[Federal Register Volume 90, Number 71 (Tuesday, April 15, 2025)]
[Rules and Regulations]
[Pages 15792-15921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-06008]
[[Page 15791]]
Vol. 90
Tuesday,
No. 71
April 15, 2025
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 and Medicaid Programs; Contract Year 2026 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
Federal Register / Vol. 90, No. 71 / Tuesday, April 15, 2025 / Rules
and Regulations
[[Page 15792]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 417, 422, 423, and 460
[CMS-4208-F]
RIN 0938-AV40
Medicare and Medicaid Programs; Contract Year 2026 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
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule revises 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 prescription drug coverage, the Medicare
Prescription Payment Plan, dual eligible special needs plans (D-SNPs),
Part C and D Star Ratings, and other programmatic areas, including the
Medicare Drug Price Negotiation Program. 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, 2025.
Applicability dates: The provisions in this rule are applicable to
coverage beginning January 1, 2026, except as otherwise noted. The
updates to marketing and communication provisions at Sec. Sec.
422.2267(e)(30) and 423.2267(e)(32) for integrated member ID cards are
applicable for all contract year (CY) 2027 marketing and communications
beginning October 1, 2026. The requirements related to eligibility and
election, targeted outreach, and general outreach regarding
participation in the Medicare Prescription Payment Plan for 2026 at
Sec. Sec. 423.2267(e)(45) through (51), 423.2265(b)(16), and
423.137(d), (e), and (m) are applicable beginning October 1, 2025. The
health risk assessment (HRA) provision that we are finalizing at Sec.
422.101(f)(1)(v) is applicable beginning October 1, 2026, for HRAs
conducted for effective dates of enrollment on or after January 1,
2027. The addition of the updated Part C Breast Cancer Screening
measure as described in section III.E. of the final rule is applicable
for 2029 Star Ratings beginning January 1, 2027.
FOR FURTHER INFORMATION CONTACT:
Lucia Patrone, (410) 786-8621--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.
Alissa Stoneking, (410) 786-1120--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.
[email protected]--Parts C and D Star Ratings
Issues.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
A. 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 for contract
year 2026, as well as codify existing Part C and Part D sub-regulatory
guidance.
In this final rule, CMS codifies certain Part D requirements from
the Inflation Reduction Act of 2022 (IRA). Specifically, this rule
codifies the IRA's vaccine and insulin cost-sharing requirements and
codifies the program instruction for the Medicare Prescription Payment
Plan program. Additionally, CMS is finalizing two IRA-related
provisions that are needed to help ensure that selected drugs with
maximum fair prices (MFPs) in effect under the Negotiation Program are
available to beneficiaries at the point of dispensing and that the MFPs
are effectuated for dispensing entities timely.
B. Summary of the Major Provisions
1. Vaccine Cost-Sharing Changes
We are finalizing as proposed this provision to implement section
11401 of the Inflation Reduction Act of 2022 (IRA), which amends
section 1860D-2 of the Social Security Act (the Act) to require that,
effective for plan years beginning on or after January 1, 2023, the
Medicare Part D deductible shall not apply to, and there is no cost
sharing for, an adult vaccine recommended by the Advisory Committee on
Immunization Practices (ACIP) covered under Part D.
2. Insulin Cost-Sharing Changes
We are finalizing as proposed this provision to implement section
11406 of the IRA, which amends section 1860D-2 of the Act to require
that, effective for plan years beginning on or after January 1, 2023,
the Medicare Part D deductible shall not apply to covered insulin
products, and the Part D cost-sharing amount for a one-month supply of
each covered insulin product must not exceed the statutorily defined
``applicable copayment amount'' for all enrollees. The applicable
copayment amount for 2023, 2024, and 2025 is $35. For 2026 and each
subsequent year, in accordance with the statute, we are finalizing
that, with respect to a covered insulin product covered under a
prescription drug plan (PDP) or a Medicare Advantage prescription drug
(MA-PD) plan prior to an enrollee reaching the annual out-of-pocket
threshold, the ``covered insulin product applicable cost-sharing
amount'' is the lesser of--
$35;
An amount equal to 25 percent of the maximum fair price
established for the covered insulin product in accordance with Part E
of title XI; or
An amount equal to 25 percent of the negotiated price, as
defined in Sec. 423.100, of the covered insulin product under the PDP
or MA-PD plan.
3. Medicare Prescription Payment Plan
We proposed regulatory changes to codify agency guidance
implementing section 11202 of the IRA, which establishes the Medicare
Prescription Payment Plan and requires each PDP sponsor offering a
prescription drug plan and each MA organization offering an MA-PD plan
to provide any enrollee of such plan, including an enrollee who is
subsidy eligible, the option to elect with respect to a plan year to
pay cost sharing under the plan in monthly amounts that are capped.
