460.19(a) that CMS may take compliance actions as described at 
Sec.  460.19(c) (discussed in this section of this 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 at 42 CFR part 460. As proposed, Sec.  
460.19(a)(1) would provide that CMS may determine that a PACE 
organization is noncompliant 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, we proposed to establish at Sec.  460.19(a)(2) 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, we issue three types of compliance actions: Notices of 
Non-Compliance (NONCs), Warning Letters (WLs), and Corrective Action 
Plans (CAPs).\257\ These actions are our 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 regarding how the organization intends to address the problem.
---------------------------------------------------------------------------

    \257\ The CAPs we proposed 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.
---------------------------------------------------------------------------

    First, we proposed to specify that NONCs may be issued for any 
failure to comply with the requirements of the PACE organization's 
current or previously terminated program agreement. We typically use a 
NONC to document small or isolated compliance problems. NONCs represent 
the lowest level of compliance action issued by CMS. We typically issue 
NONCs for the least egregious failures, such as a first-time offense, a 
failure that affects only a small number or 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 marketing materials 
or incorrectly uploading these materials.
    Second, we proposed to specify that a WL may be issued for a 
serious failure or continued failure to comply with the requirements of 
the PACE organization's current or previously terminated prior program 
agreement. WLs are typically issued as an intermediate level of 
compliance action and when discussing compliance actions on a 
continuum, would be issued for compliance issues that fall in terms of 
the level of their egregiousness between a NONC and a CAP. WLs are 
issued when an organization has already received a NONC and the problem 
continues to persist without correction, or they may be issued after a 
first offense when the offense concerns a larger or more concerning 
problem, such as failure to provide medically necessary services. 
Unlike NONCs, WLs contain language informing the PACE organization of 
the potential consequences to the organization should the non-compliant 
performance continue. An example of when a WL might be issued would be 
when, for example, a PACE organization has failed to have the full 
interdisciplinary team (IDT) involved in the review of participant care 
plans, which may result in participants not receiving necessary care. 
We might determine that the PACE organization's non-compliance in this 
regard warrants a higher level of compliance, such as a WL in place of 
a lower level of compliance. Our determination to issue a WL instead of 
a NONC, in this case, might be based on a review of factors, such as 
the type of care that was not received and the consequence of the care, 
not being properly provided, due to the PACE organization's failure to 
ensure that the IDT was reviewing all care plans.
    Third, we proposed 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 non-compliance. We 
may determine that the PACE organization has repeated, not corrected, 
or has a new deficiency which substantially impacts participants. In 
these types of scenarios, we require the PACE organization to implement 
a CAP. The CAPs contemplated here 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 SAA through reviews and audits of 
the PACE organization (Sec.  460.194(a)(2)). We have a formal audit 
process, which separately identifies non-compliance. We issue CAPs 
under Sec.  460.194(a)(2) resulting from finding of our reviews or 
audits. CMS routinely requests these CAPs and responses are submitted 
to CMS by PACE organizations as they address deficiencies identified 
during CMS reviews or audits. We expect to continue to request CAPs as 
necessary under Sec.  460.194(a)(2) in response to deficiencies 
identified through reviews

[[Page 30729]]

or audits; nothing about this rule would change that process.
    Consistent with the past performance methodology applicable to MA, 
we proposed to assign points to each type of compliance action taken by 
CMS against PACE organizations. We then proposed 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. We will then sum the total of the points accrued by the 
applicant organization, and if the total meets or exceeds 13 points 
during the 12-month review period, we may deny the organization's new 
or expansion application on the basis of past performance.
    With the addition of compliance actions as a basis for the denial 
of applications, we proposed 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 proposed to codify in 
regulation the factors CMS currently uses when determining whether and 
at what level of a compliance action should be issued. As discussed in 
the paragraphs that follow, we consider 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.
    We proposed to add Sec.  460.19(b)(1) to establish that CMS 
considers the nature of the PACE organization's non-compliant conduct. 
The nature of the conduct is relevant to our 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.
    We proposed to specify at Sec.  460.19(b)(2) 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 our decision about the type of 
compliance action to take.
    As 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 many or all of the 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.
    At Sec.  460.19(b)(4), we proposed to 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 for a period of time 
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 regarding the PACE organization's 
previous failure to provide transportation, we may escalate this 
continued failure to comply with CMS requirements by issuing a WL, 
based on the PACE organization's history and continued failure to 
correct the deficiency.
    As 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. We 
do not consider issues to be self-reported if they are identified 
through specific requests made by CMS, the review of data CMS either 
has or has requested, complaints that have come into CMS through 
sources such as 1-800-Medicare, or complaints that CMS has asked the 
PACE organization to provide. If an organization has self-reported a 
compliance issue, we may decide to lower the level of non-compliance 
(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, based on the factors identified previously, CMS determines 
that a higher-level compliance action is warranted.
    Finally, we proposed to add Sec.  460.19(b)(6) to provide that CMS 
considers the PACE organization's failure to adequately oversee its 
operations. For example, 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, we proposed to establish at 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. We believe an organization whose performance 
results in issuance of two CAPs and a NONC, or whose performance 
results in any combination of compliance actions that adds up to 13 
points, should not be permitted to expand.
    We proposed to specify at Sec.  460.18(c)(1)(ii) that CMS could 
also

[[Page 30730]]

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 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 our past 
performance methodology by establishing new legal entities and using 
those to submit PACE applications to avoid having CMS consider 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 we review 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, to 
consider information from the current or prior PACE program 
agreement(s) of the parent organization of the applicant, and from 
members of the same parent organization as the applicant. As noted in 
the proposed rule, we are seeing initial PACE applications more 
frequently that represent unique and distinct legal entities that are 
part of a broader parent organization. In the December 2022 proposed 
rule at page 79642, we described an instance in which 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 that case, in accordance with Sec.  460.18(a) 
and (b), we 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. We denied the application 
due to the nature of the deficiencies that led to formal sanctions for 
the related organizations.
    We also proposed one exception to this policy. Specifically, we 
proposed that 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 our requirements to acquire poorly performing PACE 
organizations without being penalized based solely on that acquisition. 
As stated in 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 poorly performing organization.
    Finally, we proposed 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 proposed 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, we 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 part 
423, 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 our ability to 
terminate its PACE program agreement. Allowing organizations to re-
enter the PACE program when they have failed to adequately implement a 
prior agreement would be contrary to 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.
    We solicited comments on these proposals. We appreciate 
stakeholders' input on the proposed changes and have provided comment 
summaries and our responses later in this section.
    Comment: Several commenters supported the evaluation of PACE 
organizations' past performance in CMS's application review process. 
Commenters also supported our proposed 24-month grace period and 
expressed appreciation for CMS's transparency in publicly sharing the 
past performance methodology.
    Response: We thank those supporting the evaluation of past 
performance during application reviews.
    Comment: A few commenters questioned whether the corrective actions 
resulting from CMS's audits are included in the calculation of 
compliance points. Commenters were concerned that issues identified in 
audits would unfairly disadvantage those organizations that have been 
audited by CMS within the past twelve months as compared to 
organizations that were not audited by CMS.
    Response: We clarify that the compliance action plans identified in 
Sec.  460.19(c)(3) are separate from the corrective action requests 
resulting from audits, as identified in Sec.  460.194, and are not 
considered as part of the past performance methodology. We explained in 
the proposed rule that the corrective action requests resulting from 
audits are considered routine and result from a process which CMS 
considers

[[Page 30731]]

separate and distinct from past performance. We updated the language 
Sec.  460.18(c)(1)(D)(1)(i) to state that these corrective action 
requests resulting from audits, as identified in Sec.  460.194, are not 
issued points used for past performance evaluation purposes.
    Comment: A few commenters were concerned that the 13-point 
compliance point threshold would disproportionately affect larger 
organizations. They expressed concern that organizations that had many 
center sites, especially in different States, could incur a 
disproportionate number of points due to the size or geographic spread 
of the organization.
    Response: We do not believe that the compliance point threshold 
would disproportionately affect larger organizations because past 
performance is determined at the legal entity level, not the parent 
organization level. PACE organizations are generally licensed under 
different legal entities in each State. The compliance action taken 
against a contract only impacts that contract's legal entity and does 
not impact any other legal entity held by that parent organization. 
This eliminates the concern of the commenters that compliance actions 
will disproportionately affect larger organizations. Moreover, 
regardless of the size of the PACE organization, CMS expects all PACE 
organizations to comply with established requirements. Therefore, we 
decline to adjust the proposed 13-point calculation to account for the 
size of an organization.
    Comment: A commenter requested that CMS outline the process, 
protocols, and compliance thresholds that rise to the levels of a 
Notice of Non-Compliance, a Warning Letter, or a Request for a 
Corrective Action Plan.
    Response: In the December 2022 proposed rule starting on page 
79640, we outlined the factors CMS uses to determine whether to take a 
compliance action against a Medicare Advantage Organization and the 
level of compliance that is appropriate. The process CMS uses to 
determine whether to issue and how CMS issues a Notice of Non-
Compliance, a Warning Letter, or a Request for a Corrective Action Plan 
to an organization is the same for regardless of the type of compliance 
taken. CMS considers the following list of factors when determining the 
level of compliance action to take as described in this list, and we 
note that we may consider additional factors not specifically listed 
here that address the impact of the non-compliance or the 
organization's inadequate oversight that contributed to the non-
compliance: the nature of the conduct, the degree of culpability of the 
organization, the actual or potential adverse effect on enrollees which 
resulted or could have resulted from the conduct of the organization, 
the history of prior offenses by the organization, the 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 the organization's inadequate oversight of 
the operations that contributed to the non-compliance. Once we 
determine the level of compliance action to issue based on our 
criteria, we issue the action to the organization through a letter. As 
for compliance review protocols, as discussed in the December 2022 
proposed rule, we base the review protocols on the specific issue being 
reviewed in accordance with the approach detailed therein, for example, 
the standard protocol for fiscal soundness is such that the 
organization either has a positive or negative net worth. However, the 
protocols for other issues such as, for example, the failure to ensure 
enrollment packets are provided timely to participants are subject to 
review and consideration in accordance with the factors set forth at 
Sec.  460.19, such as how many participants are affected and the lack 
of timeliness with respect to when the enrollment packets were actually 
received by an enrollee. Compliance thresholds may also be dependent 
upon specific circumstances. As identified above, compliance actions 
are taken for fiscal soundness if the organization has a negative net 
worth. The level of compliance taken for untimely delivery of an 
enrollment packet would depend on the application of the factors 
outlined in our final regulation. We believe these criteria and 
processes are well-documented in the December 2022 proposed rule and do 
not believe additional elaboration is needed here.
    Comment: One commenter disagreed with our proposal to have the 
authority to deny an application based on past performance when an 
organization was under sanction, even though the sanction was 
ultimately lifted prior to CMS receiving the application. The commenter 
suggested that denying an application after a sanction is lifted would 
inhibit the expansion of PACE into new States.
    Response: We believe sanctions, even if lifted, should be a basis 
for denial if that sanction was in place at any time during the twelve-
month look-back period. A sanction is issued for serious non-compliance 
and is in place until such time the issue is corrected and not likely 
to reoccur. Sanctions issued for these reasons, indicate the 
organization should continue to focus on compliance rather than 
expansion, even after the sanction is lifted. We believe the inclusion 
of sanctions that have been lifted within the twelve-month look-back 
period is an important protection for the PACE program and the 
participants of the PACE organization that was under sanction as well 
as being consistent with Part C and Part D Past Performance 
regulations. For these reasons, we are finalizing our proposal to 
establish as a basis for denying a PACE application that an 
organization was under sanction within the twelve-month look-back 
period, without modification.
    Comment: A commenter stated that CMS should not start the look-back 
period until 2025, noting that it would be unfair to use compliance 
letters issued prior to January 1, 2025. The commenter suggested that 
CMS exclude the time of performance during the COVID-19 pandemic and 
the associated public health emergency. This commenter also stated that 
CMS should provide PACE organizations time to train and educate 
employees on compliance.
    Response: We understand the commenters concern regarding the time 
for consideration of compliance letters. By waiting, we could be 
providing PACE organizations additional time to correct any issues that 
might result in a compliance action. However, organizations should be 
vigilant about complying with program rules, regardless of the timing 
of the start of the past performance methodology. If a PACE 
organization is complying with CMS rules, the start of the period of 
past performance is immaterial. The timing is only a concern for those 
organizations whose current non-compliance would result in CMS denying 
an application based on past performance. It is exactly those 
organizations that should not expand and providing them with an 
additional year to come into compliance with existing rules is not in 
the best interest of the program or participants. This is particularly 
important should PACE organizations that are out of compliance attempt 
to expand during any period in which the start date of our 
consideration of past performance is delayed.
    With respect to the commenter's contention that we should delay the 
implementation to avoid issues that may have resulted from the COVID-19 
Public Health Emergency, we disagree. The federal COVID-19 Public 
Health Emergency declaration ended May 11, 2023, and sufficient time 
has passed allowing PACE organizations an

[[Page 30732]]

opportunity to address and cure any issues resulting from the Public 
Health Emergency and return to a normal state of operations.
    Finally, the commenter suggested waiting so PACE organizations had 
time to train and educate their employees regarding past performance 
criteria. CMS's past performance measures do not require training or 
educating employees. Any training or educating would concern adhering 
to CMS regulations, which employees should already be trained on and 
educated about. Past performance only looks back at the actions of the 
organization and does not require the organization to do anything 
differently.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing the rule as proposed.
    Comment: A commenter suggested we use a six-month look-back instead 
of a 12-month look-back. The commenter stated that a 12-month look-back 
effectively prohibits an organization from expanding for 24 months.
    Response: We do not believe a six-month look back is appropriate 
for a few reasons. The 12-month look-back period aligns with the look-
back period used in the MA and Part D past performance methodology, 
which has proven effective over a number of years. In addition to 
aligning with the MA and Part D past performance methodology, we 
believe a 12-month look-back period allows for CMS to obtain sufficient 
data to determine whether an organization is operating in such a manner 
that we would deny an application. We believe a six-month look-back 
period is an insufficient amount of time for CMS to evaluate an 
organization's performance. We believe a 12-month look-back period is 
necessary to ensure an organization can provide the required services 
in a compliant manner over the long term, and not only in a shortened 
timeframe.
    As mentioned previously, we are working towards consistency within 
programs and across programs where applicable. PACE organizations are 
already subject to Part D regulations. Establishing a 6-month look-back 
period for PACE would be inconsistent with the 12-month look-back 
period in the Part D regulations.
    For these reasons, we are finalizing as proposed.
    Comment: A few commenters stated that some PACE organizations may 
have high-quality programs but are not fiscally solvent and that 
applications from these organizations should be approved. A commenter 
stated that a PACE organization, to meet fiscal soundness requirements 
for expansion, may decrease staff or services resulting in less care 
for participants.
    Response: We do not agree with the commenter that CMS should look 
beyond an organization's negative net worth when reviewing past 
performance. While a PACE organization may be able to provide quality 
services in the absence of a positive net worth, such an entity should 
not expand its operations until it demonstrates it can meet our fiscal 
soundness requirements. If such an organization were to expand 
operations the organization would likely incur additional costs, 
possibly resulting in further deterioration of the organization's 
fiscal soundness. An organization with a decreasing net worth and 
potentially experiencing cash flow problems, may reduce services to 
participants or the number of providers to continue operating, neither 
of which would be a desired outcome. As previously noted, we believe an 
organization's past performance is an indicator of future performance. 
We believe a positive net worth is critical to ensuring the future 
success of a PACE organization.
    Based on these reasons we are finalizing these requirements as 
proposed.

B. PACE 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's 
authority regarding PACE provider application requirements. Based on 
this authority, we proposed 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 program's 
geographic service area and/or the addition of a new PACE center), on 
designated quarterly submission dates.
    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 assurance document. The State assurance 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) and the 
designated agency for the PACE program in the State in which the 
program will be located. The document confirms the State's support for 
the PACE application. It is imperative that the applicant demonstrate 
the State's support of the application because the State is an equal 
party to the PACE program agreement, which, once approved and 
finalized, establishes the 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

[[Page 30733]]

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 an 
application received without the required State assurance 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 determine 
whether to approve or deny the application (Sec.  460.20(b)).
    As part of annual training sessions and resources available at: 
https://www.cms.gov/Medicare/Health-Plans/PACE/Overview, CMS 
acknowledges and has stated that the State readiness review (SRR) of a 
center site, as applicable, is the only required application document 
that may not be available and submitted at the time of the initial 
application submission to CMS on the designated quarterly application 
submission date. The SRR is conducted at the applicant's PACE center by 
the State, and the accompanying report issued by the State certifies to 
the State and CMS that the PACE center satisfies all applicable local, 
State, and Federal requirements for operation. CMS has instructed PACE 
applicants to upload the SRR during the application process, including 
following the initial submission date if necessary, and when responding 
during the course of CMS's review to a CMS-initiated request for 
additional information from the applicant.
    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 assurance 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 these aforementioned 
scenarios occur, CMS will instruct the applicant to withdraw the 
application.
    In the December 2022 issue of the Federal Register (87 FR 79637) 
(hereinafter referred to as the December 2022 proposed rule), we 
proposed to treat any PACE application that does not include a signed 
and dated State assurance document, meaning a document with accurate 
service area information and the accurate physical address of the PACE 
center, as an incomplete and invalid application and therefore not 
subject to CMS review or consideration. Further, an application 
submitted without a valid State assurance document must be withdrawn 
from HPMS. These applicants must wait until the next quarterly 
submission date to submit the application with the State assurance 
document included. We proposed to add paragraph Sec.  460.12(b)(3) to 
specify that any PACE application that does not include the proper 
State assurance documentation is considered incomplete and invalid and 
will be removed from HPMS.
    In the June 2019 final rule, we amended Sec.  460.12(a) by adding 
the phrase ``in the form and manner specified by CMS'' to describe 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 (84 FR 
25671) was issued. We proposed 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 it clear that CMS will only accept 
applications that are submitted within the timeframes established by 
CMS.
    In the December 2022 proposed rule, we proposed 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 assurance 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. We proposed Sec.  460.20(b)(1) to 
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. This is 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 proposed 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 
42 CFR 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 submit a Part D application. 
Therefore, consistent with current practice, we did not propose to 
establish Part D application requirements for PACE organizations 
seeking to expand their existing service area. As stated in the 
proposed rule, we will 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 to promote 
consistency.
    Consistent with current practice, we proposed 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. 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.
    Comment: A few commenters were not in support of the State 
assurance form being a requirement for a PACE application submission. 
They requested that PACE applicants be afforded an opportunity to amend 
the State assurance document after application submission.

[[Page 30734]]

    Response: We appreciate the comments and understand the request. 
The State assurance document is a necessary part of the application 
because the document demonstrates that the State is supportive of the 
PACE application. Since the State is a party to the 3-way agreement 
that is signed once the application is approved, it is important that 
the information provided on the State assurance form is correct at the 
time of application submission.
    After considering the comments we received and for the reasons 
outlined in the proposed rule and our responses to comments, we are 
finalizing the proposed requirements at Sec. Sec.  460.12 and 460.20 to 
determine that a substantially incomplete PACE application without a 
State assurance document is a nonapplication. These provisions will 
strengthen the PACE regulations which pertain to application 
requirements, by further defining what constitutes a complete and valid 
application.

C. 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), we added Sec.  
460.64, which sets forth certain personnel qualification requirements 
for PACE staff. When drafting these regulations, we 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.). We 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), we added Sec.  460.71, which sets forth oversight 
requirements for PACE employees and contractors with direct patient 
care responsibilities. We 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, we 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.'' In the June 
2019 final rule, we 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) to reduce confusion across PACE organizations.
    The proposed rule at 87 FR 79643 discussed how we have seen as part 
of our audit and oversight activities that PACE organizations have an 
inconsistent approach to medical clearance. We further discussed how 
the COVID-19 pandemic impacted the population served by PACE and 
``demonstrated a need for a more comprehensive approach to infectious 
disease management and prevention'' (Id.). 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. Therefore, 
we proposed 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 and vulnerable population served by PACE.
    We proposed 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 
proposed 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 
proposed 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. We proposed to 
include in paragraph (a)(6) language specifying that, at a minimum, 
vaccinations identified in Sec.  460.74 must be up to date. As we 
discussed in the proposed rule at 87 FR 79644, CMS does not currently 
define what immunizations are included in the requirement that ``all 
immunizations are up to date.'' 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. However, based on the PACE population we also 
considered 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. We solicited 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, with particular focus on commenters' views on 
vaccinations recommended by ACIP. We also solicited 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.
    At Sec.  460.64(a)(5), we proposed 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. We solicited comment 
on adding this annual

[[Page 30735]]

requirement into the medical clearance provision.
    We also proposed adding requirements to define what would 
constitute an acceptable medical clearance process. As discussed in the 
proposed rule at 87 FR 79644, 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 
proposed 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; therefore, it would not be difficult to 
operationalize. We also proposed 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. We proposed 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.
    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 proposed 
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.
    We proposed at Sec.  460.64(a)(5)(iii) to establish the minimum 
requirements that the PACE organization must satisfy if it chooses to 
conduct a risk assessment for medical clearance. First, we proposed to 
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. 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.
    We proposed at Sec.  460.64(a)(5)(iii)(B) to 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 
we discussed in the proposed rule at 87 FR 79645, 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. We proposed at Sec.  460.64(a)(5)(iii)(C) to establish a 
requirement 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 proposed 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 proposed 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, Influenza, Measles, Meningitis, Meningococcal 
Disease, Mumps, Pertussis, Pneumococcal Disease, Rubella, Streptococcal 
Infection, and Varicella Zoster Virus. We proposed 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 also proposed 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 or determines that a threat exists 
and communicates that threat via an official mechanism such as the 
CDC's Health Alert Network mentioned above. 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. As we 
discussed in the proposed rule at 87 FR 79645, 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. It is likely that any threat to public health related to 
communicable diseases would be shared through this mechanism, but we 
solicited 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 were not inclined to add a specific source into 
regulation, but we solicited comment on that as well. We also proposed 
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. Although we 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 solicited comment on whether we should eliminate the 
risk assessment from this proposal and

[[Page 30736]]

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. We discussed and accounted for the burden of 
updating the policies and procedures in the collection of information 
requirements section of the 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 
proposed to amend the current language to state that all employees and 
contracted staff furnishing care directly to participants must 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). We also proposed 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. Under our proposal, current paragraphs (b)(5) and (b)(6) would 
be redesignated as paragraphs (b)(6) and (b)(7). As we stated in the 
proposed rule, we believe that modifying this provision as proposed 
would not increase the burden on PACE organizations as they are already 
required to ensure employees and contractors have all immunizations up-
to-date (87 FR 79646).
    We received the following comments related to this proposal:
    Comment: Several commenters expressed concerns with the 
solicitation for comment related to vaccinations. These same commenters 
noted that requiring an expansive list of required immunizations would 
create a new federal floor for PACE that was unlike what any other 
Medicare provider was required to adhere to. These commenters were 
concerned that requiring specific vaccinations would impair PACE 
organizations' ability to hire and retain staff. A commenter stated 
that a PACE organization had lost 30 percent of its staff after the 
COVID-19 vaccination rule went into effect. Another commenter requested 
that CMS clarify if religious and medical exemptions would apply to the 
new vaccination requirements. Multiple commenters requested that, if 
CMS finalized a list of required vaccinations, CMS finalize the more 
targeted subset of vaccinations for which CMS solicited comment, 
specifically Hepatitis B virus, influenza, measles, rubella, and 
varicella. Lastly, a commenter asked CMS to clarify whether the up-to-
date COVID-19 requirement referred to the primary series or if booster 
shots would be required.
    Response: When we issued the proposed rule (87 FR 79452) on 
December 27, 2022, many Medicare and Medicaid providers and suppliers 
(including PACE organizations) were required to have policies and 
procedures in place for staff vaccination against COVID-19. However, on 
June 5, 2023, we issued a final rule ``Medicare and Medicaid Programs: 
Policy and Regulatory Changes to the Omnibus COVID-19 Health Care Staff 
Vaccination Requirements for Long-Term Care (LTC) Facilities and 
Intermediate Care Facilities for Individuals with Intellectual Diseases 
(ICFs-IID) To Provide COVID-19 Vaccine Education and Offer Vaccinations 
to Residents, Clients, and Staff; Policy and Regulatory Changes to the 
Long Term Care Facility COVID-19 Testing Requirements'' (88 FR 36485), 
hereinafter referred to as the ``LTC 2023 final rule.'' In that final 
rule, we cited, among other considerations, ``increased vaccine uptake, 
declining infection and death rates, decreasing severity of disease, 
increased instances of infection-induced immunity'' as reasons for 
withdrawing the provisions of the COVID-19 staff vaccination rule (88 
FR 36488). Taking these considerations into account, we removed the 
requirement at Sec.  460.74(d) for PACE employees and contractors to be 
up-to-date with COVID-19 vaccinations. In our proposed rule, we had 
proposed referencing the COVID-19 vaccination rule at Sec.  460.74(d) 
as part of our new paragraph Sec.  460.64(a)(6). Following the 
withdrawal of that rule, we are not finalizing the proposed reference 
to Sec.  460.74(d) in Sec. Sec.  460.64(a)(6) and 460.71(b)(5).
    We thank commenters for their concerns regarding PACE 
organizations' ability to staff due to the COVID-19 vaccination rule as 
well as our solicitation for comment relating to requiring a specific 
set of immunizations in the proposed rule. As we stated in the LTC 2023 
final rule, ``[S]taffing shortages peaked nationally during the Omicron 
wave, with nearly one in three facilities reporting a shortage in 
January 2022. Staffing shortage rates have fallen since then, and 
remained relatively stable through March 2022, even after the 
implementation of the staff vaccination IFC'' (88 FR 36495). Based on 
the data available, we disagree with commenters that implementing 
additional vaccination requirements would adversely impact PACE 
organizations' ability to staff. However, we understand the concerns 
expressed by commenters that requiring a specific list of vaccinations 
for PACE organizations would potentially hold PACE organizations to a 
different standard regarding vaccinations than other Medicare programs. 
While we are not finalizing a specific list of vaccination 
requirements, and instead will leave the language in Sec.  460.64(a)(6) 
that ``all immunizations must be up to date'', we will continue to 
assess the need for vaccinations. We will consider moving forward with 
a vaccination requirement in the future if the need arises. We also 
encourage PACE organizations to consider resources such as the ACIP 
vaccination standards when determining which immunizations to require 
for their employees and/or contractors.
    Comment: Several commenters expressed concerns with the proposed 
requirement that medical clearance be conducted on an annual basis, 
versus only being done at the time of hire. These commenters suggested 
that it was overly burdensome for PACE organizations, particularly 
smaller organizations, to have to re-clear staff on an annual basis. 
These commenters also indicated that this would place an undue burden 
on a PACE organizations' ability to contract with other health care 
providers who may not be currently required to medically clear staff on 
an annual basis.
    Response: We agree with commenters that an annual physical 
screening requirement may be overly burdensome for some PACE 
organizations since the requirement could impact PACE organizations' 
ability to contract with other health care providers. Therefore, we are 
not finalizing the proposed requirement that the physical examination 
or risk assessment be conducted annually. Instead, we will maintain the 
current requirement that direct care personnel be medically cleared 
prior to having direct contact with participants.
    Comment: Most commenters requested that CMS codify the risk 
assessment approach to medical clearance as an alternative to requiring 
a physical examination for every individual. Commenters indicated this 
alternative proposal would allow PACE organizations to retain some 
discretion to medically clear staff as well as to reduce burden on PACE 
organizations. A couple of commenters requested that CMS leave medical 
screening requirements up to individual States, while a couple of other 
commenters expressed concern that home health agencies in certain 
States are not required to undergo additional medical screenings. These 
commenters noted

[[Page 30737]]

that State medical screening requirements apply to all health care 
providers within each respective State, and that requiring only PACE 
organizations to follow stricter federal requirements by conducting a 
physical exam in all instances or requiring specific vaccinations would 
put PACE organizations at a disadvantage when competing for contracts 
with medical providers and/or facilities. Instead, most commenters 
wanted CMS to finalize the risk assessment approach without requiring 
the PACE organization to conduct a physical exam.
    Response: We thank commenters for sharing their concerns. We 
understand why commenters requested that we finalize the risk 
assessment alternative to the proposal that a physical exam be 
completed on each individual that provides direct participant care. As 
we stated in the proposed rule, PACE organizations serve a vulnerable 
population, and we believe performing a physical exam prior to staff 
having direct contact with participants is a best practice to protect 
participants from infectious diseases (87 FR 79644). However, we 
understand that requiring a physical exam for every individual that a 
PACE organization may employ or contract with may be overly burdensome, 
and therefore we proposed the risk assessment as a way for PACE 
organizations to determine if a physical exam is necessary for all 
personnel (Id.).
    We recognize the concern commenters expressed of additional medical 
screening requirements putting PACE organizations at a disadvantage in 
contract negotiations with medical providers and/or facilities, 
including home health agencies, and as we discussed in our earlier 
responses, we are not finalizing our proposed requirements for annual 
medical clearance or a specific list of required vaccinations. We 
believe our decision not to finalize the annual physical screening 
requirement or the specific vaccination list will alleviate contracting 
concerns; however, PACE organizations can also take into consideration 
the processes they already have in place to demonstrate compliance with 
individual State requirements when they develop the risk assessment 
tool. Therefore, we are finalizing the requirement for a physical 
examination of direct care personnel with the risk assessment as an 
alternative provided the risk assessment meets the minimum requirements 
set forth in the proposed rule.
    Comment: Multiple commenters raised questions and concerns 
regarding whether allowing colleagues to conduct health screenings 
would violate HIPAA. A commenter requested that PACE organizations be 
allowed to conduct physical exams or outsource them as needed. Another 
commenter asked that risk assessments without red flags be allowed to 
be reviewed by non-clinical staff to free up the time of clinical 
staff. A commenter supported CMS's approved list of clinical staff who 
can perform the risk assessment and/or physical exam.
    Response: We appreciate the commenters' concerns over potential 
HIPAA Privacy Rule violations; however, we believe they are misplaced. 
The HIPAA Privacy Rule does not apply to employment records held by a 
covered entity in its role as an employer. In our experience, there are 
many medical organizations and hospital systems that perform medical 
clearance on personnel without violating the HIPAA Privacy Rule. 
However, it should be noted that the language allowing PACE 
organizations to perform their own physical exams or risk assessments 
was in no way meant to force PACE organizations to do so. Our intent 
was to allow PACE organizations the option to perform medical 
clearances in house; however, there is nothing in our proposal that 
would prohibit a PACE organization from requiring direct care personnel 
to seek a physical examination from their primary care physician or 
from contracting with a primary care provider for the specific purpose 
of conducting medical clearance reviews. As we stated in the proposed 
rule, we do not believe that assessments conducted by unlicensed staff 
or self-assessments are sufficient to meet the requirement for medical 
clearance (87 FR 79643). We also considered different clinical staff to 
determine the appropriate professions to perform the physical exam 
versus the risk assessment (87 FR 79645). We determined that while a 
physical exam required a primary care provider, a registered nurse 
could screen staff through the risk assessment because it is not ``a 
physical exam meant to diagnose an individual'' (Id.) We believe it is 
outside the scope of authority of nonclinical staff to perform a 
physical exam or risk assessment. Therefore, we are finalizing the 
clinical staff members approved to perform a physical exam or risk 
assessment, as proposed.
    Comment: A commenter stated that the communicable disease clearance 
is a ``snapshot in time'' and is ineffective due to the transient 
nature of communicable disease. Another commenter stated that the 
proposal was not evidence-based, specifically the requirement to screen 
annually for Tuberculosis, which is not recommended by the CDC.
    Response: We thank commenters for their responses. While screening 
for medical clearance prior to individuals having direct participant 
contact does not ensure that participants will never be exposed to 
communicable diseases, we believe it is a minimum safeguard to ensure 
that PACE participants are protected to the extent possible. It is also 
a common practice in other health care settings to have a process to 
ensure new individuals coming into an organization have received some 
form of health screening to demonstrate that the individuals are free 
of communicable diseases. As we stated in an earlier response, we are 
not finalizing the requirement for a physical examination or risk 
assessment to be conducted on an annual basis.
    After considering the comments, and for the reasons set forth in 
the proposed rule and our responses to comments, we are finalizing the 
proposed changes to Sec. Sec.  460.64(a) and 460.71(b)(4) in part, with 
a modification to remove the requirement to conduct medical clearance 
on an annual basis. We are finalizing the proposed changes to 
Sec. Sec.  460.64(a)(6) and 460.71(b)(5) in part, with a modification 
to remove the reference to Sec.  460.74.

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

    As discussed in the December 2022 proposed rule, 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

[[Page 30738]]

hours per day, every day of the year. This includes the full range of 
services required under the PACE statute and regulations. Although the 
PACE regulations at 42 CFR part 460 have codified service delivery 
requirements established in the Act, they currently do not include 
specific timeframes for service delivery. Since the 1999 PACE interim 
final rule, in which CMS discussed the crucial role of timely 
comprehensive care and service delivery in maintaining participant 
functional status (64 FR 66251), we have continued to revisit the 
feasibility of implementing such timeframes in subsequent rulemaking 
(64 FR 66251, 71 FR 71292, 85 FR 9138, 86 FR 6034).
    As discussed in the December 2022 proposed rule (87 FR 79648), 
previous rulemaking has highlighted the challenges of determining 
specific timeframes for delivering the varied and broad scope of 
services PACE organizations must provide to participants, which is 
further complicated by the many possible scenarios that are part of the 
multifaceted care needs of PACE participants. As required at the 
current Sec.  460.98(b)(4), services must be provided as expeditiously 
as the participant's health condition requires. Determining how quickly 
a service must be provided would depend on more than the physical 
health of the participant, and PACE organizations must consider all 
aspects of the participant's condition, including their social, 
emotional, and medical needs when determining the provision of 
services. Although we continue to believe that a specific timeframe for 
service delivery would not be feasible, and that ultimately, a service 
delivery timeframe based on the needs of the participant's condition 
remains the best timeframe for service delivery, our monitoring and 
oversight efforts have demonstrated the need for additional participant 
protections regarding timely service delivery. For example, based on 
data collected through audits, in the past 4 years, over 80 percent of 
audited PACE organizations have been cited for a failure to provide 
services in a way that is necessary to meet participant needs.
    In response to audit findings, in the December 2022 proposed rule 
(87 FR 79648), we proposed to strengthen participant protections and 
accountability for PACE organizations by amending the service delivery 
requirements at Sec.  460.98 to establish maximum timeframes for 
arranging and scheduling IDT-approved services for PACE participants, 
allowing for certain exceptions. First, we proposed to amend Sec.  
460.98 by redesignating current paragraphs (c), (d), and (e) as 
paragraphs (d), (e), and (f), respectively. Next, we proposed to add a 
new paragraph (c) with the heading ``Timeframes for arranging and 
providing services'' and add 4 new subparagraphs. In addition, we 
proposed to move the requirement in current paragraph Sec.  
460.98(b)(4) to new paragraph (c)(4). We also proposed to redesignate 
paragraph (b)(5) as (b)(4).
    Our proposal at the new section Sec.  460.98(c) included 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. 
We proposed 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 explained that 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 that would enable the pharmacy to fill the medication order 
and provide the participant with timely access to the medication. We 
explained that this timeframe would not require the medication to be 
delivered to the participant within those 24 hours, unless the 
participant's condition required delivery within that timeframe.
    Next, we proposed 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 the 
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 Sec.  460.98(c)(3). This requirement pertains to all 
IDT-approved services other than medications. We would expect PACE 
organizations to take affirmative steps to make sure the approved 
service was set up, scheduled, or arranged within the proposed 
timeframe, which may include scheduling appointments and/or purchasing 
the item the IDT approved. As with the proposal at Sec.  460.98(c)(1), 
we noted that the proposed maximum timeframe to arrange or schedule the 
delivery of IDT-approved services, as we proposed at Sec.  
460.98(c)(2), does not apply a specific timeframe to the provision of 
the service.
    We solicited comment on alternative maximum timeframes for 
arranging or scheduling IDT-approved services, particularly timeframes 
within 5 to 10 (that is, 5, 6, 7, 8, 9, or 10) calendar days after the 
date the IDT or a member of the IDT first approves the service. 
Additionally, we invited comment on whether there are additional 
definitions of ``arrange or schedule'' that we should consider. We 
requested that such comments address how the alternative timeframes 
they recommended would ensure participant health and safety, especially 
if commenters advocate for a timeframe longer than 7 calendar days.
    We proposed at Sec.  460.98(c)(2)(i)(A) through (D) to define which 
services are included in the definition of IDT-approved services. We 
proposed to specify at Sec.  460.98(c)(2)(i)(A) that IDT-approved 
services include services approved by the full IDT. These services 
would typically be the ones discussed and approved during IDT meetings. 
This would be any service other than a medication. We proposed 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. We proposed at Sec.  
460.98(c)(2)(i)(C) that IDT-approved services include services ordered 
by a member of the IDT. We would consider an IDT member ordering a 
service as approving that service for purposes of proposed Sec.  
460.98(c)(2). We explained that, under our proposal at Sec.  
460.98(c)(2), the timeframe to arrange or schedule a service begins 
when the IDT or a member of the IDT first approves the service. 
Therefore, when any one of these approvals at Sec.  460.98(c)(2)(i)(A) 
through (D) occurs, on that first instance, the timeframe would be 
initiated.
    We proposed at new Sec.  460.98(c)(3) to exclude routine or 
preventative services from the timeframe 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 a much later time. To satisfy this exception, we proposed 
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 in Sec.  460.98(c)(2). First, we proposed at Sec.  
460.98(c)(3)(i) that the PACE organization must document that it was 
unable to schedule the appointment for the routine or preventative 
service due to circumstances beyond the control of

[[Page 30739]]

the PACE organization. Second, we proposed to establish at Sec.  
460.98(c)(3)(ii) that the PACE organization is exempt from the 
timeframe as long as the participant does not have a change in status 
that requires the service to be provided more quickly. Last, we 
proposed 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.
    We proposed to redesignate Sec.  460.98(b)(4) as Sec.  460.98(c)(4) 
without further modification, except to add a new paragraph heading 
``Providing approved services''. Thus, 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. 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 estimated 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 these proposed 
timeframes for arranging and scheduling services in the Collection of 
Information Requirements section.
    In the paragraphs that follow, we summarize the comments received 
on the proposal at Sec.  460.98(b)(4) and (c) and respond to those 
comments.
    Comment: A few commenters recommended that CMS address how PACE 
organizations would satisfy the proposed requirements at Sec.  
460.98(c) to ``arrange and schedule'' services. Specifically, two 
commenters recommended that CMS define ``arrange and schedule'' such 
that PACE organizations would demonstrate they have arranged and 
scheduled services when they can provide documentation that a service 
authorization was acted upon to initiate scheduling. Another commenter 
recommended that CMS add language to define ``reasonable efforts'', a 
term not included in the proposed provision, to arrange and schedule 
services with providers external to a PACE organization, particularly 
specialty providers. The commenter expressed concern that PACE 
organizations may be unfairly penalized for providers' communication 
delays that impact when provider appointments can be scheduled.
    Response: We explained and provided examples of the actions a PACE 
organization would have to take to arrange and schedule services within 
the maximum timeframes at Sec.  460.98(c) in the December 2022 proposed 
rule (87 FR 79649). The proposed rule explained that, for purposes of 
the proposed requirement at Sec.  460.98(c)(1), we consider ``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 (87 FR 79649). This timeframe would not 
require the medication to be delivered to the participant within those 
24 hours, unless the participant's condition required delivery in that 
timeframe. For the proposed requirement at Sec.  460.98(c)(2), we 
described the action that we would expect the PACE organization to take 
within the proposed 7-calendar day maximum timeframe to arrange or 
schedule IDT-approved services other than medication (87 FR 79649). 
Delivery of services would not need to occur within the proposed 
timeframe, unless the participant's condition required delivery within 
that 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 (87 
FR 79649). We also emphasized that, for our proposal at Sec.  
460.98(c)(2), the timeframe begins when the IDT or a member of the IDT 
first approves a service (87 FR 79650).
    In the December 2022 proposed rule (87 FR 79649), we described some 
examples of how a PACE organization might comply with the requirement 
at Sec.  460.98(c)(2). 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 the timeframe at Sec.  
460.98(c)(2). If the IDT determines that the participant should see an 
ophthalmologist, the PACE organization would be required to reach out 
to the ophthalmologist office to schedule the appointment within the 
timeframe at Sec.  460.98(c)(2). We would not expect the delivery of 
the service (in this example, the actual appointment) to occur within 
the proposed timeframe, only that the PACE organization scheduled the 
appointment within that timeframe. Following the ophthalmologist 
appointment, if the IDT determines 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. During an audit or review, we would 
expect the PACE organization to have documentation to support 
compliance with the requirements in Sec.  460.98(c). For example, a 
note that the appointment was scheduled or documentation that 
eyeglasses were purchased.
    We believe that these explanations sufficiently establish how PACE 
organizations would comply with the proposed requirements at Sec.  
460.98(c), and do not believe codifying documentation standards or 
``reasonable efforts'' at Sec.  460.98(c) would enhance the provision's 
effectiveness. As per the current requirement at Sec.  460.98(b)(4) 
(which we proposed to redesignate to Sec.  460.98(c)(4)), PACE 
organizations must already document, track, and monitor the provision 
of services across all care settings. Since arranging and scheduling 
services are components of service delivery, we expect PACE 
organizations to maintain documentation of efforts to arrange and 
schedule services.
    After consideration of the comments we received, and for the 
reasons outlined in the proposed rule and our response to comments, we 
are finalizing our proposal at Sec.  460.98(c) to establish timeframes 
for arranging and providing services without modification.
    Comment: With respect to our proposal at Sec.  460.98(c)(1) and 
regarding the required timeframes for arranging and scheduling the 
dispensing of medications, many commenters agreed that PACE 
organizations must arrange and schedule the dispensing of medications 
as expeditiously as the participant's condition requires and supported 
CMS establishing maximum timeframes for arranging and scheduling the 
dispensing of medications. However, most commenters disagreed with CMS 
establishing one timeframe for all medications, and instead recommended 
establishing separate timeframes for arranging and scheduling

[[Page 30740]]

the dispensing of emergency medications and non-emergency medications. 
These commenters advocated for allowing a longer maximum timeframe for 
arranging and scheduling the dispensing of non-emergency medications, 
and a shorter timeframe for emergency medications. Most of these 
commenters supported allowing up to 24 hours to schedule and arrange 
the dispensing of emergency or urgently needed medications and 
recommended that PACE organizations be allowed up to 2 business days to 
schedule and arrange the dispensing of non-emergency medications. Many 
commenters expressed that a longer timeframe for arranging and 
scheduling the dispensing of non-emergency medications would allow 
better prioritization of arranging and scheduling the dispensing of 
emergency medications. A commenter proposed a 48-hour timeframe for the 
coordination of all medications without explaining the basis for their 
recommendation. Another commenter did not support CMS establishing 
maximum timeframes for arranging and scheduling the dispensing of 
medications.
    Response: PACE organizations are responsible for providing care 
that meets the needs of each participant across all care settings, 24 
hours a day, every day of the year as established at Sec.  460.98(a). 
As a result, PACE organizations must meet participant needs on 
evenings, weekends, and holidays as expeditiously as the participant's 
condition requires. Therefore, we are not persuaded to lengthen the 
proposed timeframe to arrange and schedule the dispensing of 
medications on the basis of standard business hours. Furthermore, we 
emphasize that the timeframe requirement at Sec.  460.98(c)(1) does not 
pertain to the provision of medications, only to scheduling and 
arranging the dispensing of medications, which can typically be 
facilitated electronically. As explained in the December 2022 proposed 
rule (87 FR 79649), for the purposes of Sec.  460.98(c)(1), 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. However, PACE 
organizations must still provide services, including medications, as 
expeditiously as the participant's condition requires, as per the newly 
redesignated Sec.  460.98(c)(4).
    Additionally, we are not persuaded to implement two distinct 
maximum timeframes for arranging and scheduling the dispensing of 
emergency and non-emergency medications. We understand that PACE 
organizations prioritize the delivery of emergency and non-emergency 
provider medication orders differently, because participants must 
receive services as expeditiously as their condition requires, taking 
into account their medical, physical, social and emotional condition in 
accordance with Sec.  460.98(c)(4). However, we disagree with creating 
a distinction in regulation for arranging and scheduling the dispensing 
of emergency versus non-emergency medications, because we believe doing 
so would be difficult and impractical. For example, a medication that 
may be emergent to one participant may not be emergent to another, 
depending on factors that may not be apparent without information 
specific to the individual participant's medical, physical, social, and 
emotional condition. We think it is a fair and reasonable expectation 
that all medications be arranged and scheduled with the pharmacy within 
24 hours. As previously explained, the timeframe requirement at Sec.  
460.98(c)(1) pertains to arranging and scheduling the dispensing of 
medications, which is related to, but distinct from, the service 
delivery requirement at Sec.  460.98(c)(4). Therefore, although PACE 
organizations must arrange and schedule the dispensing of a medication 
no later than 24 hours after a primary care provider orders the 
medication, PACE organizations may deliver or provide the medication to 
the participant at a later time, as long as the medication is provided 
to the participant as expeditiously as their condition requires. We 
also believe this requirement is more easily accomplished than 
commenters seem to think. The timeframe to arrange or schedule a 
medication begins when an IDT member first approves or orders the 
service. Therefore, when a primary care provider orders a medication, 
they can submit the order to the pharmacy at the same time and satisfy 
this requirement. Based on many of the electronic medical records we 
have seen during oversight efforts, we think many systems are set up to 
ensure this happens seamlessly.
    After consideration of the comments received and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing our proposal at 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 a primary care provider orders the medication, 
without modification.
    Comment: A few commenters expressed concern and made 
recommendations in regard to establishing maximum timeframes for the 
provision of medications. A commenter opposed the proposal at Sec.  
460.98(c)(1) and expressed that providing all medications within 24 
hours was likely to cause harm to participants. The commenter gave the 
example that some medications, especially medications meant to treat 
chronic conditions in the elderly, should be explained and delivered 
thoughtfully in order to avoid misuse. Other commenters expressed 
concern that factors outside of the PACE organization's control, for 
example, pharmacy benefit manager (PBM) issues and national medication 
shortages, may delay access to medications and impact the PACE 
organization's ability to provide medications within the proposed 24-
hour timeframe for arranging and scheduling the dispensing of 
medications. Additionally, a commenter recommended a maximum timeframe 
of 48 hours for the delivery of all medications.
    Response: We believe these commenters may have misunderstood that 
the proposed maximum timeframe at Sec.  460.98(c)(1) would apply to 
scheduling and arranging the dispensing of medications, not the 
provision of the medications. As discussed in the preceding comment 
response, our intention with this proposal was not to impose a specific 
timeframe for the delivery of medication, but to establish a maximum 
timeframe for the PACE organization to arrange and schedule the 
dispensing of medications. Considering the wide range of medications 
provided in PACE and varying needs of participants, we do not believe a 
specific timeframe for the provision of services, including 
medications, is feasible at this time. We agree with commenters that 
the delivery of medication would be based on the needs of the 
participant. We expect PACE organizations to provide medications as 
expeditiously as the participant's condition requires, as per the 
redesignated Sec.  460.98(c)(4). Additionally, if PBM issues like 
medication shortages could impact participant care, the PACE 
organization must have contingencies in place to ensure participants 
have timely access to all necessary medications.
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to

[[Page 30741]]

comments, we are finalizing our proposal at 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 a primary care provider orders the 
medication, without modification.
    Comment: While most commenters agreed with the premise of a maximum 
timeframe to arrange and schedule services other than medications, most 
of these commenters disagreed with our proposal that 7 calendar days 
was the appropriate timeframe to apply. Most commenters recommended we 
allow a maximum timeframe of up to 10 calendar days for arranging or 
scheduling these services.
    These commenters made their maximum timeframe recommendation for 
services at Sec.  460.98(c)(2) in consideration of potential delays in 
communication with provider offices. While a commenter cited general 
delays in communication from provider offices as another potential 
consideration for extending the maximum timeframe at Sec.  
460.98(c)(2), another commenter suggested that more time may be needed 
to coordinate scheduling appointments with providers whose offices may 
be closed on weekends and holidays. A commenter preferred a 10-calendar 
day maximum timeframe, in part, due to the time needed to coordinate 
with both the provider and participant based on provider availability 
and in consideration of participant preference. Additionally, some 
commenters suggested that the participant might not need certain 
services arranged or scheduled within the proposed timeframe to meet 
their care needs. One commenter did not specify a particular 
alternative maximum timeframe to arrange or schedule the delivery of 
all IDT-approved services other than medications. Rather, the commenter 
expressed that establishing a 7-calendar day maximum timeframe for 
scheduling or arranging specialty items such as power mobility devices 
and stair lifts would be challenging for the PACE organization to meet.
    A few commenters expressed concerns with arranging and scheduling 
services with external providers, particularly specialists. A commenter 
that expressed this concern, suggested that delays in scheduling or 
arranging specialty services may not be within the PACE organization's 
control, and that ensuring compliance with the proposed requirements 
would be administratively burdensome and would divert resources from 
participant services. Another commenter recommended an exception to the 
proposed maximum timeframe and suggested up to 30 days for the PACE 
organization to schedule appointments with specialist providers.
    Lastly, a commenter expressed that PACE organizations are unique 
with each participant requiring a personalized array of services, and 
that a single timeframe for service delivery could not meet all their 
needs.
    Response: PACE organizations are responsible for providing care 
that meets the needs of each participant across all care settings, 24 
hours a day, every day of the year as established at Sec.  460.98(a). 
When we published the December 2022 proposed rule (87 FR 79650), we 
solicited comment on different maximum timeframes for arranging or 
scheduling the delivery of IDT-approved services, other than 
medications, and we specifically asked commenters that supported a 
longer timeframe than the proposed 7-calendar day maximum timeframe to 
include a rationale for how their alternative timeframe would ensure 
participant health and safety. While most commenters requested a longer 
timeframe, most commenters cited operational challenges for PACE 
organizations as the reason for a longer timeframe and did not address 
participant health and safety. However, during our oversight and 
monitoring efforts, we have not seen that the time and effort required 
to schedule services is a significant contributor to scheduling delays. 
Rather, we have observed that scheduling delays are often the result of 
a process breakdown after the primary care provider orders the service, 
which delays any attempts to schedule the service. For example, we have 
observed in numerous audits where a specialist service is ordered and 
the first documented attempt to schedule the appointment with the 
provider does not occur for weeks or months. We have not seen that PACE 
organizations expend significant effort making multiple unsuccessful 
attempts to schedule provider appointments to ensure the participant 
receives the service timely.
    Since PACE organizations are required to provide services through 
employees or contractors (see Sec.  460.70(a)), they should have 
mechanisms in place to ensure that they are able to quickly schedule or 
arrange services. As explained in the December 2022 proposed rule (87 
FR 79649) and reiterated in this rule, to comply with the proposal at 
Sec.  460.98(c)(2), PACE organizations must take affirmative steps to 
make sure the IDT-approved service was set up, scheduled, or arranged 
within the proposed timeframe, which may include scheduling 
appointments and/or purchasing the item the IDT approved. This 
requirement does not pertain to the provision of services, only to 
scheduling and arranging the service. However, PACE organizations must 
continue to provide services as expeditiously as the participant's 
condition requires in accordance with the current requirement at Sec.  
460.98(b)(4), which we proposed to be redesignated as Sec.  
460.98(c)(4).
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing our proposal at Sec.  460.98(c)(2) to require PACE 
organizations to arrange or schedule the delivery of IDT-approved 
services, other than medications, as identified in paragraph 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 
member of the IDT first approves the service without modification.
    Comment: Many commenters fully supported the proposed exception at 
Sec.  460.98(c)(3) for routine or preventative services being excluded 
from the requirement in paragraph (c)(2).
    Response: We thank the commenters for their support of our proposed 
criteria to exempt a PACE organization from the requirements at Sec.  
460.98(c) when certain conditions are met as proposed at Sec.  
460.98(c)(3)(i) through (iii).
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing our proposal at Sec.  460.98(c)(3) to exclude routine or 
preventive services from the requirements in Sec.  460.98(c)(2) when 
requirements in Sec.  460.98(c)(3)(i) through (iii) are met without 
modification.

E. 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

[[Page 30742]]

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. We have codified requirements pertaining 
to the interdisciplinary team (IDT) at Sec.  460.102.
    As discussed in the December 2022 proposed rule, changes to Sec.  
460.102 are the result of years of assessing PACE organizations' 
compliance with care coordination requirements established by the Act 
and our conclusion that further specification of these care 
coordination requirements in regulation would benefit participants and 
improve PACE organizations' understanding of how to comply with these 
requirements. In the December 2022 proposed rule, we proposed 
strengthening Sec.  460.102 to identify the IDT's specific care 
coordination responsibilities, introduced maximum timeframes for the 
IDT's review of all recommendations from hospitals, emergency 
departments, urgent care providers, other employees, and contractors, 
and reiterated the IDT's role in timely service delivery.
    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.
    In the December 2022 proposed rule we proposed several amendments 
to Sec.  460.102(d)(1). First, we proposed to redesignate current 
paragraph (d)(1)(ii) as paragraph (d)(1)(iii), and to add a new 
paragraph (d)(1)(ii). We also proposed to add a new paragraph 
(d)(1)(iv). We proposed 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 addition of ``for each participant'' emphasizes that these 
responsibilities are not general requirements the IDT must fulfill, but 
rather specific responsibilities the IDT must fulfill for each 
participant. Since the inception of PACE, CMS has considered the IDT 
responsibilities to apply to all participants at the individual level. 
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.
    We proposed 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 proposed 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 
proposed 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 assessment and care planning responsibilities at Sec.  
460.102(d)(1)(i) improves the provision's readability. We also proposed 
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 proposed 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. For example, we have seen problems with 
medication orders being implemented inappropriately, wound care not 
being done in accordance with orders, and other necessary services not 
being provided to the participant.
    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 discussed in the January 2021 
final rule, PACE organizations are responsible for furnishing 
comprehensive services to PACE participants across all care settings, 
24 hours a day, every day of the year (86 FR 6034, 86 FR 6036). 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 to 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 proposed adding 5 subparagraphs at

[[Page 30743]]

Sec.  460.102(d)(1)(ii)(A) through (E) that further specify IDT 
coordination responsibilities across all care settings. We proposed 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 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 proposed 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 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. In the December 
2022 proposed rule (87 FR 79652), 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 regulatory provision broad.
    We proposed 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 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 proposed 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 proposed 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. 
Also, it is essential that the IDT respond promptly and modify care 
when it is determined that the participant's needs 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 proposed 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 were 
proposed for this provision. Then, we proposed 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, within maximum timeframes, as proposed in at Sec.  
460.102(d)(1)(iv)(A) through (C). As discussed earlier, the IDT is 
responsible for authorizing, approving and ordering all care, including 
care recommended from contracted providers. Through monitoring and 
oversight activities, we had 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 proposed timeframes for the IDT to review and act 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 proposed 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).
    Per Sec.  460.98(b)(4) (which we proposed to redesignate as Sec.  
460.98(c)(4)), PACE organizations must continue to provide services as 
expeditiously as the

[[Page 30744]]

participant's condition requires, taking into account the participant's 
medical, physical, social, and emotional needs. 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 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 proposed to redesignate as Sec.  
460.102(d)(1)(iii) and Sec.  460.210(b).
    We proposed 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 and expressed that 
we believed the 24-hour timeframe was necessary and reasonable due to 
the following considerations. First, the 24-hour 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 proposed 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 invited 
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 requested commenters' perspectives on timeframes of 12 
hours, 24 hours, 48 hours, and 72 hours from the time of the 
participant's discharge. We requested that such comments address how 
the commenter's preferred/recommended timeframe would ensure 
participant health and safety.
    We proposed 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. 
As discussed in the December 2022 proposed rule (87 FR 79653), 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 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 recommended care. We explained that 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 that we would expect the IDT to consider the 
participant's condition in determining whether it is necessary to make 
a determination sooner than 5 calendar days after the recommendation is 
made.
    Additionally, we proposed 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 invited 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 asked 
about commenters' perspectives on whether we should adopt a 3-calendar 
day timeframe, a 5-calendar day timeframe, a 7-calendar day timeframe, 
or a 10-calendar day timeframe. We requested that commenters address 
how the alternative timeframes would ensure participant health and 
safety.
    In the December 2022 proposed rule (87 FR 79654), we emphasized 
that these recommendation review and necessity determination 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 the full maximum 
timeframe 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.
    Finally, we proposed 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 
in accordance with the timeframes at Sec.  460.98(c).
    As discussed in the December 2022 proposed rule, 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 reiterate our belief that, by 
modifying this

[[Page 30745]]

provision, 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).
    We summarize the comments received on the proposal at Sec.  460.102 
and provide our responses to those comments in this section of this 
rule.
Response to Comments
    Comment: Some commenters expressed concern with the implementation 
of IDT care coordination responsibilities across all care settings as 
proposed in Sec.  460.102(d)(1)(ii), and particularly in reference to 
IDT care coordination when participants reside in acute and long-term 
care facilities. Although most of the commenters that provided 
recommendations pertaining to Sec.  460.102(d)(1)(ii) acknowledged that 
PACE organizations are responsible for overseeing participants' care at 
these facilities, they considered IDT involvement in daily care 
coordination activities for participants residing in care facilities to 
be functionally impractical and potentially harmful to participants. A 
few commenters thought that having the IDT order all necessary care for 
participants residing in care facilities could delay the provision of 
necessary care. In order to prevent delays in necessary care, a couple 
commenters recommended that the PACE organization delegate ordering 
care to care facility providers operating within their scope of 
practice. Another commenter suggested that the IDT does not have 
purview to order services provided by care facilities and recommended 
that the IDT take a consultative approach to overseeing care of 
participants staying in care facilities.
    Another commenter noted different challenges with IDT involvement 
in daily care coordination at care facilities. These commenters 
remarked on the difficulty of ensuring daily communication between the 
IDT and the care facilities when care facilities experience operational 
issues, like staffing shortages, that may diminish their ability to 
promptly communicate with the IDT. The commenter asked CMS to provide 
guidance on how PACE organizations could strengthen care coordination 
with external healthcare facilities and suggested care coordination 
with the IDT be added into the contractual agreement between the PACE 
organization and care facility. This commenter also requested that CMS 
provide guidance on the types of documentation that would be needed to 
demonstrate that the IDT is meeting the care coordination requirements 
proposed at Sec.  460.102(d)(1)(ii).
    Response: The PACE program design is based on the IDT being 
responsible for authorizing and approving all care that is needed for 
PACE participants. Contractors, including medical specialty providers 
and contracted facilities, must agree to furnish only those services 
authorized by the IDT per Sec.  460.70(d)(5)(i). Therefore, the IDT is 
currently required to authorize all participant care, regardless of the 
participant's care setting. PACE organizations may need to establish 
different coordination procedures and/or contract terms to ensure 
adequate communication with inpatient care facilities that meets the 
needs of participants. This does not mean that the PACE organization, 
or the PCP, needs to directly order all services for the participant 
that resides in acute and long-term care settings. While we know that 
some PACE organizations ensure that their PCP has privileges at 
contracted facilities (and therefore can order services directly), this 
is not always an option. While the PCP may not directly order all care, 
it does not absolve the IDT from ensuring that only approved or 
authorized care is provided. For example, even if a skilled nursing 
facility (SNF) PCP orders the participant's care, the IDT must 
authorize or approve the participant's care at the SNF.
    As for documentation that demonstrates IDT compliance with the care 
coordination requirements proposed at Sec.  460.102(d)(1)(ii) when a 
participant resides in a care facility, CMS expects to see 
documentation of communications with the facility that demonstrate the 
IDT's active monitoring and management of the participant's condition. 
This may include documentation from the admission of the participant, 
which includes all approved or ordered services (including medication) 
and ongoing documentation addressing any changes to the participant's 
care.
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing our proposal at Sec.  460.102(d)(1)(ii) to require 
coordination and implementation of 24-hour care delivery that meets 
participant needs across all care settings without modification.
    Comment: A commenter requested that CMS clarify the specific 
actions the IDT should take to ``act on'' recommendations as proposed 
in Sec.  460.102(d)(1)(iv), which states that the interdisciplinary 
team must review, assess, and act on recommendations from emergency or 
urgent care providers, employees, and contractors, including medical 
specialists.
    Response: In the December 2022 proposed rule (87 FR 79653), after 
introducing at Sec.  460.102(d)(1)(iv) the requirement that the IDT 
review, assess, and act on recommendations from emergency or urgent 
care providers, employees, and contractors, including medical 
specialists, we explained the specific components of the requirement in 
Sec.  460.102(d)(1)(iv)(A) through (C). In addition to the IDT 
reviewing all recommendations from emergency or urgent care providers, 
employees, and contractors, we proposed that the IDT would determine 
whether the recommended services are necessary to meet the 
participant's medical, physical, social, or emotional needs and arrange 
and furnish necessary care in accordance with Sec.  460.98(c). 
Therefore, for the purposes of Sec.  460.102(d)(1)(iv), ``act on'' 
means, in addition to reviewing and assessing these recommendations, 
the IDT would decide whether it is appropriate to approve the service 
and ensure the provision of any approved services. If the IDT 
determines a recommended service is not necessary, they must document 
their rationale for not approving or providing the service in 
accordance with the redesignated Sec.  460.102(d)(1)(iii) and Sec.  
460.210(b).
    After consideration of the comments and for the reasons outlined in 
the proposed rule and our response to comments, we are finalizing our 
proposal at Sec.  460.102(d)(1)(iv) to require the interdisciplinary 
team to review, assess, and act on recommendations from emergency or 
urgent care providers, employees, and contractors, including medical 
specialists without modification.
    Comment: A few commenters had concerns regarding the proposed 
requirement at Sec.  460.102(d)(1)(iv) that the IDT review, assess, and 
act on recommendations from emergency or urgent care providers 
following participant discharge, and employees and contractors, 
including medical specialists, specifically with respect to the 
involvement of the full IDT in recommendation reviews. They believed 
that CMS was proposing to require that the full IDT be involved in 
reviewing and approving these recommendations, which they considered 
administratively burdensome without added benefit to participant 
outcomes, particularly in emergency situations.

[[Page 30746]]

    Response: We disagree with the commenters' interpretation of this 
requirement. The proposed regulatory text supports flexibility in 
determining which IDT disciplines review, assess and act on 
recommendations. Although Sec.  460.102(d)(1)(iv) proposed to require 
the IDT to review, assess, and act on recommendations from emergency or 
urgent care providers following participant discharge, Sec.  
460.102(d)(1)(iv) further specifies that, in the cases of Sec.  
460.102(d)(1)(iv)(A) and (B), ``The appropriate member(s) of the 
interdisciplinary team must review all recommendations.'' The proposed 
language at Sec.  460.102(d)(1)(iv) is similar to the language in Sec.  
460.121(h)(1), which allows the IDT to determine the appropriate IDT 
member or members to conduct a reassessment in response to a service 
determination request. For the proposed Sec.  460.102(d)(1)(iv)(C), the 
IDT or a member of the IDT may authorize and approve the recommended 
service, which then must be promptly arranged and furnished.
    Additionally, as discussed in the December 2022 proposed rule (87 
FR 79653), we reiterate that the IDT can determine the appropriate IDT 
disciplines for reviewing recommendations. We do not anticipate that 
the full IDT would need to be involved in all decisions relating to 
recommendations made by hospitals, emergency departments, or urgent 
care centers. More likely, 1 or 2 IDT members would be responsible for 
these recommendations, and we believe typically this would be the PCP. 
The PCP in PACE is typically the only individual that can order care 
given a state's scope of practice laws, and the PCP has the additional 
responsibility of ensuring they manage the participant's condition, 
including the use of specialists and inpatient care, as required per 
Sec.  460.102(c)(2). The example we provided in the December 2022 
proposed rule involved a post discharge recommendation for antibiotics. 
In this instance, the PCP may be the only IDT discipline needed in 
order to appropriately review, assess, and act on the medication 
request, since the PCP is responsible for ordering care and 
medications. We clarify that the IDT has flexibility to determine which 
IDT disciplines should review, assess, and act on employee and 
contractor recommendations as well, which may not involve the full IDT. 
However, we emphasize that PACE organizations are responsible for 
providing comprehensive, multidisciplinary care that meets the needs of 
each participant, and that the IDT should review recommendations with a 
multidisciplinary approach, as appropriate.
    After consideration of the comments and for the reasons outlined in 
the proposed rule and our response to comments, we are finalizing our 
proposal at Sec.  460.102(d)(1)(iv) to require the interdisciplinary 
team to review, assess, and act on recommendations from emergency or 
urgent care providers, employees, and contractors, including medical 
specialists without modification.
    Comment: Most commenters recommended that CMS modify the proposed 
Sec.  460.102(d)(1)(iv)(A) to extend the maximum timeframe for the IDT 
review of all recommendations from hospitals, emergency departments, 
and urgent care providers from 24 to 72 hours from the time of the 
participant's discharge. A few commenters recommended other maximum 
timeframes for IDT review of all recommendations from hospitals, 
emergency departments, and urgent care providers: 2 business days, 3 
calendar days from the time the IDT was notified of the discharge, and 
96 hours after documentation is included in the participant's medical 
record. One commenter did not recommend a maximum timeframe for IDT 
review of these recommendations but believed the proposed maximum 
timeframe to be unreasonable and shared the experience that it may be 
several days or weeks before the PACE organization receives emergency 
department recommendations. Another commenter was against imposing any 
timeframe for IDT review of recommendations from hospitals, emergency 
departments, and urgent care providers. These commenters advocated for 
more time to process these recommendations primarily due to concerns 
that hospitals, emergency departments, and urgent care providers tend 
to be providers external to the PACE organization for which the PACE 
organization has no purview. Additionally, some commenters noted that 
participants may not notify the PACE organization when they receive 
emergency or urgent care services. Thus, commenters expressed concern 
that PACE organizations may not be made aware of a participant's 
discharge or receive the recommendation from the external provider 
promptly enough for review of the recommendation within 24 hours from 
the time of the participant's discharge. The commenter that recommended 
a 2-business day maximum timeframe for the IDT review of these 
recommendations also recommended we keep long holiday weekends in mind 
when setting timeframes for recommendation reviews and that codifying a 
business day instead of a calendar day approach to the IDT 
recommendation review timeframe would give the PCP an opportunity to 
consider the information in the recommendation and develop a plan of 
care.
    Several commenters interpreted the proposed maximum timeframe at 
Sec.  460.102(d)(1)(iv)(A) to require the full IDT to be on-call to 
review all recommendations from hospitals, emergency departments, and 
urgent care providers on weekends. They expressed that having the full 
IDT present to review recommendations on weekends would impose 
unreasonable cost increases on the PACE organization, reduce IDT 
availability for participant care, and impact staff retention. Another 
commenter expressed general concern for requiring the IDT to review 
these recommendations within the proposed timeframe when the 
participant's discharge occurs on weekends.
    Response: We carefully considered commenters' recommendations on 
lengthening the maximum timeframe to act on recommendations from 
hospitals, emergency rooms and urgent care providers. When we solicited 
comment on potentially lengthening the proposed timeframe of 24 hours, 
we asked commenters to indicate in their response how a longer 
timeframe would ensure participant health and safety. While commenters 
overwhelmingly requested a longer timeframe than 24 hours, all 
commenters indicated operational challenges as the basis for their 
recommendation and did not discuss how these longer timeframes would 
ensure participant health and safety. While we think there needs to be 
some consideration to operational challenges, our primary focus is on 
the participant and their needs. We are not persuaded to lengthen the 
timeframe to 72 hours or greater without some consideration of how the 
participants' needs would be addressed. However, we understand that 
sometimes, despite the PACE organizations' best efforts, 24 hours to 
act on recommendations may not be enough time. Therefore, we have 
modified the timeframe in which the appropriate member(s) of the IDT 
must review and determine the necessity of all recommended services 
from hospitals, emergency departments, and urgent care providers from 
our proposed 24 hours to 48 hours from the time of the participant's 
discharge as a compromise to the majority of commenters' preference for 
a 72-hour timeframe. We consider 48 hours to be a maximum timeframe, 
and therefore have also added language to take into

[[Page 30747]]

account the participant's condition, such that the finalized timeframe 
requirement is ``as expeditiously as the participant's health condition 
requires, but no later than 48 hours from the time of the participant's 
discharge.'' We believe the 48-hour timeframe would not negatively 
impact participant well-being, as we reiterate that the 48-hour 
timeframe is a maximum timeframe, and PACE organizations ultimately 
must both review the recommendation and provide any necessary 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 IDT to act sooner than the maximum 48-hour 
timeframe. Since 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, which includes weekends and 
holidays, we believe the 48-hour maximum timeframe provides an 
appropriate level of protection for participants and accountability for 
PACE organizations regarding the types of services typically 
recommended after a participant receives urgent or emergency care. 
Additionally, as discussed in our earlier response to commenters 
regarding the IDT involvement in recommendation reviews, the IDT has 
flexibility to determine which IDT disciplines should review, assess, 
and act on recommendations. We do not expect the full IDT's involvement 
in every recommendation review. The recommendation review may be 
conducted by 1 IDT member. However, we continue to emphasize the 
importance of a multidisciplinary approach to participant care.
    After consideration of the comments received, and for the reasons 
outlined in our response to comments, we are modifying and finalizing 
our proposal at 460.102(d)(1)(iv)(A) to require that the appropriate 
member(s) of the interdisciplinary team 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 as 
expeditiously as the participant's health condition requires, but no 
later than 48 hours from the time of the participant's discharge.
    Comment: A commenter requested clarification regarding how the 
IDT's recommendation review, as proposed at Sec.  460.102(d)(1)(iv) 
should be documented, and more specifically asked whether the IDT 
review of recommendations could be conducted verbally, or whether the 
reviewing provider should document their review of the order.
    Response: We interpret this commenter's question as asking about 
documentation expectations for recommendations the IDT receives and 
reviews orally. At a minimum, the IDT is responsible for documenting 
recommendations from employees and contractors into the medical record 
per Sec.  460.210(b)(4). Once the recommendation is documented, the IDT 
may have oral conversations regarding the necessity of that 
recommendation. Not all of those discussions would need to be 
documented. However, we expect to see the result of that discussion 
documented to demonstrate that the IDT assessed and considered the 
recommendations. If a recommendation was approved, we expect to see 
some evidence or documentation that the service was approved/authorized 
or ordered. If the recommendation was not considered necessary (and 
therefore not approved), the IDT is responsible for documenting the 
rationale for that decision per redesignated Sec. Sec.  
460.102(d)(1)(iii) and 460.210(b)(5). Additionally, if the IDT approves 
or orders the recommended service, the PACE organization must document, 
track, and monitor the provision of the service as per the redesignated 
Sec.  460.98(b)(4).
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing our proposal at Sec.  460.102(d)(1)(iv) to require the 
interdisciplinary team to review, assess, and act on recommendations 
from emergency or urgent care providers, employees, and contractors, 
including medical specialists without modification.
    Comment: Most commenters recommended that we modify Sec.  
460.102(d)(1)(iv)(B) to extend the maximum timeframe for the IDT to 
review and make determinations on all recommendations from other 
employees and contractors. We had initially proposed 5 calendar days 
from the date the recommendation was made as the maximum timeframe, and 
most commenters recommended a maximum timeframe of 10 calendar days. 
Commenters' primary justification for extending the timeframe centered 
on the concern that providers external to the PACE organization might 
not cooperate in providing all necessary information to the IDT in a 
timely manner, which they considered beyond the control of the PACE 
organization, and potentially a situation that may unfairly penalize 
PACE organizations. Many commenters mentioned that PACE organizations 
may experience delays in follow-ups from specialist providers, since 
provider offices are often closed on weekends and holidays. A commenter 
did not recommend a specific alternative maximum timeframe for IDT 
review of other employee and contractor recommendations but expressed 
that the proposed 5-calendar day maximum timeframe was unreasonable 
based on their experience that PACE organization may not receive 
specialist recommendations for up to 2 weeks after the date the 
provider made the recommendation. Another commenter recommended that 
CMS not impose any timeframe for IDT reviews of contractor 
recommendations. This commenter considered any review timeframe for 
contractor recommendations unreasonable and echoed other commenters' 
concerns that PACE organizations may be penalized for situations 
outside of their control, such as when contracted providers do not 
communicate or provide necessary documentation timely to the PACE 
organization. This commenter also suggested that IDT review of all 
contractor recommendations would increase IDT responsibilities to the 
point of negatively impacting the time they can devote to participant 
care. A commenter asked that we clarify what the starting point for the 
review timeframe would be and recommended that we base the timeframe on 
when the PACE organization receives the recommendation rather than the 
date the recommendation was made.
    Response: After careful consideration of the comments, we have 
decided to modify the proposed Sec.  460.102(d)(1)(iv)(B). 
Specifically, we have modified the maximum timeframe in which the 
appropriate member(s) of the IDT must review and make necessity 
determinations for all recommended services from other employees and 
contractors from the proposed 5 calendar days to 7 calendar days from 
the date the recommendation was made. As previously mentioned in the 
December 2022 proposed rule (87 FR 79653), most PACE organizations 
audited in 2021 received citations of non-compliance for failing to 
review and act on recommendations from specialists in a manner 
necessary to meet the needs of the participant. Most PACE organizations 
audited in 2022 and 2023 also received citations in this area. During 
our oversight and monitoring efforts, we have not observed that PACE 
organizations are routinely making multiple good faith attempts to 
receive

[[Page 30748]]

documentation, including recommendations, from specialist providers. 
Instead, we have seen numerous situations where PACE organizations make 
no attempt to obtain recommendations from specialists, and therefore 
are not aware of their recommendations until months later. The delayed 
receipt of specialist recommendations jeopardizes participant wellbeing 
by delaying necessary follow-up care and services. In consideration of 
our oversight and monitoring observations and commenter concerns, we 
believe the 7-calendar day timeframe is an appropriate compromise 
between the 5-calendar day timeframe we originally proposed and the 10-
calendar day timeframe that the majority of commenters on this proposal 
preferred. We believe the 7-calendar day maximum timeframe offers 
additional flexibility to the IDT in terms of coordination with 
external providers, while continuing to prioritize participant 
wellbeing.
    We continue to emphasize that the 7-calendar day timeframe is a 
maximum timeframe, and that the IDT 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, which may require action sooner than 7 calendar 
days. Although we recognize there may be logistical challenges involved 
with external provider communications, 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, and we 
decline to implement a timeframe that may result in a lower standard of 
care on the basis of communication delays by the contracted providers, 
as we expect PACE organizations to initiate communication and follow-up 
with external providers to ensure participants receive any necessary 
follow-on care and services. We also understand that some specialists 
may not provide written consult notes immediately following an 
appointment, but nothing would prevent the IDT from calling the 
specialist and documenting recommendations prior to receiving the 
complete consultation documentation. Additionally, as discussed in the 
December 2022 proposed rule, we reiterate that the Sec.  
460.102(d)(1)(iv)(B) timeframe begins the date the recommendation was 
made (87 FR 79654), not the date that the PACE organization or IDT 
receives the recommendation. In order to ensure participants receive 
the care they need, in the timeframe they need it, it is important that 
the timeframe begins when the recommendation is made, and that the PACE 
organization puts processes into place to get information relating to 
the recommendations quickly from providers.
    After consideration of the comments received, and for the reasons 
outlined in our response to comments, we are modifying and finalizing 
our proposal at Sec.  460.102(d)(1)(iv)(B) to require the appropriate 
member(s) of the interdisciplinary team to 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 7 calendar days from the date the 
recommendation was made.
    Comment: A commenter suggested that we may have made an error when 
proposing at Sec.  460.102(d)(1)(iv)(C) that services must be promptly 
arranged and furnished under Sec.  460.98(c). The commenter did not 
believe the use of ``arrange and furnish'' was consistent with other 
sections in the proposed amendments to Sec.  460.98, which specify 
maximum timeframes for arranging and scheduling services, but also that 
services must be provided as expeditiously as the participant's health 
condition requires, taking into account the participant's medical, 
physical, emotional, and social needs.
    Response: Although the proposed and now finalized Sec.  460.98 
addresses timeframes for arranging and scheduling services, the 
redesignated Sec.  460.98(c)(4) also states that 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. As discussed in the December 2022 proposed 
rule, the IDT must arrange (or schedule) the IDT-approved service 
within the maximum timeframes established at Sec.  460.98(c)(1) and (2) 
and furnish the service as required by Sec.  460.98(c)(4). (87 FR 
79654).
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing our proposal at Sec.  460.102(d)(1)(iv)(C) to require that, 
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) without 
modification.

F. 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).
    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. 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.
    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

[[Page 30749]]

of a comprehensive plan of care which included: a consolidation of 
discipline-specific initial assessments into a single plan of care for 
each participant within 30 days of the date of enrollment; 
documentation in the plan of care of the reasoning behind any IDT 
determination that certain services are not necessary to the care of a 
participant; and documentation in the plan of care that the participant 
was assessed for all services, even where a determination was made that 
certain services were unnecessary at the time.
    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 
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. As we discussed in the proposed rule, we have seen through our 
oversight and monitoring process that robust initial care plans become 
more sparse over time due to the omission of care originally included 
in the plan of care which is instead handled through discipline-
specific progress notes as the participant's enrollment continues (87 
FR 79655). In the proposed rule, we acknowledged that documenting 
detailed information about participant care and services in discipline-
specific progress notes is necessary and an accepted standard practice, 
but argued that practice should not be done in lieu of a comprehensive 
plan of care that addresses the participant's needs because it results 
in individual IDT members providing care in an isolated and 
individualized approach (Id.).
    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 noncompliance 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, we discussed in the proposed rule how 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 
implemented by the IDT (Id.). 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. In the proposed rule, we stated that the 
purpose of participant/caregiver involvement is to ensure that they 
approve of the care plan and that participant concerns are addressed 
(87 FR 79656). 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.
    As we discussed in the proposed rule, we believe it is prudent to 
implement additional requirements related to the minimum requirements 
for a participant's plan of care (Id.). The proposed rule included a 
discussion of our attempt to adopt language and requirements that are 
consistent with the long-term care facility regulation at Sec.  
483.21(b) when possible because these regulations require nursing homes 
to develop comprehensive and person-centered care plans that meet 
residents' needs. Since individuals who enroll in PACE must be deemed 
nursing home eligible, they have similar needs as those who receive 
services from nursing facilities (Id.).
    First, we proposed 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. As we discussed in the proposed rule, 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 
(87 FR 79656). Additionally, the IDT is required to reevaluate the plan 
of care on a semiannual basis at the current Sec.  460.106(d); however, 
we proposed 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 also proposed 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. 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 proposed 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 semiannual timeframe has posed issues for PACE 
organizations. We therefore proposed 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 proposed 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. As we discussed in the proposed rule, the current 
requirement is that the IDT must conduct reassessments when a 
participant experiences a change in participant status and the IDT must 
also reevaluate the participant's plan of care (87 FR 79656). However, 
there is no timeframe for how quickly the IDT

[[Page 30750]]

members must conduct those reassessments or reevaluate the plan of care 
to determine if changes are needed. In the proposed rule, we argued 
that 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 (Id.). We reviewed the long-term care requirements 
which state that a resident must receive a comprehensive assessment 
within 14 calendar days after the date the facility determines, or 
should have determined there was a significant change in status in the 
resident's condition and the facility must use the results of the 
assessments to develop, review, and revise the resident's plan of care 
(Id.) In the proposed rule, we argued this is an appropriate standard 
to apply in PACE as well due to the similarities between the 
populations (Id.). As discussed later in this section of this proposed 
rule, we also proposed 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 proposed to specify at Sec.  460.106(b)(3)(i) that the 14-
calendar day timeframe starts when the PACE organization determines, or 
should have determined, that a change in the participant's condition 
occurs. As we discussed in the proposed rule, 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 (87 FR 79657). We also proposed to define at Sec.  
460.106(b)(3)(i) what constitutes a change in status. As we discussed 
in the proposed rule, what constitutes a change in status has not been 
previously defined and we proposed to adopt in PACE the requirement 
applicable to nursing homes at Sec.  483.20(b)(2)(ii), but with 
language tailored to be specific to PACE (Id.). Therefore, the proposed 
requirement 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.
    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 proposed 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. In the proposed rule, we recognized 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 (87 FR 79657). We proposed that the timeframe for 
reevaluating the plan of care starts when the participant is discharged 
from the hospital. Despite this proposed exception, we reminded PACE 
organizations in the proposed rule 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) (Id.).
    We solicited comment on whether 14 calendar days is an appropriate 
timeframe to use or if 21 or 30 days would be more appropriate.
    We proposed at Sec.  460.106(c) to make certain modifications 
related to the content of a plan of care. As we discussed in the 
proposed rule, the current 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 (87 FR 79657). We discussed in the 
proposed rule that 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 which has caused members of the IDT to be unaware of the 
treatments and recommendations the participant has received from other 
members of the IDT or outside contracted specialists (Id.). 
Additionally, we discussed how 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 (Id.). 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 proposed to add language 
to the section to create minimum requirements for what each plan of 
care must include. As we discussed in the proposed rule, we considered 
the regulations at Sec.  483.21(b) which specify the requirements for a 
comprehensive plan of care (Id.). Additionally, Sec.  483.21(b) 
references 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. Therefore, at Sec.  460.106(c), we proposed 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 
proposed 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. As we 
discussed in the proposed rule, 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 (Id.). However, we 
proposed 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 
which is consistent with nursing home requirements. As explained in the 
proposed rule, 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 
(87 FR 79657). We observed that the nursing home care plan requirements 
at Sec.  483.21(b) reference the behavior health requirements at Sec.  
483.40. Therefore, we proposed that chronic behavioral and psychiatric 
disorders that require treatment or routine monitoring also be included 
in PACE plans of care.
    We proposed to limit what diseases must be included in the plan of 
care to

[[Page 30751]]

those that are chronic and require treatment or routine monitoring. As 
we discussed in the proposed rule, 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 (87 FR 79658). We 
also solicited comment on whether acute conditions should be included 
in the minimum content that a care plan must address.
    We proposed 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). As we discussed in the proposed rule, 
the age of the PACE population and the co-morbidities that may impact 
the population makes addressing a participant's vision an important 
part of the care plan (87 FR 79658). We similarly proposed 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 proposed at Sec.  
460.106(c)(1)(iii) that a participant's plan of care must address the 
participant's dentition. This is consistent with the requirement at 
Sec.  483.20(b)(1)(xi). We proposed at Sec.  460.106(c)(1)(iv) that a 
plan of care must address the participant's skin integrity. This is 
consistent with the requirements at Sec. Sec.  483.20(b)(1)(xii) and 
483.25(b). We proposed at Sec.  460.106(c)(1)(v) that the participant's 
plan of care must address the participant's mobility. This is 
consistent with the requirement at Sec.  483.25(c). We proposed 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 is consistent with the requirements at Sec. Sec.  
483.20(b)(1)(viii) and 483.24(b). We proposed at Sec.  
460.106(c)(1)(vii) that the plan of care must address the participant's 
pain management needs. This is consistent with the requirement at Sec.  
483.25(k).
    As we discussed in the proposed rule, the next few proposed 
requirements deviate from the nursing home requirements and are 
tailored specifically to the PACE program (87 FR 79658). We proposed 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. The 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. As we discussed in the proposed rule, PACE 
participants live in a variety of settings and the exact manner in 
which the organization meets the requirement may be different for each 
participant (Id.). For this reason, we proposed to include in 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 proposed 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. As we 
discussed in the proposed rule, the 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, and 
the IDT must assess the participant's environment and living situation 
for potential factors that may make it unsafe for the participant (87 
FR 79658). 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 proposed at Sec.  460.106(c)(1)(x) 
that the plan of care must address the participant's home care needs. 
As we discussed in the proposed rule, this proposal would also deviate 
from nursing home guidance because, while nursing homes provide 24-hour 
care to residents living at the facility, PACE provides similar care 
through home care services (87 FR 79653). Therefore, we believe a 
participant's home care needs must be addressed through the plan of 
care. We proposed to establish at Sec.  460.106(c)(1)(xi) that the 
participant's center attendance must be included in the plan of care. 
As we discussed in the proposed rule, 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 (Id.). We proposed at Sec.  
460.106(c)(1)(xii) to require that a participant's transportation needs 
be incorporated into the plan of care. As we discussed in the proposed 
rule, 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 (Id.). In 
addition, we proposed 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. As we discussed in the 
proposed rule, for participants who are not English speaking, or have 
some other difficulty communicating, addressing and resolving these 
needs preemptively can mean the difference between quality of care and 
participants not receiving the care they need (Id.).
    We solicited comment on all items identified in proposed Sec.  
460.106(c)(1) and whether they should be required content in a plan of 
care for PACE participants. We specifically requested comment on 
whether to include acute diseases and/or acute behavioral and 
psychiatric disorders in the plan of care as part of the minimum 
criteria. We also solicited 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 proposed 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. As we 
discussed in the proposed rule, the PACE organization must also 
identify any service that will be provided to meet the participant's 
medical, physical, social, or emotional needs (87 FR 79659). We 
proposed 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 discussed in the 
proposed rule, we define services at Sec.  460.6 to include medications 
because 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 (Id.). However, we also understand 
that medications may change frequently, and are typically documented in 
the medical record in way that would allow the IDT to understand all 
current, pending and discontinued medications. While we did not propose 
to require that all medications be identified in the plan of care, we 
solicited comment on whether the plan of care should include a 
comprehensive list of active medications.
    We proposed to redesignate current Sec.  460.106(b)(3), which 
requires the care

[[Page 30752]]

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 proposed 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 proposed rule noted that the IDT is 
already required to identify how each intervention will be implemented 
in Sec.  460.106(b)(4); we proposed 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 (Id.). 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.
    We proposed at Sec.  460.106(c)(5) to require that the plan of care 
must identify a measurable goal for each intervention. As we discussed 
in the proposed rule, 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)) (87 FR 79659). We explained in 
the proposed rule that our proposal at Sec.  460.106(c)(5) is 
consistent with the intention of the current requirement; however, we 
believe that it is important when identifying a service to also 
identify the measurable goal for that service (Id.).
    We proposed 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. As we discussed in the proposed rule, 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 (87 FR 79659). We explained in the proposed rule that 
our proposal is similar in intent, but would reduce ambiguity by 
specifying that the evaluation by the IDT should focus on determining 
whether the goal was met before deciding if the intervention needs to 
be continued, discontinued or modified (Id.). We further explained that 
if the participant met the goal, the IDT may decide to discontinue the 
service; however if the participant didn't meet the goal, the IDT may 
decide to modify or continue the intervention, and at that time, the 
IDT will need to determine both a new measurable goal and how that goal 
will be evaluated (Id.).
    Finally, we proposed at Sec.  460.106(c)(7) to require that the 
plan of care must identify the participant's preferences and goals of 
care. As we discussed in the proposed rule, it is important for the 
PACE organization to document the 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 (87 FR 79659).
    We proposed to move the requirements in Sec.  460.106(c) to Sec.  
460.106(d) and make modifications to the existing requirements. We 
proposed to move the language in Sec.  460.106(c)(1) to Sec.  
460.106(d)(1) and 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. As we discussed in the proposed rule, 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 (87 FR 79660). In 
the proposed rule, we reemphasized 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 (Id.). We proposed to 
include the language ``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.
    We proposed 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. As we discussed in the proposed rule, the 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) (87 FR 79660).
    We proposed to add Sec.  460.106(d)(3) to state that all services 
must be arranged and provided in accordance with Sec.  460.98(c). As we 
discussed in section VI.G. of the proposed rule, we have proposed 
additional criteria concerning the arranging and provision of services 
that are determined necessary by the IDT (87 FR 79648). We explained in 
the proposed rule that 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 (87 FR 79660).
    As we discussed in the December 2022 proposed rule, although Sec.  
460.106(e) currently requires that the team must develop, review, and 
reevaluate the plan of care in collaboration with the participant or 
caregiver, or both, 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 (87 FR 79660). We further discussed how 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.'' 
(Id.) Therefore, we proposed to split the existing language into two 
new paragraphs Sec.  460.106(e)(1) and (e)(2). We proposed 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 
proposed 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 proposed 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.
    As we discussed in the December 2022 proposed rule, we have seen 
organizations have insufficient documentation related to participant 
plans of care despite the current requirement that the team document 
the plan of care, and any changes made to it, in the participant's 
medical record (87 FR 79660). We further explained how 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 no 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

[[Page 30753]]

addressed (Id.). Therefore, we proposed 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. As we discussed in the 
proposed rule, our proposal is consistent with the current requirement, 
but ensures that the PACE organization understands that it must 
document all care planning requirements (Id.). 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 proposed certain modifications to Sec.  460.104 to align 
with our proposed amendments to Sec.  460.106. We proposed to remove 
most of the language currently in 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. As we discussed in the proposed 
rule, we believe this will eliminate any unnecessary duplication and 
ensure there is no confusion as it relates to care plans (87 FR 79661).
    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.
    We solicited comment on these proposals. A summary of the comments 
received and our responses follow.
    Comment: Most commenters appreciated CMS's clarification of semi-
annual by modifying the requirement to 180 days. Several commenters 
expressed concern over the change in requirement from a semi-annual re-
evaluation of the plan of care to a re-evaluation at least every 180 
days. Those commenters stated the requirement is overly burdensome 
because it will require PACE organizations to monitor and track the 
care plan precisely and notify the IDT when the next care plan is due. 
A commenter requested clarification of whether the 180-day timeline 
restarts every time the plan of care is reevaluated or if it is 
predicated on the participant's enrollment date. A commenter requested 
that the requirement be modified from 180 days to the last day of the 
6th month following the last reevaluation of the plan of care because 
it would provide PACE organizations an entire month to focus on care 
planning rather than having to calculate the 180 days exactly. Another 
commenter pointed out that 180 days is just short of six months, and 
that CMS should change the requirement to 185 days to allow for a full 
six months between reevaluations for plans of care.
    Response: We thank commenters for sharing their concerns regarding 
the 180-day timeline being overly burdensome. We believe that providing 
a clear standard will reduce the ambiguity of the semi-annual care plan 
requirement currently in regulation. We are not persuaded by the 
argument that tracking the care plan by 180 days is overly burdensome 
as PACE organizations are already required to track care plans semi-
annually. We have also consistently heard from both PACE organizations 
and advocacy groups that PACE requirements are overly vague and 
clarification of CMS's intent is appreciated whenever possible. For 
these reasons, we are not persuaded to extend the timeframe beyond the 
proposed 180-days or leave the requirement as it currently is written. 
Additionally, we clarify that we intend the 180-day timeline to restart 
every time a new care plan is finalized. We believe this is consistent 
with other parts of the regulation that contemplate care plans being 
developed within specific timeframes (for example, Sec. Sec.  
460.104(b) and 460.106(a)) and also the service determination request 
language which discusses requests made ``prior to completing the 
development'' of the initial plan of care (see Sec.  460.121(b)(2)). 
For example, if a participant experiences a change in health status, 
the participant must be assessed, and a new care plan must be developed 
and implemented. The participant's next care plan would then be due 180 
days from the date the latest care plan was finalized. To ensure there 
is no ambiguity on when the timeframe begins, we are finalizing the 
proposed requirement with a modification to the regulation text to 
state that the 180-day timeline starts from the date when the last care 
plan was finalized at Sec.  460.106(b)(2).
    Comment: Multiple commenters requested that CMS extend the 
timeframe to conduct unscheduled assessments following a change of 
status from the 14-day timeline that was proposed to a 30-day timeline 
to allow PACE organizations more flexibility in complex cases and more 
time to coordinate with providers outside of the PACE organization's 
network. A commenter questioned CMS's decision to hold PACE 
organizations to the same standard as long-term care facilities when it 
is not clear whether the 14-day timeline used by these facilities 
improves care. A few commenters requested that CMS add a participant 
being discharged from a SNF as an exception to the 14-day timeframe, 
similar to the exception proposed for participants who are 
hospitalized. These commenters argued that it is beneficial for the 
participant to be as stable as possible before conducting assessments 
and developing a care plan. These commenters suggested that if a 
participant is placed in a SNF for a short-term stay, or another 
similar environment, the IDT should delay the reassessment timeframe 
until discharge, similar to the hospital exception. A commenter 
requested CMS consider providing an exception process to the timeline 
to allow PACE organizations an exemption when needed, but to limit 
abuse by requiring 85 percent of care plans to meet the regulatory 
timeframes to be considered compliant. Another commenter requested that 
CMS clarify when the timeline would begin for care planning purposes if 
a PACE organization failed to determine, but should have determined, 
that there had been a change in the participant's health or 
psychosocial status.
    Response: We thank the commenters for their suggestions to extend 
the timeline to conduct an unscheduled re-evaluation of the care plan 
following a change in status. We understand the concerns expressed by 
commenters about the ability of PACE organizations to obtain necessary 
information from outside sources, such as hospitals, to complete 
assessments of the participants after a change in status. We had 
solicited comment on whether the timeline should be 14, 21, or 30 days 
and, if commenters believed a different timeline was more appropriate 
for PACE, why PACE should be held to a

[[Page 30754]]

different standard than long term care facilities. While most 
commenters requested 30 days, we were not persuaded by the commenters' 
arguments for why this longer timeframe was justified. PACE 
organizations must have processes in place to ensure their contracted 
providers are promptly communicating information relating to the 
participant's condition. Incidents that prompt a change in status 
reassessment are not minor events, but situations that have a direct 
impact to a participant's ability to function, and therefore, they need 
to be considered and addressed as expeditiously as the participant's 
health requires. As we have stated previously, because PACE and long-
term care facilities serve the same vulnerable population, we feel 
aligning the requirements ensures participants receive the same quality 
of care they would receive in a nursing home or other SNF. We are also 
not persuaded to add an exception to the timeframe for conducting a re-
evaluation of the care plan to include a participant's discharge from a 
SNF. SNFs are contracted with the PACE organization, and the PACE 
organization should already have processes in place to conduct 
assessments of participants when they are at those facilities as 
needed. Additionally, while commenters requested exceptions for ``short 
term'' stays in a SNF, ``short term'' is an undefined period of time 
which will change for every participant in every situation. While some 
participants may experience a short term stay of a week, other 
participants may be admitted for a ``short term'' stay and end up 
residing in the SNF for a month or even longer. Delaying those 
participants' re-evaluations until after discharge would be 
inappropriate as the participant may end up residing for long periods 
in another care setting without a care plan that is appropriately 
tailored to their needs. We would note, nothing in our modification 
prohibits a PACE organization from conducting change in condition 
assessments and care plans on a more frequent basis. If the PACE 
organization determines that the participant should be re-assessed 
following the discharge from the SNF, it is encouraged to do so.
    As for the language that the timeframe begins 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; this language is meant to convey that the trigger 
for the timeframe is when the change in status event occurs, even if 
that event happens prior to the PACE organization becoming aware of it. 
For example, if the participant has a stroke with hemiplegia on a 
Monday, and the PACE organization becomes aware of the stroke 2 days 
later, the 14-calendar day timeframe begins the date of the stroke, not 
the date the PACE organization becomes aware of the stroke. However, if 
the participant is hospitalized because of the stroke, the 14-calendar 
day timeframe would begin upon discharge from the hospital. We are 
finalizing the 14-calendar day timeframe as proposed.
    Comment: Several commenters requested that CMS modify the proposal 
on the required content of plans of care to focus on what is most 
important and relevant to participants' needs as identified by the IDT 
in collaboration with the participant and/or designated representative. 
A few commenters also requested that CMS clarify that the proposed 
changes to the content of the care plan will not interfere with the 
participant's views and wishes, including the participant's desire to 
decline certain plan goals. A few commenters expressed concern that the 
minimum requirements for the content of care plans would include such a 
high level of detail that it would impact the IDT's time and resources 
and create administrative burden. A commenter stated that long-term 
care facilities and PACE organizations are different and should not be 
held to the same standards, and asked for clarification of how CMS 
would determine the validity of an assessment for a participant who has 
no needs in a specified area. A commenter requested that CMS clarify 
what the word ``need'' means in the context of the care plan, and 
whether that refers to an assessed medical need or a need the 
participant believes they have. Another commenter stated that it was 
impractical and duplicative for IDT members to incorporate their 
individual notes and diagnoses from the medical record into a care plan 
for all participants.
    Response: We thank commenters for sharing their concerns on the 
proposed required content to the plan of care. Our intent in proposing 
required content for the plan of care wasn't to override participant's 
wishes and desires for what is included in their individual plans of 
care, but instead to ensure that all participants are equally assessed 
for services that meet their needs, and to ensure the care plan is a 
comprehensive document that reflects an accurate picture of the care a 
participant receives. In the event a participant is assessed for a 
service that they do not wish to include in their plan of care, we 
would expect the PACE organization to document that the participant was 
assessed for the service and requested it not to be included in their 
plan of care. Additionally, if the IDT determined the participant did 
not have any identified needs in a particular area, they would indicate 
that in the plan of care. For example, if the participant is assessed 
as having perfect vision, the care plan content for vision may include 
an optometry appointment once a year without any further goals or 
interventions. Or the IDT may note that there are no current needs in a 
particular area, such as skin integrity. When determining a 
participant's needs in a particular area the IDT should use all 
available information including recent assessments to ensure the care 
plan accurately reflects the participant's condition in a particular 
area. Per our changes to Sec.  460.121(b)(2), as discussed in section 
IX.L of this final rule, when a participant believes they have a need, 
we would expect the IDT to assess the participant for that need to 
determine if the need is present. Then the IDT would assess what 
services or interventions are necessary to meet that need, just as the 
IDT determines whether any request for a specific service is necessary 
to improve and/or maintain a participant's medical, physical, 
emotional, or social wellbeing. Then we would expect the IDT to 
document the request for assistance with the stated need, the IDT's 
determination, and in the event the need was determined not to be 
present, the IDT's reasoning for that determination. We would review 
the available documentation in the medical record to determine if the 
participant's needs were appropriately assessed and addressed.
    We understand that long-term care facilities and PACE organizations 
are not the same, but they share some important similarities. They are 
both direct care providers serving nursing home eligible participants. 
Therefore, we do not believe it is inappropriate to adopt long-term 
care standards in order to ensure equitable access to care among the 
vulnerable populations served.
    We are not persuaded that requiring the IDT to record its diagnoses 
into the care plan as well as the medical record is duplicative. PACE 
was created to care for the individual as a whole, with the IDT and 
care planning being important components of the program's success. If 
the care plan does not include all current diagnoses from the different 
IDT disciplines, then the participant may not receive all the care for 
which they have been approved. As we stated in the proposed rule, we 
have seen as part of our oversight and monitoring activities that PACE 
organizations rely heavily on

[[Page 30755]]

discipline specific progress notes causing participant care plans to be 
sparse and not fully detailing the care received by the participant (87 
FR 79655). If the IDT is not fully aware of all of a participant's 
comorbidities as well as any developments in the participant's medical, 
physical, emotional, and social status, the participant's planned 
treatment and services may not be adequate to meet the participant's 
needs. We are finalizing the required content of the care plan as 
proposed.
    Comment: Multiple commenters agreed with CMS's decision not to 
include acute diseases or medications in the care plan requirements. A 
commenter supported CMS's inclusion of vision in the content 
requirements of the care plan and requested that CMS require PACE 
organizations to report the number of participants referred to a doctor 
of optometry for a comprehensive eye exam.
    Response: We thank the commenters for their support of the proposed 
required content of the plan of care. We agree with commenters that the 
inclusion of acute diseases is not always appropriate in the plan of 
care and are finalizing the proposed required content without inclusion 
of acute diseases or medications; however, as we stated in the proposed 
rule, nothing prevents a PACE organization from including acute 
diseases or medications in the care plan if they so choose (87 FR 
79659). Additionally, while we appreciate the support for including 
vision as required care plan content, the collection of data including 
optometry appointments is outside the scope of this rule.
    Comment: A few commenters requested CMS refer to the National 
Consensus Project for Quality Palliative Care to include interventions 
such as palliative care, non-pain symptoms, caregiver burden, 
participant's cognitive status and decision-making ability, financial 
vulnerability, and spiritual concerns.
    Response: While we agree with the commenters that interventions for 
other areas in a participant's life are an important consideration for 
treating a participant's medical, physical, emotional, and social 
needs, we are not persuaded to require additional content regarding 
non-pain symptoms, caregiver burden, participant's cognitive status and 
decision-making, financial vulnerability, or spiritual concerns. While 
we agree that these specific areas may be relevant to some 
participants, we believe it is such a personal matter that we are not 
adding them to the minimum criteria. However, we encourage PACE 
organizations to consider whether other interventions would be 
appropriate when developing the care plan based on the participant's 
needs and other regulatory requirements, including requirements related 
to participant rights. We may consider proposing additional minimum 
content for the plan of care in the future. We would note that nothing 
in our proposal would prevent PACE organizations from including 
additional content in the care plan if they so desired. We also 
extensively discussed the proposed palliative care requirements in 
section IX.G, Specific Rights to Which a Participant is Entitled, where 
we proposed to require PACE organizations to define comfort care, 
palliative care, and end-of-life care, and obtain consent from 
participants and/or their designated representatives prior to 
implementing comfort, palliative or end-of-life care. We believe our 
proposal in that section to require PACE organizations to explain the 
different treatment options, provide written information of those 
treatment options, and obtain written consent prior to initiating 
palliative, comfort or end-of-life care services is the appropriate 
avenue for addressing palliative care interventions. To the extent that 
a participant's services change as a result of their designation of 
palliative care, comfort care or end-of-life care, the IDT should 
consider how those changes impact the care plan and whether 
modifications to the care plan are necessary. Therefore, we are 
finalizing the required content of the plan of care as proposed.
    Comment: Multiple commenters requested CMS to modify the proposed 
participant and/or caregiver participation requirement to allow PACE 
organizations to document attempts to engage the participant and/or 
their caregiver. These commenters stated that often participants and/or 
caregivers are averse to participating in the care planning process. 
Alternatively, a few commenters suggested CMS grant the IDT a grace 
period of 15 days to accommodate the participant's and/or caregiver's 
availability and willingness to review the care plan prior to 
finalization or to allow PACE organizations to finalize care plans 
prior to obtaining participant and/or caregiver approval. With respect 
to the latter alternative, a commenter stated that if the caregiver 
and/or participant do not approve of the care plan after it has been 
finalized by the PACE organization, the care plan can be reviewed and 
revised at that point. Another commenter requested CMS modify the 
proposed requirement to clarify how PACE organizations can prove 
compliance when participants and/or their caregivers do not participate 
in the care planning process.
    Response: We thank commenters for sharing their concerns regarding 
the proposed requirement to include participants and/or caregivers in 
the plan of care development and implementation process. We recognize 
that some participants and/or caregivers may be averse to participating 
in the care planning process. However, we would point out that there 
are different methods the IDT may use to involve the participant. Some 
participants may want to participate in the IDT meeting where the care 
plan is discussed and developed. Other participants may want to 
participate less in the care planning process. In those cases, we would 
expect, at a minimum, documentation to demonstrate that the care plan 
was fully reviewed with the participant, and that any concerns were 
addressed, prior to the care plan being finalized. It is important that 
participants and/or caregivers are active in discussions regarding the 
participant's needs. A collaborative approach to care planning allows 
participants and/or caregivers to be actively engaged in the care 
participants receive. As we stated in the proposed rule, often we see 
through our oversight and monitoring process that participants and/or 
caregivers are only informed of the new care plan after it has been 
completed by the IDT (87 FR 79660). We also believe this requirement 
addresses commenters' concerns, discussed in an earlier comment 
summary, regarding ensuring the participant's views and wishes are 
taken into consideration during the development of the plan of care. 
The best way to ensure that the care plan satisfies the participant's 
goals for care is to include the participant in the care plan 
discussion. Therefore, we are finalizing the participant and/or 
caregiver participation requirements as proposed.
    We are also not persuaded by the argument to extend the timeframe 
beyond 180 days to allow a grace period for finalizing the care plan to 
accommodate participants' and/or their caregivers' availability and 
willingness to review the care plan. However, nothing prevents a PACE 
organization from factoring in their own grace period when calculating 
the 180-day timeframe to ensure the PACE organization has enough time 
to meet with the participant before the deadline. For example, if the 
participant is historically difficult to reach, the IDT may decide to 
start the care planning discussions a few weeks prior to the

[[Page 30756]]

180-day deadline in order to allow ample time to finalize the plan of 
care.
    Our intent in proposing the participant and/or caregiver 
participation requirement was to reduce the instances of participants 
and/or caregivers being presented with a finalized care plan after the 
IDT has completed its assessments and recommendations. As we stated in 
the proposed rule, 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'' (87 FR 79660). While we 
understand that participants and/or caregivers may not wish to 
participate in the care planning process, they should at least be given 
the opportunity prior to the care plan being finalized. We would expect 
a PACE organization to document attempts to engage the participant and/
or caregiver in the care planning process and would consider those 
attempts in our review of a PACE organization's compliance with this 
requirement.
    After considering the comments, we are finalizing the proposed 
changes to Sec.  460.106 in part, with a modification to the language 
at Sec.  460.106(b)(2) to clarify that the required timeline for the 
care plan reevaluation is 180 days from the date when the previous care 
plan was finalized.