Specifically, we proposed to add new Sec. 423.137 establishing
requirements for the Medicare Prescription Payment Plan, add several
new Part D required materials and content at Sec. 423.2267, add
Medicare Prescription Payment Plan information to the list of required
content for Part D sponsor websites at Sec. 423.2265, and add the
Medicare Prescription Payment Plan to the list of Part D requirements
waived for the
[[Page 15793]]
Limited Income Newly Eligible Transition (LI NET) program at Sec.
423.2536. We also proposed to codify the requirements we established in
the Final CY 2025 Part D Redesign Program Instructions for the
treatment for Medical Loss Ratio (MLR) purposes of Medicare
Prescription Payment Plan unsettled balances for 2026 and subsequent
years.
We are finalizing all requirements for 2026 and future years as
proposed with a few exceptions:
Modified the timing and content requirements for the
renewal notice at Sec. 423.137(d)(10)(iv).
Modified the requirements for the telephonic notice of
election approval at Sec. 423.137(d)(10)(ii).
Modified the requirements for voluntary termination
effective date at Sec. 423.137(f)(2)(i)(A)(1).
Modified timing requirements for the involuntary
termination notice at Sec. 423.137(f)(2)(ii)(D)(1).
Modified Sec. 423.137(i)(2) to state that Part D plan
sponsors should require long-term care pharmacies to provide the
``Medicare Prescription Payment Plan Likely to Benefit Notice'' to the
Part D enrollee (or their authorized representative) at the time of the
pharmacy's typical enrollee cost-sharing billing process.
Modified Sec. 423.137(m)(1) to exempt dual eligible
special needs plans (D-SNPs) from certain general outreach and
education requirements.
Modified Sec. 423.137(j)(7) to remove the requirements
for Part D sponsors to ensure that pharmacies are prepared to provide
information regarding out-of-pocket (OOP) costs for the Medicare
Prescription Payment Plan to a participant at the point of sale (POS).
4. Improving Experiences for Dually Eligible Enrollees
Dually eligible individuals face fragmentation in many parts of the
health care system, including their experiences as enrollees of
Medicare and Medicaid managed care plans. One way in which we seek to
address such fragmentation is through policies that integrate care for
dually eligible individuals. ``Integrated care'' refers to delivery
system and financing approaches that (1) maximize person-centered
coordination of Medicare and Medicaid services; (2) mitigate cost-
shifting incentives between the two programs; and (3) create a seamless
experience for dually eligible individuals. We are finalizing new
Federal requirements for D-SNPs that are applicable integrated plans
to: (1) have integrated member identification (ID) cards that serve as
the ID cards for both the Medicare and Medicaid plans in which an
enrollee is enrolled; and (2) conduct an integrated health risk
assessment (HRA) for Medicare and Medicaid, rather than separate HRAs
for each program. We are also finalizing provisions to codify
timeframes for special needs plans to conduct HRAs and individualized
care plans (ICPs) and prioritize the involvement of the enrollee or the
enrollee's representative, as applicable, in the development of the
ICPs.
5. Timely Submission Requirements for Prescription Drug Event (PDE)
Records
We are finalizing as proposed PDE submission timeframes similar to
those timeframes described in the October 2011 guidance on the timely
submission of PDE records and refer to those timeframes as the General
PDE Submission Timeliness Requirements. CMS is codifying PDE submission
timeframes that initial PDE records are due within 30 calendar days
following the date the claim is received by the Part D sponsor (or its
contracted first tier, downstream, or related entity). Adjustment and
deletion PDE records are due within 90 calendar days following
discovery of the issue requiring a change to the PDE. Resolution of
rejected PDE records are due within 90 calendar days following the
receipt of rejected record status from CMS. In addition, we are
finalizing as proposed regulatory changes at Sec. 423.325(b) to
establish a distinct PDE submission timeliness requirement for selected
drugs, in which CMS requires that a Part D sponsor must submit initial
PDE records for selected drugs (as described at section 1192(c) of the
Act) within 7 calendar days from the date the Part D sponsor (or its
contracted first tier, downstream, or related entity) receives the
claim.
6. Medicare Transaction Facilitator Requirements for Network Pharmacy
Agreements
We are finalizing as proposed our proposal to amend Sec. 423.505
by adding paragraph (q), requiring that Part D sponsors' network
participation agreements with contracting pharmacies, including any
contracts with any first tier, downstream, and related entities require
such pharmacies to be enrolled in the Medicare Drug Price Negotiation
Program's (``Negotiation Program'') Medicare Transaction Facilitator
Data Module (``MTF DM'') and that such pharmacies certify the accuracy
and completeness of their enrollment information in the MTF DM. We
believe the inclusion of the requirement for Part D sponsors' network
pharmacies to be enrolled in the MTF DM that will be added to Part D
sponsors' network contracts with pharmacies will facilitate continued
beneficiary access to selected drugs that are covered Part D drugs,
promote access to negotiated MFPs under the Negotiation Program for
both beneficiaries and dispensing entities, and help ensure accurate
Part D claims information and payment.
7. Clarifying MA Organization Determinations To Enhance Enrollee
Protections in Inpatient Settings
We are finalizing our proposal to clarify that the definition of
``organization determination'' includes MA plan decisions made
concurrent to the enrollee's receipt of services. We are also
finalizing our proposals to codify existing guidance that requires
plans give a provider notice of a coverage decision, in addition to the
enrollee, whenever the provider submits a request on behalf of an
enrollee, as well as our proposal to modify existing regulations to
clarify that an enrollee's liability to pay for services cannot be
determined until an MA organization has made a claims payment
determination. Lastly, we are finalizing our proposal to restrict
plans' ability to use information gathered after the inpatient
admission has taken place when reviewing the appropriateness of the
admission itself.
8. Risk Adjustment Data Updates
We are finalizing a series of provisions related to risk adjustment
data updates. First, we are finalizing a technical change to the
definition of Hierarchical Condition Categories (HCCs) to remove the
reference to a specific version of the ICD, while maintaining a
reference to the ICD in general, to keep the HCC definition in Sec.
422.2 current as newer versions of the ICD become available and are
adopted by the Secretary, as well as substituting the terms ``disease
codes'' with ``diagnosis codes'' and ``disease groupings'' with
``diagnosis groupings'' to be consistent with ICD terminology.
Additionally, we are codifying the longstanding practice of requiring
the collection and mandatory submission of risk adjustment data by PACE
organizations (at Sec. 460.180(b)) and Cost plans (at Sec.
417.486(a)).
C. Summary of Costs and Benefits
[[Page 15794]]
Table 1--Summary of Costs and Benefits
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Provision Description Financial impact
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1. Vaccine Cost-Sharing Changes....... We are codifying section 11401 of the IRA to require that, effective for We do not expect these regulatory
plan years beginning on or after January 1, 2023, the Medicare Part D changes to have an impact on the
deductible shall not apply to, and there is no cost sharing for an adult Medicare Trust Funds.
vaccine recommended by the Advisory Committee on Immunization Practices
(ACIP) covered under Part D.
2. Insulin Cost-Sharing Changes....... We are codifying section 11406 of the IRA to require that the Medicare Part We estimate that this provision
D deductible shall not apply to covered insulin products, and the Part D will increase Federal transfers
cost-sharing amount for a one-month supply of each covered insulin product from the Medicare Supplementary
must not exceed the ``covered insulin product applicable cost-sharing Medical Insurance Trust Fund by
amount.'' approximately $1.2 billion from
2026-2035.
3. Medicare Prescription Payment Plan. We proposed to codify, with limited modifications, agency guidance We do not expect these regulatory
implementing section 11202 of the IRA, which establishes the Medicare changes to have an impact on the
Prescription Payment Plan and requires Part D sponsors to provide all Part Medicare Trust Funds.
D enrollees the option to pay their out-of-pocket (OOP) prescription drug
costs in monthly amounts over the course of the plan year, instead of
paying OOP costs at the point of sale (POS). We are finalizing all
requirements for 2026 and future years as proposed with a few exceptions:
Modified the timing and content requirements for the renewal
notice at Sec. 423.137(d)(10).
Modified the requirements for the telephonic notice of election
approval at Sec. 423.137(d)(10)(ii).
Modified the requirements for voluntary termination effective
date at Sec. 423.137(f)(2)(i)(A)(1).
Modified timing requirements for the involuntary termination
notice at Sec. 423.137(f)(2)(ii)(D)(1).
Modified Sec. 423.137(i)(2) to state that Part D plan sponsors
should require long-term care pharmacies to provide the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' to the Part D
enrollee (or their authorized representative) at the time of the
pharmacy's typical enrollee cost-sharing billing process.
Modified Sec. 423.137(m)(1) to exempt dual eligible special
needs plans (D-SNPs) from certain general outreach and education
requirements.
Modified Sec. 423.137(j)(7) to remove the requirements for
Part D sponsors to ensure that pharmacies are prepared to provide
information regarding OOP costs for the Medicare Prescription Payment
Plan to a participant at the POS.
4. Improving Experiences for Dually We are finalizing new Federal requirements for D-SNPs that are applicable The integrated HRA provisions may
Eligible Enrollees. integrated plans (AIPs) to--(1) have integrated member ID cards that serve cause a small number of AIPs to
as the ID cards for both the Medicare and Medicaid plans in which an incur some upfront costs to make
enrollee is enrolled; and (2) conduct an integrated HRA for Medicare and administrative updates. We do not
Medicaid, rather than separate HRAs for each program. We are also expect the provisions regarding
finalizing provisions to codify timeframes for special needs plans to integrated member ID cards and
conduct HRAs and ICPs and prioritize the involvement of the enrollee or the ICPs to have any financial
enrollee's representative, as applicable, in the development of the ICPs. impact.