G. 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 the proposed rule, CMS proposed 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 participants access to necessary 
covered items and services 24 hours per day, every day of the year. We 
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), 
we 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, as we discussed in the 
proposed rule, 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 (87 FR 79661). We also stated in the 
proposed rule that we have seen organizations 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 (Id.). 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. We argued in 
the proposed rule that 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 (Id.). We further stated that it is 
essential that PACE participants understand their right to receive all 
treatments in the PACE benefit package that are necessary and 
appropriate, and that they clearly understand their rights as their 
health transitions throughout their time in the PACE program (Id.).
    For the foregoing reasons, we proposed certain modifications to 
Sec.  460.112. First, we proposed 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. As we discussed in the proposed rule, we considered 
the language in Sec.  460.92 related to services meant to improve or 
maintain the participant's health condition as well as nursing home 
regulations at Sec.  483.21(b)(1)(i), which require care plans to 
describe ``the services that are to be furnished to attain or maintain 
the resident's highest practicable physical, mental, and psychosocial 
well-being'' (87 FR79661).
    In addition, we proposed 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. As we discussed in the proposed rule, although the right to 
access emergency care services currently appears at Sec.  460.112(d), 
we believe that it relates to the right to treatment, and therefore, we 
proposed to move the text of current Sec.  460.112(d) to new Sec.  
460.112(a)(2) (87 FR 79662).
    In the 1999 PACE interim final rule, we codified at Sec.  
460.112(a) (which we proposed 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). We also codified at Sec.  460.112(e) the right 
of participants to participate fully in all treatment decisions. As we 
discussed in the proposed rule, Sec.  460.112(e)(1) 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 (87 FR 79662). We stated in the proposed

[[Page 30757]]

rule that 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'') (Id.). Therefore, we proposed 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. As we stated in the 
proposed rule, 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 (Id.).
    In the 1999 PACE interim final rule (64 FR 66254), we codified the 
participant's rights to receive accurate and easily understood 
information at current Sec.  460.112(b) (which we proposed to 
redesignate as Sec.  460.112(c)). In the 2006 PACE final rule, we 
further stated that this information was necessary for participants to 
``comprehensively assess differences in their health care options'' (71 
FR 71295). We 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). We argued in the 
proposed rule that a participant's designated representative should 
receive the same accurate, easily understood information the 
participant receives in order to make informed decisions on behalf of 
the participant (87 FR 79662). We proposed 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.
    The proposed rule at 87 FR 79662 discussed how we have seen as part 
of our audit and oversight activities that PACE organizations used the 
terms palliative care, comfort care, and end-of-life care, without 
providing participants with clear information on how the PACE 
organization is defining those terms or offering clear explanations of 
whether participants who opt to receive those forms of treatment will 
also continue to receive curative treatments. Although we did not 
propose 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. Therefore, we proposed 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 proposed that the written 
notification to participants must explain four different aspects of the 
treatment options, which we outlined in proposed Sec.  460.112(c)(5)(i) 
through (iv).
    First, we proposed 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. As we discussed in the proposed rule, a participant 
should have the right to fully understand the care they are agreeing to 
receive prior to that care being initiated (87 FR 79662).
    As 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. As we 
discussed in the proposed rule, we have seen through audit that some 
PACE participants receive palliative care and/or comfort care in 
addition to curative treatment; however, we have also seen participants 
receive palliative care and/or comfort care instead of treatment meant 
to improve or maintain the participant's health condition when the 
participant was unaware that in choosing palliative care, they were 
also choosing to forego curative treatments (Id.). We stated that 
providing palliative care only services may be appropriate in some 
instances, but we believe it is important that participants fully 
understand what they are agreeing to when they enter into palliative or 
comfort care status (Id.).
    As 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. As discussed in the 
proposed rule, 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 (87 FR 79663). We further explained that PACE organizations 
that provide palliative care services in conjunction with curative 
treatment may not have to provide a detailed analysis and could instead 
include language in their explanation that palliative or comfort care 
will not impact existing services (Id.).
    As 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 proposed 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). That 
includes the right to participate 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. 
As we discussed in the proposed rule, we have seen situations where 
participants or their designated representatives want to stop 
palliative care or comfort care when they realize this means they will 
no longer receive other services, and they do not know they have the 
right to revisit prior treatment decisions (87 FR 79663). As we 
discussed in the proposed rule, participants should be clearly 
informed, in writing, that they have the ability to change their mind 
on these important treatment decisions (Id.).
    In the 1999 PACE interim final rule (64 FR 66255), we 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 the proposed rule, we proposed 
to amend 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 
proposed 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 proposed at Sec.  460.112(e)(1)(i) to establish that a 
participant's right to make health care decisions includes the right to 
have all treatment options fully explained to them. As we discussed in

[[Page 30758]]

the proposed rule, a participant cannot make an informed health care 
decision without fully understanding the options available (87 FR 
79663).
    As 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 proposed 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 proposed 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.'' As we discussed in the 
proposed rule, 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 (87 FR 79663).
    We proposed 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.
    At Sec.  460.112(e)(2)(i), we proposed 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. We proposed 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). As we discussed in the proposed rule for Sec.  
460.112(c)(5), 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 (87 FR 79662). We proposed 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 explaining the 
treatment options in a way that is understandable to the participant so 
that the participant has a full understanding of their options. 
Finally, we proposed 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. As we discussed in 
the proposed rule, we have seen that some organizations stop treatments 
to improve or maintain a participant's condition when a participant 
enters palliative care or comfort care, and therefore, we believe it is 
especially important that participants or their designated 
representatives are in agreement with these treatment options, and 
consent to receiving this care (87 FR 79664). We proposed 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. As we emphasized in the proposed 
rule, 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 (Id.). That directive is distinct from the notification 
proposed at new Sec.  460.112(e)(2), which would 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), we 
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), we 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 as 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 (Id.). 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. As we discussed in the 
proposed rule, we believe that Sec.  460.112(g) should also reference 
the right to request a service determination request, which is the 
first step in the appeals process. Therefore, we proposed 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 proposed 
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 this burden in the collection 
of information section of this final rule.
    We solicited comments on these proposals and a summary of the 
comments received and our responses follow.
    Comment: A majority of commenters requested that CMS proactively 
define the terms palliative care and end-of-life care in the final 
rule, rather than leaving the definition up to each PACE organization. 
Several commenters referenced CMS's current definition of palliative 
care in the hospice regulations at Sec.  418.3. A commenter requested 
that palliative care be defined as care that focuses on improving the 
quality of life and easing suffering. Most commenters requested CMS to 
stop using the term ``comfort care'' as they stated that it is not a 
medically defined term and is more a term of art. Additionally, a 
majority of commenters requested that CMS stop using the terms 
interchangeably to avoid furthering the misconceptions around the 
different terms. A few commenters requested that CMS clarify that end-
of-life care is a comprehensive set of services to provide for the 
physical, psychosocial, spiritual, and emotional needs of terminally 
ill patients and their family members.
    Response: We thank commenters for their feedback. Commenters are 
correct that the hospice regulations define palliative care at Sec.  
418.3 as ``patient and family-centered care that optimizes the quality 
of life by anticipating, preventing, and treating suffering.'' We

[[Page 30759]]

agree that the palliative care definition in the hospice regulations is 
a national standard and we encourage PACE organizations to consider 
this definition for use in their own program. We do not intend to 
define these terms for purposes of the PACE regulations as a part of 
this rule; however, we will consider defining these terms in future 
rulemaking. Our intent with this proposal is to ensure that PACE 
participants have notice of how the terms are defined by the PACE 
organization and how the definition impacts the care they receive. As 
we stated in the proposed rule, we have seen through our oversight and 
monitoring process that PACE organizations are using these terms 
interchangeably without providing participants with clear definitions 
or an explanation of how the different terms impact the treatment 
options available to participants (87 FR 79661). While we do not want 
to add to the misconceptions around the terms, we routinely see these 
three terms in PACE organization medical records, without clear 
definitions applied to them. This provision is intended to provide 
clarity for participants when PACE organizations use any of these terms 
in their explanation of benefits. Therefore, we will be finalizing the 
requirement that PACE organizations provide participants with clear, 
written definitions to increase transparency and understanding of what 
services participants can expect to receive in lieu of or in addition 
to the services they were receiving prior to opting for palliative, 
comfort, or end-of-life care without modification.
    Comment: Several commenters objected to the proposed requirement 
that the PACE organization obtain written consent from the participant 
and/or their caregiver prior to implementing palliative care on the 
grounds that it would be administratively burdensome and unnecessary, 
as it was their understanding that palliative care is intended to be 
provided concurrently with curative care. A commenter requested that 
the proposed regulation language be altered to require consent only 
when the PACE organization implements a plan of care no longer 
considered curative or life-prolonging, and instead is focused on only 
palliative care or end-of-life care.
    Response: We thank the commenters for sharing their concerns 
regarding the proposed requirement for written consent prior to 
implementation of palliative care. While we understand that palliative 
care may be provided in addition to all other services at some 
organizations, that is not always the case. As we stated in the 
proposed rule, we have seen as part of our oversight and monitoring 
efforts that some PACE organizations are not continuing to provide 
curative treatment once a participant has elected to receive palliative 
care (87 FR 79661). In these situations, some participants are not 
aware that by consenting to receive palliative care, they are 
consenting to stop curative treatment in favor of palliative only care. 
In some cases, the participant may believe they are consenting to 
receive palliative care in conjunction with continuing to receive 
curative treatment. We disagree that requiring consent from 
participants prior to implementing palliative care would be overly 
burdensome. If a PACE organization offers palliative care in addition 
to or in conjunction with curative treatment, then the notice required 
in this provision is minimal. The PACE organization would need to 
provide a description of the term or benefit and would need to indicate 
that this is done in addition to all other services received by the 
participant. This notification could be provided to the participant 
early on in their enrollment through either enrollment materials or the 
care plan. However, if palliative or end-of-life care is offered in 
lieu of curative treatment, participants need to be informed that 
choosing palliative or end-of-life care will result in a cessation of 
curative treatment and participants need to consent to the change in 
treatment. It is only when a participant's services will change as a 
result of moving to palliative care, comfort care, or end-of-life care 
that the notification must become more tailored and include a detailed 
description of how the services being received by a participant will be 
impacted. We are finalizing the consent requirement as proposed because 
we believe it will protect participants from agreeing to forego 
curative treatment when that is not their intent.
    Comment: A few commenters expressed support for our proposal to 
require PACE organizations to fully inform participants about 
applicable treatment options, including any policies that would limit 
participants' ability to receive curative treatment. These commenters 
also supported our proposed requirement that PACE organizations obtain 
consent from participants before making changes to the treatment plan, 
as well as our proposal that participants have the right to revoke 
consent at any time. A commenter expressed concern that in some cases 
participants have decided to reinstate disease-directed care, but the 
care was not effectuated until the first of the month following the 
participant's request. The commenter requested that we clarify that if 
participants revoke or withdraw their consent to palliative care-only 
services, that decision to reinstate curative care should be 
effectuated immediately.
    Response: We thank the commenters for their support for our 
proposal. We share the commenter's concerns about the need to 
effectuate a return to curative treatment immediately if the 
participant revokes their agreement for palliative only care. When a 
participant decides to return to curative treatment and/or forego 
palliative only care, the PACE organization must act on that 
information immediately. We would consider this a change in participant 
status, and per the changes to the plan of care that we are finalizing 
in section IX.F of this rule, the PACE organization would be required 
to reassess the participant and re-evaluate the participant's plan of 
care.
    Comment: Several commenters expressed a desire that PACE 
organizations have the ability to continue to provide and/or coordinate 
hospice care through a Medicare Advantage or other hospice program to 
allow participants to remain enrolled in PACE. A couple of commenters 
requested that the proposed regulation language be altered to require 
PACE organizations to inform participants of their rights regarding 
hospice care both within and outside of the PACE program. Specifically, 
these commenters requested that PACE staff be required to explain to 
participants about the Medicare hospice benefit and the participants' 
right to enroll, including an explanation that participants must 
disenroll from PACE to enroll in the Medicare hospice benefit. A 
commenter also requested that CMS require PACE staff to disclose any 
contractual relationship the PACE organization has with hospices in the 
community. Finally, a few commenters requested that CMS should 
strengthen requirements regarding the IDT's capabilities to ensure they 
have sufficient expertise in pain and symptom management for 
participants with serious illness or who require end-of-life care.
    Response: We thank commenters for their concerns. Although we have 
proposed to require PACE organizations to inform participants of all 
treatment options, including palliative and end-of-life care, and how 
those options may impact curative treatment, nothing we have proposed 
would remove the ability of PACE organizations to continue

[[Page 30760]]

providing hospice-like services or contracting with community hospice 
programs to provide hospice services to participants. The enrollment 
agreement that PACE participants enter into with the PACE organization 
is required to provide information regarding disenrollment, including 
the requirement to disenroll from PACE in order to receive and enroll 
in the Medicare hospice benefit per Sec.  460.154(i). The PACE 
organization is also already required to disclose contractual 
relationships to participants upon enrollment and throughout the time 
the participant is enrolled in the PACE program. Therefore, we are not 
persuaded that an additional requirement is needed in regulation 
regarding hospice care.
    As for ensuring that the IDT includes the expertise to provide 
meaningful end-of-life care to participants, in the April 12, 2023 
final rule, we modified the proposed regulation for contracted services 
to include palliative medicine. Effective January 1, 2024, PACE 
organizations are required to staff and/or contract with palliative 
medicine specialists. At this time, we do not believe it is necessary 
to include a palliative care specialist on the IDT as a routine role. 
The disciplines that participate in the IDT are the minimum required, 
but the IDT may always include additional personnel or specialists as 
it sees fit. To the extent an IDT wants to bring in a palliative care 
specialist to assist with developing an end-of-life plan of care, it is 
allowed and encouraged to do so.
    Comment: A commenter requested that the language in the regulation 
be altered to require written notification only when a participant is 
moving to palliative only care or end-of-life care as it will not be 
beneficial to the participant and may be overly burdensome to PACE 
organizations.
    Response: As we have stated previously, through our oversight and 
monitoring efforts, we have seen instances of participants transitioned 
to palliative-only care or end-of-life care without the PACE 
organization explaining to the participant that this transition means 
the participant will no longer receive curative treatment. We believe 
that requiring written notification to the participant regarding the 
implementation of palliative, comfort, or end-of-life care will reduce 
confusion among participants of what care they expect to receive. As we 
stated in response to a previous comment, if a PACE organization 
provides palliative care in addition to curative treatment, then 
inclusion of that additional benefit in the enrollment materials 
provided to the participant at the time of enrollment or the inclusion 
of information regarding the palliative care benefit in the 
participant's care plan would likely be sufficient to meet this 
requirement.
    Comment: A commenter supported the proposed requirement that 
participants have a right to request services via a service 
determination request in addition to their right to file a grievance or 
appeal.
    Response: We thank the commenter for their support and are 
finalizing this provision as proposed.
    After considering the comments, and for the reasons set forth in 
the proposed rule and in the previous responses, we are finalizing the 
changes to Sec.  460.112 as proposed.

H. 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. 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. In the December 2022 
proposed rule (87 FR 79452), we proposed 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 
proposed certain adjustments that would align the requirements with the 
service determination process in Sec.  460.121 for consistency.
    First, we proposed to amend Sec.  460.120(a) by removing the 
current paragraph header, which reads ``Process to resolve 
grievances.'' and added in its place a new paragraph header ``Written 
procedures.'' Specifically, we proposed 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. In addition, we proposed to further amend Sec.  460.120(a) by 
removing the list of individuals who can file a grievance, as we 
proposed to create a new paragraph that outlines who may submit a 
grievance at Sec.  460.120(d). We proposed 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. 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 the 
purposes of PACE. Specifically, in the December 2022 proposed rule, we 
discussed how the grievance definitions in other managed care programs 
and care settings, specifically in MA and in nursing homes, could 
inform and enhance the grievance definition for PACE.
    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. 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

[[Page 30761]]

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 proposed to include in our 
definition of a grievance that a request for remedial action is not 
required.
    We also proposed 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 solicited 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 solicited comment on whether we 
should consider adopting the following definition of grievance for 
purposes of the PACE regulations: A grievance means any complaint or 
dispute expressing dissatisfaction with any aspect of the PACE 
organization's or its contractors' operations, activities, or behavior, 
regardless of whether remedial action is requested.
    We proposed to redesignate current Sec.  460.120(b) as Sec.  
460.120(c), change the title, and amend the regulation text. 
Specifically, we proposed to change the title from ``Notification to 
participants.'' to ``Grievance process notification to participants.'', 
to differentiate from notifications related to grievance resolutions, 
and to add the requirement that the grievance process notification be 
written in understandable language. We proposed 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 solicited 
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 
solicited 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 proposed 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. 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 proposed at Sec.  460.120(c)(2) that the grievance process 
notification must inform participants 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. 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 proposed 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.
    We proposed 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 
submit 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 the amendments we proposed, would require PACE 
organizations to have a formal written process to promptly identify, 
document, investigate, and resolve all medical and nonmedical 
grievances. We proposed to amend the list of individuals who can submit 
a grievance to include the participant's caregiver. We believe the 
addition of the participant's caregiver 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.
    As we explained in the January 2021 final (86 FR 6018), we have not 
historically considered ``caregivers'' to include employees or 
contractors of the PACE 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

[[Page 30762]]

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 submit a grievance under Sec.  460.120. 
In the December 2022 proposed rule (87 FR 79667), we solicited comment 
on our proposal to amend the list of individuals who can submit a 
grievance to include a participant's caregiver.
    We proposed to add these rules around the submission of grievances 
in new paragraph Sec.  460.120(e). We 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. We 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 proposed 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 two different issues, and 
both may need to be investigated in order to appropriately resolve the 
grievance. The PACE organization may determine through its 
investigation 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 proposed 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. In our proposal for the PACE grievance 
regulation, we proposed 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 
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 proposed 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 proposed Sec.  460.120(h) would establish requirements for the 
processing of expedited grievances. Specifically, we proposed 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. We proposed 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 
proposed 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 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 proposed to establish at Sec.  460.120(i)(2) that oral or 
written notification of grievance resolutions

[[Page 30763]]

must include a minimum of three requirements. First, we proposed at 
Sec.  460.120(i)(2)(i) that the notification must include a summary 
statement of the participant's grievance including all distinct issues. 
Second, we proposed 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. Third, 
we proposed 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) proposed requirements related to how PACE 
organizations must provide notification when the complaint relates to a 
Medicare quality of care issue. Specifically, we proposed 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 proposed to establish 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 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 final rule. We also proposed 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 regulation 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 proposed 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. 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 proposed 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 proposed to include in a new Sec.  460.120(i)(4) language that 
provides the PACE organization would still be responsible for all other 
parts of this section. Section Sec.  460.120(d) specifies the PACE 
organization must continue to furnish all required services to the 
participant during the grievance process. We proposed to redesignate 
current Sec.  460.120(d) as 460.120(j) to account for our other 
proposals.
    We proposed 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 proposed 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 PACE 
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 reiterate 
that accepting and processing a confidential grievance would not negate 
the PACE organization's responsibilities to investigate and resolve the 
grievance. It also would not negate the responsibilities to document, 
aggregate and analyze the grievance, as required under current Sec.  
460.120(f). Additionally, 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 proposed to add a new paragraph at Sec.  460.120(l) that aligns 
with the record keeping requirements for service

[[Page 30764]]

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. 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 in the resolution.
    Finally, current Sec.  460.120(f) requires PACE organizations to 
maintain, aggregate, and analyze information on grievance proceedings. 
We proposed to redesignate this as paragraph (m) to account for our 
other proposals. We also proposed 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 organization must aggregate and analyze the 
information collected under the proposed paragraph (l) of this section 
for purposes of its internal quality improvement program. We noted that 
this requirement applies to all grievances; oral or written, including 
anonymous grievances.
    We estimated 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 regarding 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 solicited comment on this proposal regarding 
burden.
    We summarize the comments received on the proposal at Sec.  460.120 
and provide our responses to those comments in this section of this 
rule.
    Comment: Most commenters expressed their general support for CMS's 
proposal to clarify the grievance process at Sec.  460.120. A commenter 
preferred that CMS not formalize the grievance process in regulation, 
because they believed that establishing specific grievance process 
requirements in regulation would add to PACE organizations' 
administrative burden and would divert resources from participant care. 
Another commenter agreed with formalizing certain aspects of the 
grievance process but did not want to formalize the grievance process 
for all complaints, particularly for what the commenter referred to as 
``lower-level concerns.''
    Response: We thank commenters for their support of formalizing the 
grievance process at Sec.  460.120. Throughout the years, PACE 
organizations have expressed interest in a more clearly defined 
grievance definition, among other process clarifications in the 
regulation. We do not believe formalizing the grievance process in 
regulation will be overly burdensome for PACE organizations, as PACE 
organizations already must process grievances, including evaluating, 
resolving, responding to, and documenting grievances in a timely 
manner. Additionally, we included flexibilities in the proposed 
regulation at Sec.  460.120 when certain conditions are met. For 
example, PACE organizations may provide oral or written resolution of 
the grievance, depending on the participant's preference, as specified 
at the redesignated Sec.  460.120(h)(1). Another flexibility at the 
redesignated Sec.  460.120(h)(4) allows PACE organizations to 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. We disagree with the commenter's suggestion to categorically 
exclude certain types of complaints from the formal grievance process 
at Sec.  460.120. As established at Sec.  460.112(g), each participant 
has the 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. Specifically, it is a participant's right to be encouraged and 
assisted to voice complaints to PACE staff and outside representatives 
of their choice, free of any restraint, interference, coercion, 
discrimination, or reprisal by the PACE staff.
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing the proposed amendments to Sec.  460.120 without 
modification.
    Comment: Most commenters supported CMS's proposed definition of 
grievance at Sec.  460.120(b), and specifically mentioned their 
agreement with the part of the proposed definition that describes 
complaints as grievances regardless of whether remedial action is 
requested. Many of these commenters, while agreeing with this aspect of 
the proposed grievance definition at Sec.  460.120(b), generally 
rejected CMS's consideration of the MA grievance regulations at 
Sec. Sec.  422.561 and Sec.  422.564 in the development of PACE 
grievance requirements. These commenters emphasized the uniqueness of 
PACE, as an insurer and provider, and recommended that PACE grievance 
requirements consider the program's uniqueness, rather than repurposing 
MA grievance regulations for the PACE regulation.
    A few commenters disagreed with including complaints for which no 
remedial action is requested as part of the proposed grievance 
definition at Sec.  460.120(b). These commenters generally considered 
the proposed grievance definition at Sec.  460.120(b) to be broader and 
more administratively burdensome than the current grievance definition 
at Sec.  460.120, and either did not want to process these complaints 
as grievances or recommended a separate administrative process for such 
complaints. A commenter suggested that including complaints for which 
no remedial action is requested in the grievance definition would 
increase the number of complaints that would be considered grievances, 
which the commenter believed would increase the administrative burden 
of processing grievances without improving participant care and 
outcomes. The commenter recommended that CMS amend the proposed 
grievance definition to give PACE organizations the flexibility to not 
have to document complaints as grievances when the participant declines 
remediation. The commenter emphasized the uniqueness of the PACE care 
model and how it requires frequent communication and interaction 
between staff and participants, which they believed made documenting 
all complaints as grievances unreasonable and unnecessary. Another 
commenter indicated CMS's proposed grievance definition emphasized 
process compliance over staff judgment to the detriment of quality 
care, participant outcomes, and organizational culture.
    Response: We appreciate the commenters' support for the grievance 
definition proposed at Sec.  460.120(b), including where we specified 
that complaints can be grievances regardless of whether remedial action 
is requested. We acknowledge the commenters' general concerns regarding 
developing

[[Page 30765]]

PACE requirements based on MA requirements and agree that there are 
significant differences between these programs in terms of design and 
function. We carefully considered the relevance of the MA grievance 
regulations at Sec. Sec.  422.561 and Sec.  422.564 as we developed the 
PACE grievance definition for the December 2022 proposed rule (87 FR 
79665). Based on our review of MA grievance regulations, we proposed a 
PACE grievance definition that includes complaints as grievances 
regardless of whether remedial action is requested and provides that 
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 (87 FR 79665). We have considered 
commenters' specific feedback on the proposed grievance definition at 
Sec.  460.120(b) in the responses to comments that follow.
    We disagree with the commenters that described the proposed 
definition of grievance at Sec.  460.120(b) as overly broad, 
unnecessary, and burdensome with potentially negative consequences for 
participant care and PACE organizations' workplace culture. As 
explained in the December 2022 proposed rule, we believe the proposed 
grievance definition at Sec.  460.120(b) clarifies how we expect PACE 
organizations to identify grievances. The proposed grievance definition 
was the result of requests from PACE organizations over the years for 
CMS to better define grievances in the PACE regulation. We believe the 
proposed grievance definition clarifies our expectations for grievances 
and would not necessitate major changes to PACE organizations' existing 
grievance processes if they are already compliant with the current 
requirements at Sec.  460.120.
    Additionally, we have determined that categorically excluding 
complaints that do not require remedial action would be counter to 
compliance with other requirements within the PACE statute and 
regulation. As established at Sec.  460.112(g), each participant has 
the 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. Specifically, it is a participant right to be encouraged and 
assisted to voice complaints to PACE staff and outside representatives 
of their choice, free of any restraint, interference, coercion, 
discrimination, or reprisal by PACE staff. Therefore, amending the 
regulation to clarify that the definition of grievance includes 
complaints regardless of whether remedial action was requested provides 
important guidance to PACE organizations on how to achieve program 
compliance with current program requirements. Also, PACE organizations 
are required to aggregate and analyze grievances as part of their 
quality improvement organization (see Sec. Sec.  460.120(l) and 
460.134(a)(5)). A participant may feel that remedial action is not 
necessary in a particular situation, but that does not mean the PACE 
organization should not consider, analyze, and aggregate that 
information as part of its quality improvement efforts as a whole. If 
multiple participants have the same complaint, and none of them request 
remedial action, it may still be indicative of a larger, systemic 
breakdown that needs to be considered by the PACE organization.
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing the grievance definition at Sec.  460.120(b) as proposed, 
which includes complaints regardless of whether remedial action was 
requested.
    Comment: Most commenters disagreed with our proposed inclusion of 
``caregiver'' among the list of individuals who can submit a grievance 
at Sec.  460.120(d). Mostly these commenters expressed concern that the 
term ``caregiver'' is not defined in the PACE regulation at 42 CFR 460, 
and recommended that we define, clarify, or provide guidance regarding 
the term ``caregiver'' so that PACE organizations are not required to 
include individuals in the grievance process who may not have formal 
legal authority to act on behalf of the participant. Several of these 
commenters expressed that allowing a caregiver without formal legal 
authority to submit grievances on behalf of the participant could 
influence the participant's care in a way that would not align with the 
participant's goals, could pose risks to HIPAA Privacy Rule compliance, 
or may cause confusion when coordinating care for participants with 
support networks made of many individuals with complex dynamics. Many 
commenters questioned why it would be necessary for caregivers to have 
the ability to submit grievances when the participant, participant's 
family, and participant's designated representatives can already submit 
grievances per the current requirement at Sec.  460.120(a). One 
commenter suggested that adding caregivers to the list of individuals 
who may submit grievances on behalf of participants creates more 
administrative burden for PACE organizations, because PACE 
organizations would have to provide and document an increased number of 
grievance resolution notifications.
    Response: We believe that the guidance provided in the December 
2022 proposed rule (87 FR 79666) and this response offers adequate 
clarification of CMS's expectations for PACE organizations regarding 
how caregivers may participate in the grievance process. As we 
originally discussed in the January 2021 final rule (86 FR 6018) and 
reiterated in the December 2022 proposed rule (87 FR 79666), caregivers 
are typically aware of the participant's situation and are involved in 
care planning activities, as required at the current Sec.  460.106(e), 
which states that the IDT must develop, review, and reevaluate the plan 
of care in collaboration with the participant or caregiver or both. 
Because caregivers are involved in the care planning process and are 
presumably providing at least some care to the participant, we believe 
that it is also appropriate for these individuals to be able to 
advocate for services as necessary on behalf of a participant and voice 
complaints about participant care, regardless of whether these service 
determination requests or complaints result in changes to the plan of 
care. Additionally, since caregivers are often the participant's family 
member and/or designated representative, we do not believe that 
allowing caregivers to submit grievances on behalf of participants will 
meaningfully increase burden for PACE organizations, as PACE 
organizations already must receive, process, and provide notification 
for grievances submitted by participant family members and/or 
designated representatives. Also, we reiterate that, as we explained in 
the January 2021 final rule (86 FR 6018), we have not historically 
considered ``caregivers'' to include employees or contractors of the 
PACE organization, though 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. Lastly, we believe that caregiver involvement in the grievance 
process would benefit, rather than negatively impact, participant care, 
even when PACE organizations must coordinate within the complexities of 
participants' support systems. The PACE organization remains 
responsible for resolving a grievance based on the

[[Page 30766]]

facts of the situation and not based on who may have initiated the 
complaint.
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing our proposal at Sec.  460.120(d) to require that PACE 
organizations accept grievances from participants' caregivers without 
modification.
    Comment: A commenter requested that we clarify whether the proposed 
maximum timeframe requirement for notification of a grievance 
resolution at Sec.  460.120(g)(2) could be satisfied with attempts to 
notify the individual who submitted the grievance of the resolution 
within the 3-calendar day maximum timeframe, or whether the individual 
who submitted the grievance must receive the notification within that 
timeframe.
    Response: We clarify that we would consider the individual who 
submitted the grievance resolution to be notified for the purposes of 
Sec.  460.120(g)(2) when the PACE organization furnishes them with the 
resolution notification within the 3-calendar day maximum timeframe, 
but as expeditiously as the case requires. However, during a review of 
PACE organizations' grievance notification documentation, CMS may 
consider mitigating circumstances based on outreach attempts and when 
they occurred.
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing our proposal at Sec.  460.120(g)(2) to require that PACE 
organizations 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) without 
modification.
    Comment: Some commenters recommended a longer timeframe for 
processing expedited grievances than 24 hours after the time the PACE 
organization receives the oral or written grievance, as proposed at 
Sec.  460.120(h). Most of the commenters recommended increasing the 
maximum timeframe for processing expedited grievances to 72 hours. A 
commenter recommended that we modify the maximum timeframe to process 
expedited grievances to require the PACE organization to initiate an 
investigation within 24 hours, rather than fully resolving the 
expedited grievance within that timeframe. Another commenter suggested 
lengthening the maximum timeframe for processing expedited grievances 
to 2 business days. These commenters all expressed concerns with the 
possibility that the proposed timeframe at Sec.  460.120(h) would 
require staff to be available to process grievances at all times, 
including evenings and weekends, which may burden staff and exacerbate 
workforce shortages. A commenter suggested that more time may be needed 
to investigate the grievances at issue to determine if it is imminent 
or significant and should be processed as an expedited grievance. Most 
of the commenters expressed their support for allowing PACE 
organizations the flexibility to determine which grievances could have 
an imminent and significant impact on the health or safety of 
participants and should be processed as expedited grievances as 
proposed at Sec.  460.120(h).
    Response: We thank the commenters for their input regarding the 
proposed expedited grievance requirements at Sec.  460.120(h). After 
consideration of the concerns raised by commenters, we are declining to 
finalize our proposal to establish an expedited grievance process at 
Sec.  460.120(h), and we are redesignating all of our proposed 
provisions in Sec.  460.120(i) to instead appear at Sec.  460.120(h). 
While we are not finalizing the expedited grievance process, we remind 
PACE organizations that they are still required, as 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. Additionally, we emphasize 
that the IDT is responsible for triaging grievances to determine what 
needs to be processed more quickly in order to meet the participant's 
needs. Ultimately, as per Sec.  460.98(a), 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, and 
PACE organizations must continue to meet this requirement as they 
process grievances.
    Comment: A commenter disagreed with the proposal to establish at 
Sec.  460.120(i)(1) the requirement that the PACE organization must 
provide notification of the grievance resolution either orally or in 
writing based on the individual's preference for notification, with the 
exception of quality of care grievances as proposed at Sec.  
460.120(i)(3). The commenter recommended that all grievance resolution 
notifications be provided in writing, regardless of the nature of the 
grievance, as a participant safeguard. Another commenter expressed 
general support for the flexibility to provide oral or written notice 
of the grievance resolution as proposed at Sec.  460.120(i)(1).
    Response: We thank the commenter for expressing their concern 
regarding the impact of this provision on participant wellbeing. As 
discussed in the December 2022 proposed rule (87 FR 79668), we believe 
that PACE organizations should tailor the grievance resolution 
notification to the preference of the PACE participant or individual 
submitting the grievance. Based on our monitoring experience, we 
believe that requiring all grievance resolutions to be communicated in 
writing would be unnecessarily burdensome to PACE organizations and 
would not always be desired by the family members or participants 
filing the grievance. Therefore, we decline to modify the proposal.
    After consideration of the comments received and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing our proposal to require that PACE organizations must provide 
notification of the grievance resolution either orally or in writing, 
based on the individual's preference for notification, without 
modification, except we are redesignating proposed Sec.  460.120(i)(1) 
as Sec.  460.120(h)(1).
    Comment: A few commenters disagreed with the proposal at Sec.  
460.120(i)(2)(ii) to require PACE organizations to provide the steps 
taken to investigate the grievance in the grievance resolution 
notification. The commenters expressed concern that providing the steps 
taken to investigate the grievance in the notification adds burden to 
PACE organizations with no additional value to the participant, because 
detailing the investigation steps is not the same as providing a 
resolution.
    Response: As we stated in the December 2022 proposed rule (87 FR 
79668), 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, when an investigation is appropriate, 
we believe it would be important for the individual who submitted the 
grievance to understand what the organization found during its 
investigation. We agree with commenters that the value to the 
participant is the summary of the findings for each distinct issue, and 
not the specific steps taken to investigate the grievance.
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing this provision by redesignating

[[Page 30767]]

Sec.  460.120(i)(2)(ii) as Sec.  460.120(h)(2)(ii) and modifying Sec.  
460.120(h)(2)(ii) to require a summary of the pertinent findings or 
conclusions regarding the concerns for each distinct issue that 
requires investigation, and not requiring that the specific steps taken 
to investigate the grievance be included in the grievance resolution 
notification.
    Comment: A few commenters disagreed with the proposal at Sec.  
460.120(i)(2)(iii) to require that grievance resolution notifications 
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. These commenters noted that PACE 
organizations do not always know when corrective action will be fully 
implemented, especially when the corrective action requires a system 
change to a process within the PACE organization, and they did not 
believe it would be reasonable for CMS to expect PACE organizations to 
have all improvements in place and all grievance issues fully resolved 
in 30 days. Another commenter expressed concern that including 
corrective actions in the grievance resolution notification could 
include administrative or human resources actions that are not 
appropriate to share with participants or their designated 
representatives and stated that the finalized provision should protect 
the rights and privacy of participants, clinicians, and staff.
    Response: We believe the commenters misunderstood our expectations 
regarding the proposal at Sec.  460.120(i)(2)(iii). The Sec.  
460.120(g) grievance resolution and notification timeframe requirements 
apply to taking action to resolve the grievance and notifying the 
individual who submitted the grievance of the grievance resolution. 
Taking action to resolve the grievance and providing notification does 
not necessarily require that all corrective actions be completely 
implemented within the grievance resolution and notification timeframes 
proposed at Sec.  460.120(g) for all grievances issues.
    Additionally, we do not specify the level of detail a PACE 
organization should provide in the grievance resolution notification to 
describe the corrective actions taken, or when the participant may 
expect the corrective action(s) to occur. As explained in the December 
2022 proposed rule (87 FR 79668), the purpose of including information 
on corrective actions that have or will be taken by the PACE 
organization in response to a grievance is for the participant to 
understand how their grievance has been resolved or how it will be 
resolved. PACE organizations may protect provider privacy and business 
confidentiality in how they disclose the details of their investigation 
and any corrective action when providing grievance resolution 
notification. An appropriate level of detail for the corrective action 
demonstrates that the PACE organization has addressed each specific 
grievance issue, has taken or will take action to resolve the issue(s), 
and that the individual submitting the grievance can understand what 
actions were taken or will be taken to resolve the grievance. For 
example, if the complaint relates to a participant always being picked 
up by the PACE driver late, the correction may be that a new driver 
will be assigned to pick up that participant and the new driver will 
start in a week.
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing our proposal to require the grievance notification to 
include, for grievances that require 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 without modification, except we are redesignating proposed 
Sec.  460.120(i)(2)(iii) as Sec.  460.120(h)(2)(iii).
    Comment: A commenter disagreed with the proposed requirement to 
include Quality Improvement Organization (QIO) rights in grievance 
resolution letters as proposed at Sec.  460.120(i)(3), because they 
believed modifying standardized grievance notification forms would be 
administratively burdensome for PACE organizations and they expressed 
that participants already have many other options available when filing 
complaints with Medicare.
    Response: 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. The fact that there are other ways for participants to file 
complaints with Medicare has no bearing on participants' right to file 
quality of care grievances with the QIO. Up to this point, the PACE 
regulations have been silent as to this right, and the proposed 
requirement at Sec.  460.120(i)(3) meant to ensure that participants 
understand and can access this platform for complaints related to 
quality of care. We would expect PACE organizations to communicate this 
right to participants, as applicable.
    After consideration of the comments received and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing our proposal to include QIO rights in grievance resolution 
letters to Medicare participants with quality of care grievances about 
Medicare covered services without modification, except that we are 
redesignating Sec.  460.120(i)(3) as Sec.  460.120(h)(3) and paragraphs 
Sec.  460.120(h)(3)(i) and Sec.  460.120(h)(3)(ii).
    Comment: A commenter expressed wanting to better understand CMS's 
expectations for PACE organizations' cooperation with QIOs regarding 
quality of care grievances, as well as whether the quality of care 
grievance requirements we originally proposed at Sec.  460.120(i)(3) 
(which we redesignate and finalize as Sec.  460.120(h)(3), as noted in 
the previous response), would apply to Medicaid-only participants.
    Response: We appreciate the commenter's interest in learning more 
about how PACE organizations should participate in the QIO quality of 
care grievance process, as required by section 1154(a)(14) of the Act 
and as proposed in the December 2022 proposed rule at Sec.  
460.120(i)(3). We will consider future educational opportunities that 
may help PACE organizations better understand the QIO quality of care 
grievance process and their role within it.
    In the December 2022 proposed rule (87 FR 79668), we explained that 
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 
proposed 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. We reiterate 
that the QIO quality of care grievance process applies to Medicare 
participants' quality of care grievances regarding Medicare covered 
services. Therefore, participants who are not enrolled in Medicare, 
including Medicaid-only participants, would not be eligible for the QIO 
quality of care grievance process.
    After consideration of the comments received, and for the reasons 
outlined in the proposed rule and our response to comments, we are 
finalizing our proposal to include QIO rights in grievance resolution 
letters to Medicare participants with quality of care grievances about 
Medicare covered

[[Page 30768]]

services without modification, except we are redesignating Sec.  
460.120(i)(3) as Sec.  460.120(h)(3). Additionally, we are 
redesignating Sec.  460.120(j) through Sec.  460.120(m) as Sec.  
460.120(k) through Sec.  460.120(l) and any redesignated provision 
citations therein, without further modification.

I. PACE 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 provide 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 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, hereinafter referred 
to as the April 2010 final rule), which appeared in the April 15, 2010 
issue of the Federal Register, we 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.''
    In contrast to the Part C and D regulations at 42 CFR 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, 4432-33)). However, as explained in the proposed rule, 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. We also believe 
it is important to ensure there is public transparency regarding a PACE 
organization that has, or has had, performance and contract compliance 
deficiencies.
    Therefore, we proposed to amend the regulations at 42 CFR 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 4432-33), the disclosure requirement 
in paragraph (f) did not appear in Sec.  423.128.\258\ 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 will serve as an important protection 
for PACE participants. This policy does not impact the waiver of the 
remainder of Sec.  423.128 for PACE organizations, as applicable.
---------------------------------------------------------------------------

    \258\ The April 2010 final rule (75 FR 19677) amended Sec.  
423.128 to include paragraph (f).
---------------------------------------------------------------------------

    We received the following comments on this proposal, which are 
summarized later in this section:
    Comment: Numerous commenters expressed support for this proposal.
    Response: We thank the commenters for their support of our 
proposal, which would enable CMS to require PACE organizations to 
disclose to current and potential PACE participants information 
specific to PACE organization performance and contract compliance 
deficiencies, in a manner specified by CMS.
    Comment: Several commenters suggested that we clarify the scope, 
mechanism, format, and timing in which we would require PACE 
organizations to disclose contract and compliance deficiencies to 
current and potential participants.
    Response: We currently anticipate limiting this requirement to 
situations where we are imposing an intermediate sanction on a PACE 
organization, and we will follow a disclosure process that is similar 
to the process in MA and Part D. As in the MA and Part D programs, we 
would provide PACE organizations with a letter template, and the PACE 
organization would complete the required information in the template 
(for example, the bases for the intermediate sanction and participants' 
rights to a special election period if they have been impacted by the 
issues identified). We will then review and approve the notification 
and provide a date for the PACE organization to mail the notice to 
participants. We will also require the PACE organization to post the 
notice to its website.
    Comment: Several commenters suggested that we clarify the types of 
contract and performance deficiencies that we might require PACE 
organizations to disclose to current and potential participants.
    Response: As previously discussed, we intend to use these 
disclosures for instances where we are imposing an intermediate 
sanction on a PACE organization. We recognize, however, that there may 
be other instances where

[[Page 30769]]

a PACE organization has serious compliance or performance deficiencies 
such as those that may lead to intermediate sanctions or require 
immediate correction where we believe PACE participants and potential 
PACE participants should be specifically notified. We may also require 
disclosures in these instances.
    We received a comment on the following topic which is outside the 
scope of our proposal and to which we are therefore not responding: A 
request for CMS to create public reporting of performance for PACE 
organizations similar to Nursing Home Compare and an updated PACE 
manual with interpretive guidance prior to instituting a disclosure 
requirement.
    After consideration of the comments received, and for the reasons 
set forth in the proposed rule and our responses to comments, we are 
finalizing our proposal to add Sec.  460.198 to 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, 
without modification.

J. 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, to comply with the Paperwork 
Reduction Act of 1995 (Pub L. 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, we proposed 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.'' As explained 
in the proposed rule, we believe this change would eliminate any 
confusion regarding where the data collection requirements may be found 
(87 FR 79673).
    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 modifying Sec.  460.202 as 
proposed would not increase the burden on PACE organizations as they 
are currently required to furnish information to CMS and the SAA 
through the aforementioned information collection request.
    We solicited comment on this proposal and a summary of the comments 
received and our response follows.
    Comment: A few commenters expressed support of the proposal to 
amend Sec.  460.202(b) by removing the requirement that the PACE 
program agreement specify the data to be collected.
    Response: We thank commenters for their support. We are finalizing 
our proposal without modification.

K. Corrective Action (Sec.  460.194)

    Sections 1894(e)(4) and 1934(e)(4) of the Act require CMS, in 
cooperation with the State administering agency (SAA), to conduct 
comprehensive reviews of PACE organizations' compliance with all 
significant program requirements. Additionally, sections 
18941(e)(6)(A)(i) and 1934(e)(6)(A)(i) of the Act condition the 
continuation of the PACE program agreement upon timely execution of a 
corrective action plan if the PACE provider fails to substantially 
comply with the program requirements as set forth in the Act and 
regulation. In the 1999 PACE interim final rule, we specified at Sec.  
460.194(a) and (c) that PACE organizations must take action to correct 
deficiencies identified by CMS or the SAA, or PACE organizations may be 
subject to sanction or termination (84 FR 66296). The 2019 PACE final 
rule amended Sec.  460.194(a) to expand the ways CMS or the SAA may 
identify deficiencies that the PACE organization must correct (84 FR 
25677). These include ongoing monitoring, reviews, audits, or 
participant or caregiver complaints, and for any other instance in 
which CMS or SAA identifies programmatic deficiencies requiring 
correction (84 FR 25677).
    The 1999 PACE interim final rule also specified at Sec.  460.194(b) 
that CMS or the SAA monitors the effectiveness of PACE organizations' 
corrective actions. The burden on CMS and SAAs to always monitor the 
effectiveness of every corrective action taken by the organization 
after an audit is high, and the number of audits, and thus the number 
of instances in which monitoring is required, increases each year 
because the PACE program continues to rapidly grow, and CMS is required 
to conduct audits in each year of the three-year trial period for new 
PACE contracts. However, as discussed in the November 2023 proposed 
rule, our experience overseeing this program has shown that it is not 
always necessary or worthwhile for CMS to monitor the effectiveness of 
every corrective action taken by an audited organization. We provided 
the example that a PACE organization may implement a corrective action 
that impacts its unscheduled reassessments due to a change in 
participant status, but historically, these types of assessments are 
not conducted frequently; thus, it may not be worthwhile for CMS or the 
states to spend resources monitoring the effectiveness of that 
correction due to limited data available for CMS or the SAA to monitor. 
Additionally, as PACE continues to grow, it will be increasingly 
important that CMS and the SAA have the flexibility to determine how to 
use their oversight resources most effectively. Therefore, in the 
November 2023 proposed rule, we proposed an amendment to Sec.  
460.194(b) that specified, at their discretion, CMS or the SAA may 
monitor the effectiveness of corrective actions (88 FR 78587).
    As discussed in the November 2023 proposed rule, the flexibility 
afforded under this proposed amendment to Sec.  460.194(b) would not 
change our expectation that PACE organizations expeditiously and fully 
correct any identified deficiencies, and CMS and the SAAs would 
continue to engage in monitoring efforts that prioritize participant 
health and safety and program integrity. In addition, as a part

[[Page 30770]]

of a PACE organization's oversight compliance program, we require at 
Sec.  460.63 that PACE organizations adopt and implement effective 
oversight requirements, which include measures that prevent, detect and 
correct non-compliance with CMS's program requirements. A PACE 
organization's oversight compliance program must, at a minimum, include 
establishment and implementation of procedures and a system for 
promptly responding to compliance issues as they are raised. In 
addition, compliance oversight programs must ensure ongoing compliance 
with CMS requirements (88 FR 78587).
    Since the effect of the proposed change would be to provide CMS and 
the SAA more flexibility when monitoring the effectiveness of 
corrective actions without placing new requirements on CMS, the SAAs, 
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.
    We solicited comment on this proposal. A summary of the comments 
received, and our response follows.
    Comment: Most commenters that addressed the proposed change to 
Sec.  460.194(b) supported the proposal that, at their discretion, CMS 
or the SAA may monitor the effectiveness of corrective actions. Some of 
those commenters, while supportive of the proposal, requested 
clarification regarding how CMS and the SAA will implement the 
provision. A few of these commenters offered conditional support for 
the proposed change at Sec.  460.194(b) based on whether CMS and the 
SAA's increased discretion when monitoring the effectiveness of 
corrective actions could lead to increases in burden for PACE 
organizations, particularly during corrective action plan 
implementation, monitoring, and release following any issues of non-
compliance that CMS or the SAA identify during PACE audits as requiring 
corrective action. Therefore, these commenters suggested that CMS 
clarify whether the proposed change at Sec.  460.194(b) could increase 
burden for PACE organizations. One commenter that supported the 
proposed change at Sec.  460.194(b) requested clarification regarding 
any thresholds or criteria that would govern CMS's or the SAA's 
discretion over corrective action monitoring activities. Another 
commenter in support of the change at Sec.  460.194(b) recommended that 
CMS and the SAA ``liberally'' apply their discretion authorities under 
Sec.  460.194(b) to reduce burden concerns for PACE organizations 
related to what the commenter considered unnecessary and prolonged 
monitoring. In reference to the proposed change at Sec.  460.194(b), 
one commenter stated that they do not support any proposals that reduce 
the oversight of corrective actions.
    Response: We thank commenters for their general support of the 
proposed change to Sec.  460.194(b), which specifies that, at their 
discretion, CMS or the SAA may monitor the effectiveness of corrective 
actions. In response to the one commenter that expressed they do not 
support any proposals that reduce the oversight of corrective actions, 
as initially discussed in the November 2023 proposed rule, we reiterate 
that the proposed change at Sec.  460.194(b) and subsequent discretion 
afforded to CMS and the SAA regarding the monitoring of the 
effectiveness of corrective actions would not reduce meaningful 
oversight of corrective actions (88 FR 78587). Based on our experience 
overseeing PACE, it is not always necessary or worthwhile for CMS to 
monitor the effectiveness of every corrective action taken by an 
audited PACE organization. The example we provided in the November 2023 
proposed rule pertained to unscheduled reassessments due to a change in 
participant status. Historically, these types of assessments are not 
conducted frequently; therefore, it may not be worthwhile for CMS or 
the SAA to expend significant resources monitoring the effectiveness of 
that correction due to limited data available for CMS or the SAA to 
monitor (88 FR 78587). CMS and the SAA will implement the flexibility 
provided by the change at Sec.  460.194(b) such that we safeguard PACE 
participant wellbeing and safety and program integrity, and effectively 
adapt to the growing monitoring demands of the program's rapid 
expansion. Additionally, regardless of the change to Sec.  460.194(b), 
PACE organizations must continue to comply with all applicable PACE 
requirements, and CMS and the SAA will continue to oversee PACE 
organization compliance through a variety of monitoring and oversight 
activities that ensure accountability.
    In response to commenters that support the change to Sec.  
460.194(b), we offer the following clarifications. First, we clarify 
that we do not expect the implementation of the change at Sec.  
460.194(b) to alter the PACE audit corrective action monitoring process 
in a way that increases PACE organizations' burden. Second, we clarify 
that, given the complexity and scope of potential corrective actions, 
we decline to establish specific criteria or thresholds as determinants 
of whether CMS or the SAA will monitor the effectiveness of a 
particular corrective action for the purposes of this final rule. 
Moreover, it is important for any corrective action monitoring 
threshold we create as a result of the discretion afforded under Sec.  
460.194(b) to be internal to CMS and the SAA in order to ensure we have 
the flexibility to reassess any thresholds, as needed, based on new 
information and changing data. However, such discretion, when applied, 
will safeguard PACE participant wellbeing and safety and program 
integrity while considering the monitoring resources available to CMS 
and the SAA, and will be consistently applied across organizations. 
Whether monitoring a specific corrective action is necessary or 
worthwhile will depend on CMS and SAA consideration of these 
objectives.
    In response to the commenter that supported the change at Sec.  
460.194(b) and recommended that CMS and the SAA use their corrective 
action monitoring discretion ``liberally'' to reduce burden for PACE 
organizations, we emphasize that, although the change to Sec.  
460.194(b) might reduce burden for audited PACE organizations, we do 
not anticipate a significant burden reduction for PACE organizations as 
a result of this provision. Regardless of formal monitoring of 
corrective actions by CMS or the SAA, as previously mentioned, PACE 
organizations must correct any issues of noncompliance identified by 
CMS and the SAA and adopt their own oversight compliance program in 
accordance with Sec.  460.63 compliance oversight requirements. 
Additionally, we expect PACE organizations to demonstrate that they 
have appropriately corrected all noncompliance identified during their 
previous audit during subsequent audits by CMS and the SAA.
    After consideration of the comments we received, we are finalizing 
the proposed amendments to Sec.  460.194(b) without modification.

L. Service Determination Requests Pending Initial Plan of Care (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 participants, 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.
    The PACE regulations define a service determination request as a 
request to

[[Page 30771]]

initiate a service; 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 (see Sec.  460.121(b)(1)(i)-(iii)). In the 
January 2021 final rule (86 FR 6024), CMS finalized an exception to the 
definition of service determination request at Sec.  460.121(b)(2), 
which, as amended, provides that requests to initiate, modify, or 
continue a service do not constitute a service determination request if 
the request is made prior to completing the development of the initial 
plan of care. When CMS proposed this exception in the February 2020 
proposed rule, we noted that the exception would apply any time before 
the initial plan was finalized and discussions among the 
interdisciplinary team (IDT) ceased (85 FR 9125). We explained that we 
believed this change would benefit both participants and PACE 
organizations because it would allow the IDT and the participant and/or 
caregiver ``to continue to discuss the comprehensive plan of care 
taking into account all aspects of the participant's condition as well 
as the participant's wishes'' (Id.). We also stated that ``if a service 
was not incorporated into the plan of care in a way that satisfies the 
participant, the participant would always have the right to make a 
service determination request at that time'' (85 FR 9126).
    Our intention for this provision was that the IDT would discuss 
specific requests made by a participant and/or caregiver as part of the 
care planning process and determine whether these requests needed to be 
addressed in the plan of care. We stated in the February 2020 proposed 
rule that if a participant asked for a specific number of home care 
hours, that the request would not need to be processed as a service 
determination request because the IDT was actively considering how many 
home care hours the participant should receive as part of the 
development of the initial plan of care (85 FR 9125). This rationale is 
also consistent with our statement in the proposed rule titled 
``Medicare and Medicaid Programs; Programs of All-Inclusive Care for 
the Elderly (PACE),'' which appeared in the August 16, 2016 Federal 
Register, that ``CMS expects 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 that time'' (81 FR 
54684).
    However, as part of our oversight and monitoring of PACE 
organizations, we have found that often requests made by participants 
and/or caregivers prior to the finalizing of the care plan are not 
discussed during the care planning process and are therefore not 
considered by the IDT. These requests are some of the first 
communications from participants related to the care they will be 
receiving from the PACE organization and would otherwise be considered 
service determination requests at any other stage of their enrollment. 
While we continue to believe that it is not prudent for the PACE 
organization to process these requests as service determination 
requests, it is important that the IDT consider these requests and 
determine whether they are necessary for the participant.
    Therefore, we proposed to modify the regulation text at Sec.  
460.121(b)(2) to specify that service requests made prior to developing 
the participant's initial plan of care must either be approved and 
incorporated into the participant's initial plan of care, or the 
rationale for why it was not approved and incorporated must be 
documented. Specifically, we proposed to add the following sentence at 
the end of current Sec.  460.121(b)(2): ``For all requests identified 
in this section, the interdisciplinary team must (i) document the 
request, and (ii) discuss the request during the care plan meeting, and 
either: A) approve the requested service and incorporate it into the 
participant's initial plan of care, or B) document their rationale for 
not approving the service in the initial plan of care.'' As we stated 
in the November 2023 proposed rule at 88 FR 78588, we believe this 
change is consistent with existing plan of care requirements at Sec.  
460.104(b) and aligns with our plan of care proposals in the December 
2022 proposed rule (87 FR 79452), which we discuss in section IX.F of 
this final rule.
    As the development of the plan of care is 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 documenting the determination of any assessment of a 
participant and/or caregiver service request during the initial care 
planning process is exempt from the PRA in accordance with 5 CFR 
1320.3(b)(2).
    We solicited comment on this proposal. A summary of the comments 
received and our responses follow.
    Comment: Most commenters supported our proposal to modify the 
requirements regarding documenting and responding to requests received 
prior to the finalization of the initial plan of care.
    Response: We thank commenters for their support.
    Comment: A couple of commenters requested that the regulation 
language be modified to clarify that the requirement does not pertain 
to requests for services made by participants prior to the first day of 
the participant's enrollment. A commenter opposed the proposed 
requirement because some States require initial plans of care to be 
completed prior to enrollment, and the commenter stated it would be 
inappropriate to process these requests as service determination 
requests.
    Response: We are not persuaded to modify our proposal to clarify 
that the requirement to document requests for services is only from the 
time the participant enrolls until the finalization of the initial plan 
of care. The initial plan of care developed by the IDT is intended to 
be a comprehensive document that details all necessary services the 
participant should receive from the PACE organization. As part of that 
plan of care, the IDT is required to consider the assessments conducted 
by members of the IDT, but it should also consider the participant's 
wishes, and any specific requests for services that the participant 
makes prior to that initial plan of care being developed. The intention 
of our proposal was to ensure PACE organizations were appropriately 
addressing participant service requests during the process of creating 
the initial plan of care regardless of when the requests are received. 
We would reiterate that we are not asking that the requests for 
services received prior to the finalization of the initial plan of care 
be processed as service determination requests as defined in Sec.  
460.121(b)(1). As we stated in the November 2023 proposed rule, we do 
not believe it is appropriate to process these early requests for 
services as service determination requests (88 FR 78588). However, we 
further stated in the November 2023 proposed rule that we have seen 
through our oversight and monitoring activities instances of 
participants and/or caregivers making requests during the process of 
creating the initial care plan, which the IDT did not consider (Id.).
    While we understand that certain service areas may require PACE 
organizations to finalize the initial plan of care prior to enrollment, 
we would expect that any request for service received during the 
initial care planning process would be documented and that the IDT 
would discuss the request as part of the normal course of creating the 
initial plan of care regardless of whether the care planning process 
occurs prior to or after enrollment. We have seen through our oversight 
and monitoring activities that these requests for services

[[Page 30772]]

are typically made by participants during the initial assessment. 
Therefore, if a PACE organization chooses (or is required by a State) 
to conduct initial assessments prior to the date of enrollment, we 
would expect requests made during that time to be documented and 
considered by the IDT.
    Comment: A commenter expressed concern that the documentation 
requirement was overly burdensome and does not offer any additional 
value to the participant as PACE organizations are already required to 
review the care plan with the participant prior to finalization. The 
same commenter stated that it was more appropriate to begin documenting 
requests for services after the participant has an initial plan of care 
to allow the participant time to become familiar with the PACE 
organization's services.
    Response: We are not persuaded by the argument that the requirement 
to document requests for services received prior to the finalization of 
the initial plan of care is overly burdensome or that this proposed 
requirement holds no inherent value to the participant. While we agree 
that PACE organizations are already required to develop the care plan 
in collaboration with the participant and/or caregiver prior to 
finalization, as we stated in the December 2022 proposed rule in our 
discussion regarding our proposed changes to the plan of care 
requirements, we have seen instances ``where participants and/or 
caregivers are unaware of the contents of their plan of care or what 
services they should be receiving'' (87 FR 79660). We have also seen 
through oversight and monitoring that each PACE organization develops 
its own approach concerning the participant's involvement in the care 
planning process. Although Sec.  460.102(d)(2)(ii) requires the IDT to 
remain alert to pertinent information about participants, including 
input that comes from the participants themselves, for many PACE 
organizations, there is no detailed discussion with the participant. 
Instead, following the IDT meeting, the PACE organization mails the 
participant the care plan or other information regarding what services 
have been included in the care plan. This method of informing the 
participant of the finalized care plan after the fact does not often 
allow the participant to make a meaningful contribution to the services 
being incorporated by the IDT into the initial plan of care. When 
participants are not able to actively participate in the care planning 
process, participants may not understand why requested services were 
not included or considered in the initial plan of care. By documenting 
the requests for services received during the initial care planning 
process, the IDT can track the requests to ensure they have addressed 
all concerns the participant expressed during the initial care planning 
process and demonstrate to the participant that their concerns were 
reviewed and considered.
    We are also not persuaded by the argument that it is more 
appropriate to wait until the participant has an initial plan of care 
to document their requests for services to allow the participant to 
become more familiar with the services provided by the PACE 
organization. Per Sec.  460.98(a), PACE organizations are required to 
provide care that meets participant needs across all care settings, 24 
hours a day, every day of the year regardless of whether the 
participant is familiar with what services are available to them. 
Additionally, in the early part of a participant's enrollment into 
PACE, prior to an initial plan of care being finalized, participants 
are actively engaged in communicating the services they hope to receive 
from the PACE organization. Those requests that indicate the 
participant's wishes for treatment should be considered and addressed 
as part of the development of the initial plan of care. It is the IDT's 
responsibility to document, assess, and determine whether a requested 
service is necessary to meet the needs of the participant based on the 
requirements in Sec.  460.92(b). Due to the PACE benefit including any 
service that is determined necessary by the IDT, the participant's 
understanding of the benefit should not hinder their ability to 
advocate for services they believe are necessary for their medical, 
physical, social, or emotional needs.
    Comment: A commenter supported the proposed changes but requested 
that we require PACE organizations to inform participants of the formal 
grievance process for any declined requests. The same commenter 
requested that we add a requirement for data collection and reporting 
related to declined requests to identify inequities and systemic issues 
to hold PACE organizations accountable.
    Response: We are not persuaded by the suggestion to modify our 
proposal to require PACE organizations to discuss the grievance process 
for any declined requests received prior to the finalization of the 
initial plan of care. If the IDT reviews a request for a service and 
decides not to include the request in the initial plan of care, nothing 
in our proposal would prevent the IDT from explaining the grievance 
process and providing the participant the right to submit a grievance. 
However, to the extent that a participant still wants a service that 
was not included in the initial plan of care, we would expect the PACE 
organization to process that request as a service determination request 
and, if the service determination request were denied, to provide 
appeal rights as detailed in Sec.  460.121(j)(2) and Sec.  460.122. The 
grievance process would not be the appropriate process if a participant 
still wanted to advocate for the inclusion of a particular service. The 
suggestion to require data collection and reporting of declined service 
requests is beyond the scope of our proposal.
    After reviewing and considering the public comments received, we 
are finalizing the regulation as proposed.

X. 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. 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.
    In our December 27, 2022 (CMS-4201-P; RIN 0938-AU96; 87 FR 79452) 
and November 15, 2023 (CMS-4205-P; RIN 0938-AV24; 88 FR 78476) proposed 
rules we solicited public comment on each of the aforementioned issues 
for the following information collection requirements. The following 
ICRs received PRA-related comment: #2 (Standards for Electronic 
Prescribing), #7 (Mid-Year Notice of Unused Supplemental Benefits), #9 
(Agent Broker Compensation), and #14 (Part D Medication Therapy 
Management Program Eligibility Criteria). A summary of the comments and 
our response can be found below under the applicable ICR section.

[[Page 30773]]

A. Wage Data

1. Private Sector
    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 (https://www.bls.gov/oes/2022/may/oes_nat.htm), which, at the time of publication of this final 
rule, provides May 2022 wages. In this regard, Table J1 presents BLS' 
mean hourly wage, our estimated cost of fringe benefits and other 
indirect costs (calculated at 100 percent of salary), and our adjusted 
hourly wage.
BILLING CODE P
[GRAPHIC] [TIFF OMITTED] TR23AP24.020

BILLING CODE C
    As indicated, we are adjusting our employee hourly wage estimates 
by a factor of 100 percent. This is necessarily a rough adjustment, 
both because fringe benefits and other indirect costs vary 
significantly from employer to employer and because methods of 
estimating these costs vary widely from study to study. In this regard, 
we believe that doubling the hourly wage to estimate costs is a 
reasonably accurate estimation method.
    The December 2022 NPRM's (CMS-4201-P) wages were based on BLS' 2021 
wage data. This final rule updates those wages to reflect BLS' 2022 
wage data. Table J2 compares BLS' May 2021 and May 2022 mean hourly 
wages for the applicable occupation codes.
    The November 2023 NPRM (CMS-4205-P) set out BLS' May 2022 wages. In 
that regard they are unchanged in this final rule.
[GRAPHIC] [TIFF OMITTED] TR23AP24.021

2. Beneficiaries
    We believe that the cost for beneficiaries undertaking 
administrative and other tasks on their own time is a post-tax wage of 
$20.71/hr. The Valuing Time in U.S. Department of Health and Human 
Services Regulatory Impact Analyses: Conceptual Framework and Best 
Practices identifies the approach for valuing time when individuals 
undertake activities on their own time. To derive the costs for 
beneficiaries, a measurement of the usual weekly earnings of wage and 
salary workers of $998, divided by 40 hours to calculate

[[Page 30774]]

an hourly pre-tax wage rate of $24.95/hr. This rate is adjusted 
downwards by an estimate of the effective tax rate for median income 
households of about 17 percent, resulting in the post-tax hourly wage 
rate of $20.71/hr. Unlike our private sector wage adjustments, we are 
not adjusting beneficiary wages for fringe benefits and other indirect 
costs since the individuals' activities, if any, would occur outside 
the scope of their employment. There is logic to valuing time spent 
outside of work, but there is also logic for using a fully loaded wage. 
In the past, we have used occupational code 00-0000, the average of all 
occupational codes, which currently is $29.76/hr. Thus we propose a 
range for enrollees of $20.71/hr-$29.76/hr. Nevertheless, the upper 
limit is based on an average over all occupations while the lower limit 
reflects a detailed analysis by ASPE targeted at enrollees many of whom 
are over 65 and unemployed; consequently, in our primary estimates we 
will exclusively use the lower limit as we consider it more accurate. 
However, the effect of using the alternate upper limit will be included 
in a footnote referenced in Table J7 and the summary table.

B. Information Collection Requirements (ICRs)

    The following ICRs are listed in the order of appearance within the 
preamble of this final rule.
1. ICRs Regarding Network Adequacy in Behavioral Health (Sec.  
422.116(b)(2) and (d)(2) and (5))
    The following changes will be submitted to OMB for approval under 
control number 0938-1346 (CMS-10636).
    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 one new facility-specialty 
type that will be subject to network adequacy evaluation under Sec.  
422.116. As discussed in the ``Expanding Network Adequacy Requirements 
for Behavioral Health'' section of the preamble, we are finalizing our 
proposal to amend the network adequacy requirements and add one 
combined facility-specialty category called ``Outpatient Behavioral 
Health'' under Sec.  422.116(b)(2) and to add ``Outpatient Behavioral 
Health'' to the time and distance requirements at Sec.  422.116(d)(2). 
For network adequacy evaluation purposes, provider types under this 
category can include, Marriage and Family Therapists (MFTs), Mental 
Health Counselors (MHCs), Opioid Treatment Program (OTP) providers 
Community Mental Health Centers or other behavioral health and 
addiction medicine specialists and facilities. Based on the current 
regulation at Sec.  422.116(e)(2) for all facility-specialty types 
other than acute inpatient hospitals, the minimum provider number 
requirement for this proposed new provider type is one. Finally, we 
also proposed to add the new ``Outpatient Behavioral Health'' facility-
specialty type to the list at Sec.  422.116(d)(5) of the specialty 
types that will receive a 10-percentage point credit towards the 
percentage of beneficiaries that reside within published time and 
distance standards for certain providers 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. To determine the potential burden regarding this 
proposal, we considered cost estimates for MA organizations to update 
policies and procedures. However, the burden for updating the HPMS 
system is a burden to CMS and its contractors and hence is not subject 
to the requirements of the PRA.
    Although there is no cost for MA organizations to report new 
specialty types to CMS for their network adequacy reviews as this 
proposal requires, 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 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 3 years for the triennial review. This provision 
requires that the specialty type 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 type is included. We 
estimate that it would take 5 minutes (0.0833 hr) at $79.50/hr for a 
business operations specialist to update policies and procedures 
related to this task. In aggregate we estimate a one-time burden of 62 
hours (742 MA contracts * 0.0833 hr) at a cost of $4,929 (62 hr * 
$79.50/hr).
    We received no comments specific to our analysis of paperwork 
burden and are therefore finalizing our estimates as is.
3. ICRs Regarding Changes to an Approved Formulary--Including 
Substitutions of Biosimilar Biological Products (Sec. Sec.  423.4, 
423.100, 423.104, 423.120, 423.128, and 423.578)
    The following 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 this final rule.
    In the provision, ``Changes to an Approved Formulary'' (see section 
III.Q. of the December 2022 proposed rule [87 FR 79452]) we proposed to 
codify guidance in place since early in the Part D program and in 
section VII.B.10. of the December 2022 proposed rule (87 FR 79680), we 
outlined ICRs regarding the proposed provision. In the provision 
``Additional Changes to an Approved Formulary--Biosimilar Biological 
Product Maintenance Changes and Timing of Substitutions'' (see section 
III.F. of the November 2023 proposed rule [88 FR 78476]), we proposed 
to update the regulatory text proposed in the December 2022 proposed 
rule to permit Part D sponsors to treat substitutions of biosimilar 
biological products other than interchangeable biological products as 
``maintenance changes'' under Sec.  423.100 as proposed in the December 
2022 rule. We also proposed to revise paragraphs (1) and (2) of the 
Sec.  423.100 definition of ``maintenance changes'' to clarify that 
certain substitutions need not take place ``at the same time'' but that 
Part D sponsors can remove or make negative changes to a brand name 
drug or reference product within a certain time period after adding a 
corresponding drug or a biosimilar biological product other than an 
interchangeable biological product to the formulary. Lastly, we 
proposed a few technical changes, including in support of the above 
specified proposals. In this final rule, we are finalizing the proposed 
changes with some technical clarifications that do not impact our 
estimates.
    The burden estimates in the December 2022 proposed rule were based 
on actual formulary changes submitted to CMS for contract year (CY) 
2021 since the ``Changes to an Approved Formulary'' proposals primarily 
set out to codify existing guidance that Part D sponsors had already 
been following. We did not make adjustments to the methodology for this 
collection request

[[Page 30775]]

based on the proposal in the November 2023 proposed rule to permit 
formulary substitutions of a biosimilar biological product other than 
an interchangeable biological product for the reference product as a 
maintenance change. New drugs and biological products are approved or 
licensed by the FDA and become available on the market at irregular 
intervals. Therefore, with respect to this provision, we cannot predict 
when new biosimilar biological products will enter the market or to 
what extent Part D sponsors will make formulary substitutions as a 
result. Several biosimilar biological products entered the market in 
2023,\259\ but CMS did not receive any non-maintenance negative change 
requests from Part D sponsors requesting to apply a negative change to 
a reference product when adding a corresponding biosimilar biological 
product to the formulary. It is unclear whether Part D sponsors are not 
requesting midyear formulary changes due to concerns about patient and 
provider hesitancy towards biosimilar biological products, or if the 
current policy that treats such formulary changes as non-maintenance 
changes disincentivizes Part D sponsors from making midyear formulary 
changes that will not apply to all enrollees currently taking the 
reference product. For this final rule, we are revising our burden 
estimates using the same methodology as the collection request in the 
December 2022 proposed rule but updated based on actual formulary 
changes submitted to CMS for CY 2023.
---------------------------------------------------------------------------

    \259\ Billingsly A. Is There a Biosimilar for Humira? Yes, Here 
Are 9 Humira Biosimilars Launching in 2023. GoodRxHealth. July 12, 
2023. Available from: https://www.goodrx.com/humira/biosimilars.
---------------------------------------------------------------------------

    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 annually per Part D contract for a business operations 
specialist to complete notice requirements to CMS and other specified 
entities, but this estimate did not include notice to affected 
enrollees. As discussed later in this section, multiple contracts share 
the same formulary; therefore, there are efficiencies in managing 
formularies such that each contract does not assume burden 
independently. See Table J3 for the burden estimates currently in CMS-
10141 that will be removed from the package along with our revised 
burden estimates. 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) 
and(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. 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 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 moving 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 2023, CMS 
approved 542 formularies which were used across 1,556 contracts and 
7,048 plans offered by 197 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 2023, 89 parent 
organizations submitted 2,642 NCRs for 219 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 89 parent organizations, the burden to submit NCRs is estimated to 
be 220 hours (2,642 NCRs x 0.0833 hr per NCR) at a cost of $ 27,377 
($124.44/hr x 220 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 197 parent organizations representing 542 
formularies in 2023. 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, 
5,962 formulary submissions (542 formularies x 11 submission windows). 
We estimate that each formulary file update requires 2 hours to 
prepare, for a total of 11,924 hours (5,962 submissions x 2 hr per 
submission) at a cost of $1,483,823 (11,924 hr x $124.44/hr).
    In addition to notifying CMS in the manner described, Part D 
sponsors are required to notify other specified entities of formulary 
changes. As

[[Page 30776]]

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 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). 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 542 formularies in 2023, 
monthly updates would be posted at least 12 times annually for a total 
of 6,504 postings (542 formularies x 12 updates/year) by all 197 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 6,504 hours (6,504 updates x 1 
hr/update) at a cost of $642,855 ($98.84/hr x 6,504 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 are finalizing our proposal to 
move this requirement to Sec.  423.120(f)(1) 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. There are no affected 
enrollees subject to non-maintenance changes since these types of 
changes are 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 
2022 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 in 2023 to the total Medicare Part D enrollment in 
2023.
    The following example illustrates this process. As of December 
2023, there were 52,376,078 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 108 individual plans utilizing this formulary. The 
total number of Part D enrollees taking Drug A in 2022 was 364,930. The 
total number of enrollees in the 108 plans implementing the negative 
formulary change was 1,776,856, representing 3.392 percent of the total 
Part D enrollment (1,776,856/52,376,078). We then assume that of the 
364,930 Part D enrollees taking Drug A during 2022, that 3.392 percent 
or 12,380 enrollees (364,930 x 0.03392) were affected by the negative 
formulary change assuming they were still taking the drug in 2023. This 
logic was applied across all immediate substitutions and maintenance 
formulary changes submitted for contract year 2023. 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 143 parent organizations that implemented 
immediate substitutions or maintenance formulary changes for 348 
formularies used for 528 contracts and 2,298 plans affecting a total of 
54,114 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, envelopes, 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 envelopes: We assume a cost of $440 for 10,000 
envelopes. The cost per envelope is $0.044.
     Cost of postage: The current cost of first-class metered 
mail is $0.64 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 cost per mailing is $0.712 ([$0.007 for paper x 2 pages] 
+ [$0.007 for toner x 2 pages] + $0.64 for postage + $0.044 per 
envelope). We estimate the total annual mailing cost at $38,529 
($0.7120 per notice x 54,114 affected enrollees).
    The summary of burden, labor and non-labor costs, associated with 
this provision follows in Table J3.
BILLING CODE P

[[Page 30777]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.022

BILLING CODE C
    We received no comments specific to our analysis of paperwork 
burden based on our proposed changes to an approved formulary in the 
December 2022

[[Page 30778]]

proposed rule and the November 2023 proposed rule and are therefore 
finalizing our estimates based on the proposed methodology but updated 
with more current data as discussed. In aggregate, our revised 
estimates result in a reduction of $955,616 and 20,952 hours from the 
previous annual burden estimates.
4. ICRs Regarding to Improvements to Drug Management Programs 
(Sec. Sec.  423.100 and 423.153)
    The following changes will be submitted to OMB for approval under 
control number 0938-TBD (CMS-10874). At this time, the OMB control 
number has not been determined, but it will be assigned by OMB upon its 
clearance of our collection of information request. We intend to 
identify the new control number in the subsequent final rule. The 
control number's expiration date will be issued by OMB upon its 
approval of our final rule's collection of information request. When 
ready, the expiration date can be found on reginfo.gov.
    Ordinarily, the changes would be submitted to OMB for approval 
under control number 0938-0964 (CMS-10141), where the current OMB-
approved Part D drug management program (DMP) information collection 
and burden is located. However, based on internal review, we are 
removing the DMP information collection and related burden from CMS-
10141 and submitting it under a new collection of information request 
(OMB 0938-TBD, CMS-10874). This change will streamline clearance 
processes and minimize duplicative administrative burden for CMS and 
other stakeholders. Although we are removing DMP burden from CMS-10141, 
that collection will continue to include burden associated with many 
other aspects of the Part D program.
    As described in section III.L. Improvements to Drug Management 
Programs, Definition of Exempted Beneficiary of this final rule, we are 
amending regulations regarding Part D DMPs for beneficiaries at risk of 
abuse or misuse of frequently abused drugs (FADs). Specifically, we are 
amending the definition of ``exempted beneficiary'' at Sec.  423.100 by 
replacing the reference to ``active cancer-related pain'' with 
``cancer-related pain.'' This change will reduce the overall burden 
associated with sponsors providing DMP case management and notices to 
potentially at-risk beneficiaries (PARBs) and at-risk beneficiaries 
(ARBs) because some beneficiaries identified as PARBs under the current 
definition would be excluded under the amended definition.
    Under Sec.  423.153(a), all Part D plan sponsors must have a DMP to 
address overutilization of FADs for enrollees in their prescription 
drug benefit plans. Based on 2023 data, there are 319 Part D parent 
organizations. The provisions codified at Sec.  423.153(f)(2) require 
that Part D sponsors conduct case management of beneficiaries 
identified by the minimum overutilization monitoring system (OMS) 
criteria through contact with their prescribers to determine if a 
beneficiary is at-risk for abuse or misuse of opioids and/or 
benzodiazepines. Case management must include informing the 
beneficiary's prescriber(s) of the beneficiary's potential risk for 
misuse or abuse of FADs and requesting information from the prescribers 
relevant to evaluating the beneficiary's risk, including whether they 
meet the regulatory definition of exempted beneficiary. Under current 
CMS regulations at Sec.  423.100, if a beneficiary meets the definition 
of an exempted beneficiary, the beneficiary does not meet the 
definition of a PARB. For this reason, exempted beneficiaries cannot be 
placed in a Part D sponsor's DMP.
    In 2022, the OMS identified 43,915 PARBs meeting the minimum 
criteria prior to applying exclusions and 30,411 after excluding 
exempted beneficiaries. Thus, 13,504 beneficiaries (43,915-30,411) met 
the definition of exempted beneficiary. Amending the definition of 
``exempted beneficiary'' at Sec.  423.100 by replacing the reference to 
``active cancer-related pain'' with ``cancer-related pain'' results in 
46 additional enrollees meeting the definition of exempted beneficiary, 
or 13,550 exempted beneficiaries total (13,504 + 46). This yields 
30,365 (43,915-13,550) instead of 30,411 beneficiaries requiring case 
management under the amended definition.
    We estimate it takes an average of 5 hours for a sponsor to conduct 
case management for a PARB. We assume certain components of case 
management can be completed by staff of differing specialization and 
credentialing. Of the 5 hours, we assume that 2 hours at $124.44/hr 
would be conducted by a pharmacist (such as initial review of 
medication profiles, utilization, etc.), 2 hours at $38.70/hr would be 
conducted by a pharmacy technician, and 1 hour at $229.52/hr would be 
conducted by a physician to work directly with prescribers on 
discussing available options and determining the best course of action. 
The case management team would require 5 hours at a cost of $555.80 per 
PARB case managed ([2 hr x $124.44/hr] + [2 hr * $38.70/hr] + [1 hr * 
$229.52/hr]). Therefore, the case management team's average hourly wage 
is $111.16/hr ($555.80/5 hr). In aggregate, we estimate annual burden 
with the changes for case management is 151,825 hours (30,365 enrollees 
subject to case management * 5 hr/response) at a cost of $16,876,867 
(151,825 hr * $111.16/hr); see case management row in Table J5. CMS 
10141 included an estimate for the current case management burden of 
178,855 hours and, with the hourly wage updated, a cost of $19,881,522; 
see case management row in Table J4. Thus, we calculate a savings of 
27,030 hours (178,855 hr-151,825 hr) and $3,004,655 ($19,955,671-
$16,876,867) with this updated burden; see case management row in Table 
J6 and note that in Table J6 we list savings as a negative number.
    As a result of case management, a portion of PARBs may receive 
notice from a plan sponsor informing the beneficiary of the sponsor's 
intention to limit their access to coverage of opioids and/or 
benzodiazepines. Approximately 5 percent of PARBs identified by OMS 
criteria receive an initial and either a second notice or an alternate 
second notice. Amending the definition of ``exempted beneficiary'' 
would reduce the number of notices sent. Therefore, it follows that 2 
fewer PARBs would receive notices (46 additional individuals * 0.05) 
and there would be 4 fewer notices total (2 enrollees * 2 notices/
enrollee). Approximately 1,518 (30,365 * 0.05) PARBs overall would 
receive an initial and second notice (or alternate second notice) 
annually. We estimate it takes a pharmacy technician at $38.70/hr 
approximately 5 minutes (0.0833 hr) to send each notice and a total of 
10 minutes (0.1667 hr) per enrollee to send both notices. In aggregate, 
we estimate an annual burden with the changes for sending notices of 
253 hours (1,518 enrollees * 0.1667 hr) at a cost of $9,791 (253 hr * 
$38.70/hr) to send both notices; see the row for notification for 
enrollees in Table J5. CMS 10141, presenting the current burden, 
includes an estimated notice burden of 1,319 hours and, with the hourly 
wage updated, a cost of $51,045; see the row for notification for 
enrollees in Table J4 Thus, we calculate a savings of 1,066 hours 
(1,319 hr-253 hr) and $41,254 ($51,045-$9,791) with this updated 
burden; see the row for notification for enrollees in Table J6 and note 
that in Table J6 we list savings as a negative number.
    Amending the definition of ``exempted beneficiary'' also reduces 
the burden of disclosure of DMP data to CMS based on the outcome of 
case management of PARBs. Using 30,365

[[Page 30779]]

beneficiaries requiring DMP data disclosure, we estimate that it would 
take (on average) 1 minute (0.0167 hr) at $38.70/hr for a sponsor's 
pharmacy technician to document the outcome of case management and any 
applicable coverage limitations in OMS and/or MARx. In aggregate, we 
estimate an annual burden with the changes for notification to CMS of 
507 hours (30,365 PARBs * 0.0167 hr) at a cost of $19,621 (507 hr * 
$38.70/hr); see the row for notification to CMS in Table J5. CMS-10141, 
presenting the current burden, includes an estimated data disclosure 
burden of 597 hours and, with updated hourly wages, a cost of $23,104; 
see the row for notification to CMS of TableJ4. Thus, we calculate a 
savings of 90 hours (597 hr-507 hr) and $3,483 ($23,104-$19,621) with 
this updated burden; see the row for notification to CMS in Table J6 
and note that in Table J6 we list savings as a negative number.
[GRAPHIC] [TIFF OMITTED] TR23AP24.023

    Table J5 presents the estimated burden in this final rule which 
will be submitted with the new package, CMS-10874, which uses the 
currently approved burden from CMS-10141 as a baseline.
[GRAPHIC] [TIFF OMITTED] TR23AP24.024

    In aggregate, these changes will result in an annual reduction of 
cost of $3,049,392 and reduction of 28,186 hours. The aggregate burden 
change (reduction) is presented in Table J6, and will be submitted with 
the new package, CMS-10874.

[[Page 30780]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.025

    We did not receive any comments related to the aforementioned 
collection of information requirements and burden estimates and are 
finalizing them in this rule as proposed.
5. ICRs Regarding Expanding Permissible Data Use and Data Disclosure 
for MA Encounter Data (Sec.  422.310)
    In section III.Q. of this final rule, we discuss two provisions to 
improve access to MA encounter data for certain purposes. We noted that 
our current regulatory language limits CMS's ability to use and 
disclose MA encounter data to States for activities in support of 
administration or evaluation of the Medicaid program, including care 
coordination. Further, the regulation delays when CMS may share MA 
encounter data to State Medicaid agencies for care coordination and 
quality review and improvement activities for the Medicaid program, 
particularly with regard to dually eligible individuals. This final 
rule improves access to MA encounter data by:
     Adding ``and Medicaid programs'' to the current MA risk 
adjustment data use purposes codified at Sec.  422.310(f)(1)(vi) and 
(vii); and
     Adding Sec.  422.310(f)(3)(v) to allow for risk adjustment 
data to be released prior to reconciliation if the data will be 
released to States for the purpose of coordinating care for dually 
eligible individuals.
    Together, these provisions clarify and broaden the allowable data 
uses for CMS and external entities (for data disclosed in accordance 
with Sec.  422.310(f)(2) and (3)). We discuss the regulatory impact on 
CMS review and fulfillment of new MA encounter data requests in section 
XI. of this rule, explaining that we did not anticipate any significant 
impact to CMS.
    As discussed in sections III.Q. and XI. of this rule, these 
provisions will allow States to voluntarily request MA encounter data 
from CMS for certain allowable purposes to support the Medicaid 
program. Currently, States can request MA encounter data to support the 
administration of the Medicare program or Medicare-Medicaid 
demonstrations, and to conduct evaluations and other analyses to 
support the Medicare program (including demonstrations). In addition, 
we interpret the regulation as permitting use and disclosure of MA 
encounter data for quality review and improvement activities for 
Medicaid as well as Medicare.
    When determining the potential burden on States, we considered our 
existing data sharing program for States to request Medicare data for 
initiatives related to their dually eligible population. We expected 
the process to request MA encounter data would be similar to the 
process that States currently undertake to request new Medicare FFS 
claims and events data files or to update allowable data uses. All 
States, including the District of Columbia, maintain agreements with 
CMS that cover operational data exchanges related to the Medicare and 
Medicaid program administration as well as optional data requests for 
Medicare claims and events data. Therefore, States interested in 
requesting MA encounter data will not need to complete and submit a new 
data agreement for MA encounter data; instead, they will submit a use 
justification for the new data request and update their existing data 
agreement form. We note that requesting Medicare data is voluntary and 
that not all States currently request Medicare FFS claims or 
prescription drug events data for coordinating care of dually eligible 
beneficiaries, and of those States that request Medicare data, not all 
States request the same Medicare data files. As with Medicare FFS 
claims and events data, States will maintain the ability to choose if 
and when they want to request MA encounter data for existing or newly 
expanded uses. We further note that the process for States to submit a 
request for data and for CMS to review these requests are part of 
standard operations for CMS and many States. Additionally, we have 
technical assistance support to help States navigate the data request 
process and maintain their data agreements.
    In the August 2014 final rule, when we established several of the 
current provisions around CMS disclosure of MA encounter data, we 
explained that we had determined that ``the proposed regulatory 
amendments would not impose a burden on the entity requesting data 
files.'' (79 FR 50445). Similarly, for the proposed refinements to the 
approved data uses and the data disclosure in the November 2023 
proposed rule, we did not anticipate a significant change in burden for 
States.
    In the November 2023 proposed rule, we solicited comments specific 
to our analysis of no impact on paperwork burden. We received no 
comments on this analysis. We are finalizing the ICR narrative as is.
6. ICRs Regarding Standards for Determining Whether a Special 
Supplemental Benefit for the Chronically Ill Has a Reasonable 
Expectation of Improving the Health or Overall Function of an Enrollee 
(Sec.  422.102(f)(3)(iii) and (iv) and (f)(4))
    The following changes will be submitted to OMB for approval under 
control number 0938-0753 (CMS-R-267).
    As explained in section IV.B. of this rule, due to increased 
offering of SSCBI, we are finalizing our proposal with modification to: 
(1) require the MA organization to establish, by the date on which it 
submits its bid, a bibliography of ``relevant acceptable evidence'' 
related to the item or service the MA

[[Page 30781]]

organization would offer as an SSBCI during the applicable coverage 
year; (2) require that an MA plan follow its written policies (that 
must be based on objective criteria) for determining eligibility for an 
SSBCI when making such determinations, and prohibit plans from 
modifying policies like utilization management requirements, 
evidentiary standards for a specific enrollee to be determined eligible 
for a particular SSBCI, or the specific objective criteria used by a 
plan as part of SSBCI eligibility determinations; (3) require the MA 
plan to document SSBCI eligibility determinations, including approvals 
and denials; and (4) codify CMS's authority to decline to accept a bid 
due to the SSBCI the MA organization includes in its bid and to review 
SSBCI offerings annually for compliance, taking into account the 
evidence available at the time. We now estimate burden.
    Item (4) is a burden specific to CMS and is therefore not subject 
to collection of information requirements. We choose to combine the 
burdens of: (1) and (2) as the evidence gathered under (1) will likely 
directly inform the criteria established under (2).
    In estimating the impact, we note the following: (i) Not all 
contracts offer SSBCI (only about 40 percent); (ii) not all plan 
benefit packages (PBP) offer them (only about 20 percent); (iii) the 
distribution of the number of SSBCI per PBP is highly skewed (for 
example, for 2023 the average is about 8 while the median is 2); and 
(iv) both the median and 3rd quartile of the number of SSBCI per PBP 
reflect only a handful of SSBCI offered.
    Based on internal CMS data we are using 10,000 SSBCI per year for 
the three-year estimates required by the Collection of Information 
requirements. To comply with the requirements of the provision that 
would require bibliography, a staff member knowledgeable in health 
should be deployed. We are using a registered nurse. Establishing a 
bibliography requires research, including reading papers and assessing 
their quality. Because the bibliography would contain only citations 
and copies of the necessary information, and not any narrative, we 
assume these activities would take a day of work (8 hours), which can 
refer to the aggregate activity of 1 nurse working 8 hours or 2 nurses 
working 4 hours each. A plan would need to review and update its 
bibliography annually. We assume that updating an existing bibliography 
would take less time than establishing an initial bibliography. We 
estimate that it would take 8 hours each year to update existing 
bibliographies.
    To create a single line-item, we estimate that it would take 8 
hours at $85.60/hr for a registered nurse to create the bibliography 
for one plan. Thus, the median burden per plan is 16 hours (8/hr per 
SSBCI * a median of 2 SSBCI) at a cost of $1,397 ($85.60/hr *16 hr). 
The aggregate cost across all plans would be 80,000 hours (8 hours per 
SSBCI * 10,000 aggregate SSBCI) at a cost of $6,848,000 (80,000 * 
$85.60/hr).
    Regarding the requirement for plans to document approvals and 
denials of SSCBI eligibility, it is reasonable that plans already have 
this information stored in their systems. Thus, we assume that plans 
will need to compile data already collected into a report or other 
transmittable format. We estimate that it would take 2 hours at $98.84/
hr for a programmer to complete the initial software update. In 
aggregate, we estimate a one-time burden of 1,548 hours (774 plans x 2 
hr) at a cost of $153,004 (1,548 hr x $98.84/hr).
    We did not receive any comments related to the aforementioned 
collection of information requirements and burden estimates and are 
finalizing them in this rule as proposed.
7. ICRs Regarding Mid-Year Notice of Unused Supplemental Benefits 
(Sec. Sec.  422.111 and 422.2267)
    When ready, the following changes will be posted for public review 
under control number 0938-TBD (CMS-10893) 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 after the publication 
of this final rule and when the model notice has been completed. In the 
meantime, we are scoring the burden to identify the expected PRA-
related costs. At this time, the OMB control number has not been 
determined, but it will be assigned by OMB upon its approval of our new 
collection of information request.
    We note that in the proposed rule, we stated that the changes would 
be submitted to OMB for approval under control number 0938-0753 (CMS-R-
267). However, because (as discussed in the preamble) we intend to 
create a model notice which will require additional burden analysis and 
scoring, CMS believes providing the additional 60-day and 30-day public 
notices through a standalone PRA package will allow both the agency and 
stakeholders to give the model notice more comprehensive and thoughtful 
consideration.
    Per CMS regulations at Sec.  422.101, MA organizations are 
permitted to offer mandatory supplemental benefits, optional 
supplemental benefits, and special supplemental benefits for the 
chronically ill (SSBCI). The number of supplemental benefit offerings 
has risen significantly in recent years, as observed through trends 
identified in CMS's annual PBP reviews. At the same time, CMS has 
received reports that MA organizations have observed low utilization 
for many of these benefits by their enrollees and it is unclear whether 
plans are actively encouraging utilization of these benefits by their 
enrollees. The finalization of this new requirement will establish a 
minimum requirement for MA organizations to conduct outreach to 
enrollees to encourage utilization of supplemental benefits.
    We have several concerns about this low utilization of some 
supplemental benefits. First, we are concerned that beneficiaries may 
be making enrollment decisions based on the allure of supplemental 
benefits that are extensively marketed by a given MA plan during the 
annual election period (AEP), but once enrolled in the plan the 
beneficiaries do not fully utilize, or utilize at all, those 
supplemental benefits during the plan year. Such under-utilization of 
supplemental benefits may hinder or nullify any potential health 
benefit value offered by these extra benefits. Additionally, section 
1854(b)(1)(C) of the Act requires MA plans to provide the value of the 
MA rebates to enrollees; per CMS regulations at Sec.  422.266, MA 
rebates must be provided to enrollees in the form of payment for 
supplemental benefits (including reductions in cost sharing for Part A 
and B benefits compared to Original Medicare), or payment of Part B or 
D premiums. Therefore, CMS has an interest in ensuring that the MA 
rebate is provided to enrollees in a way that they can benefit from the 
value of these rebate dollars.
    Hence, we are finalizing the proposal to require plans engage in 
targeted outreach to inform enrollees of their unused supplemental 
benefits they have not yet accessed. This targeted outreach aims to 
increase utilization of these benefits, as it would increase enrollees' 
awareness of the supplemental benefits available to them.
    This new requirement will ensure that a minimum outreach effort is 
conducted by MA organizations to inform enrollees of supplemental 
benefits available under their plans they have not yet accessed. 
Beginning January 1, 2026, MA organizations must mail a mid-year notice 
annually, but not sooner than June 30 and not later than July 31 of the

[[Page 30782]]

plan year, to each enrollee with information pertaining to each 
supplemental benefit available through the plan year that the enrollee 
has not accessed, by June 30 of the plan year. For each covered 
mandatory supplemental benefit and optional supplemental benefit (if 
elected) the enrollee is eligible for but has not accessed, the MA 
organization must list in the notice the information about each such 
benefit that appears in the Evidence of Coverage (EOC). For SSBCI, the 
notice must also include the proposed new SSBCI disclaimer. Finally, 
all notices must include the scope of the supplemental benefit(s), 
applicable cost-sharing, instructions on how to access the benefit(s), 
applicable information on use of any network providers application 
information for each available benefit consistent with the format of 
the EOC, and a toll-free customer service number and, as required, 
corresponding TTY number to call if additional help is needed.
    When estimating the burden of this provision, we first noted that 
plans already keep track of utilization patterns of benefits by 
enrollees. The primary burden is therefore dissemination of notices. In 
this regard, there are three burdens: (1) a one-time update to software 
systems to produce reports; (2) a one-time update of policies and 
procedures; and (3) the printing and sending of notices to 
beneficiaries.
     We estimate that a software developer working at $127.82/
hr would take about 4 hours to update systems. In aggregate we estimate 
a one-time burden of 3,096 hours (774 prepaid contracts * 4 hr/
contract) at a cost of $395,731 (3,096 hr * $127.82/hr).
     We estimate that a business operations specialist working 
at $79.50/hr would take 1 hour to update of policies and procedures. In 
aggregate we estimate a one-time burden of 774 hours (774 prepaid 
contracts * 1 hour/contract) at a cost of $61,533 (774 hr * $79.50/hr).
     The major cost would be printing and dissemination. There 
have been several recent CMS rules in which such printing and 
dissemination has been estimated.
    A recent estimate was presented in proposed rule, ``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,'' CMS-4201-P, (87 FR 79452) published on 
December 27, 2022. We have checked the prices listed there for paper 
and toner and found them consistent with current pricing.
     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: As a result of comments discussed in 
detail at the end of this ICR we are revising our estimate of cost of 
postage to $0.64, the cost of 1st class metered postage for the first 
ounce per enrollee. The mailings have personally identifiable 
information necessitating first class mailings.
     Cost of envelopes: Because we are not using bulk mailings, 
we require envelopes. Accordingly, 10,000 envelopes cost approximately 
$440, resulting in a cost per envelope of $0.044.
    To make a final calculation we need to estimate the number of 
enrollees affected and the average number of pages involved.
    We believe it reasonable that every MA enrollee has at least one 
supplemental benefit that they have not used. Since PDPs do not provide 
supplemental benefits, we would require 32 million mailings for the 32 
million enrollees in prepaid contracts. We do not have a definite basis 
for estimating the average number of pages needed per enrollee. Some 
enrollees may only require 1 page listing 1 to 3 benefits with all 
information required by CMS. Some enrollees may require more. We are 
estimating 3 pages on average per enrollee. Consistent with a 3-page 
average we are not estimating extra postage (extra postage would first 
be required for mailings of seven or more pages and we have no way of 
estimating how many plans if any would require an excess of 6 pages).
    Therefore, costs per mailing are $0.726 per mailing ([3 * $0.007 
for paper] + [3 * $0.007 for toner] + $0.64 for postage + $0.044 for an 
envelope). The aggregate non-labor cost for 32 million mailings of one 
page would be $23,232,000 (32,000,000 * $0.726).
    We received the following comment:
    Comment: For various reasons, some commenters believed CMS 
underestimated the costs associated with printing and mailing documents 
that consist of personalized information; for example, a commenter 
stated their printing costs were always higher for personalized 
materials; some commenters estimated average document lengths would be 
much higher than the CMS estimate, from 18 to over 20 pages.
    Response: With regard to the cost of mailing, we thank the 
commenters for pointing out the increased cost for mailing personalized 
materials and agree. Therefore, we revised mailing costs to reflect 
first order postage and the cost of envelopes versus bulk mailing 
consistent with HIPAA requirements.
    With regard to length, the Mid-Year Notice of Unused Supplemental 
Benefits is intended to be a concise and user-friendly document, and 
CMS is committed to the formulation of a model design that is both 
informative and succinct. The length of the document will ultimately 
vary from enrollee to enrollee, depending on individual utilization and 
the number of supplemental benefits offered under the plan.
8. ICRs Regarding New Requirements for the Utilization Management 
Committee (Sec.  422.137)
    The following changes will be submitted to OMB for approval under 
control number 0938-0964 (CMS-10141).
    As discussed in section IV.F. of this rule, we are adding new 
requirements related to the Utilization Management (UM) Committee 
established at Sec.  422.137.
    We are finalizing at Sec.  422.137(c)(5) to require a member of the 
UM committee have expertise in health equity. Reviewing UM policies and 
procedures is an important beneficiary protection, and adding a 
committee member with expertise in health equity will ensure that 
policies and procedures are reviewed from a health equity perspective. 
We estimate that a compliance officer working at $74.02/hr would take 
30 minutes for a one-time update of the policies and procedures. In 
aggregate, we estimate a one-time burden of 483 hours (966 plans * 0.5 
hr) at a cost of $35,752 (483 hr * $74.02/hr).
    We are finalizing at Sec.  422.137(d)(6) to require the UM 
committee to conduct an annual health equity analysis of the use of 
prior authorization and publicly post the results of the analysis to 
the plan's website. The analysis will examine the impact of prior 
authorization, at the plan level, on enrollees with one or more of the 
following social risk factors: (i) receipt of the low-income subsidy 
for Medicare Part D, or being dually eligible for Medicare and 
Medicaid, or (ii) having a disability, as reflected in CMS's records 
regarding the basis for Medicare Part A entitlement. To gain a deeper 
understanding of the impact of prior authorization practices on

[[Page 30783]]

enrollees with the specified SRFs, the proposed analysis must compare 
metrics related to the use of prior authorization for enrollees with 
the specified SRFs to enrollees without the specified SRFs. The metrics 
that must be stratified and aggregated for all items and services for 
this analysis are as follows:
     The percentage of standard prior authorization requests 
that were approved.
     The percentage of standard prior authorization requests 
that were denied.
     The percentage of standard prior authorization requests 
that were approved after appeal.
     The percentage of prior authorization requests for which 
the timeframe for review was extended, and the request was approved.
     The percentage of expedited prior authorization requests 
that were approved.
     The percentage of expedited prior authorization requests 
that were denied.
     The average and median time that elapsed between the 
submission of a request and a determination by the MA plan, for 
standard prior authorizations.
     The average and median time that elapsed between the 
submission of a request and a decision by the MA plan for expedited 
prior authorizations.
    We estimate that a software and web developer working at an hourly 
wage of $120.14/hr would take 8 hours at a cost of $961 (8 hr * 
$120.14/hr) for developing the software necessary to collect and 
aggregate the health equity analysis data required to produce the 
report. In aggregate, we estimate a one-time burden of 7,728 hr (966 
plans * 8 hr/plan) at a cost of $928,442 (7,728 hr * $120.14/hr).
    Annually, the report must be produced and posted to the plan's 
website. The health equity analysis and public reporting must be easily 
accessible, without barriers, including but not limited to ensuring the 
information is available: free of charge; without having to establish a 
user account or password; without having to submit personal identifying 
information (PII); to automated searches and direct file downloads 
through a link posted in the footer on the plan's publicly available 
website, and includes a txt file in the root directory that includes a 
direct link to the machine-readable file of public reporting and health 
equity analysis to establish and maintain automated access. We believe 
that making this information more easily accessible to automated 
searches and data pulls and capturing this information in a meaningful 
way across MA organizations will help third parties develop tools and 
researchers conduct studies that further aid the public in 
understanding the information. We assume the plans' programmers will 
make this an automated process accessing data already in the plans' 
systems; hence, we estimate minimal time to produce and inspect the 
report prior to posting. We estimate a Business Operations Specialist 
working at $79.50/hr would take 0.1667 hr (10 minutes) to produce, 
inspect, and post the report at a cost of $13 ($79.50/hr * 0.1667 hr). 
In the aggregate, we estimate an annual burden of 161 hours (966 plans 
* 0.1667 hr/plan) at a cost of $12,800 (161 hr * $79.50/hr).
    We did not receive any comments related to the aforementioned 
collection of information requirements and burden estimates and are 
finalizing them in this rule as proposed.
9. ICRs Regarding Agent Broker Compensation (Sec.  422.2274)
    Since we are scoring this provision as having no burden, we are not 
submitting any changes to OMB. The active requirements and burden 
estimates are approved by OMB under control number 0938-0753 (CMS-R-
267).
    Currently, agents and brokers are compensated by MA plans at 
national fair market value (FMV) base rate a base rate with a maximum 
of $611 per enrollee, plus administrative payments. As explained in 
section X.X of this finalized rule, separate administrative payments 
are being eliminated but the base rate per enrollee is increasing by 
$100 per enrollee for new enrollments in MA plans, beginning with 
contract year 2025. We are also eliminating administrative payments for 
PDPs and increasing their base rate by $100. For each renewal, agents 
and brokers receive compensation equal up to 50 percent of the 
compensation rate so that for MA and PDP enrollees' agents and brokers 
would receive up to $50 more per enrollee renewal, as permitted under 
Sec.  422.2274(d)(3).
    These increases of $100 per enrollee for MA plan enrollment, and up 
to $50 for renewals of MA and PDP plans are not costs but rather 
transfers. The money that formerly was being paid for administrative is 
sufficient to cover these increases. While we do not have detailed 
quantitative information on payments, many commenters, from both those 
who pay as well as those who receive, submitted overall quantitative 
payment recommendations for administrative payments. The numbers range 
from $50 to about $500. In other words, currently, several hundred 
dollars is already being paid per enrollee for administrative payments; 
this finalized regulation, requiring a payment of $100 per new 
enrollment would not, according to most commentators, increase net 
payments but transfer a portion of them to increased compensation.
    The differences between this finalized version and the proposed 
version are explained below in our response to comments.
    Comment: Many commenters provided feedback on our estimates for 
administrative costs in the proposed rule. These comments were both 
purely qualitative (for example, too low), semi-qualitative (for 
example, the variance and volatility of the estimates preclude using 
one number), and quantitative with a wide range of $50 to $500 per 
enrollee. Comments were submitted by individuals and organizations that 
that both receive these payments as well as those that make payments.
    The comments also included a variety of line items besides the 
training and transcription items discussed in the NPRM, which 
commenters believed should be included in estimating the minimum 
necessary cost of administrative activities.
    Response: We thank the commenters for their detailed observations. 
After careful consideration of these comments several changes were made 
from the NPRM. We adopted a total cost approach in the Final Rule 
versus the line-item-approach used in the NPRM. Generally, line-item 
approaches are appropriate when variability is small and detailed 
quantitative information is available. This is not the case for agent-
brokers and therefore we adopted a total cost approach. We used the 
wide range of total costs supplied by the commenters. The reasons for 
adopting the $100 total cost are detailed in section X.X of the 
preamble. Our basic goals were to provide sufficient funds so that 
payments for legitimate MA and PDP enrollment could be made while 
excessive funding being used for other purposes was not encouraged. 
Because the current administrative payments rates are estimated to be 
significantly higher than the flat $100 increase to encompass these 
administrative payments, we have classified this $100 payment as a 
transfer rather than as a new cost.
    As a result of comments, we are finalizing our impact analysis as a 
transfer with no additional cost.
10. ICRs Regarding Rationales for an Exception From the Network 
Adequacy Requirements (Sec.  422.116(b) Through (e))
    The following changes will be submitted to OMB for approval under

[[Page 30784]]

control number 0938-1346 (CMS-10636).
    Historically, the industry has stated that CMS's current network 
adequacy criteria under Sec.  422.116 create challenges for facility-
based Institutional Special Needs Plans (I-SNP) because facility-based 
I-SNP enrollees access services and seek care in a different way than 
enrollees of other plan types. Thus, we are finalizing provisions to 
broaden our acceptable rationales for facility-based I-SNPs when 
submitting a network exception under Sec.  422.116(f). The first new 
basis for an exception request is that a facility-based I-SNP is unable 
to contract with certain specialty types required under Sec.  
422.116(b) because of the way enrollees in facility-based I-SNPs 
receive care. Facility-based I-SNPs may also request an exception from 
the network adequacy requirements in Sec.  422.116(b) through (e) if: 
The I-SNP covers Additional Telehealth Benefits (ATBs) consistent with 
Sec.  422.135 and uses ATB telehealth providers of the specialties 
listed in paragraph (d)(5) to furnish services to enrollees; when 
substituting ATB telehealth providers of the specialties listed in 
paragraph (d)(5) for in-person providers, the facility-based I-SNP 
would fulfill the network adequacy requirements in Sec.  422.116(b) 
through (e); the I-SNP complies with Sec.  422.135(c)(1) and (2) by 
covering in-person services from an out-of-network provider at in-
network cost sharing for the enrollee who requests in-person services 
instead of ATBs; and the I-SNP provides substantial and credible 
evidence that the enrollees of the facility-based I-SNP receive 
sufficient and adequate access to all covered benefits.
    To determine the potential burden, we considered the one-time 
burden for MA organizations to update policies. The other burden 
associated with this provision involve updates to the HPMS system, 
which is done by CMS and its contractors and hence is not subject to 
the requirements of the PRA.
    MA organizations that offer facility-based I-SNPs are already 
required to conduct work related to network adequacy reviews that 
happen during the initial or service area expansion application 
process, or every 3 years for the triennial review. Further, MA 
organizations that offer facility-based I-SNPs should already have 
measures in place to submit data to meet CMS network adequacy review 
requirements to CMS, so there is no additional burden.
    We understand that MA organizations will need to update their 
policies and procedures related to broadening our acceptable rationales 
for facility-based I-SNPs when submitting a network exception. We 
estimate that a business operations specialist working at $79.50/hr 
would take 5 minutes (0.0833 hr) to update policies and procedures 
related to this task. In aggregate, we estimate a one-time burden of 
0.8 hour (10 facility-based I-SNP contracts * 0.0833 hr) at a cost of 
$64 (0.8 hr * $79.50/hr).
    We did not receive any comments related to the aforementioned 
collection of information requirements and burden estimates and are 
finalizing them in this rule as proposed.
11. ICRs Regarding Increasing the Percentage of Dually Eligible Managed 
Care Enrollees Who Receive Medicare and Medicaid Services From the Same 
Organization (Sec. Sec.  422.503, 422.504, 422.514, 422.530, and 
423.38)
a. MA Plan Requirements and Burden
    In section VIII.F. of this final rule, we are amending Sec. Sec.  
422.514(h), 422.503(b), 422.504(a), and 422.530(c). Section 422.514(h) 
will require an MA organization, its parent organization, or an entity 
that shares a parent organization with the MA organization, where that 
MA organization offers a D-SNP (and that parent organization also 
contracts with the State as a Medicaid managed care organization (MCO) 
in the same service area), to only offer one D-SNP for full-benefit 
dually eligible individuals. We are finalizing the regulation at Sec.  
422.514(h) with a minor technical modification at Sec.  422.514(h)(1) 
to correct the terminology to use the term ``full-benefit dual eligible 
individual(s)'' where necessary. We are finalizing Sec.  422.514(h)(2) 
with a modification to clarify that any D-SNP(s) subject to enrollment 
limitations in Sec.  422.514(h)(1) may only enroll (or continue 
coverage of people already enrolled) individuals also enrolled in (or 
in the process of enrolling in) the Medicaid MCO beginning in 2030. We 
are finalizing with modifications our proposal at Sec.  
422.514(h)(3)(i) to permit an MA organization, its parent organization, 
or an entity that shares a parent organization with the MA 
organization, to offer more than one D-SNP for full-benefit dually 
eligible individuals in the same service area as that MA organization's 
affiliated Medicaid MCO only when a SMAC requires it in order to 
differentiate enrollment into D-SNPs by age group or to align 
enrollment in each D-SNP with the eligibility criteria or benefit 
design used in the State's Medicaid managed care program(s). We are 
also finalizing with technical modifications our proposed amendment at 
Sec.  422.514(h)(3)(ii) to permit an MA organization, its parent 
organization, or an entity that shares a parent organization with the 
MA organization that offers both HMO D-SNP(s) and PPO D-SNP(s) to 
continue to offer both the HMO and PPO D-SNPs only if the D-SNP(s) not 
subject to the enrollment limitations at Sec.  422.514(h)(1) no longer 
accepts new full-benefit dual eligible enrollment in the same service 
area as the D-SNP affected by the new regulations at Sec. Sec.  
422.504(a)(20) and 422.514(h). This finalized provision will also 
require the affected D-SNP to limit new enrollment to individuals 
enrolling in, or in the process of enrolling in, the affiliated 
Medicaid MCO effective 2027, and further require the D-SNP to limit all 
enrollment to individuals enrolled in, or in the process of enrolling 
in the affiliated MCO effective 2030. A new contract provision that we 
are finalizing at Sec.  422.503(b)(8) will prohibit parent 
organizations from offering a new D-SNP when that D-SNP would result in 
noncompliance with the regulation finalized at Sec.  422.514(h). 
Additionally, the finalized regulation at Sec.  422.504(a)(20) will 
require compliance with Sec.  422.514(h). To support parent 
organizations seeking to consolidate D-SNPs, we are also finalizing 
Sec.  422.530(c)(4)(iii) that will provide a new crosswalk exception to 
allow D-SNP parent organizations to crosswalk enrollees (within the 
same parent organization and among consistent plan types) where they 
are impacted by the requirements at Sec.  422.514(h).
    The provisions we are finalizing at Sec. Sec.  422.514(h) and 
422.530(c)(4)(iii) will create burden for MA organizations where they 
offer multiple D-SNPs in a service area with a Medicaid MCO. Impacted 
MA organizations will need to non-renew or (more likely) combine plans 
and update systems as well as notify enrollees of plan changes. We 
expect that MA organizations will need two software engineers with each 
working 4 hours at $127.82/hr to update software in the first year with 
no additional burden in future years and one business operations 
specialist working 4 hours at $79.50/hr to update plan policies and 
procedures in the first year with no additional burden in future years. 
In aggregate, we estimate a one-time burden (for plan year 2027) of 600 
hours (50 plans * 12 hr/plan) at a cost of $67,028 (50 plans x [(8 hr * 
$127.82/hr) + (4 hr * $79.50/hr)]). The aforementioned changes will be 
submitted to OMB for approval under control number 0938-0753 (CMS-R-
267).