5. Timely Submission Requirements for We are codifying at Sec. 423.325 PDE submission timeliness requirements. We do not expect these regulatory
Prescription Drug Event (PDE) Records. Specifically, CMS is codifying timeframes at Sec. 423.325(a) to require changes to have an impact on the
that--(1) initial PDE records be submitted within 30 calendar days Medicare Trust Funds.
following the date the claim is received by the Part D sponsor (or its
contracted first tier, downstream, or related entity); (2) adjustment and
deletion PDE records are due within 90 calendar days following discovery of
the issue requiring a change to the PDE; and (3) resolution of rejected PDE
records are due within 90 calendar days following the receipt of rejected
record status from CMS. In addition, we are finalizing regulatory changes
at Sec. 423.325(b) to establish a distinct PDE submission timeliness
requirement for selected drugs, in which CMS requires that a Part D sponsor
must submit initial PDE records for selected drugs (as described at section
1192(c) of the Act) within 7 calendar days from the date the Part D sponsor
(or its contracted first tier, downstream, or related entity) receives the
claim.
6. Medicare Transaction Facilitator We are codifying at Sec. 423.505(q) a requirement on Part D sponsors (or We do not expect these regulatory
Requirements for Network Pharmacy first tier, downstream, or related entities, such as PBMs, acting on the changes to have an impact on the
Agreements. sponsors' behalf) to include in their network pharmacy agreements a Medicare Trust Funds.
provision that requires such pharmacies to be enrolled in the MTF DM (or
any successor to the MTF DM) and to certify to CMS that the enrollment
information provided by such pharmacies in the MTF DM is accurate,
complete, and up to date.
7. Clarifying MA Organization We are finalizing changes to clarify the definition of organization We anticipate that these changes
Determinations to Enhance Enrollee determination, codify requirements related to delivery of notices to could decrease the number of
Protections in Inpatient Settings. providers, clarify that an enrollee's liability to pay for services cannot inpatient downgrades which could,
be determined until an MA organization has made a claims payment in turn, create a non-quantified
determination, and restrict plans' ability to use information gathered cost to MA organizations that
after the inpatient admission has taken place when reviewing the could be passed on to the
appropriateness of the admission itself. Medicare Hospital Insurance Trust
Fund.
8. Risk Adjustment Updates............ We are finalizing a technical change to the definition of Hierarchical We do not expect these regulatory
Condition Categories (HCCs) to remove the reference to a specific version changes to have an impact on the
of the ICD, while maintaining a reference to the ICD in general. Medicare Trust Funds.
Additionally, we are codifying the longstanding practice of requiring the
collection and mandatory submission of risk adjustment data by PACE
organizations (at Sec. 460.180(b)) and Cost plans (at Sec. 417.486(a)).
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[[Page 15795]]
D. Publication of the Proposed Rule, Responding to Public Comments, and
the Finalization of Proposed Provisions
The proposed rule titled ``Medicare and Medicaid Programs; Contract
Year 2026 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'' appeared
in the December 10, 2024 Federal Register (89 FR 99340) (hereinafter
referred to as the ``Contract Year 2026 proposed rule'').
In response to the Contract Year 2026 proposed rule, we received
approximately 31,227 timely pieces of correspondence containing
multiple comments on the proposed rule. We note that 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 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. We are
finalizing several of the provisions from the proposed rule, some with
minor clarifications based on comments received. In this final rule, we
are not summarizing or responding to comments received with respect to
the provisions of the proposed rule that we are not addressing or
finalizing at this time. Rather, as appropriate, and if applicable, we
will address those comments at a later time in a subsequent rulemaking
document.
With respect to the section of the proposed rule entitled
``Formulary Inclusion and Placement of Generics and Biosimilars,'' CMS
continues to encourage Part D sponsors to prioritize formulary
placement for generics and biosimilars through favorable tier placement
relative to branded and reference products. As we noted in the proposed
rule, CMS currently conducts an extensive formulary review process to
ensure Part D sponsors provide an adequate formulary consistent with
Sec. 423.120(b)(2). In addition, as also noted in the proposed rule,
we have been monitoring beneficiary access to generics and biosimilars,
utilization of multi-source brand drugs when generics are available,
and situations where the brand drug is situated more favorably in
comparison to the generic with regard to tiering and UM, and we will
continue to do so. While we are not adding the additional step in our
formulary review process described in the proposed rule, the policy
reminders and clarifications with respect to Part D plan formularies
providing broad access to generics and biosimilars as part of a cost-
effective drug utilization program still apply. CMS may consider
codifying additional requirements regarding formularies in future
rulemaking if necessary.