[[Page 30785]]

    We are finalizing a proposal to redesignate Sec.  423.38(c)(35) as 
Sec.  423.38(c)(36) and finalizing with modification a new integrated 
care special enrollment period (SEP) at Sec.  423.38(c)(35). This final 
policy narrows the scope from the proposed policy that would have 
allowed enrollment in any month into FIDE SNPs, HIDE SNPs, and AIPs for 
those dually eligible individuals who meet the qualifications for such 
plans. Instead, the integrated care SEP that we are finalizing at Sec.  
423.38(c)(35) will only be available to facilitate aligned enrollment 
as defined at Sec.  422.2 and are clarifying in Sec.  423.38(c)(35)(i) 
that the SEP is available only for full-benefit dual eligible 
individuals as defined in Sec.  423.772. The integrated care SEP at 
Sec.  423.38(c)(35) will require plans to update guidance and train 
staff. That new burden would be limited to FIDE SNPs, HIDE SNPs, and 
AIPs. We expect that plans will need one software engineer working 4 
hours at $127.82/hr to update software and one business operations 
specialist working 4 hours at $79.50/hr to update plan policies and 
procedures and train staff in the first year with no additional burden 
in future years. In aggregate, we estimate a one-time burden (for plan 
year 2025) of 904 hours (113 plans * 8 hr/plan) at a cost of $93,709 
(113 plans x [(4 hr * $127.82/hr) + (4 hr * $79.50/hr)]). We do not 
anticipate any new burden to plans after the initial year. The 
aforementioned changes will be submitted to OMB for approval under 
control number 0938-0964 (CMS-10141).
b. Medicare Enrollee Requirements and Burden
    At Sec.  423.38(c)(4) we are replacing the current quarterly 
special enrollment period (SEP) with a one-time-per month SEP for 
dually eligible individuals and others enrolled in the Part D low-
income subsidy program to elect a standalone PDP. At Sec.  
423.38(c)(35), we proposed a new integrated care SEP to allow dually 
eligible individuals to elect an integrated D-SNP on a monthly basis 
and are finalizing this proposal with a modification that will narrow 
the scope of the SEP.
    The amendments we are finalizing at Sec.  423.38(c)(4) and (35) 
will affect the circumstances in which individuals can change plans. 
Individuals can complete an enrollment form to effectuate such changes, 
and we have previously estimated that the forms take 0.3333 hours (20 
min) to complete as cited under OMB control number 0938-1378 (CMS-
10718). However, Medicare beneficiaries make enrollment choices 
currently, and we do not expect the overall volume of enrollment 
selections to materially change with our finalized provisions. 
Therefore, we do not believe the provisions at Sec.  423.38(c)(4) and 
(35) will impact the burden estimates that are currently approved under 
0938-1378 (CMS-10718). Similarly, we are not finalizing any changes to 
that collection's currently approved forms.
    In section XI. of this rule, we describe the impacts related to the 
expected enrollment shift from non-integrated MA-PDs into FIDE SNPs, 
HIDE SNPs, and AIPs over time as more D-SNPs align with Medicaid MCOs.
12. ICRs Regarding Contracting Standards for Dual Eligible Special 
Needs Plan (D-SNP) Look-Alikes (Sec.  422.514)
    The following changes will be submitted to OMB for approval under 
control number 0938-0753 (CMS-R-267) consistent with burden on MA plans 
identified as D-SNP look-alikes under Sec.  422.514(d) through (e). 
While mentioned below, we are not making any changes under control 
number 0938-0935 (CMS-10237) and control number 0938-1051 (CMS-10260).
    As described in section VIII.J. of this final rule, we are reducing 
the D-SNP look-alike threshold from 80 percent to 60 percent over a 
two-year period. We are finalizing a limitation on non-SNP MA plans 
with 70 or greater percent dually eligible individuals for CY 2025. For 
CY 2026, we are reducing the threshold from 70 percent to 60 percent or 
greater dually eligible enrollment as a share of total enrollment. This 
incremental approach will minimize disruptions to dually eligible 
individuals and allow plans and CMS to operationalize these transitions 
over a two-year period.
    We will maintain processes to minimize disruption for the enrollees 
in plans affected by this change. We are applying the existing 
transition processes and procedures at Sec.  422.514(e) to non-SNP MA 
plans that meet the D-SNP look-alike contracting limitation of 70 
percent or greater dually eligible individuals effective plan year 2025 
and 60 percent or greater dually eligible individuals effective plan 
year 2026. Consistent with the initial years of implementation of the 
D-SNP look-alike contract limitations with the 80-percent threshold, 
maintaining these transition processes and procedures will help to 
minimize disruption for current enrollees as a result of the 
prohibition on contract renewal for existing D-SNP look-alikes. For 
plan year 2027 and subsequent years, we are limiting the Sec.  
422.514(e) transition processes and procedures to D-SNP look-alikes 
transitioning dually eligible enrollees into D-SNPs. Based on our 
experience with D-SNP look-alike transitions through plan year 2024, 
the vast majority of enrollees transitioned to other MA-PDs under the 
same parent organization as the D-SNP look-alike.
    MA organizations can utilize other CMS processes to transition D-
SNP look-alike enrollees to other MA plans. For example, an MA 
organization can utilize the CMS crosswalk process if it is 
transitioning the full D-SNP look-alike enrollment to one non-SNP plan 
benefit package (PBP) of the same type offered by the same MA 
organization under the same contract and the requirements at Sec.  
422.530 for a crosswalk are met. An MA organization moving the entire 
enrollment of the D-SNP look-alike PBP to another PBP of the same type 
under the same contract may structure this action as a consolidation of 
PBPs and use the crosswalk for consolidated renewal process, under 
Sec.  422.530(b)(1)(ii). An MA organization may utilize the crosswalk 
exception process, subject to CMS approval, at Sec.  422.530(c)(2) to 
transition the entire enrollment of the MA contract (including the D-
SNP look-alike) to another MA contract (of the same type) offered by 
another MA organization with the same parent organization as part of a 
contract consolidation of separate MA contracts. While multiple options 
exist for MA organizations to transition D-SNP look-alike enrollees to 
other non-SNP MA plans, these pathways are not available for moving 
enrollees to D-SNPs.
    Using data from the 2023 contract year, we estimate that there are 
30 non-SNP MA plans that have enrollment of dually eligible individuals 
of 70 percent through 79.9 percent of total enrollment and 40 non-SNP 
MA plans that have enrollment of dually eligible individuals of 60 
percent through 69.9 percent of total enrollment. As of January 2023, 
the 30 non-SNP MA plans had total enrollment of 53,334 enrollees and 
the 40 non-SNP MA plans had 92,100 enrollees collectively. Of the 30 
non-SNP MA plans with 70-79.9 percent dually eligible enrollment, 28 
are in States where for contract year 2023 there are D-SNPs or 
comparable managed care plans and would be subject to Sec.  422.514(d). 
Of the 40 non-SNP MA plans with 60-69.9 percent dually eligible 
enrollment, all are in States where for contract year 2023 there are D-
SNPs or comparable managed care plans and would be subject to Sec.  
422.514(d). As of January 2023, these 68 plans had total enrollment of 
145,434 for contract year 2023. If these plans all have the same

[[Page 30786]]

enrollment pattern in 2024, MA organizations will need to non-renew for 
plan year 2025 those 28 plans that exceed the criteria we are 
finalizing in this rulemaking to lower the threshold to 70 percent for 
plan year 2025. Similarly, MA organizations with plans that exceed the 
criteria we are finalizing in this rulemaking to lower the threshold to 
60 percent for plan year 2026 would need to non-renew 40 plans for plan 
year 2026. Each MA organization will have the opportunity to make an 
informed decision to transition enrollees into another MA-PD plan 
(offered by it or by its parent organization) by: (1) identifying, or 
applying, or contracting for, a qualified MA-PD plan, including a D-
SNP, in the same service area; or (2) creating a new D-SNP through the 
annual bid submission process. Consistent with our experience with D-
SNP look-alikes non-renewing for plan years 2021 through 2024, we 
expect the vast majority of D-SNP look-alike enrollees to be 
transitioned into a plan offered by the same parent organization as the 
D-SNP look-alike, and we expect in rare instances that the non-renewing 
plan may choose to not transition enrollees. In plan year 2023, 9 of 
the 47 D-SNP look-alikes transitioned approximately 3,300 enrollees to 
Traditional Medicare, which accounted for less than 2 percent of total 
enrollees transitioned from D-SNP look-alikes. In plan year 2024, 3 of 
the 12 D-SNP look-alikes transitioned approximately 1,414 enrollees to 
Traditional Medicare, which accounted for 7 percent of total enrollees 
transitioned from D-SNP look-alikes. The changes required of MA 
organizations based on this rule will impact D-SNP look-alikes and 
their enrollees (see section VIII.J. of this final rule). While we 
cannot predict the actions of each affected MA organization with 100 
percent certainty, we base our burden estimates on the current 
landscape of D-SNP look-alikes and our experience with transitions of 
D-SNP look-alikes through plan year 2024.
a. MA Plan Requirements and Burden
    As indicated, the following changes will be submitted to OMB for 
approval under control number 0938-0753 (CMS-R-267).
    At Sec.  422.514(e), we established a process for an MA 
organization with a D-SNP look-alike to transition individuals who are 
enrolled in its D-SNP look-alike to another MA-PD plan offered by the 
MA organization, or by the same parent organization as the MA 
organization, to minimize disruption as a result of the prohibition on 
contract renewal for existing D-SNP look-alikes. This process allows, 
but does not require, the MA organization to transition dually eligible 
enrollees from D-SNP look-alikes into D-SNPs and other qualifying MA-PD 
plans for which the enrollees are eligible without the transitioned 
enrollees having to complete an election form. This transition process 
is conceptually similar to the ``crosswalk exception'' procedures at 
Sec.  422.530(a) and (b); however, Sec.  422.514(e) allows the 
transition process to apply across contracts or legal entities and from 
non-SNP to SNPs provided that the receiving plan is otherwise of the 
same plan type (for example, HMO or PPO) as the D-SNP look-alike.
    Based on the experience of D-SNP look-alike transitions through 
plan year 2024, we believe 94 percent of D-SNP look-alikes for plan 
years 2025 and 2026 will be able to move enrollees into another MA-PD 
plan using the transition process established at Sec.  422.514(e) or 
existing crosswalk functionality at Sec.  422.530 and will choose to 
transition enrollment for plan years 2025 and 2026. All are in States 
where for contract year 2023 there are D-SNPs or comparable managed 
care plans that would be subject to Sec.  422.514(d). Therefore, we are 
assuming the burden of 26 of the 28 non-SNP MA plans with 70-79.9 
percent dually eligible enrollment and offered in a State with a D-SNP 
would transition enrollees for plan year 2025 (for a January 2025 
effective date) and 38 of the 40 non-SNP MA plans with 60-69.9 percent 
dually eligible enrollment would transition enrollees for plan year 
2026 (for a January 2026 effective date). In 2027 and subsequent years, 
we estimate that 12 plans per year would be identified as D-SNP look-
alikes under Sec.  422.514(d). Consistent with our assumptions for plan 
years 2025 and 2026, we assume 94 percent of D-SNP look-alikes for plan 
year 2027, which is 11 D-SNP look-alikes, will be able to move 
enrollees into another MA-PD plan. Consistent with our estimates from 
the June 2020 final rule, we estimate each plan will take a one-time 
amount of 2 hours at $79.50/hr for a business operations specialist to 
submit all enrollment changes to CMS necessary to complete the 
transition process. D-SNP look-alikes that transition enrollees into 
another non-SNP plan will take less time than D-SNP look-alikes that 
transition eligible beneficiaries into a D-SNP because they would not 
need to verify enrollees' Medicaid eligibility. The 2-hour time 
estimate accounts for any additional work to confirm enrollees' 
Medicaid eligibility for D-SNP lookalikes transitioning eligible 
enrollees to a D-SNP. Based on the previous discussion, the estimates 
for the burden for MA organizations to transition enrollees to other 
MA-PD plans during the 2025-2027 plan years is summarized in Table J7.
[GRAPHIC] [TIFF OMITTED] TR23AP24.026


[[Page 30787]]


    Based on our experience through plan year 2024, we expect the vast 
majority of MA organizations with non-SNP MA plans with dually eligible 
enrollment between 60 and 80 percent of total enrollment also have an 
MA-PD plan with a premium of $0 or a D-SNP in the same service area as 
the D-SNP look-alike. Based on 2023 plan year data, of the 30 non-SNP 
MA plans with 70 to 79.9 percent dually eligible enrollment, 19 of 
these plans (63 percent) have a D-SNP within the same service area or 
nearly the same service area. Also based on 2023 plan year data, of the 
40 non-SNP MA plans with 60 to 69.9 percent dually eligible enrollment, 
24 of these plans (60 percent) have a D-SNP within the same service 
area or nearly the same service area. An MA organization with one of 
these non-SNP MA plans could expand its service area for an existing 
MA-PD plan or D-SNP. The MA organizations with the non-SNP MA plans 
between 60 and 79.9 percent dually eligible enrollment already have the 
opportunity to establish a D-SNP and expand their service areas. Any 
burden associated with these MA organizations establishing new D-SNPs 
and/or expanding their service areas is already captured under 
currently approved burden under control number 0938-0935 (CMS-10237) 
for creating a new MA-PD plan to receive non-SNP MA plan enrollees. In 
this regard, we are not making any changes under that control number.
    Per Sec.  422.514(e)(2)(ii), in the Annual Notice of Change (ANOC) 
that the MA organization must send consistent with Sec.  422.111(a), 
(d), and (e), the MA organization will be required to describe changes 
to the MA-PD plan benefits and provide information about the MA-PD plan 
into which the individual is enrolled.
    Consistent with Sec.  422.111(d)(2), enrollees will receive this 
ANOC describing the change in plan enrollment and any differences in 
plan enrollment at least 15 days prior to the first date of the annual 
election period (AEP). As each MA plan must send out the ANOC to all 
enrollees annually, we do not estimate that MA organizations will incur 
additional burden for transitioned enrollees. The current burden for 
the ANOC is approved by OMB under control number 0938-1051 (CMS-10260). 
In this regard, we are not making any changes under that control 
number.
    We expect one plan for plan year 2025 and two plans for plan year 
2026 will be required to send affected enrollees a written notice 
consistent with the non-renewal notice requirements at Sec.  
422.506(a)(2) and described at Sec.  422.514(e)(4), as we anticipate--
based on our experience with transitions through plan year 2024--not 
all D-SNP look-alikes will be able to transition their enrollees into 
another MA-PD plan (or plans).
b. Enrollee Requirements and Burden
    In 2027 and subsequent years, we estimate that 12 plans per year 
would be identified as D-SNP look-alikes under Sec.  422.514(d). We 
base our estimate on the fact that there are 12 D-SNP look-alikes for 
plan year 2024, which is the first year following the phase in of the 
80-percent threshold. We expect the policy we are finalizing in this 
rule to lower the threshold for identifying D-SNP look-alikes from 80 
percent to 60 percent will increase the number of plans identified as 
D-SNP look-alikes. However, we expect this increase to be offset by a 
reduction in D-SNP look-alikes due to our changes to the Sec.  
422.514(e) transition process, which will limit use of the Sec.  
422.514(e) transition process to D-SNP look-alikes transitioning dually 
eligible enrollees into D-SNPs. Under our provision, D-SNP look-alikes 
transitioning effective for plan year 2025 and plan year 2026--
including the newly identified D-SNP look-alikes based on the threshold 
lowered to 70 percent and then 60 percent--can continue to use the 
existing transition process under Sec.  422.514(e). Once the newly 
identified D-SNP look-alikes at the lower thresholds complete their 
transitions for plan year 2025 and plan year 2026, the Sec.  422.514(e) 
transition process can only be used for D-SNP look-alike transitioning 
enrollees into D-SNPs. We believe this limit will give MA organizations 
a stronger incentive to avoid creating D-SNP look-alikes, due to the 
more limited opportunity for these plans to transition enrollees to 
non-D-SNPs. The limit on the Sec.  422.514(e) transitions will be 
effective for plan year 2027 and subsequent years. We believe that 
these 12 D-SNP look-alikes will non-renew and transition their 
enrollment into a D-SNP or other MA-PD plan. The annual burden is 
summarized in Table J7.
    As indicated, the following changes will be submitted to OMB for 
approval under control number 0938-0753 (CMS-R-267).
    An individual transitioned from a D-SNP look-alike to another MA-PD 
plan may stay in the MA-PD plan receiving the enrollment or, using the 
AEP or another enrollment period (such as the MA OEP), make a different 
election. The enrollees may choose new forms of coverage for the 
following plan year, including a new MA-PD plan or receiving services 
through Traditional Medicare and enrollment in a stand-alone PDP. 
Because the enrollment transition process is effective on January 1 and 
notices would be provided during the AEP, affected individuals have 
opportunities to make different plan selections through the AEP (prior 
to January 1) or the MA open enrollment period (OEP) (after January 1). 
Affected individuals may also qualify for a special enrollment period 
(SEP), such as the SEP for plan non-renewals at Sec.  422.62(b)(1) or 
the SEP for dually eligible/LIS beneficiaries at Sec.  423.38(c)(4), 
which we are revising as discussed in section VIII.F. of this final 
rule. Based on our experience with D-SNP look-alike transitions through 
plan year 2024, we estimate that 98 percent of the 53,334 D-SNP look-
alike enrollees (52,267 enrollees = 53,334 enrollees x 0.98) in the 30 
non-SNP MA plans with dually eligible enrollment of 70 to 79.9 percent 
and 98 percent of the 92,100 D-SNP look-alike enrollees (90,258 
enrollees = 92,100 enrollees x 0.98) in the 40 non-SNP MA plans with 
dually eligible enrollment of 60 to 69.9 percent would transition into 
another plan under the same parent organization as the D-SNP look-
alike. Of these 142,525 transitioning enrollees (52,267 enrollees + 
90,258 enrollees), our experience with D-SNP look-alike transitions 
through plan year 2023 suggests that 14 percent will select a new plan 
or the Traditional Medicare and PDP option rather than accepting the 
transition into a different MA-PD plan or D-SNP under the same MA 
organization as the D-SNP in which they are currently enrolled. For 
plan year 2025, we estimate that 7,317 enrollees (52,2677 transitioning 
D-SNP look-alike enrollees * 0.14), will opt out of the new plan into 
which the D-SNP look-alike transitioned them. For plan year 2026, we 
estimate that 12,636 enrollees (90,258 transitioning D-SNP look-alike 
enrollees * 0.14), will opt out of the new plan into which the D-SNP 
look-alike transitioned them. Consistent with the per response time 
estimate that is currently approved by OMB under control number 0938-
0753 (CMS-R-267), we continue to estimate that the enrollment process 
requires 20 minutes (0.3333 hr).
    Based on the aforementioned discussion, Table J8, summarizes the 
hour and dollar burden for added enrollments for years 2025 to 2027.

[[Page 30788]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.027

    As stated previously, we believe that in 2027 and subsequent years, 
12 plans will be identified as D-SNP look-alikes and therefore this 
rule would have a much smaller impact on MA enrollees after the initial 
period of implementation. Since the current 70 non-SNP MA plans with 
dually eligible enrollment of 60.0 to 79.9 percent have 145,434 
enrollees in 70 plans, we estimate 24,932 enrollees (145,434 enrollees 
* 12/70 plans) in 12 plans. For plan year 2027, we estimate that 98 
percent of the 24,433 D-SNP look-alike enrollees (24,433 enrollees = 
24,932 enrollees x 0.98) in the 12 non-SNP MA plans would transition 
into another plan under the same parent organization as the D-SNP look-
alike. We further estimate that we estimate that 3,421 enrollees 
(24,433 transitioning D-SNP look-alike enrollees * 0.14) will opt out 
of the new plan into which the D-SNP look-alike transitioned them. The 
burden on D-SNP look-alike enrollees is summarized in Table J7. The 
average annual enrollee burden over 3 years is presented in Table J8.
    We received no comments specific to our analysis of paperwork 
burden and, except for modifications made to reflect 2024 plan year 
experience with D-SNP look-alike transitions, we are therefore 
finalizing our estimates as is.
13. ICRs Regarding Update to the Multi-Language Insert Regulation 
(Sec. Sec.  422.2267 and 423.2267)
    The following changes will be submitted to OMB for approval under 
control number 0938-1421 (CMS-10802).
    The multi-language insert (MLI) required at Sec. Sec.  
422.2267(e)(31) and 423.2267(e)(33) is a standardized communications 
material that informs enrollees and prospective enrollees that 
interpreter services are available in Spanish, Chinese, Tagalog, 
French, Vietnamese, German, Korean, Russian, Arabic, Italian, 
Portuguese, French Creole, Polish, Hindi, and Japanese. These were the 
15 most common non-English languages in the United States when we 
reinstituted the MLI in the May 2022 final rule. Additionally, 
Sec. Sec.  422.2267(e)(31)(i) and 423.2267(e)(33)(i) require plans to 
provide the MLI in any non-English language that is the primary 
language of at least 5 percent of the individuals in a PBP service area 
but is not already included on the MLI. These regulations also provide 
that a plan may opt to include the MLI in any additional languages that 
do not meet the 5 percent threshold, where it determines that including 
the language would be appropriate.
    As discussed in section III.P. of this final rule, we are 
finalizing an update to Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33) 
to require that notice of availability of language assistance services 
and auxiliary aids and services be provided in English and at least the 
15 languages most commonly spoken by individuals with limited English 
proficiency in a State and must be provided in alternate formats for 
individuals with disabilities who require auxiliary aids and services 
to ensure effective communication. We are finalizing this provision 
with one amendment: We are adding ``or States associated with the 
plan's service area'' between the language ``relevant State'' and ``and 
must be provided . . .'' to reduce the burden on organizations with 
plan benefit packages that operate in more than one State and conform 
with the OCR proposed rule, and to clarify that the requirement is 
based on the plan benefit package service area. Thus, under the final 
provision, MA organizations and Part D sponsors would send the Notice 
of Availability in English and at least the 15 most common non-English 
languages in a State or States associated with the plan's service area 
instead of the current MLI in the 15 most common non-English languages 
nationally. This policy is consistent with a proposed rule that OCR 
published in August 2022 (87 FR 47824). We also expect that this policy 
will better align with the Medicaid translation requirements at Sec.  
438.10(d)(2).\260\ We are modifying the language to note that this is a 
model communication material rather than a standardized communication 
material because we are no longer specifying the exact text that must 
be used. Even though the MA organizations and Part D sponsors could 
change the Notice of Availability, we are not accounting for such 
changes because we do not expect any MA organizations or Part D 
sponsors to make such changes. It is possible that some States may 
require the use of a specific tagline to meet this requirement, however 
if this is the case, we again do not anticipate an additional burden to 
plans since the State would provide the specific language and 
translations to be used.
---------------------------------------------------------------------------

    \260\ We expect the 15 most common languages for a given State 
to include any language required by the Medicaid program at Sec.  
438.10(d)(2). Therefore, our NPRM would not impose additional burden 
on fully integrated dual eligible special needs plans and highly 
integrated dual eligible special needs plans, as defined at Sec.  
422.2, and applicable integrated plans, as defined at Sec.  422.561, 
to comply with regulations at Sec. Sec.  422.2267(a)(4) and 
423.2267(a)(4).
---------------------------------------------------------------------------

    We did not expect this policy to create any new collection of 
information burden for MA organizations or Part D sponsors since the 
August 2022 proposed rule indicates that OCR would provide translations 
of the Notice of Availability. Also, the MA organizations and Part D 
sponsors are already distributing the MLI and, under this final 
provision, would instead distribute the Notice of Availability, so we 
do not anticipate any new burden associated with printing or mailing. 
In addition, the Notice of Availability will be a one-page document 
that would never be sent

[[Page 30789]]

alone and therefore does not create additional postage costs.
    We expected some new burden for MA organizations and Part D 
sponsors operating plans across multiple States. Rather than sending 
the same MLI with the same 15 non-English language translations to 
plans in any State, under the final rule the plans under these MA 
organizations or Part D sponsors would need to send the Notice of 
Availability with translations in at least the 15 most common non-
English languages in each State or States in which the plan operates. 
Based on plan year 2023 data, we estimated there are approximately 20 
MA parent organizations offering MA plans in multiple States with 
approximately 3,900 PBPs and approximately 20 Part D sponsors offering 
Part D plans in multiple States with approximately 1,400 Part D plans. 
Since many of these parent organizations have MA organizations at the 
State level, we estimated that these 20 parent organizations have 
approximately 220 MA organizations covering PBPs by State. Similarly, 
we estimated that the 20 Part D sponsors had approximately 50 parent 
organizations covering PBPs by State. We believe the parent 
organizations will update systems software and plan policies and 
procedures as well as train staff at the MA organization and Part D 
sponsor level to cover all PBPs and Part D plans, respectively, offered 
in a State. We expected that MA organizations and Part D sponsors would 
need one software engineer working one hour to update systems software 
in the first year with no additional burden in future years and 1 hour 
at $127.82/hr to update systems software in the first year with no 
additional burden in future years and one business operations 
specialist working 1 hour at $79.50/hr to update plan policies and 
procedures and train staff in the first year with no additional burden 
in future years.
    For MA organizations, we estimated the burden for plan year 2025 at 
440 hours (220 MA organizations * 2 hr/plan) at a cost of $56,241 (440 
hr * $127.82/hr) for a software engineer to update systems to ensure 
the Notice of Availability with the correct State or States-specific 
languages is distributed with other communications and marketing 
materials. We estimated the burden for MA organizations for plan year 
2025 to be 440 hours (220 MA organizations * 2 hr/plan) at a cost of 
$34,980 (440 hr * $79.50/hr) for a business operations specialist to 
update plan policies and procedures and train staff.
    For Part D sponsors, we estimate the burden for plan year 2025 at 
100 hours (50 Part D sponsors * 2 hr/plan) at a cost of $12,782 (100 hr 
* $127.82/hr) for a software engineer to update systems to ensure the 
Notice of Availability with the correct State or States-specific 
languages is distributed with other communications and marketing 
materials. We estimated the burden for Part D sponsors for plan year 
2025 to be 100 hours (50 Part D sponsors * 2 hr/plan) at a cost of 
$7,950 (100 hr * $79.50/hr) for a business operations specialist to 
update plan policies and procedures and train staff. We do not 
anticipate any new burden to plans after the initial year.
    We also note that, as part of the current MLI required at 
Sec. Sec.  422.2267(e)(31) and 423.2267(e)(33), MA organizations and 
Part D sponsors must already include additional languages that meet the 
5 percent service area threshold as required under Sec. Sec.  
422.2267(a)(2) and 423.2267(a)(3). Thus, MA organizations and Part D 
sponsors must currently review the most frequently used languages in a 
service area beyond the top 15 national languages. As a result, we did 
not believe the burden will be greater than our estimate noted 
previously.
    We do not believe that the modified policy poses any additional 
impact on burden. We received no comments specific to our analysis of 
paperwork burden and are therefore finalizing our estimates as is.
14. ICRs Regarding Part D Medication Therapy Management (MTM) Program 
Eligibility Criteria (Sec.  423.153(d))
    The following changes will be submitted to OMB for approval under 
control number 0938-1154 (CMS-10396). Based on comments summarized in 
section III.E., we are finalizing our proposed changes to the MTM 
eligibility criteria with modification, as follows:
     Requiring plan sponsors to target all core chronic 
diseases and continuing to allow them to Add other chronic diseases.
     Codifying the current nine core chronic diseases in 
regulation and adding HIV/AIDS, for a total of 10 core chronic 
diseases.
     Maintaining the maximum number of covered Part D drugs a 
sponsor may require at eight drugs, requiring sponsors to include all 
Part D maintenance drugs in their targeting criteria, and continuing to 
allow them to include all covered Part D drugs in their targeting 
criteria.
     Revising the annual cost threshold ($5,330 in 2024) 
methodology to be based on the average annual cost of eight generic 
drugs ($1,623 for 2025 based on 2023 data).
    We are also revising our estimates to reflect our final policies 
and updated data, including more accurate postage rates. Taken 
together, we estimate that the changes to the MTM eligibility criteria 
will increase the number (and percentage) of Part D enrollees eligible 
for MTM services by 3,466,029 beneficiaries, from 3,599,356 (7 percent 
of all Part D enrollees) to 7,065,385 (13 percent of all Part D 
enrollees). While we considered multiple alternative proposals, we 
ultimately finalized this combination of changes as a way to close 
significant gaps in MTM eligibility while being responsive to concerns 
about program size and burden on Part D sponsors.
    Under Sec.  423.153(d)(1)(vii), all MTM enrollees must be offered a 
CMR at least annually and TMRs no less than quarterly. A CMR is an 
interactive consultation, performed by a pharmacist or other qualified 
provider, that is either in person or performed via synchronous 
telehealth, that includes a review of the individual's medications and 
may result in the creation of a recommended medication action plan as 
required in Sec.  423.153(d)(1)(vii)(B)(1) as amended in this final 
rule. An individualized, written summary in CMS's Standardized Format 
must be provided following each CMR. For ongoing monitoring, sponsors 
are required to perform TMRs for all beneficiaries enrolled in the MTM 
program with follow-up interventions when necessary. The TMRs must 
occur at least quarterly beginning immediately upon enrollment in the 
MTM program and may address specific or potential medication-related 
problems. TMRs may be performed to assess medication use, to monitor 
whether any unresolved issues need attention, to determine if new drug 
therapy problems have arisen, or assess if the beneficiary has 
experienced a transition in care. Under Sec.  423.153(d)(1)(vii)(E), 
plans are also 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 on plan sponsors to conduct CMRs (labor cost) and 
mail the written CMR summaries (non-labor cost) to the additional 
beneficiaries that will be targeted for MTM enrollment based on our 
revisions. We also estimate the cost of sending safe disposal 
information to the beneficiaries who will be newly

[[Page 30790]]

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 do not Accept the offer of a CMR.
     The burden for pharmacists to complete the additional 
CMRs: Based on internal data, we found 66.2 percent of MTM program 
enrollees accepted the offer of a CMR in 2022. To estimate the cost of 
conducting the additional CMRs, we multiply the expected number of 
additional MTM program enrollees (3,466,029) by 0.662 to obtain the 
number of additional CMRs we estimate will actually be conducted 
(2,294,511). We estimate a pharmacist would take 40 minutes (0.6667 hr) 
at $124.44/hr to complete a CMR. Thus, the total burden is 1,529,750 
hours (0.6667 hr/CMR * 2,294,511 enrollees who accept the CMR offer) at 
a cost of $190,362,090 (1,529,750 hr * $124.44/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 
double-sided (including 1 page for information regarding safe 
disposal). The cost of mailing one CMR summary is the cost of postage 
plus the cost of printing one CMR summary. First-class postage costs 
$0.64 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). 
Bulk envelope costs are $440 for 10,000 envelopes or $0.044 per 
envelope. Therefore, the cost of printing the average CMR summary is 
$1.0220 ($0.64 postage for the first ounce + 0.24 for the second ounce 
+ 7 sheets * $0.007 for paper + 7 sheets*$0.007 for toner + 0.044 for 
envelopes). And taken as a whole, the annual cost of mailing CMRs to 
the additional 2,294,511 beneficiaries expected to accept the CMR offer 
is $2,344,990 (2,294,511 enrollees x $1.0220/mailing).
     Mailing costs for safe disposal information: Out of the 
3,466,029 additional beneficiaries expected to be targeted for MTM 
based on the revised criteria, we expect that 33.8 percent or 1,171,518 
(3,466,029 * 0.338) beneficiaries will decline a CMR. These 
beneficiaries 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 standalone 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. If the 
letter does not contain private health information and thus bulk 
mailing costs (which include the envelope, typically a fold over paper) 
is used, the cost to mail one page of safe disposal information is 
$0.01495 per enrollee [(1 page $0.007/sheet) + (1 page * $0.007 toner) 
+ ($0.19/200 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 $17,514 
($0.01495 * 1,171,518).
    Therefore, the total burden associated with the finalized revisions 
to the MTM targeting criteria is 1,529,750 hours and $192,724,594 
($190,362,090 for a pharmacist to perform the CMRs for beneficiaries 
newly targeted for MTM under the revised criteria + $2,344,990 to mail 
the CMR written summary in the CMS Standardized Format with safe 
disposal information + $17,514 for mailing information regarding safe 
disposal to beneficiaries newly targeted for MTM who do not receive a 
CMR).
    We received the following comments on the estimates included in 
this section of the proposed rule, and our responses follow:
    Comment: A commenter pointed out that the increase in program size 
and burden would not be evenly distributed, and that some plans would 
be disproportionately affected due to member population and plan type. 
Another commenter suggested simplifying the program by focusing only on 
CMRs to improve participation and decrease the cost.
    Response: We acknowledge that eligibility rates for MTM are not 
evenly distributed among Part D contracts. Similar to current MTM 
programs, some contracts may have actual MTM enrollment rates above or 
below the average rate for the program as a whole. CMS took the cost 
burden into consideration when developing its policies for this final 
rule and modified the eligibility criteria to lessen the burden on 
plans but still provide access to MTM to more beneficiaries. As a key 
component of the MTM program, the CMR is also the costliest component 
as evidenced by our calculations. Therefore, it is unlikely that 
focusing solely on the CMR would significantly decrease the cost 
burden.
    Comment: One commenter suggested that the time for a pharmacist or 
other qualified provider to complete the CMR was underestimated and 
should be 60 minutes. While the average CMR consultation with the 
enrollee may take 20-40 minutes, the pharmacist or other qualified 
provider spends additional time reviewing the case before the 
consultation with the enrollee and preparing the CMR summary.
    Response: CMS disagrees. The time spent conducting a CMR for the 
purposes of our burden calculations is an average; as supported by the 
range of 20 to 60 minutes provided in this comment, 40 minutes is an 
accurate estimate. CMS considers the preparatory time for the CMR 
summary to be negligible since most sponsors and MTM providers use an 
automated system to complete the Standardized Format.
15. ICRs Regarding Required Notices for Involuntary Disenrollment for 
Loss of Special Needs Status (Sec.  422.74)
    The following changes will be submitted to OMB for approval 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; therefore, no additional burden is anticipated 
from this change. 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 codifying current policy on MA plan notices prior to a 
member disenrollment for loss of special needs status. MA organizations 
will 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 will be required to 
provide the member a final notice of involuntary disenrollment, sent 
within 3 business days following

[[Page 30791]]

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 0.117 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 $512,775 (6,450 hr * $79.50/hr)
    We did not receive any comments related to the aforementioned 
collection of information requirements and burden estimates and are 
finalizing them in this rule as proposed.
16. ICRs Regarding Involuntary Disenrollment for Individuals Enrolled 
in an MA Medical Savings Account (MSA) Plan (Sec.  422.74(b)(2))
    The requirement 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 approval 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 
$7.95 (0.1 hr x $79.50/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 $954 
(12 hr * $79.50/hr).
    We did not receive any comments related to the aforementioned 
collection of information requirements and burden estimates and are 
finalizing them in this rule as proposed.
17. ICRs Regarding Required Notice for Reinstatements Based on 
Beneficiary Cancellation of New Enrollment (Sec. Sec.  422.60 and 
423.32)
    The following changes will be submitted to OMB for approval 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 change will not add to 
existing reinstatement processes; therefore, no additional burden is 
anticipated. However, because a burden estimate for these enrollment 
reinstatement notifications has not previously been submitted to OMB, 
we are correcting that oversight by requesting OMB's review and 
approval under the aforementioned control number.
    We are codifying 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 will 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 will 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 will take 1 minute (0.017 hr) at $79.50/hr for 
a MA or PDP plan's business operations 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 $305,280 (3,840 hr * $79.50/hr).
    We did not receive any comments related to the aforementioned 
collection of information requirements and burden estimates and are 
finalizing them in this rule as proposed.
18. 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).
    In this rule, Sec. Sec.  422.528, 422.529, 423.521, and 423.522 
will permit 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. In the December 2022 proposed rule, we had erroneously 
estimated the burden of the proposed provision. We are correcting that 
oversight in this final rule by removing such burden since the 
preparation and submission of appeals are in response to an 
administrative action, investigation or audit pertaining to specific 
individuals or entities (5 CFR 1320.4(a)(2) and (c)). In this regard, 
the preparation and submission of appeals

[[Page 30792]]

are not subject to the requirements of the PRA.
19. ICRs Regarding Personnel Requirements Under PACE (Sec. Sec.  460.64 
and 460.71)
    The following changes will be submitted to OMB for approval 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 IX.C. of this final rule, we are finalizing our proposal 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 clearance, and 
developing the risk assessment tool. For revising policies and 
procedures related to medical clearance, we estimate it would take 1 
hour at $74.02/hr for a compliance officer at each PACE organization to 
update these materials. In aggregate, we estimate a one-time burden of 
156 hours (156 PACE organizations * 1 hr) at a cost of $11,547 (156 hr 
* $74.02/hr) for the update of policies and procedures.
    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 $74.02/hr and 1 hour of work by the 
PCP at $229.52/hr. The weighted hourly wage for the compliance officer 
and PCP to create a risk assessment tool is $105.12/hr ([(4 hr * 
$74.02/hr) + (1 hr * $229.52/hr)]/5 hr of aggregate burden). In 
aggregate, we estimate a one-time burden of 780 hours (156 PACE 
organizations * 5 hr) at a cost of $81,994 (780 hr * $105.12/hr) for 
both the compliance officer and PCP roles in developing the risk 
assessment tool.
    Based on internal CMS data, there were 156 active PACE 
organizations as of February 2024. This number of active PACE 
organization represents an increase of 7 PACE organizations from the 
149 active PACE organizations counted in the December 2022 proposed 
rule and based on September 2022 data.
    We received no comments specific to our analysis of paperwork 
burden and are therefore finalizing our estimates as is, except that we 
have made updates related to the increased number of PACE organizations 
and changes to mean hourly wages.
20. ICRs Regarding Service Delivery Under PACE (Sec.  460.98)
    The following changes will be submitted to OMB for approval 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 final rule, but as 
discussed in section IX.D. of this final rule, we are finalizing our 
proposal to add required maximum 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 finalized 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 $74.02/hr to update the necessary materials. Therefore, we 
estimate a one-time burden of 156 hours (156 PACE organizations * 1 hr) 
at a cost of $11,547 (156 hr * $74.02/hr).
    We received no comments specific to our analysis of paperwork 
burden and are therefore finalizing our estimates as is, except that we 
have made updates related to the increased number of PACE organizations 
and changes to mean hourly wages.
21. ICRs Regarding PACE Participant Rights (Sec.  460.112)
    The following changes will be submitted to OMB for approval 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 IX.G. of this 
final rule, we are finalizing our proposal to add new participant 
rights and modify existing participant rights to enhance participant 
protections. Specifically, we are finalizing our proposal 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. Under our finalized changes to Sec.  
460.112, PACE organizations must 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 $74.02/hr to update these materials.
    Additionally, PACE organizations must 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 
$74.02/hr.
    In aggregate, we estimate a one-time burden of 624 hours (156 PACE 
organizations * (2 hr + 2 hr)) at a cost of $46,188 (624 hr * $74.02/
hr).
    We also estimate this provision would result in increased ongoing 
costs to PACE organizations. As discussed in section IX.G. of this 
final rule, we are finalizing the requirement that PACE organizations 
provide participants with written documentation explaining the 
different treatment options including palliative, comfort, and end-of-
life care services. Specifically, we are finalizing the requirement 
that PACE organizations must 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

[[Page 30793]]

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 $85.60/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 $60.34/hr.
    For tailoring information within the written templates and 
providing written materials to participants as specified at finalized 
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 $95.66/hr [(1 hr * $85.60/hr 
(RN)) + (0.1667 hr * $60.34/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 $81.99/hr (total cost of $95.66/1.1667 hr).
    Using these assumptions, we estimate the ongoing burden for the 
finalized requirements at Sec.  460.112(c)(5) would affect 12,169 
participants (60,847 enrollees times 20 percent of participants who are 
expected to need end-of-life explanations). Therefore, to tailor and 
mail materials there is an annual burden of 14,198 hours (12,169 
affected participants * 1.1667 hr) at a cost of $1,164,094 (14,198 hr * 
$81.99/hr).
    We are also finalizing our proposal requiring that PACE 
organizations 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 
$60.34/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. Based on CMS internal data, the total national enrollment in 
PACE as of February 2024 was 60,847. This enrollment data represents an 
11 percent increase from the national PACE enrollment data utilized in 
the December 2022 proposed rule, 54,637 enrollees, which was based on 
September 2022 enrollment data.
    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 12,169 hours (60,847 participants * 0.20 * 1 hr) at 
a cost of $734,277 (12,169 hr to discuss treatment options * $60.34/
hr).
    We estimate a total one-time burden of 624 hours at a cost of 
$46,188 and a total annual ongoing burden of 26,367 hours (14,198 hr + 
12,169 hr) at a cost of $1,898,371 ($1,164,094 + $734,277).
    We received no comments specific to our analysis of paperwork 
burden and are therefore finalizing our estimates as is, except that we 
have made updates related to the increased number of PACE 
organizations, national PACE enrollment data, and changes to mean 
hourly wages.
22. ICRs Regarding PACE Grievance Process (Sec.  460.120)
    The following changes will be submitted to OMB for approval 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 IX.H. of 
this final rule, PACE organizations are already required to develop 
procedures on processing grievances and to provide notification of the 
grievance process to participants upon enrollment and at least 
annually. We are finalizing our proposed changes to further require 
that PACE organizations update those procedures. Specifically, we are 
finalizing our proposal that written or oral notification of the 
grievance resolution must include a summary of the grievance issues, a 
summary of the findings for each distinct issue that requires an 
investigation, 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 (if applicable). 
Our finalized changes, which add requirements on what must be included 
in grievance resolution notifications, require PACE organizations 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 finalized changes to 
Sec.  460.120 will impact the annual hours of burden for PACE 
organizations, because they are already required to 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 requirement.
    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 $74.02/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 $74.02/hr. For the written grievance 
resolution notification, we estimate it will take the compliance 
officer 1 hour to revise the written resolution notification at $74.02/
hr.
    In aggregate, we estimate it would take PACE organizations 624 
hours [156 PACE organizations * (2 hr + 1 hr + 1 hr)] at a cost of 
$46,188 (624 hr * $74.02/hr).
    We received no comments specific to our analysis of paperwork 
burden and are therefore finalizing our estimates as is, except that we 
have made updates related to the increased number of PACE organizations 
and changes to mean hourly wages.
23. ICRs Regarding PACE Participant Notification Requirement for PACE 
Organizations With Past Performance Issues or Compliance Deficiencies 
(Sec.  460.198)
    The following changes will be submitted to OMB for approval under 
control number 0938-0790 (CMS-R-244).
    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, this rule adds 
a new provision, Sec.  460.198, which gives 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 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

[[Page 30794]]

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 will 
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 at $74.02/hr to 
complete and send out the template (which would be automated). In 
aggregate, we estimate it would take 2 hours (2 PACE organizations * 1 
hr) at a cost of $148 (2 hr * $74.02/hr).
    We did not receive any comments related to the aforementioned 
collection of information requirements and burden estimates and are 
finalizing them in this rule as proposed.
24. ICRs Regarding Distribution of Personal Beneficiary Data by Third 
Party Marketing Organizations (TPMOs) (Sec. Sec.  422.2274(g) and 
423.2274(g))
    The following changes will be submitted to OMB for approval under 
control number (0938-0753) (CMS-R-267).
    As explained in section VI.A. of this rule, personal beneficiary 
data collected by a TPMO for marketing or enrolling them into an MA 
plan may only be shared with another when prior express written consent 
is given by the beneficiary. Additionally, we codified that prior 
express written consent from the beneficiary to share the data and be 
contacted for marketing or enrollment purposes must be obtained through 
a clear and conspicuous disclosure that lists each TPMO receiving the 
data and allows the beneficiary to consent or reject to the sharing of 
their information with each entity. We expect that each TPMO that 
collects personal beneficiary data and intends to share it with TPMOs 
must update their disclosure process to obtain individual consent for 
each TPMO with whom it will share the information. We expect that this 
collection of a consent to have information shared with other TPMOs 
will impact both TPMOs and Medicare beneficiaries.
a. Beneficiaries
    To estimate the information collection burden for beneficiaries, we 
have estimated the number of beneficiaries enrolling through agents and 
brokers that received their contact information from a TPMO and the 
time it takes for the beneficiary to complete the consent to sharing 
their information with specific entities. First, we estimate that it 
will take a beneficiary approximately five minutes to read the 
disclosure and provide consent to have their information shared with 
the entities of their choosing. We estimate that there are 
approximately 2 million new MA enrollees every year \261\ and 
approximately 50 percent of those enrollees utilized a TPMO and/or 
agent/broker to assist with their enrollment into an MA plan.\262\ 
Thus, in total, we expect that 1,000,000 (2,000,000 new MA enrollees * 
50 percent assisted by an agent broker) beneficiaries to spend five 
minutes (0.083 hr) consenting or rejecting to the disclosure resulting 
in an aggregate burden of 83,000 hours (1 million new enrollees * 0.083 
hr) and $1,718,930 (83,000 hr * $20.71/hr).
---------------------------------------------------------------------------

    \261\ Published CMS data (https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/mcradvpartdenroldata) shows MA non employer enrollment increasing 
steadily by 2 million a year since 2020. It shows PDP enrollment 
decreasing steadily by \1/2\ million a year. This number is an 
overestimate since it includes deaths, ignores migrations from MA to 
FFS, ignores the downward trend in PDPs, and ignores migrations 
between plans.
    \262\ This was stated in the NPRM. Additionally the following 
source supports this: https://deftresearch.com/wp-content/uploads/2023/11/Deft-Research-Gut-Check-Study-Snapshot.pdf.
---------------------------------------------------------------------------

b. TPMOs
    To estimate the information collection burden on TPMOs, we have 
estimated the number of TPMOs that collect personal beneficiary data 
for purposes of marketing or enrolling them into an MA or Part D plan. 
The most current industry profile for Market Research and Analysis and 
Marketing Specialists provided by the U.S. Bureau of Labor Statistics 
\263\ states that there are 66,900 people employed in management 
capacity in this area. We estimate that there are approximately 10 
managers per company,\264\ resulting in 6,690 marketing organizations 
(66,900 people in management capacity divided by 10 managers per 
organization). Further, we estimate that 10 percent of these companies 
are operating in the healthcare industry,\265\ which results in about 
669 TPMOs or other entities (6,690 organizations * 0.10) that 
potentially would need to comply with this rule. We estimate it will 
take approximately 20 hours for a single TPMO manager and a single web 
and software developer to update the proper disclosure and form to 
obtain consent and a software engineer to program it into the company's 
workflow and process for collection. We therefore use the average wage 
of $136.17/hr (the average of $152.20/hr for a marketing manager and 
$120.14/hr for a software and web developer) In aggregate we estimate a 
burden of 13,380 (669 entities * 20 hr) at a cost of $1,821,955 (13,380 
hr * $136.17/hr).
---------------------------------------------------------------------------

    \263\ https://www.bls.gov/oes/current/oes131161.htm Another BLS 
page for the profile specific to ``Marketing Managers'', https://www.bls.gov/oes/current/oes112021.htm, lists 44710 managers. In our 
estimates we used the higher estimate for the number of managers 
(66,900) and higher estimate for the mean hourly wage ($76.10, for 
Marketing Managers, Occupational code 11-2021) We then adjusted this 
for overtime and fringe and benefits.
    \264\ Typically, managers include top-level, middle-level, 
first-line, and team-leads. Top level itself might include the 
president, vice-president, CEO, and CFO. Thus, we believe the number 
10 reasonable and possibly an underestimate.
    \265\ The BLS does not further break down the area specialty, 
``Market Research Analysts and Marketing Specialists'' Occupational 
code 13-1161, by sub-areas. However, the area includes marketing for 
real-estate, life and property insurance, scientific and technical 
companies, and software companies. Thus, we believe 10 percent a 
reasonable estimate for health-insurance marketing specialists.
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25. 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 VII. of this final rule, we are finalizing 
adding, removing, and updating certain measures. Most of the new 
measures will be calculated from administrative data and, as such, 
there will be no increase in plan burden. The other measure-level 
changes entail moving existing measures from the display page to Star 
Ratings, which also will have no impact on plan burden. We are also 
finalizing a series of technical clarifications related to QBP appeals 
processes, consolidations, and weighting of measures with a substantive 
specification change. The finalized 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),

[[Page 30795]]

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 making changes under any of the aforementioned control numbers.

C. Summary of Information Collection Requirements and Associated Burden 
Estimates

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XI. Regulatory Impact Analysis

A. Statement of Need

    The primary purpose of this final rule is to amend the regulations 
for the Medicare Advantage (Part C) program, Medicare Prescription Drug 
Benefit (Part D) program, Medicare cost plan program, and Program of 
All-Inclusive Care for the Elderly (PACE). This final rule includes 
several new policies that would improve these programs beginning with 
contract year 2025 as well as codify existing Part C and Part D sub-
regulatory guidance. This final rule also includes revisions to 
existing regulations in the Risk Adjustment Data Validation (RADV) 
audit appeals process and the appeal process for quality bonus payment 
determination that would take effect 60 days after publication. 
Revisions to existing regulations for the use and release of risk 
adjustment data would also take effect 60 days after publication of a 
final rule. Additionally, this final rule would implement certain 
sections of the following Federal laws related to the Parts C and D 
programs:

 The Bipartisan Budget Act (BBA) of 2018.
 Consolidated Appropriations Act (CAA) of 2023

B. Overall Impact

    We have examined the impacts of this final rule as required by 
Executive Order 12866 on Regulatory Planning and Review (September 30, 
1993), Executive Order 13563 on Improving Regulation and Regulatory 
Review (January 18, 2011), Executive Order 14094 entitled ``Modernizing 
Regulatory Review'' (April 6, 2023), the Regulatory Flexibility Act 
(RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the 
Social Security Act, section 202 of the Unfunded Mandates Reform Act of 
1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on 
Federalism (August 4, 1999) and 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). The 
Executive Order 14094, entitled ``Modernizing Regulatory Review'' 
(hereinafter, the Modernizing E.O.), amends section 3(f)(1) of 
Executive Order 12866 (Regulatory Planning and Review). The amended 
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 $200 million or more in 
any 1 year, or adversely affecting in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
Tribal governments or communities; (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 legal or policy issues for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in this Executive order.
    A regulatory impact analysis (RIA) must be prepared for regulatory 
actions that are significant under 3(f)(1). The total economic impact 
for this final rule exceeds $200 million in several years. Therefore, 
based on our estimates, OMB's Office of Information and Regulatory 
Affairs (OIRA) has determined this rulemaking is significant per 
section 3(f)(1). Pursuant to Subtitle E of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (also known as the 
Congressional Review Act), OIRA has also determined that this rule 
meets the criteria set forth in 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 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 2023, the most recent year for which we have complete 
data, that threshold is approximately $183 million. This final rule is 
not anticipated to have an unfunded effect on State, local, or Tribal 
governments, in the aggregate, or on the private sector of $183 million 
or more.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a final rule that imposes 
substantial direct requirement costs on State and local governments, 
preempts State law, or otherwise has federalism implications. Since 
this final rule does not impose any substantial costs on State or local 
governments, preempt State law or have federalism implications, the 
requirements of Executive Order 13132 are not applicable.
    We did not prepare an analysis for section 1102(b) of the Act 
because we determined, and the Secretary certified, that this final 
rule would not have a significant impact on the operations of a 
substantial number of small rural hospitals.

C. Cost of Reviewing the Rule

    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that--
     The hourly cost per reviewer for reviewing this final rule 
is $123.06 per hour, including overhead and fringe benefits https://www.bls.gov/oes/current/oes_nat.htm. Had a general business operations 
specialist been used (say for an entity without medical and health 
service managers) the cost per hour would be less than that for a 
medical and health services manager. Therefore, we are at most over-
estimating the cost per hour and will use $123.06/hr.
     We estimate that there will be less than 2,000 reviewers 
of this final rule: There are currently less than 1,000 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, PBMs). 
We expect that each organization will designate one person to review 
the rule. Therefore, a reasonable maximal number is 2,000 total 
reviewers. We note that other assumptions are possible.
     The rule is about 150,000 words. Average reading speeds 
vary from 180 to 240 words per minute. Since the rule is technical and 
presumably notes are being taken, we use the lower estimate. 
Furthermore, since in addition to notetaking, summaries would be 
submitted to leadership we are lowering the 180 words/minutes to 150. 
Accordingly, we assume it would take staff 17 hours to review this 
final rule (150,000 words/150 words per minute/60 minutes hour). This 
may be an overestimate since each entity will likely only read the 
provisions affecting them and not the entire rule.
     Therefore, the estimated cost per reviewing entity for 
reading this entire rule is $2,100 (17 hr x $123.06/hr), and the total 
cost over all entities for reviewing this entire final rule is $ 4.2 
million ($2,100 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. 
Thus, it is very likely that on average only half or a

[[Page 30800]]

quarter of the rule will be read resulting in a range of $2 million to 
$5 million.
    Please 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 local, or 
region-specific effects from this final rule.
    In accordance with the provisions of Executive Order 12866, this 
final rule was reviewed by OMB.

D. 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 finalized in this rule. These 
policies codify, modify, and update current guidance governing MA 
organization and Part D Plan Sponsor 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; (3) agents 
and brokers, and (4) enrollees. Some descriptive data on these 
stakeholders are provided in Table K-1.
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    We are certifying that this final rule 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 final rule).
    MA plans can also offer extra benefits, that is, benefits not 
covered under Traditional Medicare Parts A and B, called supplemental 
benefits. These benefits are paid for through enrollee premiums, rebate 
dollars or a combination. Under the statutory payment formula, if the 
bid submitted by a Medicare Advantage plan for furnishing Parts 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 Traditional Medicare, including 
lower cost sharing) 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.
    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 the premium 
and cost sharing amounts those beneficiaries would otherwise pay.
    Thus, the cost of providing services by MA and Part D plans is 
funded by a variety of government fundingsources and 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 and Part D regulations, 
such as those in this final 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 
Traditional Medicare data; or (2)

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the benchmark, if the bid amount is greater than the benchmark.
    Theoretically, there is additional burden if plans bid above the 
benchmark. However, consistent with the RFA, the number of these plans 
is not substantial. Historically, only two percent of plans bid above 
the benchmark, and they contain roughly one percent of all plan 
enrollees. Since the CMS criteria for a substantial number of small 
entities is 3 to 5 percent, the number of plans bidding above the 
benchmark is not substantial.
    The preceding analysis shows that meeting the direct cost of this 
final rule does not have a significant economic impact on a substantial 
number of small entities, as required by the RFA.
    Therefore, 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:
     Pharmacies and Drug Stores, NAICS 446110;
     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;
     Insurance Brokerages & Agencies, NAICS 524210;
     Hospitals, NAICS 622, including General Medical and 
Surgical Hospitals, Psychiatric and Substance Abuse Hospitals, and 
Specialty Hospitals; and
     SNFs, NAICS 623110.
    Except for insurance brokers and agencies, each of these are 
providers that furnish plan-covered services to plan enrollees. Whether 
these providers are contracted or, in the case of PPOs and PFFS MA 
plans, 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 that furnishes covered services to an MA enrollee accept 
payment that is at least what the provider would have been paid had the 
services been furnished to A Medicare FFS beneficiary.
     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 health care provider or to use a particular 
price structure for payment by section 1854(a)(6)(B)(iii) of the Act.
    Consequently, for providers, there is no additional cost burden 
above the already existing burden in Traditional Medicare.
    Our finalized provision requires TPMOs that collect personal 
beneficiary data for purposes of marketing or enrolling them into an MA 
or Part D plan to obtain prior express written consent through a 
disclosure to share that data with another TPMO. In response to our 
proposal to ban the distribution of beneficiary data, one commenter 
said that CMS failed to provide a cost-benefit analysis showing the 
impact of a data distribution ban on TPMOs and independent agents. 
However, since we are not completely prohibiting the sharing of 
beneficiary data in this final rule, we expect that TPMOs can make 
adjustments to their disclosures to conform to these new requirements 
without a major disruption to their business model or having a negative 
impact on independent agents and brokers. Further, we believe 
beneficiaries that are interested in obtaining more information about 
their plan options will complete the required consent processes. We 
expect some minor reduction in collection of data and a corresponding 
reduction in the sharing of that data, to which beneficiaries did not 
previously consent, as this data sharing may not have been wanted by 
beneficiaries who unknowingly consented to the sharing, and which 
resulted in complaints received by CMS. This consent requirement and a 
reduction in unwanted contacts is, in fact, the goal of the provision. 
We, however, have no way of estimating how much data-sharing occurred 
nor do we know the extent to which requiring beneficiaries to consent 
to their data being shared will reduce the amount of data shared in the 
future.
    Based on the previous discussion, the Secretary certifies that this 
final rule will not have a significant impact on a substantial number 
of small entities.
    There are certain indirect consequences of these provisions which 
also create impact. We have already explained that at least 98 percent 
of the plans bid below the benchmark. Thus, their estimated costs for 
the coming year are fully paid by the Federal Government, given that as 
previously noted, under the statutory payment formula, if a 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 beneficiary rebate, which must be used to provide supplemental and/or 
lower beneficiary Part B or Part D premiums. If the plan's bid exceeds 
the administratively set benchmark, the beneficiary pays the difference 
in the form of a basic premium. However, as also noted previously, the 
number of MA plans bidding above the benchmark to whom this burden 
applies does not meet the RFA criteria of a significant number of 
plans.
    If the provisions of this final rule were to cause bids to increase 
and if the benchmark remains unchanged or increases by less than the 
bid does, the result could be a reduced rebate. Plans have different 
ways to address this in the short-term, such as reducing administrative 
costs, modifying benefit structures, and/or adjusting profit margins. 
These decisions may be driven by market forces. Part of the challenge 
in pinpointing the indirect effects is that there are many other 
factors combining with the effects of proposed and final rules, making 
it effectively impossible to determine whether a particular policy had 
a long-term effect on bids, administrative costs, margins, or 
supplemental benefits.
    Comment: As indicated above, one commenter commented that CMS did 
not provide a cost-benefit analysis of the impact of its provisions on 
TPMOs. Additionally, this commenter pointed out that completely banning 
sharing personal beneficiary data, as originally proposed in the NPRM, 
would have an adverse effect on small businesses.
    Response: We agree that a prohibition on sharing personal 
beneficiary data without any exception would adversely affect TPMOs and 
small businesses alike. We are therefore modifying our original 
proposal by allowing the sharing of personal beneficiary data when it's 
specifically consented to by the beneficiary. The paperwork burden for 
this has been properly estimated in the Collection of Information 
section. Since we are not completely prohibiting the sharing of 
beneficiary data in this final rule, we expect that TPMOs can make 
adjustments to their disclosures to conform to these new requirements 
without a major disruption to their business model or having a negative 
impact or TPMOs. Further, we believe enrollees that are interested in 
obtaining more information about their plan options will complete the 
required consent process or forms. We expect some minor changes in 
collection corresponding to a reduction in the sharing of data, to 
which there previously was not a requirement for consent, and this data 
sharing and subsequent contact was previously not

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wanted or desired or knowingly agreed to and resulted in complaints to 
CMS and others. The goal of the provision is to require the consent of 
beneficiaries to the sharing of their personal data. However, we have 
not provided a more detailed quantification of the effect of this 
consent requirement, since CMS lacks internal and external data for 
estimating how much unauthorized data sharing was occurring previously 
nor do we know the extent to which requiring a beneficiary to consent 
to their data being shared will reduce the amount of data sharing in 
the future.
    Comment: Several commentators provided comments on the agent-broker 
compensation provision. They noted: (1) the lack of any cost analysis; 
(2) the possible adverse impact this would have on independent agent-
brokers or small agencies; (3) the high volatility and variance of 
several line-items contributing administrative costs and expenses to 
agent broker compensation may be inconsistent with a uniform flat 
compensation rate, and iv) that not all line-item costs are mentioned 
in the NPRM. These comments came from both those who receive agent 
broker compensation as well as those (such as plans) who pay for them. 
The comments were both qualitative and quantitative. In particular, 
several commentators said that administrative costs were significantly 
higher than what we said in the NPRM; these quantitative estimates 
ranged from $50 to $500 per enrollee with many commentors targeting the 
higher amounts.
    Response: Our finalized provisions simultaneously eliminate 
administrative payments but provide for higher compensation per 
enrollee. The increased compensation above the base line compensation 
rate is $100 for each new MA or PDP enrollee. As discussed in section 
X.X of the preamble and section X.C.10 of the collection of information 
section, our goals were to: (1) provide sufficient funding which would 
compensate agents, brokers, and related entities for their work; (2) 
not to give excesses; and (3) to select increases consistent with 
current payments (that is not exceeding current administrative 
payments). In other words, the finalized provision transfers funds 
currently being allocated to administrative to compensation in a 
transparent and uniform manner. We have consequently scored this impact 
as having no cost, and therefore do not believe this will have an 
adverse effect, either on TMPOs, FMOs, or independent brokers.

E. Anticipated Effects

    Many provisions of this final rule have negligible impact either 
because they are technical provisions, clarifications, or are 
provisions that codify existing guidance. Other provisions have an 
impact that cannot be quantified. Throughout the preamble, we have 
noted when we estimated that provisions have no impact either because 
they are codifying already existing practices, or, for example, because 
contractors for CMS have asserted that changes work within their 
current contract without the need for additional compensation. 
Additionally, this Regulatory Impact Statement discusses several 
provisions with either zero impact or impact that cannot be quantified. 
The remaining provisions' effects are estimated in section XXX of this 
final rule and in this RIA. Where appropriate, when a group of 
provisions have both paperwork and non-paperwork impact, this 
Regulatory Impact Statement cross-references impacts from section XXX 
of this final rule in order to arrive at total impact.
1. Effects of Expanding Permissible Data Use and Data Disclosure for MA 
Encounter Data (Sec.  422.310)
    We discussed in section III.Q. of this final rule two provisions to 
improve access to MA encounter data for certain purposes. We noted that 
our current regulatory language limits CMS's ability to use and 
disclose MA encounter data for activities in support of administration 
or evaluation of the Medicaid program, including care coordination. 
Further, the regulation delays when CMS may share MA encounter data to 
State Medicaid agencies for care coordination and quality review and 
improvement activities for the Medicaid program, particularly with 
regard to dually eligible individuals. This final rule improves access 
to MA data by--
     Adding ``and Medicaid programs'' to the current MA risk 
adjustment data use purposes codified at Sec.  422.310(f)(1)(vi) and 
(vii); and
     Adding a new Sec.  422.310(f)(3)(v) to allow for risk 
adjustment data to be released prior to reconciliation if the data will 
be released to State Medicaid agencies for the purpose of coordinating 
care for dually eligible individuals.
    Together, these provisions clarify and broaden the allowable data 
uses for CMS and external entities (for data disclosed in accordance 
with Sec.  422.310(f)(2) and (3)). These proposals do not change the 
external entities allowed to request MA encounter data from CMS.
    As discussed in sections X and III.Q. of this final rule, these 
provisions will allow external entities to voluntarily request MA 
encounter data for allowable data uses to support the Medicare program, 
Medicaid program, and Medicare and Medicaid combined purposes. In the 
November 2023 proposed rule, we noted that there was one area where 
this provision could have impacted the burden to CMS: CMS reviewing and 
fulfilling new MA encounter data requests. However, in the Medicare 
Program; Hospital Inpatient Prospective Payment Systems for Acute Care 
Hospitals and the Long-Term Care Hospital Prospective Payment System 
and Fiscal Year 2015 Rates; Quality Reporting Requirements for Specific 
Providers; Reasonable Compensation Equivalents for Physician Services 
in Excluded Hospitals and Certain Teaching Hospitals; Provider 
Administrative Appeals and Judicial Review; Enforcement Provisions for 
Organ Transplant Centers; and Electronic Health Record (EHR) Incentive 
Program final rule, when we initially established CMS disclosure of MA 
encounter data, we explained that we had determined that ``there are 
not any economically significant effects of the proposed provisions'' 
(79 FR 50445). The same applies for the proposed refinements to the 
approved data uses and the data disclosure in this rule. We received no 
comments specific to our analysis of burden. We are finalizing our 
estimate as-is.
2. Increasing the Percentage of Dually Eligible Managed Care Enrollees 
Who Receive Medicare and Medicaid Services From the Same Organization 
(Sec. Sec.  422.503, 422.504, 422.514, 422.530, and 423.38)
    We discussed collection of information burden associated with this 
provision in section X of this final rule. In this section, we describe 
the impacts of our changes to the dual/LIS SEP, new integrated care 
SEP, and contract limitations for non-integrated MA-PD plans.
    These final provisions will impact dually eligible and other LIS 
eligible individuals that currently use the quarterly dual/LIS SEP to 
change their enrollment in MA-PD plans. We are finalizing a change the 
quarterly dual/LIS SEP to a one-time-per month SEP for dually eligible 
individuals and other LIS eligible individuals to elect a standalone 
PDP. The finalized provision will allow individuals to switch PDPs or 
leave their MA-PD plans for Traditional Medicare (with a standalone 
PDP) in any month. The finalized dual/LIS SEP will no longer permit 
enrollment into MA-PD plans or changes between MA-PD plans (although 
such options would remain available through other enrollment periods 
and SEPs). In

[[Page 30803]]

addition, we are finalizing with modification a new integrated care SEP 
that will allow enrollment in any month into a FIDE SNP, HIDE SNP, or 
AIP to facilitate aligned enrollment as defined at Sec.  422.2 for 
full-benefit dual eligible individuals who meet the qualifications of 
such plans.
    We are finalizing Sec. Sec.  422.504(a)(20) and 422.514(h) largely 
as proposed with modifications to Sec.  422.514(h). These provisions 
will establish a new requirement for an MA organization, that, 
beginning in plan year 2027, when an MA organization, its parent 
organization, or an entity that shares a parent organization with the 
MA organization, also contracts with a State as a Medicaid MCO that 
enrolls full-benefit dual eligible individuals in the same service 
area, that the MA organization's D-SNP(s) must limit new enrollment to 
individuals enrolled in (or in the process of enrolling in) the D-SNP's 
aligned Medicaid MCO. We are finalizing the proposed regulation at 
Sec.  422.514(h) with a minor technical modification at Sec.  
422.514(h)(1) to correct the terminology to use the term ``full-benefit 
dual eligible individual(s)'' where necessary. We are finalizing Sec.  
422.514(h)(2) with a modification to clarify that any D-SNP(s) subject 
to enrollment limitations in Sec.  422.514(h)(1) may only enroll (or 
continue coverage of people already enrolled) individuals also enrolled 
in (or in the process of enrolling in) the Medicaid MCO beginning in 
2030. We are finalizing with modifications our proposal at Sec.  
422.514(h)(3)(i) to permit an MA organization, its parent organization, 
or an entity that shares a parent organization with the MA 
organization, to offer more than one D-SNP for full-benefit dual 
eligible individuals in the same service area as that MA organization's 
affiliated Medicaid MCO only when a SMAC requires it in order to 
differentiate enrollment into D-SNPs by age group or to align 
enrollment in each D-SNP with the eligibility criteria or benefit 
design used in the State's Medicaid managed care program(s). We are 
also finalizing with minor technical modifications at Sec.  
422.514(h)(3)(ii) to permit an MA organization, its parent 
organization, or an entity that shares a parent organization with the 
MA organization that offers both HMO D-SNP(s) and PPO D-SNP(s) to 
continue to offer both the HMO and PPO D-SNPs only if the D-SNP(s) not 
subject to the enrollment limitations at Sec.  422.514(h)(1) no longer 
accept new full-benefit dual eligible enrollment in the same service 
area as the D-SNP affected by the new regulations at Sec. Sec.  
422.504(a)(20) and 422.514(h). Additionally, an MA organization (or its 
parent organization or another MA organization with the same parent 
organization) in this situation would only be able to offer one D-SNP 
for full-benefit dual eligible individuals in the same service area as 
that MA organization's affiliated Medicaid MCO (with limited exceptions 
as described in section VIII.F. of this final rule). Further, beginning 
in plan year 2030, such D-SNPs must only enroll (or continue to cover) 
individuals enrolled in (or in the process of enrolling in) the 
affiliated Medicaid MCO.
    Full-benefit dual eligible individuals enrolled in a D-SNP that 
consolidates due to our proposals at Sec. Sec.  422.504(a)(20) and 
422.514(h) will be moved into a new plan. The impacted enrollees will 
receive materials about the plan consolidation and materials associated 
with the new plan. We believe the plan benefit packages of the plans 
required to consolidate to be similar if not the same and do not expect 
impact to enrollees.
    We expect there to be an enrollment shift from MA-PDs into FIDE 
SNPs, HIDE SNPs, or AIPs over time as more D-SNPs align with Medicaid 
MCOs. Starting in plan year 2027, we expect new D-SNP enrollment to be 
limited and then we expect integrated D-SNP enrollment to accelerate in 
2030 when D-SNPs under a parent organization with an affiliated 
Medicaid MCO would need to disenroll individuals who are not enrolled 
in both the D-SNP and affiliated MCO.
    We examined contract year 2023 bid data for D-SNPs that enroll 
beneficiaries in States that also use Medicaid managed care to cover 
some or all benefits for dually eligible individuals. In general, the 
data shows that the more integrated D-SNPs have higher per capita MA 
rebates than those in less integrated plans. MA rebates are used to 
reduce beneficiary cost sharing, lower beneficiary premiums, and 
provide additional supplemental benefits. MA rebates are calculated by 
multiplying the difference in the risk-adjusted benchmarks and the 
risk-adjusted bids by a percentage called the rebate percentage. The 
Federal Government retains the complement of the rebate percentage (or 
1-rebate percentage) multiplied by the difference in the risk-adjusted 
benchmarks and bids. The (risk-adjusted) bid-to-benchmark ratios, in 
general, are smaller for the more integrated plans versus the less 
integrated plans. This suggests that the more integrated D-SNPs can 
provide Traditional Medicare benefits (represented by the risk adjusted 
bid) at a lower or more efficient level than the less integrated D-
SNPs. We have assumed that this provision's requirement for greater 
alignment between the D-SNP and the affiliated Medicaid MCO will lead 
to greater health benefit efficiencies and incur Federal Government 
savings since the Federal Government retains the complement of the 
difference between the submitted risk adjusted bids and benchmarks.
    In calculating our estimates, we assumed savings would begin in 
2027 when new D-SNPs enrollment would be limited. We expect integrated 
D-SNP enrollment and related savings to accelerate in 2030 when D-SNPs 
under a parent organization participating in Medicaid managed care 
would need to disenroll individuals who are not enrolled in both the D-
SNP and affiliated Medicaid MCO under the same parent organization. We 
estimated that the other elements of this proposal (including the 
proposed changes to the SEP) would have a negligible impact.
    To develop the savings projections, we calculated the bid-to-
benchmark ratios for the integrated D-SNPs based on the calendar year 
2023 plan data and applied them to the coordination-only D-SNPs that we 
assume would convert to aligned D-SNPs by 2030. We assumed that a large 
percentage of the coordination-only D-SNP enrollment would convert to 
integrated D-SNPs by 2030. For trending purposes, we used 2023 bid data 
and 2023 enrollment data as the starting point and trended those data 
points by values found in the 2023 Medicare Trustees Report. We 
calculated gross costs (savings are represented by negative dollar 
amounts) by multiplying the per member per month expenditure 
differences by the enrollment that is projected to switch to aligned 
plans. Then, we calculated the net cost by multiplying the gross costs 
by the net of Part B premium amount which averages between 85.1 percent 
and 84.6 percent from 2025-2034. This yields an overall annual estimate 
of net Part C costs ranging from -$6 million in contract year 2027 to -
$207 million in contract year 2034.

[[Page 30804]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.032

    We performed a similar comparison of contract year 2023 bids for 
Part D on the same MA plans and their associated population. The data 
also suggests that the more integrated D-SNPs had lower combined bid 
and reinsurance amounts for contract year 2023. As a result, we also 
projected that there would be efficiencies when D-SNPs aligned more 
with the Medicaid MCOs. The observed 2023 difference (efficiency) in 
the combined bid and reinsurance amounts is projected with the 
corresponding D-SNP trend assumed in the 2023 Medicare Trustees' Report 
(not shown in that report). The Part D gross savings are the product of 
the efficiency and the associated switchers from Table K-3. Since the 
premiums for the Medicaid beneficiaries are subsidized, there would be 
no premium offset. As a result, the net savings would be the same as 
the gross savings. We estimated the net costs would range from -$7 
million in contract year 2027 to -$286 million in contract year 2034.
    We also have reviewed the impact to the Medicaid program and have 
concluded that the Medicaid impacts would be negligible. The majority 
of States have a ``lesser-of'' policy, under which the State caps its 
payment of Medicare cost sharing so that the sum of Medicare payment 
and cost-sharing does not exceed the Medicaid rate for a particular 
service. Under this policy, the Medicare payment and the cost sharing 
are not expected to increase resulting in non-significant impacts to 
Medicaid payments. For Part D, given that the Medicaid liability is 
limited to the beneficiary cost sharing and that the vast majority of 
dually eligible individuals qualify for low-income cost sharing, we 
anticipate no significant impacts to Medicaid costs.
[GRAPHIC] [TIFF OMITTED] TR23AP24.033

    In addition to the estimated savings from limiting enrollment into 
certain D-SNPs starting in plan year 2027, these provisions require 
updates to a variety of CMS manual systems.
    The finalized change to Sec.  423.38(c)(4) and the finalized 
provision at Sec.  423.38(c)(35) will create burden for CMS to update 
MA-PD plan manual chapters, the plan communication user guide (PCUG), 
and model enrollment notices. Additionally, the MARx system will 
require coding changes for the finalized amended dual/LIS SEP at Sec.  
423.38(c)(4) and finalized integrated care SEP at Sec.  423.38(c)(35). 
The CMS call center 1-800-MEDICARE will need training on the finalized 
SEPs to be able to identify beneficiaries eligible for the SEPs. The 
updates and changes will require two GS-13 staff 20 hours to complete 
the necessary updates. We estimate the burden for plan year 2025, would 
be at 40 hours (2 GS-13 * 20 hrs) at a cost of $2,433 (40 hrs * $60.83) 
for two GS-13 staff to update manual chapters, the PCUG, enrollment 
notices, and complete coding for MARx. This is a one-time cost that 
will not create new burden in subsequent years.
    The finalized provision at Sec.  422.514(h)(3)(ii) with 
modification will allow plans to continue operating a PPO and HMO in 
the same service area but not allow new enrollments of full-benefit 
dually eligible individuals into the plan (or plans) that are not 
aligned with the affiliated MCO as described Sec.  422.514(h)(1). This 
provision will not create new administrative cost for CMS since CMS 
would use its existing process to suppress these plans from Medicare 
Plan Finder.
    The finalized provision at Sec.  422.530(c)(4)(iii) allowing a 
crosswalk exception for plans consolidating their D-SNPs will create 
burden for CMS. The coding to create the crosswalk exception would 
require one GS-13 10 hours to complete the necessary updates. The 
burden for plan year 2025, is estimated at 10 hours (1 GS-13 * 10 hrs) 
at a cost of $608.30 (10 hrs * $60.83) for a GS-13 to complete coding 
for crosswalk exceptions. This is a one-time cost that will not create 
new burden in subsequent years. The burden associated with crosswalks 
and plan consolidation could create additional burden such as breaking 
plans into

[[Page 30805]]

different PBPs or having fewer PBPs to manage in the future. We cannot 
estimate these actions and associated burden but generally believe they 
cancel each other out.
3. Effects of Changes to an Approved Formulary--Including Substitutions 
of Biosimilar Biological Products (Sec. Sec.  423.4, 423.100, 423.104, 
423.120, 423.128, and 423.578)
    We do not estimate any impact on the Medicare Trust Fund as a 
result of the provisions to permit immediate substitutions of new 
interchangeable biological products for their reference products or to 
treat substitutions of biosimilar biological products other than 
interchangeable biological products for their reference products as 
maintenance changes. New biosimilar biological products are approved or 
licensed by the FDA and become available on the market at irregular 
intervals. Therefore, with respect to this provision, we cannot predict 
when new biosimilar biological products will enter the market or to 
what extent Part D sponsors will make formulary substitutions as a 
result. The introduction of biosimilar biological products to the 
market is relatively recent compared to generic small molecule drugs. 
We believe there is a potential for savings to the Medicare Trust Fund 
in the long term as acceptance of biosimilar biological products grows 
and increased competition drives down costs; however, a number cannot 
be estimated right now. We received no comments on our estimate and are 
therefore finalizing without change.
4. Mid-Year Notice of Unused Supplemental Benefits
    This proposal would require plans to notify enrollees about any 
supplemental benefit they have not used during the first half-year of 
the contract year. We lack data to quantify the effects of this 
provision. Therefore, we present a qualitative analysis below. The 
provision has 3 impacts on plans and the MA program.
    One impact is the burden to plans to notify enrollees. This burden 
has been quantified in the Collection of Information in section X. of 
this finalized rule. The burden consists of: (1) a system update to 
identify supplemental benefits not utilized by enrollees; and (2) the 
burden to notify enrollees.
    The second impact relates to the intent of the provision, which is 
to increase utilization of benefits when appropriate. In some cases, 
this could initially involve a cost to both enrollees for their share 
of cost sharing, and to the plans for providing the benefit. In 
assessing the impact, there are several dimensions of impact for which 
we lack complete data: (1) which supplemental benefits are not being 
utilized at all by some enrollees; (2) for each plan offering 
supplemental benefits, how many enrollees do and do not utilize these 
benefits; (3) how many more enrollees would utilize these benefits as a 
result of the notification; and (4) what is the range and distribution 
of the cost to provide these supplemental benefits.
    The third impact relates to savings expected from increased 
utilization. Normally, such savings are considered consequences of a 
provision and not typically analyzed in an RIA. We use dental and gym 
benefits to show several complications and possibilities in this 
analysis.
    Enrollees who use their preventive supplemental dental benefits may 
uncover problems early, thus preventing unnecessary complications. For 
example, the filling of cavities may prevent a costlier root canal 
later. Also note that the filling may happen in one plan while the 
costlier root canal that was prevented refers to a possible event 
several years later possibly in another plan (or out of pocket for the 
enrollee).
    An interesting subtlety of this example is that enrollees who have 
preventive dental checkups may do so annually or semi-annually. The 
effect of the notification might be to increase annual checkups to 
semi-annual checkups. It is harder to quantify the savings from such a 
change in frequency.
    From discussions with plans, we know that enrollees may incur the 
cost of a gym membership benefit without utilizing it. The intent of 
the provision would be to increase gym utilization. In the case of gym 
benefits the savings from increased prevention is challenging to 
analyze since different frequencies of gym attendance have different 
effects on health. An enrollee, for example, who decides to visit the 
gym only once because of the notification might not have any 
significant health benefits generating savings; even enrollees who 
switch to monthly visits may not experience savings. The savings on 
enrollees who decide to continue gym visits on a regular basis might 
arise from varied consequences since increased exercise has the 
potential to ``reduce risk of chronic conditions like obesity, type 2 
diabetes, heart disease, many types of cancer, depression and anxiety, 
and dementia.'' \266\
---------------------------------------------------------------------------

    \266\ https://www.cdc.gov/chronicdisease/resources/infographic/physical-activity.htm#.
---------------------------------------------------------------------------

    In summary, this is the type of provision that has a savings impact 
that can be analyzed only after several years of experience with the 
provision.
5. Agent Broker Compensation (Sec.  422.2274)
    In the NPRM we proposed to: (1) generally prohibit contract terms 
between MA organizations and agents, brokers, or other TMPOs that may 
interfere with the agent's or broker's ability to objectively assess 
and recommend the plan which best fits a beneficiary's health care 
needs; (2) set a single agent and broker compensation rate for all 
plans, while revising the scope of what is considered ``compensation;'' 
and (3) eliminate the regulatory framework which currently allows for 
separate payment to agents and brokers for administrative services. We 
also proposed to make conforming edits to the agent broker compensation 
rules at Sec.  423.2274.
    We are finalizing the above provisions as proposed, but with the 
following modifications.
    We are finalizing our proposal to generally prohibit contract terms 
between MA organizations and agents, brokers, or other TMPOs that may 
interfere with the agent's or broker's ability to objectively assess 
and recommend the plan which best fits a beneficiary's health care 
needs. We are finalizing the policies to set a single agent and broker 
compensation rate for all plans, while revising the scope of what is 
considered ``compensation,'' and clarify the applicability date of 
October 1, 2024. And we are finalizing our policy to eliminate the use 
of administrative payments, with an applicability date of October 1, 
2024. In addition, we are finalizing a one-time $100 increase to the 
FMV compensation rate for agents and brokers to reimburse them for 
necessary administrative activities.
    As explained in the Section X.C.9 of this final rule, as a result 
of comments we replaced the line-item approach to estimating costs with 
a holistic cost estimate. This holistic cost estimate was based on the 
wide range of estimates of current administrative costs provided by 
stakeholders in response to our solicitation of comments. Additionally, 
since the finalized $100 flat rate to be paid by plans directly to 
agent brokers is less than the current administrative payments by 
plans--which are being eliminated, we regard the costs

[[Page 30806]]

associated with this provision as a transfer; that is, a portion of the 
money currently being spent on administrative expenses is going towards 
the $100 flat rate but is not an additional cost.
    The true cost of most administrative expenses can vary greatly from 
one agent or broker to another and is based in data and contracts that 
CMS does not have access to, so it would be extremely difficult for us 
to accurately capture, making a line-item calculation not practicable. 
This was further reflected in the wide variation among alternate rates 
posed by commenters, with a few commenters suggesting an alternate rate 
increase of $50, another $75, while the majority recommended higher 
rates beginning at $100 and some going as high as $500. Some commenters 
suggested that we should calculate the compensation increase as a 
percentage of the base rate, such as 30% or 33% of the current $611 
compensation figure.
    Considering the complexities involved in balancing the incentives 
not only between MA organizations and agents, brokers, and other TPMOs, 
but also balancing incentives between MA and other parts of Medicare, 
such as Traditional Medicare with PDP or supplemental Medigap plans, we 
believe that choosing a flat rate for calculating the increase is an 
appropriate path forward. By taking a flat-rate approach, we are able 
to create parity among agents, regardless of which plan, plan type, or 
type of Medicare enrollment they effectuate on behalf of the 
beneficiary. Given the fact that the administrative payments are 
intended to cover administrative costs that do not substantially differ 
based on which plan a beneficiary ultimately enrolls in, the flat rate 
approach is the best way to achieve our goals.
    Several commenters suggested that an increase of $100 would be an 
appropriate starting point, and reflects the minimum monthly costs of 
necessary licensing and technology costs. We understand that other 
commenters recommended an increase of more than $100, including some 
suggesting an increase of $200 or more. However, we believe, based on 
the totality of comments, that recommendations for an increase above 
$100 may have been inflated to include the full price of all technology 
and systems that are also utilized to effectuate sales in other 
markets. In addition, it appears that such recommendations may reflect 
the lost ``bonuses'' and other ``administrative payments'' agents and 
brokers may previously have received, some of which were beyond the 
scope and FMV of the services involved in enrolling beneficiaries into 
MA plans and, therefore, should not have been included under 
compensation or administrative payments.
6. Enhancing Enrollees' Right To Appeal an MA Plan's Decision To 
Terminate Coverage for Non-Hospital Provider Services (Sec.  422.626)
    In Sec.  422.626, we proposed to (1) require the QIO instead of the 
MA plan, to review untimely fast-track appeals of an MA plan's decision 
to terminate services in an HHA, CORF, or SNF; and (2) fully eliminate 
the provision requiring the forfeiture of an enrollee's right to appeal 
a termination of services decision when they leave the facility or end 
home health, CORF, or home-based hospice services before the proposed 
terminate date.
    Currently, there is no data collected on the volume of fast-track 
appeals conducted by MA plans for untimely requests. The QIO conducts 
appeals for FFS fast-track appeals for untimely requests but does not 
formally collect data on appeals based on untimely requests from MA 
enrollees. Thus, the following estimates were speculative given the 
lack of precise data on the number of the fast-track appeals for 
untimely FFS requests.
    Anecdotal data from the QIOs conducting these fast-track appeals 
indicates that approximately 2.5 percent of all fee-for-service (FFS) 
fast-track appeal requests are untimely. In CY 2021 (most recent year 
available), there were 190,031 MA fast-track appeals to the QIO. Thus, 
we estimate that approximately 4,751 fast track appeals will be shifted 
from MA plans to the QIO (0.025 x 190,031).
    The shift of these untimely appeals from the MA plans to the QIOs 
will result in an increased burden to QIOs and a reduced burden to MA 
plans. There is an estimated per case cost for QIOs to conduct these 
appeals (per the Financial Information and Vouchering System (FIVS) 
from 5/1/2019-7/31/2023), while MA plans are not specifically 
reimbursed for this activity. The average QIO appeal of this type takes 
1.69 hours at $85.18/hr.
    In aggregate we estimate an annual burden of 8,029 hours (4,751 
responses * 1.69 hr/response) at a cost of $683,910 (8,029 hr x $85.18/
hr). This is being classified as a transfer from MA plans to QIOs.
    We were unable to estimate how many new QIO reviews will be 
conducted under the proposed provision at Sec.  422.626(a)(3) to 
eliminate the provision requiring the forfeiture of an enrollee's right 
to appeal a termination of services decision when they leave the 
skilled nursing facility or end home health, CORF, or home-based 
hospice services before the proposed termination date. No entity tracks 
how many appeals are not conducted because the enrollee stopped the 
services at issue before the last day of coverage. Further, because 
this provision has never existed for FFS, we have no basis from which 
to derive an estimate.
    We received no comments on our estimate and are therefore 
finalizing without change.
7. Part D Medication Therapy Management (MTM) Program Targeting 
Requirements (Sec.  423.153)
    We proposed to revise Sec.  423.153(d)(2) to: (1) codify the 
current nine 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 eight to five 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 five 
generic drugs ($1,004 in 2020). We estimated 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 proposed to codify as core chronic 
diseases are more prevalent among underserved populations, including 
minority and lower income populations. As a result, we anticipated that 
our proposed changes would increase eligibility rates among those 
populations.
    We did not receive any comments on this section of the proposed 
rule. After consideration of the comments we did receive, we are 
finalizing our proposal with modifications. We are finalizing the 
requirement that sponsors include all core chronic conditions in their 
targeting criteria (the current nine core

[[Page 30807]]

chronic diseases, as well as HIV/AIDS), for a total of 10 core chronic 
conditions. Plan sponsors would also be required to include all Part D 
maintenance drugs in their targeting criteria. We are not finalizing 
the change to the maximum number of Part D drugs sponsors may require 
in their targeting criteria (remains at eight), and for alignment, 
modifying the calculation of the MTM cost threshold to be commensurate 
with the average annual cost of eight generic Part D drugs. This would 
result in a program size of 7,065,385 (or 13 percent of the Part D 
enrollees using 2022 data) compared to the current 3,599,356 (7 percent 
of Part D enrollees using actual 2022 MTM enrollment). The changes 
would allow us to address specific gaps identified in MTM program 
eligibility by reducing marked variability across plans and ensuring 
more equitable access to MTM services; better align with Congressional 
intent while focusing on more beneficiaries with complex drug regimens; 
and keep the program size increase manageable. The changes also take 
into consideration the burden a change in the MTM program size would 
have on sponsors, MTM vendors, and the health care workforce as a 
whole. A moderate expansion also offers opportunities to focus on 
quality through the development of new, outcomes-based MTM measures, 
promoting consistent, equitable, and expanded access to 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 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. 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 changes is addressed in the Collection of Information section 
(section X.) of this final rule in the ICR section for MTM targeting 
criteria.

F. Alternatives Considered

    In this section, CMS includes discussions of alternatives 
considered. Several provisions of this final 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, traditional 
categories of alternative analysis such as different compliance dates, 
different enforcement methods, different levels of stringency, as 
outlined in section C of OMB's Circular A-4, are not fully relevant 
since the provision is already being complied with adequately. 
Consequently, alternative analysis is not provided for these 
provisions.
1. Contracting Standards for Dual Eligible Special Needs Plan Look-
Alikes (Sec.  422.514)
    We are finalizing a reduction to the threshold for D-SNP look-
alikes from 80 percent to 60 percent over a 2-year period. We 
considered an alternative proposal to lower the D-SNP look-alike 
threshold to 60 percent in 1 year, allowing an earlier phase-out of 
these non-SNP MA plans. But we are finalizing the more incremental 
approach to minimize disruptions to dually eligible individuals and 
allow plans and CMS more time to operationalize these transitions.
    We considered and solicited comment on an alternative to our 
proposal that would eliminate the proposed 70 percent threshold for 
plan year 2025 but would involve additional conditions and changes 
related to the transition authority. Specifically, this alternative 
would:
     Apply the 60 percent threshold beginning in plan year 
2026;
     Permit use of the transition authority into non-SNP MA 
plans (as currently permitted under Sec.  422.514(e) for plan year 
2025; and
     Limit use of transition authority under Sec.  422.514(e) 
to transition D-SNP look-alike enrollees into D-SNPs for plan year 2026 
and subsequent plan years.
    Relative to our final provision, this alternative would have given 
plans with dually eligible individual enrollment between 70 and 80 
percent of total enrollment based on January 2024 enrollment data one 
additional year to apply for a new D-SNP or service area expansion to 
an existing D-SNP, such that these plans could transition enrollees 
into a D-SNP for plan year 2026. The alternative would have balanced 
the additional year using the existing 80 percent enrollment threshold 
to identify prohibited D-SNP look-alikes with an earlier limitation on 
the Sec.  422.514(e) transition authority to enrollees transitioning 
into non-SNPs. We solicited comment on whether this alternative is a 
better balance of the goals of our policy to prohibit circumvention of 
the requirements for D-SNPs and to encourage and incentivize enrollment 
in integrated care plans.
    Among the factors we considered related to the alternative is the 
extent to which plans with 70 percent or more dually eligible 
enrollment in plan year 2024 expect to be able to establish a D-SNP in 
the same service area as the D-SNP look-alike if given an additional 
year (that is, 2026) to transition enrollees. Based on 2023 plan year 
data, approximately two-thirds of the MA organizations with non-SNP MA 
plans with between 70 and 80 percent dually eligible individuals 
already have a D-SNP under the same MA organization with the vast 
majority of those D-SNPs having a service area that covers the service 
area as the non-SNP MA plan. The other approximately one-third of the 
MA organizations with non-SNP MA plans with between 70 and 80 percent 
dually eligible individuals do not have a D-SNP in the same service 
area in plan year 2023. If given an additional year, these MA 
organizations would have had more time in which to establish D-SNPs in 
the same service areas as non-SNP MA plans and transition the enrollees 
into a D-SNP.
    We are not finalizing any of these alternative policies, and 
instead are finalizing this provision as proposed, as discussed in 
section VIII.J. of this final rule.
2. Part D Medication Therapy Management (MTM) Program Targeting 
Criteria (Sec.  423.153)
    We considered two alternatives to our original 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

[[Page 30808]]

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 did not receive any comments in response to the specific 
alternatives considered in the proposed rule; therefore, we did not 
pursue finalizing either of these alternatives. We are instead 
finalizing the proposed changes with modifications to the Part D MTM 
program eligibility requirements as discussed in section III.E. of this 
final rule which includes our proposed changes related to chronic 
diseases, retains the current maximum number of Part D drugs a sponsor 
may require for MTM program enrollment at 8 drugs, requires sponsors to 
include all Part D maintenance drugs in their targeting criteria, and 
establishes a cost threshold commensurate with the average annual cost 
of 8 generic maintenance drugs. The changes we are finalizing allows us 
to be responsive to commenters' concerns regarding the potential impact 
of reducing the maximum number of Part D drugs from eight to five to 
maintain, about program size, and the ability to administer effective 
MTM services, while still addressing the barriers to eligibility posed 
by the increasingly restrictive plan criteria (for example, by 
targeting select core chronic diseases or drugs) and the high cost 
threshold, which were identified in our analysis as the main drivers of 
reduced eligibility rates for MTM.

G. Accounting Statement and Table

    As required by OMB Circular A-4 (available at https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/) in Table K4, we 
have prepared an accounting statement showing the costs and transfers 
associated with the provisions of this final rule for calendar years 
2025 through 2034. Table K4 is based on Tables K-5a Table K5b which 
list savings and costs by provision and year. Tables K4, K5a and K5b 
list annual costs as positive numbers and savings as positive numbers. 
As can be seen, expenditures of the Medicare Trust Fund are reduced by 
about $200 million annually, the savings arising from increased 
efficiencies in operating Dual Eligibles Special Needs Plans. This is 
offset by the approximately $224 million annual cost of this rule. The 
major contributors to this annualized cost are a variety of mailings 
and notifications. Minor seeming discrepancies in totals in Tables K4, 
K5a, and K5b reflect use of underlying spreadsheets, rather than 
intermediate rounded amounts.
BILLING CODE P
[GRAPHIC] [TIFF OMITTED] TR23AP24.034

    The following Tables K5a and K5b summarize costs, and savings by 
provision and year, and form a basis for the accounting Table K4. In 
Tables K5a and K5b, annual costs and savings are expressed as positive 
numbers and, except for the last two rows, are true costs and savings 
reflecting increases or decreases in consumption of services and goods. 
However, the provisions presenting impacts of increasing enrollment for 
D-SNPs on Part C and Part D which affect the Medicare Trust Fund are 
transfers reflecting buying the same goods and services with greater 
efficiency. These transfers are expressed as positive numbers and 
reflect reduced dollar spending to the Trust Fund, that is savings. The 
provision enhancing enrollee appeal rights is a transfer from MA 
administrative costs to QIO costs. The 10-year aggregate impacts in the 
right-most column use positive numbers to reflect costs and negative 
numbers to reflect savings, Tables K5a and K5b combine related 
provisions. For example, all provisions in the COI summary table 
related to PACE are combined into one line item in the RIA.

[[Page 30809]]

[GRAPHIC] [TIFF OMITTED] TR23AP24.035


[[Page 30810]]


[GRAPHIC] [TIFF OMITTED] TR23AP24.036


[[Page 30811]]


[GRAPHIC] [TIFF OMITTED] TR23AP24.037

BILLING CODE C

H. Conclusion

    In aggregate this final rule combines both savings and costs. Three 
provisions reduce spending by the Medicare Trust Fund: (1) the effect 
on Part C plans from the provisions designed to increase the

[[Page 30812]]

percentage of dually eligible managed care enrollees who are enrolled 
in integrated D-SNPs; (2) the effect on Part D plans from these D-SNP 
provisions and (3) enhancing enrollee appeal rights. Over a 10-year 
period they reduce spending of the Medicare Trust Fund of $961, $1,341, 
and $6.8 million respectively for a combined savings of $2.3 billion. 
These savings are offset by various paperwork burden and some minor 
savings which in aggregate over 10 years cost $2.2 billion. The major 
drivers of cost are the mailings to enrollees regarding unused 
supplemental benefits and medication therapy management (MTM). The 
provisions for the Drug Management Program reduce paperwork burden by 
$3 million annually saving $30.5 million over 10 years.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on March 29, 2024.

List of Subjects

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), 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.

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

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

0
1. 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
2. Section 417.460 is amended by revising paragraphs (c)(3), (e)(2), 
(e)(4), and adding (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 does all of 
the following:
    (i) Submits a request for reinstatement for good cause within 60 
calendar days of the disenrollment effective date.
    (ii) Has not previously requested reinstatement for good cause 
during the same 60-day period following the involuntary disenrollment.
    (iii) Shows good cause for failure to pay.
    (iv) Pays all overdue premiums or other charges within 3 calendar 
months after the disenrollment date.
    (v) Establishes 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. (i) 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.
    (ii) 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 before submitting the request for disenrollment 
to CMS.
    (i) 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.
    (A) 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.
    (B) 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 to provide an opportunity for the individual 
to cease their behavior.
    (ii) The second notice, the notice of intent to request CMS 
permission to disenroll the member, notifies the enrollee that the HMO 
or CMP requests CMS permission to involuntarily disenroll the enrollee. 
This notice must be provided before submission of the request to CMS.
* * * * *

0
3. Section 417.472 is amended by adding paragraph (l) to read as 
follows:


Sec.  417.472   Basic contract requirements.

* * * * *
    (l) Resolution of complaints in the complaints tracking module. The 
HMO or CMP must comply with requirements of Sec. Sec.  422.125 and 
422.504(a)(15) of this chapter to, through the CMS complaints tracking 
module as defined in Sec.  422.125(a) of this chapter, address and 
resolve complaints received by CMS against the HMO or CMP within the 
required timeframes. References to the MA organization or MA plan in 
those regulations shall be read as references to the HMO or CMP.
* * * * *

PART 422--MEDICARE ADVANTAGE PROGRAM

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

    Authority: 42 U.S.C. 1302, 1306, 1395w-21 through 1395w-28, and 
1395hh.


0
5. Section 422.2 is amended by--

[[Page 30813]]

0
a. Revising the definition of ``Basic benefits'';
0
b. Adding the definition of ``Chronic condition special needs plan (C-
SNPs)'', ``Facility-based institutional special needs plan (FI-SNP)'', 
``Hybrid institutional special needs plan (HI-SNP)'', ``Institutional-
equivalent special needs plan (IE-SNP)'', ``Institutional special needs 
plan (I-SNP)'', and ``Network-based plan'' in alphabetical order; and
0
c. Revising the definition of ``Severe or disabling chronic 
condition''.
    The revisions and additions read as follows:


Sec.  422.2  Definitions.

* * * * *
    Basic benefits means Part A and Part B benefits except--
    (1) Hospice services; and
    (2) Beginning in 2021, organ acquisitions for kidney transplants, 
including costs covered under section 1881(d) of the Act.
* * * * *
    Chronic condition special needs plan (C-SNPs) means an 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).
* * * * *
    Facility-based Institutional special needs plan (FI-SNP) means a 
type of I-SNP that--
    (1) Restricts enrollment to MA eligible individuals who meet the 
definition of institutionalized;
    (2) Must own or contract with at least one institution, specified 
in the definition of institutionalized in this section, for each county 
in the plan's service area; and
    (3) 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--
    (1) 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; 
and
    (2) 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:
    (1) IE-SNP.
    (2) HI-SNP.
    (3) FI-SNP.
* * * * *
    Network-based plan--
    (1) Means--
    (i) A coordinated care plan as specified in Sec.  422.4(a)(1)(iii);
    (ii) A network-based MSA plan; or
    (iii) A section 1876 reasonable cost plan; and
    (2) 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 sections 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.
    (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:

[[Page 30814]]

    (i) Spinal cord injuries.
    (ii) Paralysis.
    (iii) Limb loss.
    (iv) Stroke.
    (v) 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
6. 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
7. Section 422.52 is amended by--
0
a. Revising paragraph (b)(2);
0
b. Revising paragraph (f); and
0
c. Adding paragraph (g).
    The revision and additions read as follows:


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

* * * * *
    (b) * * *
    (2) Meet the eligibility requirements for that specific SNP, 
including any additional eligibility requirements established in the 
State Medicaid agency contract (as described at Sec.  422.107(a)) for 
dual eligible special needs plans; and
* * * * *
    (f) Establishing eligibility for enrollment. (1) For enrollments 
into an SNP that exclusively enrolls individuals that have severe or 
disabling chronic conditions (C-SNP), the organization must contact the 
applicant's current health care provider, who is a physician as defined 
in section 1861(r)(1) of the Act, physician assistant as defined in 
section 1861(aa)(5)(A) of the Act and who meets the qualifications 
specified in Sec.  410.74(c) of this chapter, or a nurse practitioner 
as defined in section 1861(aa)(5)(A) of the Act and who meets the 
qualifications specified in Sec.  410.75(b)(1)(i) and (ii) of this 
chapter to confirm that the applicant has the qualifying condition(s). 
The organization must obtain this information in one of the following 
two ways described in paragraph (f)(1)(i) or (ii) of this section:
    (i) Contact the current health care provider or current health care 
provider's office and obtain verification of the applicant's 
condition(s) prior to enrollment in a form and manner authorized by 
CMS.
    (ii) Through an assessment with the enrollee using a pre-enrollment 
qualification assessment tool (PQAT) where the assessment and the 
information gathered are verified (as described in paragraph 
(f)(1)(iii) of this section) before the end of the first month of 
enrollment in the C-SNP. Use of a PQAT requires the following:
    (A) The PQAT must do all of the following:
    (1) Include clinically appropriate questions relevant to the 
chronic condition(s) on which the C-SNP focuses.
    (2) Gather sufficient reliable evidence of having the applicable 
condition using the applicant's past medical history, current signs or 
symptoms, and current medications.
    (3) Include the date and time of the assessment completion if done 
face-to-face with the applicant, or the receipt date if the C-SNP 
receives the completed PQAT by mail or by electronic means (if 
available).
    (4) Include a signature line for and, once completed, be signed by 
the current health care provider specified in paragraph (f)(1) of this 
section to confirm the individual's eligibility for C-SNP enrollment.
    (B) The C-SNP conducts a post-enrollment confirmation of each 
enrollee's information and eligibility by having the completed PQAT 
reviewed and signed by the enrollee's current health care provider as 
specified in paragraph (f)(1) of this section.
    (C) The C-SNP must include the information gathered in the PQAT and 
used in this verification process in its records related to or about 
the enrollee that are subject to the confidentiality requirements in 
Sec.  422.118.
    (D)(1) The C-SNP tracks the total number of enrollees and the 
number and percent by condition whose post-enrollment verification 
matches the pre-enrollment assessment.
    (2) Data and supporting documentation are made available upon 
request by CMS.
    (E) If the organization does not obtain verification of the 
enrollees' required chronic condition(s) by the end of the first month 
of enrollment in the C-SNP, the organization must--
    (1) Disenroll the enrollee as of the end of the second month of 
enrollment; and
    (2) Send the enrollee notice of the disenrollment within the first 
7 calendar days of the second month of enrollment.
    (F) The organization must maintain the enrollment of the individual 
if verification of the required condition(s) is obtained at any point 
before the end of the second month of enrollment.
    (iii) Prior to enrollment, the PQAT must be completed by the 
enrollee, completed by the enrollee's current health care provider, or 
administered with the enrollee by a provider employed or contracted by 
the plan. The PQAT must be signed by the enrollee's current health care 
provider as verification and confirmation that the enrollee has the 
severe or disabling chronic condition required to be eligible for the 
C-SNP, which may be done post-enrollment.
    (2) [Reserved]
    (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
8. Section 422.60 is amended by--
0
a. Revising paragraph (a)(1); and
0
b. Adding paragraphs (a)(3), (h) and (i).
    The revision and additions read as follows:


Sec.  422.60  Election process.

    (a) * * *
    (1) Except for the limitations on enrollment in an MA MSA plan 
provided by Sec.  422.62(d)(1) and except as specified in paragraphs 
(a)(2) and (3) of this section, each MA organization must accept 
without restriction (except for an MA RFB plan as provided by Sec.  
422.57) individuals who are eligible to elect an MA plan that the MA 
organization offers and who elect an MA plan during initial coverage 
election periods under Sec.  422.62(a)(1), annual election periods 
under Sec.  422.62(a)(2), and under the

[[Page 30815]]

circumstances described in Sec.  422.62(b)(1) through (b)(4).
* * * * *
    (3) Dual eligible special needs plans must limit enrollments to 
those individuals who meet the eligibility requirements established in 
the state Medicaid agency contract, as specified at Sec.  422.52(b)(2).
* * * * *
    (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.
* * * * *
    (i) Authorized representatives. As used in this subpart, an 
authorized representative is an individual who is the legal 
representative or otherwise legally able to act on behalf of an 
enrollee, as the law of the State in which the beneficiary resides may 
allow, in order to execute an enrollment or disenrollment request.
    (1) The authorized representative would constitute the 
``beneficiary'' or the ``enrollee'' for the purpose of making an 
election.
    (2) Authorized representatives may include court-appointed legal 
guardians, persons having durable power of attorney for health care 
decisions, or individuals authorized to make health care decisions 
under state surrogate consent laws, provided they have the authority to 
act for the beneficiary in this capacity.

0
9. Section 422.62 is amended by--
0
a. Revising paragraphs (a)(1)(i), (a)(4), (b)(2), and (b)(18) 
introductory text;
0
b. Redesignating paragraphs (b)(18)(i) through (b)(18)(iii) as 
paragraphs (b)(18)(ii) through (b)(18)(iv), respectively; and
0
c. Adding new paragraph (b)(18)(i).
    The revisions and addition read as follows:


Sec.  422.62   Election of coverage under an MA plan.

    (a) * * *
    (1) * * *
    (i) The last day of the second month after the month in which they 
are first entitled to Part A and enrolled in Part B; or
* * * * *
    (4) Open enrollment period for institutionalized individuals. After 
2005, an individual who is eligible to elect an MA plan and who is 
institutionalized, as defined in Sec.  422.2, is not limited (except as 
provided for in paragraph (d) of this section for MA MSA plans) in the 
number of elections or changes he or she may make.
    (i) Subject to the MA plan being open to enrollees as provided 
under Sec.  422.60(a)(2), an MA eligible institutionalized individual 
may at any time elect an MA plan or change his or her election from an 
MA plan to Original Medicare, to a different MA plan, or from Original 
Medicare to an MA plan.
    (ii) The open enrollment period for institutionalized individuals 
ends on the last day of the second month after the month the individual 
ceases to reside in one of the long-term care facility settings 
described in the definition of ``institutionalized'' in Sec.  422.2.
* * * * *
    (b) * * *
    (2) The individual is not eligible to remain enrolled in the plan 
because of a change in his or her place of residence to a location out 
of the service area or continuation area or other change in 
circumstances as determined by CMS but not including terminations 
resulting from a failure to make timely payment of an MA monthly or 
supplemental beneficiary premium, or from disruptive behavior. 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 an SEP to make an 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 the 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 is 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. 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.
* * * * *

0
10. 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.
    (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 is not received by the MA organization within 
the timeframe specified in paragraph (b)(3)(v)(C) of this section.
* * * * *

0
11. Section 422.68 is amended by adding paragraph (g) to read as 
follows:


Sec.  422.68  Effective dates of coverage and change of coverage.

* * * * *
    (g) Beneficiary choice of effective date. If a beneficiary is 
eligible for more than one election period, resulting in more than one 
possible effective date, the MA organization must allow the beneficiary 
to choose the election period that results in the individual's desired 
effective date.
    (1) To determine the beneficiary's choice of election period and 
effective

[[Page 30816]]

date, the MA organization must attempt to contact the beneficiary and 
must document its attempts.
    (2) If the MA organization is unable to obtain the beneficiary's 
desired enrollment effective date, the MA organization must assign an 
election period using the following ranking of election periods:
    (i) ICEP/Part D IEP.
    (ii) MA-OEP.
    (iii) SEP.
    (iv) AEP.
    (v) OEPI.
    (3) If the MA organization is unable to obtain the beneficiary's 
desired disenrollment effective date, the MA organization must assign 
an election period that results in the earliest disenrollment.