CMS will continue to review regulations and policies in the
Medicare program and make necessary and appropriate changes to ensure
consistency with the Executive Order 14192, ``Unleashing Prosperity
Through Deregulation.. Such regulations and policies currently under
review include but are not limited to--
Health Equity Index Reward for the Parts C and D Star
Ratings;
Annual health equity analysis of utilization management
policies and procedures;
Requirements for MA plans to provide culturally and
linguistically appropriate services; and
Quality improvement and health risk assessments (HRAs)
focused on equity and social determinants of health (SDOH).
We also do not intend to finalize the following provisions from the
proposed rule: Enhancing Health Equity Analyses: Annual Health Equity
Analysis of Utilization Management Policies and Procedures, Part D
Coverage of Anti-Obesity Medications (AOMs) and Application to the
Medicaid Program, and Ensuring Equitable Access to Medicare Advantage
Services-- Guardrails for Artificial Intelligence (AI). CMS, however,
does want to acknowledge the broad interest in regulation of AI and
will continue to consider the extent to which it may be appropriate to
engage in future rulemaking in this area.
E. Conclusion
Finally, we are clarifying and emphasizing our intent that if any
provision of this 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 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 are finalizing 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).
II. Implementation of IRA Provisions for the Medicare Prescription Drug
Benefit Program
A. Coverage of Adult Vaccines Recommended by the Advisory Committee on
Immunization Practices (ACIP) Under Medicare Part D (Sec. Sec. 423.100
and 423.120)
1. Background
Section 11401 of the Inflation Reduction Act of 2022 (IRA) amended
section 1860D-2 of the Act by adding new paragraph (8) to subsection
(b) and new paragraph (5) to subsection (c) and making other conforming
amendments to require that, effective for plan years beginning on or
after January 1, 2023, the Medicare Part D deductible shall not apply
to, and there is no cost sharing for, an adult vaccine recommended by
the Advisory Committee on Immunization Practices (ACIP) covered under
Part D. Section 11401(e) of the IRA directed the Secretary to implement
section 11401 of the IRA for 2023, 2024, and 2025 by program
instruction or other forms of program guidance. In accordance with the
law, CMS issued memoranda via the Health Plan Management System (HPMS)
that outlined requirements for Part D sponsors regarding the
implementation of section 11401.
On September 26, 2022, CMS released an HPMS memorandum titled
``Contract Year 2023 Program Guidance Related to Inflation Reduction
Act Changes to Part D Coverage of Vaccines and Insulin.'' \1\ In this
memorandum, we provided guidance that for any new ACIP-recommended
adult vaccine that becomes available during a plan year, Part D
sponsors must apply the $0 cost-sharing requirements in section 1860D-
2(b)(8) of the Act to applicable claims with dates of service after
ACIP's issued recommendation.
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\1\ https://www.cms.gov/files/document/irainsulinvaccinesmemo09262022.pdf.
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On April 4, 2023, CMS issued an HPMS memorandum titled ``Final
Contract Year (CY) 2024 Part D Bidding Instructions'' which explained
that, in order for a vaccine to be considered ACIP-recommended for
adult use, it must be both adopted by the Director of the Centers for
Disease Control and Prevention (CDC) and published in the CDC's
Morbidity and Mortality Weekly Report (MMWR).\2\
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\2\ https://www.cms.gov/files/document/final-cy-2024-part-d-bidding-instructions.pdf.
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On July 24, 2023, CMS issued a revision to the April 4, 2023
memorandum, which clarified that the effective date of the $0 cost-
sharing requirement for an ACIP-recommended
[[Page 15796]]
adult vaccine must be aligned with the date on which the CDC Director
adopts the respective ACIP vaccine recommendation, as posted on the
CDC's website, not the date on which the recommendation is published in
the MMWR.\3\
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\3\ https://www.cms.gov/files/document/acip-recommended-vaccines-july-2023.pdf.
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In this rule, we are finalizing our proposal to codify the
requirements related to $0 cost sharing for adult vaccines recommended
by ACIP under Part D for 2026 and each subsequent plan year.
We received the following comments on this section of the proposed
rule, and our responses follow:
Comment: Many commenters supported CMS' proposal to codify the
statutory $0 cost-sharing requirement for ACIP-recommended adult
vaccines that was added to section 1860D-2 of the Act by section 11401
of the Inflation Reduction Act.
Response: We thank the commenters for their support of our
proposal.