0
12. Section 422.74 is amended by--
0
a. Adding paragraph (b)(2)(vi);
0
b. Revising paragraphs (c) and (d)(1)(i)(B)(1);
0
c. Revising paragraph (d)(1)(v)
0
e. Revising paragraphs (d)(2)(iii) and (d)(2)(iv);
0
f. Adding paragraph (d)(2)(vii);
0
g. Revising paragraphs (d)(4)(i) and (d)(4)(iv);
0
i. Adding paragraphs (d)(4)(ii)(A), adding and reserving (d)(4)(ii)(B) 
and adding (d)(4)(iii)(F);
0
j. Redesignating paragraph (d)(8) as (d)(9);
0
k. Adding new paragraph (d)(8);
0
l. Adding paragraph (d)(10); and
0
m. Revising paragraph (e)(1).
    The addition and revisions 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), (b)(2)(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) of this section 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 does all of the 
following:
    (A) Submits a request for reinstatement for good cause within 60 
calendar days of the disenrollment effective date;
    (B) Has not previously requested reinstatement for good cause 
during the same 60-day period following the involuntary disenrollment;
    (C) Shows good cause for failure to pay within the initial grace 
period;
    (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. (A) The MA organization must--
    (1) 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.
    (2) 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.
    (B) 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--
    (A) 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.
    (B) May request from CMS the ability to decline future enrollment 
by the individual.
    (C) Must submit to CMS--
    (1) The information specified in paragraph (d)(2)(iv)(A) of this 
section;
    (2) Any documentation received by the beneficiary;
    (3) Dated copies of the notices required in paragraph (d)(2)(vii) 
of this section.
* * * * *
    (vii) Required notices. The MA organization must provide the 
individual two notices prior to submitting the request for 
disenrollment to CMS.
    (A) 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.
    (1) If the disruptive behavior ceases after the member receives the 
advance notice and then later resumes, the organization must begin the 
process again.
    (2) 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.
    (B) The second notice, the notice of intent to request CMS 
permission to disenroll the member, notifies the member that the MA 
organization requests CMS permission to involuntarily disenroll the 
member.
    (1) This notice must be provided prior to submission of the request 
to CMS.
    (2) These notices are in addition to the disenrollment submission 
notice required under Sec.  422.74(c).
* * * * *
    (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 U.S. 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

[[Page 30817]]

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 U.S. 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, 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 all of the following:
    (A) The disenrollment effective date.
    (B) A description of eligibility for the SEP described in Sec.  
422.62(b)(11).
    (C) If applicable all of the following:
    (1) Information regarding the period of deemed continued 
eligibility authorized by Sec.  422.52(d).
    (2) The duration of the period of deemed continued eligibility.
    (3) The consequences of not regaining special needs status within 
the period of deemed continued eligibility.
    (iii) A final notice of involuntary disenrollment must be sent as 
follows:
    (A) Within 3 business days following the disenrollment effective 
date, which is either--
    (1) The last day of the period of deemed continued eligibility, if 
applicable; or
    (2) A minimum of 30 days after providing the advance notice of 
disenrollment.
    (B) Before submission of the disenrollment to CMS.
    (iv) The final notice of involuntary disenrollment 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 Sec.  422.74(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) 
through (iii), (b)(2)(ii) or (b)(2)(vi) of this section is deemed to 
have elected original Medicare.
* * * * *

0
13. Section 422.100 is amended by adding paragraph (o) to read as 
follows:


Sec.  422.100   General requirements.

* * * * *
    (o) Cost sharing standards for D-SNP PPOs. Beginning on or after 
January 1, 2026, an MA organization offering a local PPO plan or 
regional PPO plan that is a dual eligible special needs plan must 
establish cost sharing for out-of-network services that--
    (1) Complies with the limits described in paragraph (f)(6) of this 
section with the exception that references to the MOOP amounts refer to 
the total catastrophic limits under Sec.  422.101(d)(3) for local PPOs 
and MA regional plans; and
    (2) Complies with the limits described in paragraph (j)(1) of this 
section with the exception that references to the MOOP amounts refer to 
the total catastrophic limits under Sec.  422.101(d)(3) for local PPOs 
and MA regional plans and, for regional PPO dual eligible special needs 
plans, excluding paragraph (j)(1)(i)(C)(2) and the last sentence of 
paragraph (j)(1)(i)(E) of this section.

0
14. Section 422.101 is amended by--
0
a. Adding paragraph (f)(2)(vi);
0
b. Revising paragraph (f)(3)(iii); and
0
c. Adding (f)(3)(iv).
    The additions and revisions read as follows:


Sec.  422.101   Requirements relating to basic benefits.

* * * * *
    (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 
is only approved if each element of the model of care meets the minimum 
benchmark and the model of care meets the aggregate minimum benchmark.
    (A) An MOC for a C-SNP that receives a passing score is approved 
for 1 year.
    (B)(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.
    (3) An MOC for an I-SNP or DSNP 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.
    (iv) An MA organization sponsoring 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) C-SNPs, D-SNPs and I-SNPs must submit updates and corrections 
to their NCQA-approved MOC when CMS requires an off-cycle submission to 
ensure compliance with applicable law.
    (B) D-SNPs and I-SNPs must submit updates and corrections to their 
NCQA approved MOC between June 1st and November 30th of each calendar 
year if the I-SNP or D-SNP wishes to make any of the following 
revisions:
    (1) Substantial changes in policies or procedures pertinent to any 
of the following:
    (i) The health risk assessment (HRA) process.
    (ii) Revising processes to develop and update the Individualized 
Care Plan (ICP).

[[Page 30818]]

    (iii) The integrated care team process.
    (iv) Risk stratification methodology.
    (v) 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).
    (5) Changes to quality metrics used to measure performance.
    (C) NCQA only reviews 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 
reviewed and approved the off-cycle MOC changes. NCQA does not rescore 
the MOC during the off-cycle review of changes to the MOC, but changes 
are reviewed and determined by NCQA to be either ``Acceptable'' or 
``Non-acceptable.'' ``Acceptable'' means that the changes have been 
approved by NCQA and the MOC has been updated; ``Non-acceptable'' means 
the changes have been rejected by NCQA and the MOC has not been 
changed. If NCQA determines that off-cycle changes are unacceptable, 
the SNP must continue to implement the MOC as originally approved.
    (E) Successful revision of the MOC under paragraph (f)(3)(iv)(B) of 
this section does not change the MOC's original period of approval.
    (F) C-SNPs are only permitted to submit an off-cycle MOC submission 
when CMS requires an off-cycle submission to ensure compliance with 
applicable law.
    (G) When a deficiency is identified in the off-cycle MOC 
revision(s) submitted by a SNP, the SNP has one opportunity to submit a 
corrected off-cycle revision between June 1st and November 30th of each 
calendar year.

0
15. Section 422.102 is amended by revising paragraphs (f)(1)(i)(A)(2), 
(f)(3), (f)(4) and adding paragraph (f)(5) to read as follows:


Sec.  422.102  Supplemental benefits.

* * * * *
    (f) * * *
    (1) * * *
    (i) * * *
    (A) * * *
    (2) Has a high risk of hospitalization or other adverse health 
outcomes; and
* * * * *
    (3) MA organization responsibilities. An MA organization that 
includes an item or service as SSBCI in its bid must be able to 
demonstrate through relevant acceptable evidence that the item or 
service has a reasonable expectation of improving or maintaining the 
health or overall function of a chronically ill enrollee. By the date 
on which an MA organization submits its bid, the MA organization must 
establish a written bibliography of relevant acceptable evidence 
concerning the impact that the item or service has on the health or 
overall function of its recipient. For each citation in the written 
bibliography, the MA organization must include a working hyperlink to 
or a document containing the entire source cited.
    (i) Relevant acceptable evidence includes large, randomized 
controlled trials or prospective cohort studies with clear results, 
published in a peer-reviewed journal, and specifically designed to 
investigate whether the item or service impacts the health or overall 
function of a population, or large systematic reviews or meta-analyses 
summarizing the literature of the same.
    (ii) An MA organization must include in its bibliography a 
comprehensive list of relevant acceptable evidence published within the 
10 years prior to the June immediately preceding the coverage year 
during which the SSBCI will be offered, including any available 
negative evidence and literature.
    (iii) If no evidence of the type described in paragraphs (f)(3)(i) 
and (ii) of this section exists for a given item or service, then MA 
organization may cite case studies, federal policies or reports, 
internal analyses, or any other investigation of the impact that the 
item or service has on the health or overall function of its recipient 
as relevant acceptable evidence in the MA organization's bibliography.
    (iv) The MA organization must make its bibliography of relevant 
acceptable evidence available to CMS upon request.
    (4) Plan responsibilities. An MA plan offering SSBCI must do all of 
the following:
    (i) Have written policies for determining enrollee eligibility and 
must document its determination that an enrollee is a chronically ill 
enrollee based on the definition in paragraph (f)(1)(i) of this 
section.
    (ii) Make information and documentation related to determining 
enrollee eligibility available to CMS upon request.
    (iii)(A) Have and apply written policies based on objective 
criteria for determining a chronically ill enrollee's eligibility to 
receive a particular SSBCI; and
    (B) Document the written policies specified in paragraph 
(f)(4)(iii)(A) of this paragraph and the objective criteria on which 
the written policies are based.
    (iv) Document each eligibility determination for an enrollee, 
whether eligible or ineligible, to receive a specific SSBCI and make 
this information available to CMS upon request.
    (v) Maintain without modification, as it relates to an SSBCI, 
evidentiary standards for a specific enrollee to be determined eligible 
for a particular SSBCI, or the specific objective criteria used by a 
plan as part of SSBCI eligibility determinations for the full coverage 
year.
    (5) CMS review of SSBCI offerings in bids. (i) CMS may decline to 
approve an MA organization's bid if CMS determines that the MA 
organization has not demonstrated, through relevant acceptable 
evidence, that an SSBCI has a reasonable expectation of improving or 
maintaining the health or overall function of the chronically ill 
enrollees that the MA organization is targeting.
    (ii) CMS may annually review the items or services that an MA 
organization includes as SSBCI in its bid for compliance with all 
applicable requirements, taking into account updates to the relevant 
acceptable evidence applicable to each item or service.
    (iii) This provision does not limit CMS's authority to review and 
negotiate bids or to reject bids under section 1854(a) of the Act and 
42 CFR part 422 subpart F nor does it limit CMS's authority to review 
plan benefits and bids for compliance with all applicable requirements.

0
16. Section 422.111 is amended by--
0
a. Revising paragraph (h)(1)(iv)(B); and
0
b. Adding paragraph (l).
    The revision and addition read as follows:


Sec.  422.111  Disclosure requirements.

* * * * *
    (h) * * *
    (1) * * *
    (iv) * * *
    (B) Establishes contact with a customer service representative 
within 7 minutes on no fewer than 80 percent of incoming calls 
requiring TTY services.
* * * * *

[[Page 30819]]

    (l) Mid-year notice of unused supplemental benefits. Beginning 
January 1, 2026, MA organizations must send notification annually, no 
sooner than June 30 and no later than July 31, to each enrollee with 
unused supplemental benefits consistent with the requirements of Sec.  
422.2267(e)(42).

0
17. 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 as defined in Sec.  422.2.
* * * * *

0
18. Section 422.116 is amended by--
0
a. Adding paragraph (b)(2)(xiv);
0
b. In paragraph (d)(2), amend Table 1 by revising the column headings 
and adding an entry for ``Outpatient Behavioral Health'' in 
alphabetical order;
0
c. Adding paragraph (d)(5)(xv);
0
d. In paragraph (f)(1) introductory text, removing the phrase ``both of 
the following occur'' and adding in its place the phrase ``either of 
the following occur'';
0
e. Revising paragraph (f)(1); and
0
f. Adding paragraph (f)(2)(iv) and (f)(3).
    The additions and revisions read as follows:


Sec.  422.116  Network adequacy.

    (b) * * *
    (2) * * *
    (xiv) Outpatient behavioral health, which can include marriage and 
family therapists (as defined in section 1861(lll) of the Act), mental 
health counselors (as defined in section 1861(lll) of the act), opioid 
treatment programs (as defined in section 1861(jjj) of the act), 
community mental health centers (as defined in section 1861(ff)(3)(b) 
of the act), or those of the following who regularly furnish or will 
regularly furnish behavioral health counseling or therapy services 
including psychotherapy or prescription of medication for substance use 
disorders; physician assistants, nurse practitioners and clinical nurse 
specialists (as defined in section 1861(aa)(5) of the Act); addiction 
medicine physicians; or outpatient mental health and substance use 
treatment facilities.
    (A) To be considered as regularly furnishing behavioral health 
services for the purposes of this regulation, a physician assistant 
(PA), nurse practitioner (NP), and clinical nurse specialist (CNS) must 
have furnished specific psychotherapy or medication prescription 
services (including, buprenorphine and methadone, for substance use 
disorders) to at least 20 patients within a 12-month period. CMS will 
identify, by detailed descriptions or Healthcare Common Procedure 
Coding System (HCPCS) code(s), the specific services in the HSD 
Reference File described in paragraph (a)(4)(i) of this section.
    (B) To determine that a PA, NP, or CNS meets the standard in 
paragraph (b)(2)(xiv)(A) of this section, an MA organization must do 
all of the following:
    (1) On an annual basis, independently verify that the provider has 
furnished such services within a recent 12-month period, using reliable 
information about services furnished by the provider such as the MA 
organization's claims data, prescription drug claims data, electronic 
health records, or similar data.
    (2) If there is insufficient evidence of past practice by the 
provider, have a reasonable and supportable basis for concluding that 
the provider will meet the standard in paragraph (b)(2)(xiv)(A) of this 
section in the next 12 months.
    (3) Submit evidence and documentation to CMS, upon request and in 
the form and manner specified by CMS, of the MA organization's 
determination that the provider meets the standard in paragraph 
(b)(2)(xiv)(A) of this section.
* * * * *
    (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
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
                                                                      * * * * * * *
Outpatient Behavioral Health..............         20         10         40         25         55         40         60         50        110        100
 
                                                                      * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------

* * * * *
    (5) * * *
    (xv) Outpatient Behavioral Health, described in paragraph 
(b)(2)(xiv) of this section.
* * * * *
    (f) Exception requests. (1) An MA plan may request an exception to 
network adequacy criteria in paragraphs (b) through (e) of this section 
when either paragraph (f)(1)(i) or (f)(1)(ii) of this section is met:
    (i)(A) Certain providers or facilities are not available for the MA 
plan to meet the network adequacy criteria as shown in the Provider 
Supply file for the year for a given county and specialty type; and
    (B) The MA plan has contracted with other providers and facilities 
that may be located beyond the limits in the time and distance 
criteria, but are currently available and accessible to most enrollees, 
consistent with the local pattern of care.
    (ii)(A) A facility-based Institutional-Special Needs Plan (I-SNP) 
is unable to contract with certain specialty types required under Sec.  
422.116(b) because of the way enrollees in facility-based I-SNPs 
receive care; or
    (B) A facility-based I-SNP provides sufficient and adequate access 
to basic benefits through additional telehealth benefits (in compliance 
with Sec.  422.135) when using telehealth providers of the specialties 
listed in paragraph (d)(5) of this section in place of in-person 
providers to fulfill network adequacy standards in paragraphs (b) 
through (e) of this section.
    (2) * * *
    (iv) As applicable, the facility-based I-SNP submits:
    (A) Evidence of the inability to contract with certain specialty 
types required under this section due to the way enrollees in facility-
based I-SNPs receive care; or
    (B) Substantial and credible evidence that sufficient and adequate 
access to basic benefits is provided to enrollees using additional 
telehealth benefits (in compliance with Sec.  422.135) furnished by 
providers of the specialties listed in paragraph (d)(5) of this section 
and the

[[Page 30820]]

facility-based I-SNP covers out-of-network services furnished by a 
provider in person when requested by the enrollee as provided in Sec.  
422.135(c)(1) and (2), with in-network cost sharing for the enrollee.
    (3) Any MA organization that receives the exception provided for 
facility-based I-SNPs must agree to offer only facility-based I-SNPs 
under the MA contract that receives the exception.

0
19. Section 422.125 is added to read as follows:


Sec.  422.125  Resolution of complaints in a Complaints Tracking 
Module.

    (a) Definitions. For the purposes of this section, the terms have 
the following meanings:
    Assignment date is the date CMS assigns a complaint to a particular 
MA organization in the Complaints Tracking Module.
    Complaints Tracking Module means an electronic system maintained by 
CMS to record and track complaints submitted to CMS about Medicare 
health and drug plans from beneficiaries and others.
    Immediate need complaint means a complaint involving a situation 
that prevents a beneficiary from accessing care or a service for which 
they have an immediate need. This includes when the beneficiary 
currently has enough of the drug or supply to which they are seeking 
access to last for 2 or fewer days.
    Urgent complaint means a complaint involving a situation that 
prevents a beneficiary from accessing care or a service for which they 
do not have an immediate need. This includes when the beneficiary 
currently has enough of the drug or supply to which they are seeking 
access to last for 3 to 14 days.
    (b) Timelines for complaint resolution--(1) Immediate need 
complaints. The MA organization must resolve immediate need complaints 
within 2 calendar days of the assignment date.
    (2) Urgent complaints. The MA organization must resolve urgent 
complaints within 7 calendar days of the assignment date.
    (3) All other complaints. The MA organization must resolve all 
other complaints within 30 calendar days of the assignment date.
    (4) Extensions. Except for immediate need complaints, urgent 
complaints, and any complaint that requires expedited treatment under 
Sec. Sec.  422.564(f) or 422.630(d), if a complaint is also a grievance 
within the scope of Sec. Sec.  422.564 or 422.630 and the requirements 
for an extension of the time to provide a response in Sec. Sec.  
422.564(e)(2) or 422.630(e)(2) are met, the MA organization may extend 
the timeline to provide a response.
    (5) Coordination with timeframes for grievances, PACE service 
determination requests, and PACE appeals. When a complaint under this 
section is also a grievance within the scope of Sec. Sec.  422.564, 
422.630, or 460.120, a PACE service determination request within the 
scope of Sec.  460.121, or a PACE appeal within the definition of Sec.  
460.122, the MA organization must comply with the shortest applicable 
timeframe for resolution of the complaint.
    (c) Timeline for contacting individual filing a complaint.: 
Regardless of the type of complaint received, the MA organization must 
attempt to contact the individual who filed a complaint within 7 
calendar days of the assignment date.

0
20. Section 422.137 is amended by adding paragraphs (c)(5), (d)(6), and 
(7) to read as follows:


Sec.  422.137  Medicare Advantage Utilization Management Committee

* * * * *
    (c) * * *
    (5) Beginning January 1, 2025, include at least one member with 
expertise in health equity. Expertise in health equity includes 
educational degrees or credentials with an emphasis on health equity; 
experience conducting studies identifying disparities amongst different 
population groups; experience leading organization-wide policies, 
programs, or services to achieve health equity; or experience leading 
advocacy efforts to achieve health equity.
    (d) * * *
    (6) Beginning in 2025, annually conduct a health equity analysis of 
the use of prior authorization.
    (i) The final report of the analysis must be approved by the member 
of the committee with expertise in health equity before it is publicly 
posted.
    (ii) The analysis must examine the impact of prior authorization on 
enrollees with one or more of the following social risk factors:
    (A) Receipt of the low-income subsidy or being dually eligible for 
Medicare and Medicaid.
    (B) Disability status is determined using the variable original 
reason for entitlement code (OREC) for Medicare using the information 
from the Social Security Administration and Railroad Retirement Board 
record systems.
    (iii) The analysis must use the following metrics, calculated for 
enrollees with the specified social risk factors and enrollees without 
the specified social risk factors, to conduct the analysis at the plan 
level using data from the prior contract year regarding coverage of 
items and services excluding data on drugs as defined in Sec.  
422.119(b)(1)(v):
    (A) The percentage of standard prior authorization requests that 
were approved, aggregated for all items and services.
    (B) The percentage of standard prior authorization requests that 
were denied, aggregated for all items and services.
    (C) The percentage of standard prior authorization requests that 
were approved after appeal, aggregated for all items and services.
    (D) The percentage of prior authorization requests for which the 
timeframe for review was extended, and the request was approved, 
aggregated for all items and services.
    (E) The percentage of expedited prior authorization requests that 
were approved, aggregated for all items and services.
    (F) The percentage of expedited prior authorization requests that 
were denied, aggregated for all items and services.
    (G) The average and median time that elapsed between the submission 
of a request and a determination by the MA plan, for standard prior 
authorizations, aggregated for all items and services.
    (H) The average and median time that elapsed between the submission 
of a request and a decision by the MA plan for expedited prior 
authorizations, aggregated for all items and services.
    (7) By July 1, 2025, and annually thereafter, publicly post the 
results of the health equity analysis of the utilization management 
policies and procedures on the plan's website meeting the following 
requirements:
    (i) In a prominent manner and clearly identified in the footer of 
the website.
    (ii) Easily accessible to the general public, without barriers, 
including but not limited to ensuring the information is accessible:
    (A) Free of charge.
    (B) Without having to establish a user account or password.
    (C) Without having to submit personal identifying information.
    (iii) In a machine-readable format with the data contained within 
that file being digitally searchable and downloadable.
    (iv) Include a txt file in the root directory of the website domain 
that includes a direct link to the machine-readable file to establish 
and maintain automated access.

0
21. Section 422.164 is amended by--
0
a. Revising paragraph (d)(1)(v);
0
b. Revising and republishing (g)(1)(iii)
0
d. Adding paragraph (h)(3).
    The revisions and addition read as follows:

[[Page 30821]]

Sec.  422.164  Adding, updating, and removing measures.

* * * * *
    (d) * * *
    (1) * * *
    (v) Add alternative data sources or expand modes of data 
collection.
* * * * *
    (g) * * *
    (1) * * *
    (iii) For the appeals measures, CMS uses statistical criteria to 
estimate the percentage of missing data for each contract using data 
from MA organizations, the independent review entity (IRE), or CMS 
administrative sources to determine whether the data at the IRE are 
complete. CMS uses scaled reductions for the Star Ratings for the 
applicable appeals measures to account for the degree to which the IRE 
data are missing.
    (A)(1) The data reported by the MA organization on appeals, 
including the number of reconsiderations requested, denied, upheld, 
dismissed, or otherwise disposed of by the MA organization, and data 
from the IRE or CMS administrative sources, that align with the Star 
Ratings year measurement period are used to determine the scaled 
reduction.
    (2) If there is a contract consolidation as described at Sec.  
422.162(b)(3), the data described in paragraph (g)(1)(iii)(A)(1) of 
this section are combined for the consumed and surviving contracts 
before the methodology provided in paragraphs (g)(1)(iii)(B) through 
(O) of this section is applied.
    (B) [Reserved]
    (C) The reductions range from a one-star reduction to a four-star 
reduction; the most severe reduction for the degree of missing IRE data 
is a four-star reduction.
    (D) The thresholds used for determining the reduction and the 
associated appeals measure reduction are as follows:
    (1) 20 percent, 1 star reduction.
    (2) 40 percent, 2 star reduction.
    (3) 60 percent, 3 star reduction.
    (4) 80 percent, 4 star reduction.
    (E) If a contract receives a reduction due to missing Part C IRE 
data, the reduction is applied to both of the contract's Part C appeals 
measures.
    (F) [Reserved]
    (G) The scaled reduction is applied after the calculation for the 
appeals measure-level Star Ratings. If the application of the scaled 
reduction results in a measure-level star rating less than 1 star, the 
contract will be assigned 1 star for the appeals measure.
    (H) The Part C calculated error is determined using 1 minus the 
quotient of the total number of cases received by the IRE that were 
supposed to be sent and the total number of cases that should have been 
forwarded to the IRE. The total number of cases that should have been 
forwarded to the IRE is determined by the sum of the partially 
favorable (adverse) reconsiderations and unfavorable (adverse) 
reconsiderations for the applicable measurement year.
    (I) [Reserved]
    (J) [Reserved]
    (K) Contracts are subject to a possible reduction due to lack of 
IRE data completeness if both of the following conditions are met:
    (1) The calculated error rate is 20 percent or more.
    (2) The number of cases not forwarded to the IRE is at least 10 for 
the measurement year.
    (L) A confidence interval estimate for the true error rate for the 
contract is calculated using a Score Interval (Wilson Score Interval) 
at a confidence level of 95 percent and an associated z of 1.959964 for 
a contract that is subject to a possible reduction.
    (M) A contract's lower bound is compared to the thresholds of the 
scaled reductions to determine the IRE data completeness reduction.
    (N) The reduction is identified by the highest threshold that a 
contract's lower bound exceeds.
    (O) CMS reduces the measure rating to 1 star for the applicable 
appeals measure(s) if CMS does not have accurate, complete, and 
unbiased data to validate the completeness of the Part C appeals 
measures.
    (2) * * *
    (h) * * *
    (3) Beginning with the 2025 measurement year (2027 Star Ratings), 
an MA organization may request that CMS review its contract's 
administrative data for Patient Safety measures provided that the 
request is received by the annual deadline set by CMS for the 
applicable Star Ratings year.
* * * * *

0
22. Section 422.166 is amended by--
0
a. Revising paragraph (e)(2);
0
b. Revising paragraph (f)(2)(i)(B); and
0
c. Adding paragraphs (f)(3)(viii)(A) and (B).
    The revisions and addition read as follows:


Sec.  422.166  Calculation of Star Ratings.

* * * * *
    (e) * * *
    (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, a new or 
substantively updated measure will be assigned the weight associated 
with its category.
* * * * *
    (f) * * *
    (2) * * *
    (i) * * *
    (B) To determine a contract's final adjustment category, contract 
enrollment is determined using enrollment data for the month of 
December for the measurement period of the Star Ratings year.
    (1) For the first 2 years following a consolidation, for the 
surviving contract of a contract consolidation involving two or more 
contracts for health or drug services of the same plan type under the 
same parent organization, the enrollment data for the month of December 
for the measurement period of the Star Ratings year are combined across 
the surviving and consumed contracts in the consolidation.
    (2) The count of beneficiaries for a contract is restricted to 
beneficiaries that are alive for part or all of the month of December 
of the applicable measurement year.
    (3) A beneficiary is categorized as LIS/DE if the beneficiary was 
designated as full or partially dually eligible or receiving a LIS at 
any time during the applicable measurement period.
    (4) Disability status is determined using the variable original 
reason for entitlement (OREC) for Medicare using the information from 
the Social Security Administration and Railroad Retirement Board record 
systems.
* * * * *
    (3) * * *
    (viii) * * *
    (A) In the case of contract consolidations involving two or more 
contracts for health or drug services of the same plan type under the 
same parent organization, CMS calculates the HEI reward for the 
surviving contract accounting for both the surviving and consumed 
contract(s). For the first year following a consolidation, the HEI 
reward for the surviving contract is calculated as the enrollment-
weighted mean of the HEI reward of the consumed and surviving contracts 
using total contract enrollment from July of the most recent 
measurement year used in calculating the HEI reward. A reward value of 
zero is used in calculating the enrollment-weighted mean for contracts 
that do not meet the minimum percentage of enrollees with the SRF 
thresholds or the minimum performance threshold specified at paragraph 
(f)(3)(vii) of this section.

[[Page 30822]]

    (B) For the second year following a consolidation when calculating 
the HEI score for the surviving contract, the patient-level data used 
in calculating the HEI score will be combined from the consumed and 
surviving contracts and used in calculating the HEI score.
* * * * *

0
23. 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 must 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.
* * * * *

0
24. Section 422.260 is amended by--
0
a. Revising paragraphs (c)(1)(i), (c)(2)(v), and (c)(2)(vii);
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.
* * * * *
    (vii) After the hearing officer's decision is issued to the MA 
organization and the CMS Administrator, the hearing officer's decision 
is subject to review and modification by the CMS Administrator within 
10 business days of issuance. If the Administrator does not review and 
issue a decision within 10 business days, the hearing officer's 
decision is final and binding.
* * * * *
    (3) * * *
    (iii) The MA organization may not request a review based on data 
inaccuracy for the following data sources:
    (A) HEDIS.
    (B) CAHPS.
    (C) HOS.
    (D) Part C and D Reporting Requirements.
    (E) PDE.
    (F) Medicare Plan Finder pricing files.
    (G) Data from the Medicare Beneficiary Database Suite of Systems.
    (H) Medicare Advantage Prescription Drug (MARx) system.
    (I) 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 by a different MA organization, 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
25. Section 422.310 is amended by--
0
a. Revising paragraphs (f)(1)(vi) and (f)(1)(vii); and
0
b. Adding new paragraph (f)(3)(v).
    The revisions and addition read as follows:


Sec.  422.310   Risk adjustment data.

* * * * *
    (f) * * *
    (1) * * *
    (vi) To conduct evaluations and other analysis to support the 
Medicare and Medicaid programs (including demonstrations) and to 
support public health initiatives and other health care-related 
research;
    (vii) For activities to support the administration of the Medicare 
and Medicaid programs;
* * * * *
    (3) * * *
    (v) CMS determines that releasing data to State Medicaid agencies 
before reconciliation for the purpose of coordinating care for dually 
eligible individuals is necessary and appropriate to support activities 
or authorized uses under paragraph (f)(1)(vii) of this section.
* * * * *

0
26. Section 422.311 is amended by--
0
a. Revising paragraph (a);
0
b. Revising paragraph (c)(5)(ii)(B);
0
c. Removing paragraph (c)(5)(ii)(C);
0
d. Revising paragraph (c)(5)(iii);
0
e. Adding paragraph (c)(5)(iv);
0
f. Revising paragraphs (c)(6)(i)(A) and (c)(6)(iv)(B);
0
g. Adding paragraph (c)(6)(v);
0
h. Revising paragraph (c)(7)(ix);
0
i. Revising paragraphs (c)(8)(iii), (c)(8)(iv), (c)(8)(v), and 
(c)(8)(vi); and
0
j. Adding paragraphs (c)(8)(vii) and (c)(9).
    The revisions and additions read as follows:


Sec.  422.311  RADV audit dispute and appeal processes.

    (a) Risk adjustment data validation (RADV) audits. In accordance 
with Sec. Sec.  422.2 and 422.310(e), the Secretary conducts RADV 
audits to ensure risk-adjusted payment integrity and accuracy.
    (1) Recovery of improper payments from MA organizations is 
conducted in accordance with the Secretary's payment error 
extrapolation and recovery methodologies.
    (2) CMS may apply extrapolation to audits for payment year 2018 and 
subsequent payment years.
* * * * *
    (c) * * *
    (5) * * *
    (ii) * * *
    (B) Whether the MA organization requests a payment error 
calculation appeal, the issues with which the MA organization 
disagrees, and the reasons for the disagreements. MA organizations will 
forgo their medical record review determination appeal if they choose 
to file only a payment error calculation appeal because medical record 
review determinations need to be final prior to adjudicating a payment 
error calculation appeal.
    (iii) For MA organizations that intend to appeal both the medical 
record

[[Page 30823]]

review determination and the RADV payment error calculation, an MA 
organization's request for appeal of its RADV payment error calculation 
may not be filed and will not be adjudicated until--
    (A) The administrative appeal process for the RADV medical record 
review determinations filed by the MA organization has been exhausted; 
or
    (B) The MA organization does not timely request a RADV medical 
record review determination appeal at the hearing stage and/or the CMS 
Administrator review stage, as applicable.
    (iv) An MA organization whose medical record review determination 
appeal has been completed as described in paragraph (c)(5)(iii) of this 
section has 60 days from the date of issuance of a revised RADV audit 
report, based on the final medical record review determination, to file 
a written request with CMS for a RADV payment error calculation appeal. 
This request for RADV payment error calculation appeal must clearly 
specify where the Secretary's RADV payment error calculation was 
erroneous, what the MA organization disagrees with, and the reasons for 
the disagreements.
    (6) * * *
    (i) * * *
    (A) Any and all HCC(s) that the Secretary identified as being in 
error that the MA organization wishes to appeal.
* * * * *
    (iv) * * *
    (B) The reconsideration official's decision is final unless it is 
reversed or modified by a final decision of the hearing officer as 
defined at Sec.  422.311(c)(7)(x).
* * * * *
    (v) Computations based on reconsideration official's decision. (A) 
Once the reconsideration official's medical record review determination 
decision is considered final in accordance with paragraph (c)(6)(iv)(B) 
of this section, the Secretary recalculates the MA organization's RADV 
payment error and issues a revised RADV audit report superseding all 
prior RADV audit reports to the appellant MA organization.
    (B) For MA organizations appealing the RADV payment error 
calculation only, once the reconsideration official's payment error 
calculation decision is considered final in accordance with paragraph 
(c)(6)(iv)(B) of this section, the Secretary recalculates the MA 
organization's RADV payment error and issues a revised RADV audit 
report superseding all prior RADV audit reports to the appellant MA 
organization.
* * * * *
    (7) * * *
    (ix) Computations based on Hearing Officer's decision. (A) Once the 
hearing officer's medical record review determination decision is 
considered final in accordance with paragraph (c)(7)(x) of this 
section, the Secretary recalculates the MA organization's RADV payment 
error and issues a revised RADV audit report superseding all prior RADV 
audit reports to the appellant MA organization.
    (B) For MA organizations appealing the RADV payment error 
calculation only, once the hearing officer's payment error calculation 
decision is considered final in accordance with paragraph (c)(7)(x) of 
this section, the Secretary recalculates the MA organization's RADV 
payment error and issues a revised RADV audit report superseding all 
prior RADV audit reports to the appellant MA organization.
* * * * *
    (8) * * *
    (iii) After reviewing a request for review, the CMS Administrator 
has the discretion to elect to review the hearing officer's decision or 
to decline to review the hearing officer's decision. If the CMS 
Administrator does not decline to review or does not elect to review 
within 90 days of receipt of either the MA organization or CMS's timely 
request for review (whichever is later), the hearing officer's decision 
becomes final.
* * * * *
    (iv) If the CMS Administrator elects to review the hearing 
decision--
    (A) The CMS Administrator acknowledges the decision to review the 
hearing decision in writing and notifies CMS and the MA organization of 
their right to submit comments within 15 days of the date of the 
issuance of the notification that the Administrator has elected to 
review the hearing decision; and
* * * * *
    (v) The CMS Administrator renders his or her final decision in 
writing within 60 days of the date of the issuance of the notice 
acknowledging his or her decision to elect to review the hearing 
officer's decision.
* * * * *
    (vi) The decision of the hearing officer is final if the CMS 
Administrator--
    (A) Declines to review the hearing officer's decision; or
    (B) Does not decline to review or elect to review within 90 days of 
the date of the receipt of either the MA organization or CMS's request 
for review (whichever is later); or
    (C) Does not make a decision within 60 days of the date of the 
issuance of the notice acknowledging his or her decision to elect to 
review the hearing officer's decision.
* * * * *
    (vii) Computations based on CMS Administrator decision. (A) Once 
the CMS Administrator's medical record review determination decision is 
considered final in accordance with paragraph (c)(8)(vi) of this 
section, the Secretary recalculates the MA organization's RADV payment 
error and issues a revised RADV audit report superseding all prior RADV 
audit reports to the appellant MA organization.
    (B) For MA organizations appealing the RADV payment error 
calculation only, once the CMS Administrator's payment error 
calculation decision is considered final in accordance with paragraph 
(c)(8)(vi) of this section, the Secretary recalculates the MA 
organization's RADV payment error and issues a revised and final RADV 
audit report superseding all prior RADV audit reports to the appellant 
MA organization.
* * * * *
    (9) Final agency action. In cases when an MA organization files a 
payment error calculation appeal subsequent to a medical record review 
determination appeal that has completed the administrative appeals 
process, the medical record review determination appeal final decision 
and the payment error calculation appeal final decision will not be 
considered a final agency action until the payment error calculation 
appeal has completed the administrative appeals process and a final 
revised audit report superseding all prior RADV audit reports has been 
issued to the appellant MA organization.
* * * * *

0
27. Section 422.500(b) is amended by adding the definitions of ``Final 
settlement adjustment period'', ``Final settlement amount'', and 
``Final settlement process'' in alphabetical order 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

[[Page 30824]]

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, nonrenewed, 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 (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 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 is calculated after all applicable reconciliations 
have occurred after a contract has been consolidated, nonrenewed, or 
terminated.
* * * * *

0
28. Section Sec.  422.502 is amended by--
0
a. Adding paragraph headings for paragraphs (a)(1) and (a)(2) and 
adding paragraph (a)(3);
0
b. Revising paragraphs (b)(1)(i)(A), (B), and (C);
0
c. Removing paragraphs (b)(1)(i)(E)(2)(A) and (B).
    The additions and revisions read as follows.


Sec.  422.502  Evaluation and determination procedures.

* * * * *
    (a) * * *
    (1) Information used to evaluate applications. * * *
    (2) Issuing application determination. * * *
    (3) Substantially incomplete applications. (i) CMS does not 
evaluate or issue a notice of determination described in Sec.  
422.502(c) 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.
* * * * *
    (b) * * *
    (1) * * *
    (i) * * *
    (A) Was under intermediate sanction under subpart O of this part or 
a determination by CMS to prohibit the enrollment of new enrollees in 
accordance with Sec.  422.2410(c), with the exception of a sanction 
imposed under Sec.  422.752(d).
    (B) Failed to maintain a fiscally sound operation consistent with 
the requirements of Sec.  422.504(a)(14).
    (C) Filed for or is currently in federal or state bankruptcy 
proceedings.
* * * * *

0
29. Section 422.503 is amended by adding paragraph (b)(8) to read as 
follows:


Sec.  422.503  General provisions.

* * * * *
    (b) * * *
    (8) Not newly offer a dual eligible special needs plan that would 
result in noncompliance with Sec.  422.514(h).
* * * * *

0
30. Section 422.504 is amended by revising paragraph (a)(15) and adding 
paragraphs (a)(20) and (a)(21) to read as follows.


Sec.  422.504  Contract provisions.

* * * * *
    (a) * * *
    (15) As described in Sec.  422.125 of this part, address and 
resolve complaints received by CMS against the MA organization in the 
Complaints Tracking Module.
* * * * *
    (20) To comply with the requirements established in Sec.  
422.514(h).
* * * * *
    (21) Not to establish additional MA plans that are not facility 
based I-SNPs to contracts described in Sec.  422.116(f)(3).
* * * * *

0
31. Section 422.510 is amended by adding paragraph (e) to read as 
follows:


Sec.  422.510  Termination of contract by CMS.

* * * * *
    (e) If CMS makes a determination to terminate a MA organization's 
contract under Sec.  422.510(a), CMS also imposes the intermediate 
sanctions at Sec.  422.750(a)(1) and (3) in accordance with the 
following procedures:
    (1) The sanction goes into effect 15 days after the termination 
notice is sent.
    (2) The MA organization has a right to appeal the intermediate 
sanction in the same proceeding as the termination appeal specified in 
paragraph (d) of this section.
    (3) A request for a hearing does not delay the date specified by 
CMS when the sanction becomes effective.
    (4) The sanction remains in effect--
    (i) Until the effective date of the termination; or
    (ii) If the termination decision is overturned on appeal, when a 
final decision is made by the hearing officer or Administrator.

0
32. Section 422.514 is amended by--
0
a. Revising paragraphs (d)(1) introductory text, (d)(1)(ii), (d)(2) 
introductory text, and (d)(2)(ii);.
0
b. In paragraph (e)(1)(i), removing the phrase ``Specialized MA Plan 
for Special Needs Individuals'' and adding in its place the phrase 
``specialized MA plan for special needs individuals'';
0
c. In paragraph (e)(1)(iii), removing the phrase ``chapter; and'' and 
adding in its place ``chapter;'';
0
d. In paragraph (e)(1)(iv), removing the phrase ``of this section.'' 
and adding in its place ``of this section; and''; and
0
e. Adding paragraphs (e)(1)(v) and (h).
    The revisions and additions read as follows:


Sec.  422.514  Enrollment requirements.

* * * * *
    (d) * * *
    (1) Enter into or renew a contract under this subpart for a MA plan 
that--
* * * * *
    (ii) Projects enrollment in its bid submitted under Sec.  422.254 
in which enrollees entitled to medical assistance under a State plan 
under title XIX constitute a percentage of the plan's total enrollment 
that meets or exceeds one of the following:--
    (A) For plan year 2024, 80 percent.
    (B) For plan year 2025, 70 percent.
    (C) For plan year 2026 and subsequent years, 60 percent.
    (2) Renew a contract under this subpart for an MA plan that--
* * * * *
    (ii) 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, has

[[Page 30825]]

actual enrollment, as determined by CMS using the January enrollment of 
the current year in which enrollees who are entitled to medical 
assistance under a state plan under title XIX, constitute a percentage 
of the plan's total enrollment that meets or exceeds one of the 
following:
    (A) For renewals for plan year 2024, 80 percent.
    (B) For renewals for plan year 2025, 70 percent.
    (C) For renewals for plan year 2026 and subsequent years, 60 
percent.
    (e) * * *
    (1) * * *
    (v) For transitions for plan year 2027 and subsequent years, is a 
dual eligible special needs plan as defined in Sec.  422.2.
* * * * *
    (h) Rule on dual eligible special needs plans in relation to 
Medicaid managed care.
    (1) Beginning in 2027, where an MA organization offers a dual 
eligible special needs plan and the MA organization, its parent 
organization, or any entity that shares a parent organization with the 
MA organization also contracts with a State as a Medicaid managed care 
organization (MCO) (as defined in Sec.  438.2) that enrolls full-
benefit dual eligible individuals as defined in Sec.  423.772, during 
the effective dates and in the same service area (even if there is only 
partial overlap of the service areas) of that Medicaid MCO contract, 
the MA organization--
    (i) May only offer, or have a parent organization or share a parent 
organization with another MA organization that offers, one D-SNP for 
full-benefit dual eligible individuals, except as permitted in 
paragraph (h)(3) of this section; and
    (ii) Must limit new enrollment in the D-SNP to individuals enrolled 
in, or in the process of enrolling in, the Medicaid MCO.
    (2) Beginning in 2030, such D-SNPs may only enroll (or continue to 
cover individuals enrolled in (or in the process of enrolling in) the 
Medicaid MCO, except that such D-SNPs may continue to implement deemed 
continued eligibility requirements as described in Sec.  422.52(d).
    (3)(i) If a State Medicaid agency's contract(s) with the MA 
organization differentiates enrollment into D-SNPs by age group or to 
align enrollment in each D-SNP with the eligibility or benefit design 
used in the State's Medicaid managed care program(s) (as defined in 
Sec.  438.2), the MA organization, its parent organization, or an 
entity that shares a parent organization with the MA organization may 
offer one or more additional D-SNPs for full-benefit dual eligible 
individuals in the same service area in accordance with the group (or 
groups) eligible for D-SNPs based on provisions of the contract with 
the State Medicaid agency under Sec.  422.107.
    (ii) If the MA organization, its parent organization, or an entity 
that shares a parent organization with the MA organization offers both 
HMO D-SNP(s) and PPO D-SNP(s), and one or more of the--
    (A) HMO D-SNPs is subject to paragraph (h)(1) of this section, the 
PPO D-SNP(s) not subject to paragraph (h)(1) of this section may 
continue if they no longer accept new enrollment of full-benefit dual 
eligible individuals in the same service area as the plan (or plans) 
subject to paragraph (h)(1) of this section.
    (B) PPO D-SNPs is subject to paragraph (h)(1) of this section, the 
HMO D-SNP(s) not subject to paragraph (h)(1) of this section may 
continue if they no longer accept new enrollment of full-benefit dual 
eligible individuals in the same service area as the plan (or plans) 
subject to paragraph (h)(1) of this section.

0
33. Section 422.516 is amended by revising paragraphs (a) introductory 
text and (a)(2) to read as follows:


Sec.  422.516  Validation of Part C reporting requirements.

    (a) Required information. Each MA organization must have an 
effective procedure to develop, compile, evaluate, and report to CMS, 
to its enrollees, and to the general public, at the times and in the 
manner that CMS requires, and while safeguarding the confidentiality of 
the provider-patient relationship, information with respect to the 
following:
* * * * *
    (2) The procedures related to and utilization of its services and 
items.
* * * * *

0
34. 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 all of 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.
    (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 has 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 an 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 does not 
consider subsequent requests for appeal.
    (c) Actions if an MA organization does not request an appeal. (1) 
For MA organizations that are owed money by CMS, CMS remits 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 is 
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 refers the debt 
owed to CMS to the Department of the 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 conducts 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 Sec.  422.528(a), is issued to the MA organization, CMS no longer 
apply retroactive payment adjustments to the terminated, consolidated 
or nonrenewed contract and there are no adjustments applied to amounts 
used in the calculation of the final settlement amount.

0
35. Section 422.529 is added to read as follows:

[[Page 30826]]

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), 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 do all of the following:
    (A) Specify the calculation 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.
    (C) Not include new reconciliation data or data that was submitted 
to CMS after the final settlement notice was issued. CMS does 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 (a)(2)(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 is 
conducted in accordance with the following:
    (A) The CMS Hearing Officer provides written notice of the time and 
place of the informal hearing at least 30 days before the scheduled 
date.
    (B) The CMS reconsideration official 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 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 is 
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 (a)(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 (a)(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 reviews 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 does 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 is 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 communicates 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.

0
35a. Section 422.530 is amended by adding paragraph (c)(4)(iii) to read 
as follows:


Sec.  422.530  Plan crosswalks.

    (c) * * *
    (4) * * *
    (iii) For contract year 2027 and subsequent years, where one or 
more MA organizations that share a parent organization seek to 
consolidate D-SNPs in the same service area down to a single D-SNP 
under one MA-PD contract to comply with requirements at Sec. Sec.  
422.514(h) and 422.504(a)(20), CMS permits enrollees to be moved 
between different contracts.
* * * * *

0
36. 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 as described in Sec.  422.510(a)(4)(ix) and the contract 
may

[[Page 30827]]

be subject to intermediate enrollment and marketing sanctions as 
outlined in Sec.  422.750(a)(1) and (a)(3). Intermediate sanctions 
imposed as part of this section remain in place until CMS approves the 
change of ownership (including execution of an approved novation 
agreement), or the contract is terminated.
    (i)(A) 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 if applicable; and
    (B) If the application is conditionally approved, must submit, 
within 30 days of the conditional approval, the documentation required 
under Sec.  422.550(c) 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 paragraph (d)(1) of this section, submit the documentation 
required under Sec.  422.550(c) for review and approval by CMS.
    (2) If the new owner fails to begin the processes required under 
paragraph (d)(1)(i) or (d)(1)(ii) of this section within 30 days of 
imposition of intermediate sanctions as outlined in paragraph (d)(1) of 
this section, the existing contract is subject to termination in 
accordance with Sec.  422.510(a)(4)(ix).
* * * * *

0
37. Section 422.582 is amended by revising paragraph (b) to read as 
follows:


Sec.  422.582   Request for a standard reconsideration.

* * * * *
    (b) Timeframe for filing a request. Except as provided in paragraph 
(c) of this section, a request for reconsideration must be filed within 
60 calendar days after receipt of the written organization 
determination notice.
    (1) The date of receipt of the organization determination is 
presumed to be 5 calendar days after the date of the written 
organization determination, unless there is evidence to the contrary.
    (2) For purposes of meeting the 60-calendar day filing deadline, 
the request is considered as filed on the date it is received by the 
plan or delegated entity specified in the MA organization's written 
organization determination.
* * * * *

0
38. Section 422.584 is amended by revising paragraph (b) introductory 
text and adding paragraphs (b)(3) and (4) to read as follows:


Sec.  422.584   Expediting certain reconsiderations.

* * * * *
    (b) Procedure and timeframe for filing a request. A request for 
reconsideration must be filed within 60 calendar days after receipt of 
the written organization determination notice.
* * * * *
    (3) The date of receipt of the organization determination is 
presumed to be 5 calendar days after the date of the written 
organization determination, unless there is evidence to the contrary.
    (4) For purposes of meeting the 60-calendar day filing deadline, 
the request is considered as filed on the date it is received by the 
plan or delegated entity specified in the MA organization's written 
organization determination.
* * * * *

0
39. Section 422.626 is amended by revising paragraph (a)(2) and 
removing paragraph (a)(3) to read as follows:


Sec.  422.626  Fast-track appeals of service terminations to 
independent review entities (IREs).

    (a) * * *
    (2) If an enrollee makes an untimely request to an IRE, the IRE 
accepts the request and makes a determination as soon as possible, but 
the timeframe under paragraph (d)(5) of this section and the financial 
liability protection under paragraph (b) of this section do not apply.
* * * * *

0
40. Section 422.633 is amended by revising paragraph (d)(1) to read as 
follows:


Sec.  422.633  Integrated reconsiderations.

* * * * *
    (d) * * *
    (1) Timeframe for filing--An enrollee has 60 calendar days after 
receipt of the adverse organization determination notice to file a 
request for an integrated reconsideration with the applicable 
integrated plan.
    (i) The date of receipt of the adverse organization determination 
is presumed to be 5 calendar days after the date of the integrated 
organization determination notice, unless there is evidence to the 
contrary.
    (ii) For purposes of meeting the 60-calendar day filing deadline, 
the request is considered as filed on the date it is received by the 
applicable integrated plan.
* * * * *

0
41. 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) CMS sets minimum penalty amounts in accordance with paragraphs 
(b)(1) and (2) of this section.
    (iii) CMS announces the standard minimum penalty amounts and 
aggravating factor amounts for per determination and per enrollee 
penalties on an annual basis.
    (iv) 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
42. Section 422.2267 is amended by--
0
a. Revising paragraphs (e)(31) and (34);
0
b. Adding paragraph (e)(42).
    The revisions and additions read as follows:


Sec.  422.2267  Required materials and content.

* * * * *
    (e) * * *
    (31) Notice of availability of language assistance services and 
auxiliary aids and services (Notice of Availability).
    (i) Prior to contract year 2026 marketing on September 30, 2025, 
the notice is referred to as the Multi-language insert (MLI). This is a 
standardized communications material which states, ``We have free 
interpreter services to answer any questions you may have about our 
health or drug plan. To get an interpreter, just call us at [1-xxx-xxx-
xxxx]. Someone who speaks [language] can help you. This is a free 
service.'' in the following languages: Spanish, Chinese, Tagalog, 
French, Vietnamese, German, Korean, Russian,

[[Page 30828]]

Arabic, Italian, Portuguese, French Creole, Polish, Hindi, and 
Japanese.
    (A) Additional languages that meet the 5 percent service area 
threshold, as required under paragraph (a)(2) of this section, must be 
added to the MLI used in that service area. A plan may also opt to 
include in the MLI any additional language that do not meet the 5 
percent service area threshold, where it determines that this inclusion 
would be appropriate.
    (B) Except where otherwise provided in paragraph (e)(31)(i)(G) of 
this section, the MLI must be provided with all required materials 
under paragraph (e) of this section.
    (C) The MLI may be included as a part of the required material or 
as a standalone material in conjunction with the required material.
    (D) When used as a standalone material, the MLI may include 
organization name and logo.
    (E) When mailing multiple required materials together, only one MLI 
is required.
    (F) The MLI may be provided electronically when a required material 
is provided electronically as permitted under paragraph (d)(2) of this 
section.
    (G) At plan option for CY 2025 marketing and communications 
beginning September 30, 2024, the plan may use the model notice 
described in Sec.  422.2267(e)(31)(ii) to satisfy the MLI requirements 
set forth in paragraph (e)(31)(i) of this section.
    (ii) For CY 2026 marketing and communications beginning September 
30, 2025, the required notice is referred to as the Notice of 
availability of language assistance services and auxiliary aids and 
services (Notice of Availability). This is a model communications 
material through which MA organizations must provide a notice of 
availability of language assistance services and auxiliary aids and 
services that, at a minimum, states that the MA organization provides 
language assistance services and appropriate auxiliary aids and 
services free of charge.
    (A) This notice of availability of language assistance services and 
auxiliary aids and services must be provided in English and at least 
the 15 languages most commonly spoken by individuals with limited 
English proficiency of the relevant State or States associated with the 
plan's service area and must be provided in alternate formats for 
individuals with disabilities who require auxiliary aids and services 
to ensure effective communication.
    (B) If there are additional languages in a particular service area 
that meet the 5 percent service area threshold, described in paragraph 
(a)(2) of this section, beyond the languages described in paragraph 
(e)(31)(i) of this section, the notice of availability of language 
assistance services and auxiliary aids and services must also be 
translated into those languages. MA organizations may also opt to 
translate the notice in any additional languages that do not meet the 5 
percent service area threshold, where the MA organization determines 
that this inclusion would be appropriate.
    (C) The notice must be provided with all required materials under 
paragraph (e) of this section.
    (D) The notice may be included as a part of the required material 
or as a standalone material in conjunction with the required material.
    (E) When used as a standalone material, the notice may include 
organization name and logo.
    (F) When mailing multiple required materials together, only one 
notice is required.
    (G) The notice may be provided electronically when a required 
material is provided electronically as permitted under paragraph (d)(2) 
of this section.
* * * * *
    (34) SSBCI disclaimer. This is model content and must be used by MA 
organizations that offer CMS-approved SSBCI as specified in Sec.  
422.102(f). In the SSBCI disclaimer, MA organizations must include the 
information required in paragraphs (i) through (iii) of this section. 
MA organizations must--
    (i) * * *
    (ii) List the chronic condition(s) the enrollee must have to be 
eligible for the SSBCI offered by the applicable MA plan(s), in 
accordance with the following requirements.
    (A) The following applies when only one type of SSBCI is mentioned:
    (1) If the number of condition(s) is five or fewer, then list all 
condition(s).
    (2) If the number of conditions is more than five, then list the 
top five conditions, as determined by the MA organization, and convey 
that there are other eligible conditions not listed.
    (B) The following applies when multiple types of SSBCI are 
mentioned:
    (1) If the number of condition(s) is five or fewer, then list all 
condition(s), and if relevant, state that these conditions may not 
apply to all types of SSBCI mentioned.
    (2) If the number of conditions is more than five, then list the 
top five conditions, as determined by the MA organization, for which 
one or more listed SSBCI is available, and convey that there are other 
eligible conditions not listed.
    (iii) Convey that even if the enrollee has a listed chronic 
condition, the enrollee will not necessarily receive the benefit 
because coverage of the item or service depends on the enrollee being a 
``chronically ill enrollee'' as defined in Sec.  422.102(f)(1)(i)(A) 
and on the applicable MA plan's coverage criteria for a specific SSBCI 
required by Sec.  422.102(f)(4).
    (iv) Meet the following requirements for the SSBCI disclaimer in 
ads:
    (A) For television, online, social media, radio, or other voice-
based ads, either read the disclaimer at the same pace as, or display 
the disclaimer in the same font size as, the advertised phone number or 
other contact information.
    (B) For outdoor advertising (as defined in Sec.  422.2260), display 
the disclaimer in the same font size as the advertised phone number or 
other contact information.
    (v) Include the SSBCI disclaimer in all marketing and 
communications materials that mention SSBCI.
* * * * *
    (42) Mid-year supplemental benefits notice. This is a model 
communications material through which plans must inform each enrollee 
of the availability of any item or service covered as a supplemental 
benefit that the enrollee has not begun to use by June 30 of the plan 
year.
    (i) The notice must be sent on an annual basis, no earlier than 
June 30 of the plan year, and no later than July 31 of the plan year.
    (ii) The notice must include the following content:
    (A) Mandatory supplemental benefits. For each mandatory 
supplemental benefit an enrollee has not used, the MA organization must 
include the same information about the benefit that is provided in the 
Evidence of Coverage.
    (B) Optional supplemental benefits. For each optional supplemental 
benefit an enrollee has not used, the MA organization must include the 
same information about the benefit that is provided in the Evidence of 
Coverage.
    (C) SSBCI. For plans that include SSBCI--
    (1) The MA organization must include an explanation of SSBCI 
available under the plan (including eligibility criteria and 
limitations and scope of the covered items and services) and must 
include point-of-contact information for eligibility assessments, 
including providing point-of-contact information (which can be the 
customer service line or a separate dedicated line), with trained staff 
that enrollees can contact to inquire about or begin the SSBCI 
eligibility determination process and to

[[Page 30829]]

address any other questions the enrollee may have about the 
availability of SSBCI under their plan;
    (2) When an enrollee has been determined eligible for SSBCI but has 
not used SSBCI, the MA organization must include a description of the 
unused SSBCI for which the enrollee is eligible, and must include a 
description of any limitations on the benefit; and
    (3) The disclaimer specified at paragraph (e)(34) of this section.
    (D) The information about all supplemental benefits listed in the 
notice must include all of the following:
    (1) Scope of benefit.
    (2) Applicable cost-sharing.
    (3) Instructions on how to access the benefit.
    (4) Any applicable network information.
    (E) Supplemental benefits listed consistent with the format of the 
EOC.
    (F) A customer service number, and required TTY number, to call for 
additional help.