2. Definition of ACIP-Recommended Adult Vaccine
Section 1860D-2(b)(8)(B) of the Act specifies that for purposes of
section 1860D-2(b)(8) of the Act, the term ``adult vaccine recommended
by the Advisory Committee on Immunization Practices'' means a covered
Part D drug that is a vaccine licensed by the U.S. Food and Drug
Administration (FDA) under section 351 of the Public Health Service Act
(PHSA) for use by adult populations and administered in accordance with
recommendations of the CDC's ACIP as adopted by the CDC Director. We
proposed to refer to these vaccines as ``ACIP-recommended adult
vaccines'' and to codify this definition at Sec. 423.100. We did not
propose to specify a particular age for a vaccine to be considered
``adult'' for the purposes of determining if a Part D vaccine is
subject to $0 cost sharing under section 11401 of the IRA. We deferred
to how the CDC and ACIP categorize such a recommendation. Part D
sponsors must use the information provided by the CDC and ACIP to
determine if the vaccine is recommended for, and being administered to,
an adult.
Consistent with the September 26, 2022 HPMS memorandum, we proposed
to define an ``ACIP-recommended adult vaccine'' as a vaccine licensed
by the FDA for use in adults and administered in accordance with ACIP
recommendations. In alignment with the September 26, 2022 HPMS
memorandum, we interpreted the term ``recommendation'' to refer to a
recommendation under any one of ACIP's categories of recommendations,
including routine, catch-up, risk-based, and shared clinical decision-
making immunization recommendations.
Some vaccines that are not on the ACIP Adult Immunization Schedule
for routine immunization are included on the ACIP Vaccine
Recommendations and Guidelines web page.\4\ This web page describes
ACIP recommendations for vaccines that are used in limited populations
and under limited circumstances. For example, ACIP recommends certain
vaccinations for travelers prior to visiting certain countries.
Therefore, consistent with the September 26, 2022 HPMS memorandum, as
long as the vaccine is an FDA-licensed vaccine that is recommended by
ACIP for use by adults, such vaccine would meet our proposed definition
of an ACIP-recommended adult vaccine, when provided in accordance with
ACIP recommendations.
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\4\ https://www.cdc.gov/acip-recs/hcp/vaccine-specific/index.html.
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As described in the September 26, 2022 HPMS memorandum, a Part D
vaccine would not meet our proposed definition of an ACIP-recommended
adult vaccine and, therefore, would not be subject to the requirements
implemented in this final rule, if the vaccine is: (1) not licensed by
the FDA under section 351 of the PHSA for use by adults; (2) not
recommended by ACIP for use by adults; (3) administered to an
individual who is not an adult, even if such use in the non-adult is
supported by ACIP recommendations (for example, recommendations in the
ACIP child and adolescent immunization schedule); or (4) not
administered in accordance with ACIP recommendations.
In summary, we proposed to add at Sec. 423.100 a definition of
``ACIP-recommended adult vaccine'' that means a covered Part D drug, as
defined at Sec. 423.100, that is a vaccine licensed by the FDA under
section 351 of the Public Health Service Act for use by adult
populations and administered in accordance with recommendations of ACIP
of the CDC as adopted by the CDC Director.
We received the following comments on this section of the proposed
rule, and our responses follow:
Comment: A few commenters requested that we release a HPMS
memorandum that includes a list of ACIP-recommended adult vaccines and
the dates on which these vaccines should be covered with no cost
sharing.
Response: The most updated information regarding ACIP-recommended
adult vaccines and the effective date of ACIP recommendations is
available on the Centers for Disease Control and Prevention's (CDC's)
website at: https://www.cdc.gov/acip-recs/hcp/vaccine-specific/. Given
that the CDC's website is the best source for this information, we
decline to accept the commenters' recommendation to issue separate
guidance.
3. No Deductible or Cost Sharing for ACIP-Recommended Adult Vaccines
Section 1860D-2(b)(8)(A) of the Act specifies that the deductible
shall not apply and there shall be no coinsurance or other cost sharing
with respect to ACIP-recommended adult vaccines. Generally, Part D
vaccines that have ACIP-recommended uses in the adult population and
are administered to an adult must be provided with no enrollee cost
sharing. As described in the September 26, 2022 HPMS memorandum, this
means that enrollees must not be subject to cost sharing on the
ingredient cost of the vaccine submitted on the prescription drug event
(PDE) record, or any associated sales tax, dispensing fee, or vaccine
administration fee, regardless of the vaccine's formulary tier
placement or the benefit phase that the enrollee is in.
We also proposed at Sec. 423.120(g)(3) that enrollees who submit
direct member reimbursement (DMR) requests for ACIP-recommended adult
vaccines accessed at either out-of-network pharmacies or providers (in
accordance with Sec. 423.124(a) and (c)), or at in-network pharmacies
or providers, that a Part D sponsor determines are coverable under
their benefit must not be subject to cost sharing. While Part D
sponsors generally may charge the enrollee for the difference between
the cash price and plan allowance for DMRs for covered Part D drugs
accessed from both out-of-network and in-network pharmacies, neither
Sec. 423.124(b) nor Chapter 14 of the Prescription Drug Benefit Manual
directly addresses covered Part D drugs that have statutorily limited
cost sharing.\5\
[[Page 15797]]
Because there can be no cost sharing for ACIP-recommended adult
vaccines accessed at either out-of-network pharmacies or providers (in
accordance with Sec. 423.124(a) and (c)), or at in-network pharmacies
or providers, that a Part D sponsor determines are coverable under
their benefit, the Part D sponsor must reimburse the enrollee for the
full cash price paid to the pharmacy or provider for an ACIP-
recommended adult vaccine.