0
43. Section 422.2274 is amended by--
0
a. In paragraph (a), revising the definitions for ``Compensation'' and 
``Fair market value'';
0
b. Revising paragraphs (c)(5) and (c)(13), (d)(1)(ii), (d)(2) 
introductory text, (d)(3) introductory text, (e)(1) and (e)(2); and
0
c. Adding paragraph (g)(4).
    The revisions and addition read as follows:


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

* * * * *
    (a) * * *
    Compensation. (i) Includes monetary or non-monetary remuneration of 
any kind relating to the sale, renewal, or services related to a plan 
or product offered by an MA organization including, but not limited to 
the following:
    (A) Commissions.
    (B) Bonuses.
    (C) Gifts.
    (D) Prizes or awards.
    (E) Beginning with contract year 2025, payment of fees to comply 
with state appointment laws, training, certification, and testing 
costs.
    (F) Beginning with contract year 2025, reimbursement for mileage 
to, and from, appointments with beneficiaries.
    (G) Beginning with contract year 2025, reimbursement for actual 
costs associated with beneficiary sales appointments such as venue 
rent, snacks, and materials.
    (H) Beginning with contract year 2025, any other payments made to 
an agent or broker that are tied to enrollment, related to an 
enrollment in an MA plan or product, or for services conducted as a 
part of the relationship associated with the enrollment into an MA plan 
or product.
* * * * *
    Fair market value (FMV) means, for purposes of evaluating agent or 
broker compensation under the requirements of this section only, the 
amount that CMS determines could reasonably be expected to be paid for 
an enrollment or continued enrollment into an MA plan. Beginning 
January 1, 2021, the national FMV is $539, the FMV for Connecticut, 
Pennsylvania, and the District of Columbia is $607, the FMV for 
California and New Jersey is $672, and the FMV for Puerto Rico and the 
U.S. Virgin Islands is $370. For contract year 2025, there will be a 
one-time increase of $100 to the FMV to account for administrative 
payments included under the compensation rate. For subsequent years, 
FMV is calculated by adding the current year FMV and the product of the 
current year FMV and MA growth percentage for aged and disabled 
beneficiaries, which is published for each year in the rate 
announcement issued under Sec.  422.312.
* * * * *
    (c) * * *
    (5) On an annual basis for plan years through 2024, by the last 
Friday in July, report to CMS whether the MA organization intends to 
use employed, captive, or independent agents or brokers in the upcoming 
plan year and the specific rates or range of rates the plan will pay 
independent agents and brokers. Following the reporting deadline, MA 
organizations may not change their decisions related to agent or broker 
type, or their compensation rates and ranges, until the next plan year.
* * * * *
    (13) Beginning with contract year 2025, ensure that no provision of 
a contract with an agent, broker, or other TPMO has a direct or 
indirect effect of creating an incentive that would reasonably be 
expected to inhibit an agent or broker's ability to objectively assess 
and recommend which plan best fits the health care needs of a 
beneficiary.
* * * * *
    (d) * * *
    (1) * * *
    (ii) For contract years through contract year 2024, MA 
organizations may determine, through their contracts, the amount of 
compensation to be paid, provided it does not exceed limitations 
outlined in this section. Beginning with contract year 2025, MA 
organizations are limited to the compensation amounts outlined in this 
section.
    (2) Initial enrollment year compensation. For each enrollment in an 
initial enrollment year for contract years through contract year 2024, 
MA organizations may pay compensation at or below FMV.
* * * * *
    (3) Renewal compensation. For each enrollment in a renewal year for 
contract years through contract year 2024, MA plans may pay 
compensation at a rate of up to 50 percent of FMV. For contract years 
beginning with contract year 2025, for each enrollment in a renewal 
year, MA organizations may pay compensation at 50 percent of FMV.
* * * * *
    (e) * * *
    (1) For contract years through contract year 2024, payments made 
for services other than enrollment of beneficiaries (for example, 
training, customer service, agent recruitment, operational overhead, or 
assistance with completion of health risk assessments) must not exceed 
the value of those services in the marketplace.
    (2) Beginning with contract year 2025, administrative payments are 
included in the calculation of enrollment-based compensation.
    (g) * * *
    (4) Beginning October 1, 2024, personal beneficiary data collected 
by a TPMO for marketing or enrolling them into an MA plan may only be 
shared with another TPMO when prior express written consent is given by 
the beneficiary. Prior express written consent from the beneficiary to 
share the data and be contacted for marketing or enrollment purposes 
must be obtained through a clear and conspicuous disclosure that lists 
each entity receiving the data and allows the beneficiary to consent or 
reject to the sharing of their data with each individual TPMO.

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
44. 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
45. Section 423.4 is amended by adding the definitions of ``Authorized 
generic drug'', ``Biological product'', ``Biosimilar biological 
product'', ``Brand name biological product'', ``Interchangeable 
biological product'', ``MTM program'', ``Reference product'', and 
``Unbranded biological product'' in alphabetical order to read as 
follows:

[[Page 30830]]

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).
    Biosimilar biological product means a biological product licensed 
under section 351(k) of the Public Health Service Act (42 U.S.C. 
262(k)) that, in accordance with section 351(i)(2) of the Public Health 
Service Act (42 U.S.C. 262(i)(2)), is highly similar to the reference 
product, notwithstanding minor differences in clinically inactive 
components, and has no clinically meaningful differences between the 
biological product and the reference product, in terms of the safety, 
purity, and potency of the product.
* * * * *
    Brand name biological product means a product licensed under 
section 351(a) (42 U.S.C. 262(a)) or 351(k) (42 U.S.C. 262(k)) of the 
Public Health Service Act and marketed under a brand name.
* * * * *
    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 meets the standards described in section 351(k)(4) 
of the Public Health Service Act (42 U.S.C. 262(k)(4)), which in 
accordance with section 351(i)(3) of the Public Health Service Act (42 
U.S.C. 262(i)(3)), may be substituted for the reference product without 
the intervention of the health care provider who prescribed the 
reference product.
* * * * *
    MTM program means a medication therapy management program described 
at Sec.  423.153(d).
* * * * *
    Reference 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
46. Section 423.32 is amended by adding paragraphs (h), (i), and (j) 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 the individual's enrollment in that plan if the individual 
cancels the election in the new plan within 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.
* * * * *
    (j) Authorized representatives. As used in this subpart, an 
authorized representative is an individual who is the legal 
representative or otherwise legally able to act on behalf of an 
enrollee, as the law of the State in which the beneficiary resides may 
allow, in order to execute an enrollment or disenrollment request.
    (1) The authorized representative would constitute the 
``beneficiary'' or the ``enrollee'' for the purpose of making an 
election.
    (2) Authorized representatives may include court-appointed legal 
guardians, persons having durable power of attorney for health care 
decisions, or individuals authorized to make health care decisions 
under state surrogate consent laws, provided they have the authority to 
act for the beneficiary in this capacity.

0
47. 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; and
    (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, 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 (b)(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
48. Section 423.38 is amended by--
0
a. Revising paragraph (c)(4)(i), (c)(7), and (c)(23) introductory text;

[[Page 30831]]

0
b. Redesignating paragraphs (c)(23)(i) through (c)(23)(iii) and 
(c)(35), as paragraphs (c)(23)(ii) through (c)(23)(iv) and (c)(36), 
respectively; and
0
c. Adding new paragraphs (c)(23)(i) and (c)(35).
    The revision and addition read as follows:


Sec.  423.38  Enrollment periods.

* * * * *
    (c) * * *
    (4) * * *
    (i) Except as provided in paragraph (ii) of this section, the 
individual is a full-subsidy eligible individual or other subsidy-
eligible individual as defined in Sec.  423.772, who is making a one-
time-per month election into a PDP.
* * * * *
    (7)(i) 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; or
    (ii) The individual who, as a result of a change in permanent 
residence, has new Part D plan options available to them.
* * * * *
    (23) Individuals affected by an emergency or major disaster 
declared by a Federal, State or local government entity are eligible 
for an 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 is 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.
* * * * *
    (35)(i) The individual is a full-benefit dual eligible individual 
(as defined in Sec.  423.772) making a one-time-per month election into 
a fully integrated dual eligible special needs plan as defined in Sec.  
422.2 of this chapter, a highly integrated dual eligible special needs 
plan as defined in Sec.  422.2 of this chapter, or an applicable 
integrated plan as defined in Sec.  422.561 of this chapter.
    (ii) The SEP is available only to facilitate aligned enrollment as 
defined in Sec.  422.2 of this chapter.
* * * * *

0
48a. Section 423.40 is amended by adding paragraph (f) to read as 
follows:


Sec.  423.40   Effective dates.

* * * * *
    (f) Beneficiary choice of effective date. If a beneficiary is 
eligible for more than one election period, resulting in more than one 
possible effective date, the Part D plan sponsor must allow the 
beneficiary to choose the election period that results in the 
individual's desired effective date.
    (1) To determine the beneficiary's choice of election period and 
effective date, the Part D plan sponsor must attempt to contact the 
beneficiary and must document its attempts.
    (2) If the Part D plan sponsor is unable to obtain the 
beneficiary's desired enrollment effective date, the Part D plan 
sponsor must assign an election period using the following ranking of 
election periods:
    (i) ICEP/Part D IEP.
    (ii) MA-OEP.
    (iii) SEP.
    (iv) AEP.
    (v) OEPI.
    (3) If the Part D plan sponsor is unable to obtain the 
beneficiary's desired disenrollment effective date, the Part D plan 
sponsor must assign an election period that results in the earliest 
disenrollment.

0
49. 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), 
(d)(1)(v), (d)(1)(vi) and (d)(2)(iii);
0
c. Redesignating paragraphs (d)(2)(iv) through (vii) as paragraphs 
(d)(2)(v) through (viii);
0
e. Adding new paragraph (d)(2)(iv);
0
f. Revising newly redesignated paragraph (d)(2)(v);
0
g. Revising paragraphs (d)(5)(i) and (d)(5)(ii); and
0
h. Adding paragraph (d)(9).
    The 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 either of the following:
    (A) 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.
    (B) 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) 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 a Part D sponsor) may reinstate enrollment in the PDP, without 
interruption of coverage, if the individual does all of the following:
    (A) Submits a request for reinstatement for good cause within 60 
calendar days of the disenrollment effective date.
    (B) Has not previously requested reinstatement for good cause 
during the same 60-day period following the involuntary disenrollment.
    (C) Shows good cause for failure to pay within the initial grace 
period.
    (D) Pays all overdue premiums within 3 calendar months after the 
disenrollment date.
    (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 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,

[[Page 30832]]

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--
    (A) 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;
    (B) May request from CMS the ability to decline future enrollment 
by the individual; and
    (C) Must submit the following:
    (1) The information specified in paragraph (d)(2)(iv)(A) of this 
section.
    (2) Any documentation received by the individual to CMS.
    (3) Dated copies of the notices required in paragraph (d)(2)(viii) 
of this section.
* * * * *
    (viii) Required notices. The PDP sponsor must provide the 
individual two notices prior to submitting the request for 
disenrollment to CMS.
    (A) 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.
    (1) If the disruptive behavior ceases after the member receives the 
advance notice and then later resumes, the sponsor must begin the 
process again.
    (2) 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.
    (B) The second notice, the notice of intent to request CMS 
permission to disenroll the member, notifies the member that the PDP 
sponsor requests CMS permission to involuntarily disenroll the member.
    (1) This notice must be provided prior to submission of the request 
to CMS.
    (2) These notices are in addition to the disenrollment submission 
notice required under Sec.  423.44(c).
* * * * *
    (5) * * *
    (i) Basis for disenrollment. 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 10 calendar 
days of the 12th 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 U.S. 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
50. Section 423.100 is amended by revising paragraph (3) of the 
definition of ``Exempted beneficiary'' and adding the definitions of 
``Affected enrollee'', ``Corresponding drug'', ``Immediate negative 
formulary change'', ``Maintenance change'', ``Negative formulary 
change'', ``Non-maintenance change'', and ``Other specified entities'' 
in alphabetical order to 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 product, or an unbranded biological product marketed under 
the same biologics license application (BLA) as a brand name biological 
product.
* * * * *
    Exempted beneficiary means with respect to a drug management 
program, an enrollee who--
* * * * *
    (3) Is being treated for cancer-related pain or
* * * * *
    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 one of the following negative formulary 
changes with respect to a covered Part D drug:
    (1) Making any negative formulary changes to a drug within 90 days 
of adding a corresponding drug to the same or a 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) Making any negative formulary changes to a reference product 
within 90 days of adding a biosimilar biological product other than an 
interchangeable biological product of that reference product to the 
same or a lower cost-sharing tier and with the same or less restrictive 
PA, ST, or QL requirements.
    (3) Removing a non-Part D drug.
    (4) Adding or making more restrictive PA, ST, or QL requirements 
based upon a new FDA-mandated boxed warning.
    (5) Removing a drug withdrawn from sale by the manufacturer or that 
FDA determines to be withdrawn for safety or effectiveness reasons if 
the Part D

[[Page 30833]]

sponsor chooses not to treat it as an immediate negative formulary 
change.
    (6) Removing a drug based on long term shortage and market 
availability.
    (7) Making negative formulary changes based upon new clinical 
guidelines or information or to promote safe utilization.
    (8) Adding PA to help determine Part B versus Part D coverage.
* * * * *
    Negative formulary change means one of the following changes with 
respect to a covered Part D drug:
    (1) Removing a drug from a formulary.
    (2) Moving a drug to a higher cost-sharing tier.
    (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.


Sec.  423.104   [Amended]

0
51. Section 423.104 is amended in paragraph (d)(2)(iv)(A)(6) by 
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
52. Section 423.120 is amended by---
0
a. Revising paragraph (b)(3)(i)(B);
0
b. Revising paragraphs (b)(5) and (6); and
0
c. Adding paragraphs (e) and (f).
    The revisions and additions read as follows:


Sec.  423.120  Access to covered Part D drugs.

* * * * *
    (b) * * *
    (3) * * *
    (i) * * *
    (B) Not apply in cases of immediate changes as permitted under 
paragraph (e)(2) of this section.
* * * * *
    (5) Notice of formulary changes. Part D sponsors must provide 
notice of changes to CMS-approved formularies as specified in Sec.  
423.120(f).
    (6) Changes to CMS-approved formularies. Changes to CMS-approved 
formularies may be made only in accordance with paragraph (e) of this 
section.
* * * * *
    (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 make negative 
formulary changes to a brand name drug, a reference product, or a brand 
name biological product within 30 days of adding 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 withdrawn from sale by their 
manufacturer or that the Food and Drug Administration (FDA) determines 
to be withdrawn for safety or effectiveness reasons.
    (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; 
about 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 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).

[[Page 30834]]

    (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 all of 
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 on the formulary in the same or 
a lower cost-sharing tier and the expected cost sharing for those 
drugs.
    (v) For formulary changes other than those described in paragraph 
(e)(2)(ii) of this section, the means by which enrollees may obtain a 
coverage determination under Sec.  423.566, including an exception to a 
coverage rule 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 providing--
    (i) 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
    (ii) 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.
* * * * *

0
53. Section 423.128 is amended by revising paragraphs (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) * * *
    (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).
* * * * *

0
54. Section 423.129 is added to read as follows:


Sec.  423.129  Resolution of complaints in complaints tracking module.

    (a) Definitions. For the purposes of this regulation, the following 
terms have the following meanings:
    Assignment date is the date CMS assigns a complaint to a particular 
Part D sponsor in the Complaints Tracking Module.
    Complaints Tracking Module is an electronic system maintained by 
CMS to record and track complaints submitted to CMS about Medicare 
health and drug plans from beneficiaries and others.
    Immediate need complaint is a complaint involving a situation that 
prevents a beneficiary from accessing care or a service for which they 
have an immediate need. This includes when the beneficiary currently 
has enough of the drug or supply to which they are seeking access to 
last for 2 or fewer days.
    Urgent complaint is a complaint involving a situation that prevents 
a beneficiary from accessing care or a service for which they do not 
have an immediate need. This includes when the beneficiary currently 
has enough of the drug or supply to which they are seeking access to 
last for 3 to 14 days.
    (b) Timelines for complaint resolution--(1) Immediate need 
complaints. The Part D sponsor must resolve immediate need complaints 
within 2 calendar days of the assignment date.
    (2) Urgent complaints. The Part D sponsor must resolve urgent 
complaints within 7 calendar days of the assignment date.
    (3) All other complaints. The Part D sponsor must resolve all other 
complaints within 30 calendar days of the assignment date.
    (4) Extensions. Except for immediate need complaints, urgent 
complaints, and any complaint that requires expedited treatment under 
Sec.  423.564(f), if a complaint is also a grievance within the scope 
of Sec.  423.564 and the requirements for an extension of the time to 
provide a response in Sec.  423.564(e)(2) are met, the Part D sponsor 
may extend the timeline to provide a response.
    (5) Coordination with timeframes for grievances, PACE service 
determination requests, and PACE appeals. When a complaint under this 
section is also a grievance within the scope of Sec. Sec.  423.564 or 
460.120, a PACE service determination request within the scope of Sec.  
460.121, or a PACE appeal within the definition of Sec.  460.122, the 
Part D sponsor must comply with the shortest applicable timeframe for 
resolution of the complaint.
    (c) Timeline for contacting individual filing a complaint. 
Regardless of the type of complaint received, the Part D sponsor must 
attempt to contact the individual who filed a complaint within 7 
calendar days of the assignment date.


Sec.  423.150   [Amended]

0
55. 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
56. Section 423.153 is amended by--
0
a. Revising the section heading;
0
b. Removing the paragraph heading from paragraph (d);;
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 paragraph (d)(2)(i)(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).
0
k. In paragraph (f)(8)(i) introductory text, removing the phrase 
``paragraph (f)(8)(ii)'' and adding in its place ``paragraphs 
(f)(8)(ii) and (iii)'';

[[Page 30835]]

0
l. Revising paragraph (f)(8)(i)(A);
0
m. Redesignating paragraph (f)(8)(ii) as paragraph (f)(8)(iii); and
0
n. Adding a new paragraph (f)(8)(ii).
    The revisions and additions read as follows:


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

* * * * *
    (d) ***
    (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 comprehensive medication review with the beneficiary's 
prescriber, caregiver, or other authorized individual.
* * * * *
    (2) * * *
    (i) * * *
    (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) of this section.
    (1) For 2011, the MTM cost threshold is set at $3,000.
    (2) For 2012 through 2024, the MTM cost threshold is set at $3,000 
increased by the annual percentage specified in Sec.  
423.104(d)(5)(iv).
    (3) For 2025, the MTM cost threshold is set at the average annual 
cost of eight 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, 2025, 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).
    (J) Respiratory disease (including asthma, chronic obstructive 
pulmonary disease (COPD), and other chronic lung disorders).
    (iv) Beginning January 1, 2025, in identifying the number of Part D 
drugs under paragraph (d)(2)(i)(B) of this section, Part D plan 
sponsors must include all Part D maintenance drugs, relying on 
information in a widely accepted, commercially or publicly available 
drug database to make such determinations, and may include all Part D 
drugs.
* * * * *
    (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.
* * * * *
    (f) * * *
    (8) * * *
    (i) * * *
    (A) Within 3 days of the date the sponsor makes the relevant 
determination.
* * * * *
    (ii) In the case of a beneficiary who is determined by a Part D 
sponsor to be exempt, the sponsor must provide the alternate second 
notice within 3 days of the date the sponsor makes the relevant 
determination, even if such determination is made less than 30 days 
from the date of the initial notice described in paragraph (f)(5) of 
this section.
* * * * *


Sec.  423.165   [Amended]

0
57. Section 423.165 is amended in paragraph (b)(2) by removing the 
phrase ``MTMPs'' and adding the phrase ``MTM programs'' in its place.

0
58. Section 423.184 is amended by--
0
a. Revising paragraph (d)(1)(v);
0
b. Reserving paragraph (g)(1)(ii); and
0
c. Adding paragraph (h)(3).
    The revision and addition read as follows:


Sec.  423.184  Adding, updating, and removing measures.

* * * * *
    (d) * * *
    (1) * * *
    (v) Add alternative data sources or expand modes of data 
collection.
* * * * *
    (g) * * *
    (1) * * *
    (ii) [Reserved]
* * * * *
    (h) * * *
    (3) Beginning with the 2025 measurement year (2027 Star Ratings), 
Part D sponsor may request that CMS review its contract's 
administrative data for Patient Safety measures provided that the 
request is received by the annual deadline set by CMS for the 
applicable Star Ratings year.
* * * * *

0
59. Section 423.186 is amended by--
0
a. Revising paragraph (e)(2);
0
b. Revising paragraph (f)(2)(i)(B); and
0
c. Adding paragraphs (f)(3)(viii)(A) and (B).
    The revisions and addition read as follows:


Sec.  423.186  Calculation of Star Ratings.

* * * * *
    (e) * * *
    (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, a new or 
substantively updated measure will be assigned the weight associated 
with its category.
* * * * *
    (f) * * *
    (2) * * *
    (i) * * *
    (B) To determine a contract's final adjustment category, contract 
enrollment is determined using enrollment data for the month of 
December for the measurement period of the Star Ratings year.
    (1) For the first 2 years following a consolidation, for the 
surviving contract of a contract consolidation involving two or more 
contracts for health or drug services of the same plan type under the 
same parent organization, the enrollment data for the month of December 
for the measurement period of the Star Ratings year are combined

[[Page 30836]]

across the surviving and consumed contracts in the consolidation.
    (2) The count of beneficiaries for a contract is restricted to 
beneficiaries that are alive for part or all of the month of December 
of the applicable measurement year.
    (3) A beneficiary is categorized as LIS/DE if the beneficiary was 
designated as full or partially dually eligible or receiving a LIS at 
any time during the applicable measurement period.
    (4) Disability status is determined using the variable original 
reason for entitlement (OREC) for Medicare using the information from 
the Social Security Administration and Railroad Retirement Board record 
systems.
* * * * *
    (3) * * *
    (viii) * * *
    (A) In the case of contract consolidations involving two or more 
contracts for health or drug services of the same plan type under the 
same parent organization, CMS calculates the HEI reward for the 
surviving contract accounting for both the surviving and consumed 
contract(s). For the first year following a consolidation, the HEI 
reward for the surviving contract is calculated as the enrollment-
weighted mean of the HEI reward of the consumed and surviving contracts 
using total contract enrollment from July of the most recent 
measurement year used in calculating the HEI reward. A reward value of 
zero is used in calculating the enrollment-weighted mean for contracts 
that do not meet the minimum percentage of enrollees with the SRF 
thresholds or the minimum performance threshold specified at paragraph 
(f)(3)(vii) of this section.
    (B) For the second year following a consolidation when calculating 
the HEI score for the surviving contract, the patient-level data used 
in calculating the HEI score will be combined from the consumed and 
surviving contracts and used in calculating the HEI score.
* * * * *

0
60. Section 423.265 is amended by adding paragraph (b)(5) to read as 
follows:


Sec.  423.265  Submission of bids and related information.

    (b) * * *
* * * * *
    (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.
* * * * *


Sec.  423.293   [Amended]

0
61. 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
62. 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;
    (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. (i) 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 reduces the premium the 
Part D sponsor is allowed to charge a Part D enrollee by the amounts 
incorrectly collected or otherwise due.
    (ii) 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

[[Page 30837]]

this part with respect to retroactive collection of premiums.

0
63. Section 423.308 is amended by adding in the definition for 
``Reopening'' in alphabetical order to read as follows:


Sec.  423.308   Definitions and terminology.

* * * * *
    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
64. 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 notifies the sponsor(s) that will be included in the 
reopening of its intention to conduct a global or targeted reopening 
when it is necessary for the sponsor(s) to submit prescription drug 
event (PDE) data or direct and indirect remuneration (DIR) for the 
reopening. The notification to sponsor(s) must include the following:
    (1) The date by which PDE or DIR data must be accepted by CMS to be 
included in the reopening, which is at least 90 calendar days after the 
date of the notification.
    (2) A statement indicating the Part D contracts or types of 
contracts that is included in the reopening.
    (f) CMS announces when it has completed a reopening and provide the 
sponsor(s) with all of 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 is 
available to the sponsor.
    (4) The date by which a sponsor must submit an appeal, in 
accordance with 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 ``Notice of final settlement,'' as 
described at Sec.  423.521(a), as of the date CMS announces the 
completion of the reopening in accordance with 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
65. Section 423.501 is amended by adding the definitions of ``Final 
settlement adjustment period'', ``Final settlement amount'', and 
``Final settlement process'' in alphabetical order to read as follows:


Sec.  423.501   Definitions.

* * * * *
    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.
    Final settlement amount means 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, nonrenewed, 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 
all of 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 of this chapter).
    (2) Part D annual reconciliation (described in Sec.  423.343).
    (3) Coverage Gap Discount Program annual reconciliation (described 
in Sec.  423.2320).
    (4) MLR remittances (described in Sec. Sec.  422.2470 of this 
chapter and 423.2470).
    Final settlement process means for a contract that has been 
consolidated, nonrenewed, or terminated, the process by which CMS does 
all of the following:
    (1) Calculates the final settlement amount.
    (2) Issues the final settlement amount along with supporting 
documentation in the notice of final settlement to the Part D sponsor.
    (3) Receives responses from the Part D sponsor requesting an appeal 
of the final settlement amount.
    (5) 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 is calculated after all applicable reconciliations 
have occurred after a contract has been consolidated, nonrenewed, or 
terminated.
* * * * *

0
66. Section 423.503 is amended by--
0
a. Adding paragraph headings for paragraphs (a)(1) through (3) and 
adding paragraph (a)(4); and
0
b. Revising paragraphs (b)(1)(i)(A) and (C).
    The addition and revisions read as follows:


Sec.  423.503  Evaluation and determination procedures.

* * * * *
    (a) * * *
    (1) Information used to evaluate applications. * * *
    (2) Issuing application determination. * * *
    (3) Limitation on PDP contracts under a single parent organization 
* * *
    (4) Substantially incomplete applications. (i) CMS does not 
evaluate or issue a notice of determination described in Sec.  
423.503(c) 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.
* * * * *

[[Page 30838]]

    (b) * * *
    (1) * * *
    (i) * * *
    (A) Was under an intermediate sanction under subpart O of this 
part, or a determination by CMS to prohibit the enrollment of new 
enrollees under Sec.  423.2410(c).
* * * * *
    (C) Filed for or is currently in federal or state bankruptcy 
proceedings.
* * * * *

0
67. Section 423.505 is amended by revising paragraph (b)(22) and adding 
paragraph (i)(6) to read as follows:


Sec.  423.505  Contract provisions.

* * * * *
    (b) * * *
    (22) As described in Sec.  423.129, address and resolve complaints 
received by CMS against the Part D sponsor in the Complaints Tracking 
Module.
* * * * *
    (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.
    (iv) Contracting with or selection of prescription drug providers 
for inclusion in the Part D sponsor's network.

0
68. 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 does not 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
69. 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 requires, 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 is not 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
69a. Section 423.509 is amended by adding paragraph (f) to read as 
follows:


Sec.  423.509  Termination of contract by CMS.

* * * * *
    (f) If CMS makes a determination to terminate a Part D sponsor's 
contract under Sec.  423.509(a), CMS also imposes the intermediate 
sanctions at Sec.  423.750(a)(1) and (3) in accordance with the 
following procedures:
    (1) The sanction will go into effect 15 days after the termination 
notice is sent.
    (2) The Part D sponsor will have a right to appeal the intermediate 
sanction in the same proceeding as the termination appeal specified in 
paragraph (d) of this section.
    (3) A request for a hearing does not delay the date specified by 
CMS when the sanction becomes effective.
    (4) The sanction will remain in effect--
    (i) Until the effective date of the termination; or
    (ii) If the termination decision is overturned on appeal, when a 
final decision is made by the hearing officer or Administrator.

0
69b. Section 423.514 is amended by revising paragraph (a) introductory 
text and paragraph (a)(2) to read as follows:


Sec.  423.514  Validation of Part D reporting requirements.

    (a) Required information. Each Part D plan sponsor must have an 
effective procedure to develop, compile, evaluate, and report to CMS, 
to its enrollees, and to the general public, at the times and in the 
manner that CMS requires, information indicating the following--
* * * * *
    (2) The procedures related to and utilization of its services and 
items.
* * * * *

0
69c. Section 423.521 is added 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 for the contract that has been 
consolidated, nonrenewed, or terminated, which may be one of the 
following:
    (i) An amount due to the Part D sponsor.
    (ii) An amount due from the Part D sponsor.
    (iii) $0 if nothing is due to or from the Part D sponsor.
    (2) Relevant banking and financial mailing instructions for Part D 
sponsors that owe CMS a final settlement amount.
    (3) Relevant CMS contact information.
    (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 has 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 does 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 remits payment to the 
Part D sponsor within 60 calendar days from the date of the issuance of 
the notice of final settlement.

[[Page 30839]]

    (2) For Part D sponsors that owe CMS money, the Part D sponsor is 
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 refers the debt owed 
to CMS to the Department of the 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 conducts 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 Sec.  423.521(a), is issued to the Part D sponsor, CMS--
    (1) No longer applies retroactive payment adjustments to the 
terminated, consolidated or nonrenewed contract; and
    (2) There are no adjustments applied to amounts used in the 
calculation of the final settlement amount.

0
69d. Section 423.522 is added 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 do all of the following:
    (A) Specify the calculation with which the Part D sponsor disagrees 
and the reasons for its disagreement.
    (B) Include evidence supporting the assertion that CMS's 
calculation of the final settlement amount is incorrect.
    (C) Not include new reconciliation data or data that was submitted 
to CMS after the final settlement notice was issued. CMS does 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.
    (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's 
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 (a)(2)(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's 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 is 
conducted in accordance with the following:
    (A) The CMS Hearing Officer provides written notice of the time and 
place of the informal hearing at least 30 calendar days before the 
scheduled date.
    (B) The CMS reconsideration official 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 is 
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 (a)(2)(iv) of this section. 
The Part D sponsor may submit written arguments to the Administrator 
for review.
    (ii) Discretionary review. (A) After receiving a request for 
review, the Administrator has the discretion to elect to review the 
hearing officer's determination in accordance with paragraph 
(a)(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.
    (B) If the Administrator declines to review the hearing officer's 
decision, the hearing officer's decision is final and binding.
    (iii) Electing to review. If the Administrator elects to review the 
hearing officer's decision, the Administrator reviews 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's calculation of the final 
settlement amount. CMS does 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.
    (e) 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 is 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 communicates with the Part D sponsor to complete the financial 
transaction associated with the issuance or payment of the final 
settlement amount, as appropriate.
    (f) 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.

0
70. Section 423.530 is added to read as follows:

[[Page 30840]]

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 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 is not 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 the following:
    (A) The current year's premium for the non-renewing PBP.
    (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 does 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 in accordance with 
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 is not 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), for the region in which the PBP 
operates.
    (d) Procedures. (1) A PDP sponsor must submit the following:
    (i) All plan crosswalks described in paragraph (b) of this section 
in writing through the bid submission process in HPMS by the bid 
submission deadline.
    (ii) 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.
    (2) CMS verifies the requests and notifies a requesting PDP sponsor 
of the approval or denial after the crosswalk exception request 
deadline.

0
71. 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

[[Page 30841]]

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 as 
described in Sec.  423.509(a)(4)(ix) and the contract may be subject to 
intermediate enrollment and marketing sanctions as outlined in Sec.  
423.750(a)(1) and (a)(3). Intermediate sanctions imposed as part of 
this section remain in place until CMS approves the change of ownership 
(including execution of an approved novation agreement), or the 
contract is terminated.
    (i)(A) 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
    (B) 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 paragraph (e)(1) of this section, submit the documentation 
required under Sec.  423.551(d) for review and approval by CMS.
    (2) If the new owner fails to begin the processes required under 
paragraph (e)(1)(i) or (e)(1)(ii) of this section, within 30 days of 
imposition of intermediate sanctions as outlined in paragraph (e)(1) of 
this section, the existing contract is subject to termination in 
accordance with Sec.  423.509(a)(4)(ix).
* * * * *

0
72. 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
73. Section 423.578 is amended by revising paragraph (d) to read as 
follows:


Sec.  423.578   Exceptions process.

* * * * *
    (d) Notice regarding formulary changes. Whenever a Part D plan 
sponsor makes any negative formulary change, as defined in Sec.  
423.100, to its CMS-approved formulary, the Part D plan sponsor must 
provide notice in accordance with the requirements at Sec.  
423.120(b)(5) and (f).

0
74. Section 423.582 is amended by revising paragraph (b) to read as 
follows:


Sec.  423.582  Request for a standard redetermination.

* * * * *
    (b) Timeframe for filing a request. Except as provided in paragraph 
(c) of this section, a request for a redetermination must be filed 
within 60 calendar days after receipt of the written coverage 
determination notice or the at-risk determination under a drug 
management program in accordance with Sec.  423.153(f).
    (1) The date of receipt of the coverage determination or at-risk 
determination is presumed to be 5 calendar days after the date of the 
written coverage determination or at-risk determination, unless there 
is evidence to the contrary.
    (2) For purposes of meeting the 60-calendar day filing deadline, 
the request is considered as filed on the date it is received by the 
Part D plan sponsor or delegated entity specified in the Part D plan 
sponsor's written coverage determination or at-risk determination.
* * * * *

0
75. Section 423.584 is amended by revising paragraph (b) introductory 
text and adding paragraph (b)(3) and (4) to read as follows:


Sec.  423.584   Expediting certain redeterminations.

* * * * *
    (b) Procedure and timeframe for filing a request. A request for 
redetermination must be filed within 60 calendar days after receipt of 
the written coverage determination notice or at-risk determination 
notice.
* * * * *
    (3) The date of receipt of the coverage determination or at-risk 
determination is presumed to be 5 calendar days after the date of the 
written coverage determination or at-risk determination, unless there 
is evidence to the contrary.
    (4) For purposes of meeting the 60-calendar day filing deadline, 
the request is considered as filed on the date it is received by the 
Part D plan sponsor or delegated entity specified the Part D plan 
sponsor's written coverage determination or at-risk determination.
* * * * *

0
76. Section 423.600 is amended by revising paragraph (a) to read as 
follows:


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

    (a) An enrollee who is dissatisfied with the redetermination of a 
Part D plan sponsor has a right to a reconsideration by an independent 
review entity that contracts with CMS. The prescribing physician or 
other prescriber (acting on behalf of an enrollee), upon providing 
notice to the enrollee, may request an IRE reconsideration. The 
enrollee, or the enrollee's prescribing physician or other prescriber 
(acting on behalf of the enrollee) must file a written request for 
reconsideration with the IRE within 60 calendar days after receipt of 
the written redetermination by the Part D plan sponsor.
    (1) The date of receipt of the redetermination is presumed to be 5 
calendar days after the date of the Part D plan sponsor's written 
redetermination, unless there is evidence to the contrary.
    (2) For purposes of meeting the 60-calendar day filing deadline, 
the request is considered as filed on the date it is received by the 
IRE specified in the Part D plan sponsor's written redetermination.
* * * * *

0
77. Section 423.760 is amended by revising paragraph (b)(3) to read as 
follows:


Sec.  423.760  Definitions for calculating penalty amounts.

* * * * *
    (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) CMS sets minimum penalty amounts in accordance with paragraphs 
(b)(1) and (2) of this section.
    (iii) CMS announces the standard minimum penalty amounts and

[[Page 30842]]

aggravating factor amounts for per determination and per enrollee 
penalties on an annual basis.
    (iv) 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
78. Section 423.2267 is amended by revising paragraph (e)(33) to read 
as follows:


Sec.  423.2267  Required materials and content.

* * * * *
    (e) * * *
    (33) Notice of availability of language assistance services and 
auxiliary aids and services (Notice of Availability).
    (i) Prior to contract year 2026 marketing on September 30, 2025, 
the notice is referred to as the Multi-language insert (MLI). This is a 
standardized communications material which states, ``We have free 
interpreter services to answer any questions you may have about our 
health or drug plan. To get an interpreter, just call us at [1-xxx-xxx-
xxxx]. Someone who speaks [language] can help you. This is a free 
service.'' in the following languages: Spanish, Chinese, Tagalog, 
French, Vietnamese, German, Korean, Russian, Arabic, Italian, 
Portuguese, French Creole, Polish, Hindi, and Japanese.
    (A) Additional languages that meet the 5-percent service area 
threshold, as required under paragraph (a)(2) of this section, must be 
added to the MLI used in that service area. A plan may also opt to 
include in the MLI any additional language that do not meet the 5 
percent service area threshold, where it determines that this inclusion 
would be appropriate.
    (B) Except where otherwise provided in paragraph (e)(33)(i)(G) of 
this section, the MLI must be provided with all required materials 
under paragraph (e) of this section.
    (C) The MLI may be included as a part of the required material or 
as a standalone material in conjunction with the required material.
    (D) When used as a standalone material, the MLI may include 
organization name and logo.
    (E) When mailing multiple required materials together, only one MLI 
is required.
    (F) The MLI may be provided electronically when a required material 
is provided electronically as permitted under paragraph (d)(2) of this 
section.
    (G) At plan option for CY 2025 marketing and communications 
beginning September 30, 2024, the plan may use the model notice 
described in Sec.  423.2267(e)(33)(ii) to satisfy the MLI requirements 
set forth in paragraph (e)(33)(i) of this section.
    (ii) For CY 2026 marketing and communications beginning September 
30, 2025, the required notice is referred to as the Notice of 
availability of language assistance services and auxiliary aids and 
services (Notice of Availability). This is a model communications 
material through which MA organizations must provide a notice of 
availability of language assistance services and auxiliary aids and 
services that, at a minimum, states that the MA organization provides 
language assistance services and appropriate auxiliary aids and 
services free of charge.
    (A) This notice of availability of language assistance services and 
auxiliary aids and services must be provided in English and at least 
the 15 languages most commonly spoken by individuals with limited 
English proficiency of the relevant State or States associated with the 
plan's service area and must be provided in alternate formats for 
individuals with disabilities who require auxiliary aids and services 
to ensure effective communication.
    (B) If there are additional languages in a particular service area 
that meet the 5 percent service area threshold, described in paragraph 
(a)(2) of this section, beyond the languages described in paragraph 
(e)(33)(i) of this section, the notice of availability of language 
assistance services and auxiliary aids and services must also be 
translated into those languages. MA organizations may also opt to 
translate the notice in any additional languages that do not meet the 
5-percent service area threshold, where the MA organization determines 
that this inclusion would be appropriate.
    (C) The notice must be provided with all required materials under 
paragraph (e) of this section.
    (D) The notice may be included as a part of the required material 
or as a standalone material in conjunction with the required material.
    (E) When used as a standalone material, the notice may include 
organization name and logo.
    (F) When mailing multiple required materials together, only one 
notice is required.
    (G) The notice may be provided electronically when a required 
material is provided electronically as permitted under paragraph (d)(2) 
of this section.
* * * * *

0
79. Section 423.2274 is amended by--
0
a. Revising paragraph (i) of the definition of ``Compensation'' and the 
definition of ``Fair market value'' in paragraph (a);
0
b. Adding paragraph (c)(13);
0
c. Revising paragraphs (c)(5), (d)(1)(ii), (d)(2) introductory text, 
(d)(3) introductory text, (e)(1) and (e)(2);
0
d. Adding paragraph (g)(4).
    The revisions and addition read as follows:


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

* * * * *
    (a) * * *
    Compensation. (i) Includes monetary or non-monetary remuneration of 
any kind relating to the sale, renewal, or services related to a plan 
or product offered by a Part D sponsor including, but not limited to 
the following:
    (A) Commissions.
    (B) Bonuses.
    (C) Gifts.
    (D) Prizes or Awards.
    (E) Beginning with contract year 2025, payment of fees to comply 
with state appointment laws, training, certification, and testing 
costs.
    (F) Beginning with contract year 2025, reimbursement for mileage 
to, and from, appointments with beneficiaries.
    (G) Beginning with contract year 2025, reimbursement for actual 
costs associated with beneficiary sales appointments such as venue 
rent, snacks, and materials.
    (H) Beginning with contract year 2025, any other payments made to 
an agent or broker that are tied to enrollment, related to an 
enrollment in a Part D plan or product, or for services conducted as a 
part of the relationship associated with the enrollment into a Part D 
plan or product.
* * * * *
    Fair market value (FMV) means, for purposes of evaluating agent or 
broker compensation under the requirements of this section only, the 
amount that CMS determines could reasonably be expected to be paid for 
an enrollment or continued enrollment into a Part D plan. Beginning 
January 1, 2021, the national FMV is 81. In contract year 2025, there 
will be a one-time increase of $100 to the FMV to account for 
administrative payments included under the compensation rate. For 
subsequent years, FMV is calculated by adding the current year FMV and 
the produce of the current year FMV and Annual Percentage Increase for 
Part D, which is published for each year in the rate announcement 
issued under Sec.  422.312.
* * * * *
    (c) * * *

[[Page 30843]]

    (5) On an annual basis for plan years through 2024, by the last 
Friday in July, report to CMS whether the MA organization intends to 
use employed, captive, or independent agents or brokers in the upcoming 
plan year and the specific rates or range of rates the plan will pay 
independent agents and brokers. Following the reporting deadline, MA 
organizations may not change their decisions related to agent or broker 
type, or their compensation rates and ranges, until the next plan year.
* * * * *
    (13) Beginning with contract year 2025, ensure that no provision of 
a contract with an agent, broker, or other TPMO has a direct or 
indirect effect of creating an incentive that would reasonably be 
expected to inhibit an agent or broker's ability to objectively assess 
and recommend which plan best fits the health care needs of a 
beneficiary.
* * * * *
    (d) * * *
    (1) * * *
    (ii) For contract years through contract year 2024, Part D sponsors 
may determine, through their contracts, the amount of compensation to 
be paid, provided it does not exceed limitations outlined in this 
section. Beginning with contract year 2025, Part D sponsors are limited 
to the compensation amounts outlined in this section.
    (2) Initial enrollment year compensation. For each enrollment in an 
initial enrollment year for contract years through contract year 2024, 
Part D sponsors may pay compensation at or below FMV.
* * * * *
    (3) Renewal compensation. For each enrollment in a renewal year for 
contract years through contract year 2024, Part D sponsors may pay 
compensation at a rate of up to 50 percent of FMV. For contract years 
beginning with contract year 2025, for each enrollment in a renewal 
year, MA organizations may pay compensation at 50 percent of FMV.
* * * * *
    (e) * * *
    (1) For contract years through contract year 2024, payments for 
services other than enrollment of beneficiaries (for example, training, 
customer service, agent recruitment, operational overhead, or 
assistance with completion of health risk assessments) must not exceed 
the value of those services in the marketplace.
    (2) Beginning with contract year 2025, administrative payments are 
included in the calculation of enrollment-based compensation.
    (g) * * *
    (4) Beginning October 1, 2024, personal beneficiary data collected 
by a TPMO for marketing or enrolling them into a Part D plan may only 
be shared with another TPMO when prior express written consent is given 
by the beneficiary. Prior express written consent from the beneficiary 
to share the information and be contacted for marketing or enrollment 
purposes must be obtained through a clear and conspicuous disclosure 
that lists each entity receiving the data and allows the beneficiary to 
consent or reject to the sharing of their data with each individual 
TPMO.

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

0
80. 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
80a. Section 460.12 is amended by revising paragraph (a) 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 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 in accordance 
with 42 CFR part 423, subpart K.

0
81. Section 460.18 is amended by adding paragraphs (c) and (d) to read 
as follows:


Sec.  460.18   CMS evaluation of applications.

* * * * *
    (c) Use of information from a current or prior PACE program 
agreement. (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 following conditions apply with respect to the 
applicant during the applicable 12-month review period:
    (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. Corrective action 
requests issued under Sec.  460.194 are not included in the point 
calculations.
    (ii) Each warning letter issued under Sec.  460.19(c)(2) during the 
performance period counts for 3 points.
    (iii) Each notice of non-compliance 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.
    (d) If CMS has terminated a PACE program agreement under Sec.  
460.50, or

[[Page 30844]]

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
81. 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 Act and 
regulations in this chapter.
    (2) If CMS has not already articulated a measure for determining 
non-compliance, CMS may determine that a 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 non-compliance, 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 non-compliance was self-reported.
    (6) 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.
    (c) CMS may take one of three types of compliance actions based on 
the nature of the non-compliance.
    (1) Notice of non-compliance. A notice of non-compliance 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 non-compliance 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 non-compliance 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 non-compliance 
identified in prior compliance actions, has substantially impacted 
beneficiaries or the program with its non-compliance, or must implement 
a detailed plan to correct the underlying causes of the non-compliance.

0
82. Section 460.20 is amended by revising paragraph (c) to read 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) is withdrawn by 
CMS and the applicant is notified accordingly. The applicant is not 
entitled to a fair hearing when CMS withdraws an incomplete application 
on this basis.

0
83. 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.
    (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; and
    (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 do both of the 
following:
    (1) Assess whether staff have been exposed to or have any symptoms 
of the following diseases:
    (i) COVID-19.
    (ii) Diphtheria.
    (iii) Influenza.
    (iv) Measles.
    (v) Meningitis.
    (vi) Meningococcal Disease.
    (vii) Mumps.
    (viii) Pertussis.
    (ix) Pneumococcal Disease.
    (x) Rubella.
    (xi) Streptococcal Infection.
    (xii) Varicella Zoster Virus.
    (xiii) 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.
* * * * *

0
84. 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 follows:


Sec.  460.71  Oversight of direct participant care.

* * * * *
    (b) * * *
    (4) Be medically cleared for communicable diseases before engaging

[[Page 30845]]

in direct participant contact as required under Sec.  460.64(a)(5).
    (5) Have all immunizations up to date before engaging in direct 
participant contact.
* * * * *

0
85. Section 460.98 is amended by:
0
a. Removing paragraph (b)(4);
0
b. Redesignating paragraphs (b)(5) and (c) through (e) as paragraphs 
(b)(4) and (d) through (f), respectively; and
0
c. Adding new paragraph (c).
    The addition reads as follows:


Sec.  460.98   Service delivery.

* * * * *
    (c) Timeframes for arranging and providing services--(1) 
Medications. 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
87. 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 the following:
    (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 as expeditiously as the participant's health condition 
requires, but no later than 48 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 7 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
88. 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
87. Section 460.106 is revised to read as follows:


Sec.  460.106  Plan of care.

    (a) Definition and basic requirements--(1) Definition. 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.
    (2) Basic requirements. (i) 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.
    (ii) Each plan of care must do all of the following:
    (A) Take into consideration the most current assessment findings.
    (B) 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 from the date the latest plan of care was finalized the 
interdisciplinary team must complete a reevaluation of, and if 
necessary,

[[Page 30846]]

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.
    (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.
    (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.
    (xiii) Communication, including any identified language barriers.
    (2)(i) Identify each intervention (the care and services) needed to 
meet each medical, physical, emotional, and social needs.
    (ii) It 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. The team must continuously 
do all of the following:
    (1) 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) 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 or the participant's caregiver or both 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 do all of the following:
    (1) Establish and implement a process to document and maintain 
records related to all requirements for plans of care, in the 
participant's medical record.
    (2) Ensure that the most recent care plan is available to all 
employees and contractors within the organization as needed.

0
88. 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;
0
f. Adding paragraph (c)(5);
0
g. Revising paragraph (e)(1);
0
h. Redesignating paragraphs (e)(2) through (6) as (e)(3) through (7);
0
i. Adding new paragraph (e)(2);
0
j. Revising the paragraph heading for paragraphs (g) introductory text 
and revise paragraph (g)(2); and
0
k. Adding paragraph (g)(3).
    The additions and revisions 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 all of the following:
    (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.
    (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) is provided in addition to or in lieu of the 
care the participant is currently receiving.
    (iii) Identify all services that are impacted and provide a 
detailed explanation of how the services will be impacted if the 
participant 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.

[[Page 30847]]

    (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.
    (ii) 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 all of 
the following:
    (i) Have all treatment options fully explained.
    (ii) Refuse any and all care and services.
    (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 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
89. Section 460.119 is added to read as follows:


Sec.  460.119   Resolution of complaints in the complaints tracking 
module.

    The PACE organization must comply with requirements of Sec. Sec.  
422.125 and 422.504(a)(15) of this chapter, through the CMS complaints 
tracking module as defined in Sec.  422.125(a) of this chapter, address 
and resolve complaints received by CMS against the PACE organization 
within the required timeframes. References to the MA organization or MA 
plan in those regulations must be read as references to the PACE 
organization. Nothing in this section should be construed to affect the 
PACE organization's obligation to resolve grievances as described in 
Sec.  460.120, service determinations as described in Sec.  460.121, or 
appeals as described in Sec.  460.122.

0
90. Section 460.120 is revised to read as follows:


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 all of the following:
    (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 (j) 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.
    (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. The PACE 
organization must do all of the following:
    (1) 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) 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) 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 (h)(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) A summary of the pertinent findings or conclusions regarding 
the concerns for each distinct issue that requires investigation.
    (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.
    (i) 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.

[[Page 30848]]

    (ii) 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 (h)(1) through (3) of 
this section.
    (i) Continuing care during grievance process. The PACE organization 
must continue to furnish all required services to the participant 
during the grievance process.
    (j) 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.
    (k) 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 (j) of this section, must be available to the 
interdisciplinary team to ensure that all members remain alert to 
pertinent participant information.
    (l) Analyzing grievance information. The PACE organization must 
aggregate and analyze the information collected under paragraph (k) of 
this section for purposes of its internal quality improvement program.

0
91. Section 460.121 is amended by revising paragraph (b)(2) to read as 
follows:


Sec.  460.121  Service determination process.

* * * * *
    (b) * * *
    (2) Requests that do not constitute a service determination 
request. Requests to initiate, modify, or continue a service do not 
constitute a service determination request if the request is made prior 
to completing the development of the initial plan of care. For all 
requests identified in this section, the interdisciplinary team must--
    (i) Document the request; and
    (ii) Discuss the request during the care planning meeting, and 
either:
    (A) Approve the requested service and incorporate it into the 
participant's initial plan of care, or
    (B) Document their rationale for not approving the service in the 
initial plan of care.
* * * * *

0
92. Section 460.194 is amended by revising paragraph (b) to read as 
follows:


Sec.  460.194  Corrective action.

* * * * *
    (b) At their discretion, CMS or the State administering agency may 
monitor the effectiveness of corrective actions.
* * * * *

0
93. Section 460.198 is added 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.
* * * * *


Sec.  460.202  [Amended]

0
94. Section 460.202(b) is amended by removing the last sentence.

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-07105 Filed 4-4-24; 5:10 pm]
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