---------------------------------------------------------------------------
\5\ Section 423.124(b) currently states that a Part D sponsor
that provides its Part D enrollees with coverage other than defined
standard coverage may require its Part D enrollees accessing covered
Part D drugs at out-of-network pharmacies to assume financial
responsibility for any differential between the out-of-network
pharmacy's (or provider's) usual and customary price and the Part D
sponsor's plan allowance. Section 50.4.3 of Chapter 14 of the
Medicare Prescription Drug Benefit Manual (https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/chapter-14-coordination-of-benefits-v09-17-2018.pdf)
provides detailed guidance on how Part D sponsors must process DMR
requests that are submitted by enrollees who paid cash at an out-of-
network (or an in-network) pharmacy (or provider) and where the
pharmacy (or provider) did not submit the claim to the Part D plan.
---------------------------------------------------------------------------
The total gross covered drug cost (TGCDC) is usually reported
differently on PDEs depending on whether the drug was accessed at an
out-of-network or in-network pharmacy or provider. Specifically, Part D
sponsors report the cash price that the enrollee paid to the pharmacy
or provider as the TGCDC for out-of-network DMRs but only report the
negotiated price as the TGCDC for in-network DMRs. However, we
clarified in the proposed rule that with respect to ACIP-recommended
adult vaccines, as an exception to the Chapter 14 guidance, the sponsor
should report the cash price paid to the pharmacy or provider as the
TGCDC on the PDE for both out-of-network and in-network DMRs.
Regardless, there is no true out-of-pocket (TrOOP) cost accumulation
for these claims because the beneficiary has no cost sharing for ACIP-
recommended adult vaccines under the basic Part D benefit.
Under our proposed policy at Sec. 423.120(g), and as described in
the September 26, 2022 HPMS memorandum, new Part D vaccines that become
available during the plan year and meet the definition of an ACIP-
recommended adult vaccine are subject to the cost-sharing requirements
of section 1860D-2(b)(8)(A) of the Act. Consistent with the definition
of a covered Part D drug at Sec. 423.100, the statutory cost-sharing
requirements apply regardless of whether a Part D sponsor adds the
vaccine to the formulary midyear, or the enrollee obtains the vaccine
via a formulary exception. In addition, we proposed at Sec.
423.120(g)(2) that if ACIP issues a new or revised recommendation for a
vaccine, related to its use in adults during the plan year, Part D
sponsors must apply the cost-sharing requirements of this final rule,
as applicable, to any ACIP-recommended adult vaccine claims with dates
of service after the proposed ``effective date of the ACIP
recommendation.''
Consistent with the April 4, 2023 HPMS memorandum, Part D sponsors
may place ACIP-recommended adult vaccines on any tier, including a
vaccine tier, and apply utilization management strategies (for example,
prior authorization), insofar as such tier placement or utilization
management strategy is consistent with the requirements of CMS's
formulary review and approval process under Sec. 423.120(b).
As described in Section 30.2.7 of Chapter 6 of the Prescription
Drug Benefit Manual, Part D sponsors may only use utilization
management strategies to assess the necessity of vaccines that are less
commonly administered in the Medicare population, facilitate the use of
vaccines in line with ACIP recommendations, and evaluate potential
reimbursement of vaccines that could be covered under Part B.\6\ For
example, utilization management strategies may be used to ensure an
enrollee meets the age or clinical requirements recommended by ACIP for
a particular vaccine, such as the respiratory syncytial virus (RSV)
vaccine which is currently recommended by ACIP for adults aged 75 years
of age and older and adults aged 60 to 74 years of age who are at
increased risk for severe RSV disease. However, regardless of an ACIP-
recommended adult vaccine's tier placement or applicable utilization
management strategies, the statutory zero cost-sharing limits required
under this final rule would still apply.
---------------------------------------------------------------------------
\6\ https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/part-d-benefits-manual-chapter-6.pdf.
---------------------------------------------------------------------------
In summary, we proposed to codify at Sec. 423.120(g)(1) the
requirement that Part D sponsors must not apply the deductible or
charge cost sharing on ACIP-recommended adult vaccines. We also
proposed to codify at Sec. 423.120(g)(2) that once a new or revised
recommendation is posted on the CDC website, Part D sponsors must
provide coverage consistent with Sec. 423.120(g)(1) for dates of
service on or after the ``effective date of the ACIP recommendation.''
Finally, we proposed to codify at Sec. 423.120(g)(3) that these cost-
sharing requirements apply for ACIP-recommended adult vaccines obtained
from either in-network or out-of-network pharmacies or providers (in
accordance with Sec. 423.124(a) and (c)).
We received the following comments on this section of the proposed
rule, and our responses follow:
Comment: Several commenters provided feedback related to the
implementation of utilization management strategies for vaccines. A few
of these commenters opposed the use of utilization management
strategies to determine whether an enrollee meets the age or clinical
requirements recommended by ACIP for a particular vaccine. These
commenters stated that utilization management can limit or delay
beneficiaries' access to vaccines. A commenter urged CMS to ensure that
all commercially available Part D vaccines are included on Part D
formularies and that utilization management for vaccines is used
appropriately. Another commenter urged CMS to issue guidance to ensure
Part D plans are providing coverage and access to ACIP-recommended
vaccines and are not imposing restrictive utilization management
strategies. Finally, other commenters requested that CMS ensure Part D
sponsors are not implementing utilization management strategies that
prevent a provider or pharmacy from stocking or administering vaccines.
Response: We appreciate these commenters sharing their concerns
related to utilization management strategies for vaccines. As described
in Chapter 6, Section 30.2.7 of the Prescription Drug Benefit Manual,
CMS reviews all Part D sponsors' formularies to ensure they contain all
commercially available Part D vaccines and to ensure that Part D
sponsors are only using utilization management tools to--
Assess the necessity of vaccines that are less commonly
administered in the Medicare population, such as anthrax and yellow
fever vaccines;
Facilitate use of vaccines in line with ACIP
recommendations; and
Evaluate potential reimbursement of those vaccines that
could be covered under Part B when directly related to the treatment of
an injury or direct exposure to a disease or condition (for example,
tetanus).
In order to ensure a vaccine meets the definition of an ``ACIP-
recommended adult vaccine'' and is therefore subject to the cost-
sharing requirements outlined in this rule, a Part D sponsor may
implement utilization management strategies to determine if the vaccine
is being administered in accordance with ACIP recommendations, which is
consistent with the Chapter 6 guidance outlined previously.
Given that our existing guidance in Chapter 6 of the Prescription
Drug Benefit Manual clearly outlines the situations in which Part D
sponsors may implement utilization management for vaccines, we decline
to issue additional guidance on this topic.
Comment: Several commenters expressed concern about Part D sponsors
restricting coverage for specific vaccine products and having a
``preferred'' brand of a particular
[[Page 15798]]
vaccine. Commenters stated that these restrictions have been
implemented using utilization management strategies (for example, step
therapy), $0 reimbursement to pharmacies for less preferred vaccine
products, and National Drug Code (NDC) blocks. Commenters emphasized
the negative impact these strategies may have on beneficiary access to
vaccines. For example, the commenters asserted that a beneficiary may
present to a pharmacy to receive a vaccine and, if the vaccine product
in stock is not the ``preferred'' brand on the beneficiary's Part D
plan's formulary, the beneficiary would need to return to the pharmacy
once the ``preferred'' brand is in stock or find another pharmacy with
the ``preferred'' brand currently in stock. Commenters also stated how
difficult and costly it would be to keep every brand of a vaccine in
stock to avoid these situations. A commenter noted that this would be
particularly costly in primary care settings where providers are not
paid until after a vaccine is administered, and they cannot receive
reimbursement for unused vaccines. All commenters requested that CMS
not allow these strategies to be implemented.
Response: We appreciate the concerns these commenters shared about
the potential negative impacts of Part D sponsors restricting coverage
for certain brands of a vaccine. We reiterate our rules outlined in
Chapter 6, Section 30.2.7, of the Prescription Drug Benefit Manual
which state that Part D sponsors' formularies must contain all
commercially available Part D vaccines and, as discussed earlier in
this preamble, the only allowable uses of utilization management for
vaccines are to assess the necessity of vaccines that are less commonly
administered in the Medicare population, facilitate the use of vaccines
in line with ACIP recommendations, and evaluate potential reimbursement
of vaccines that could be covered under Part B. Given that these are
the only situations in which utilization management can be used for
vaccines, Part D sponsors may not implement utilization management,
including step therapy and NDC blocks, to prefer one brand of a vaccine
over another.
Comment: A few commenters expressed concerns about beneficiaries
receiving Part D vaccines in primary care settings. The commenters
stated that because these settings are not considered in-network,
beneficiaries must pay for the vaccine and wait to be reimbursed, which
can disincentivize them from receiving recommended vaccines. The
commenters emphasized that being considered out-of-network can
negatively affect primary care providers' relationships with their
patients as they navigate vaccine coverage requirements for each
patient and must often refer patients to network pharmacies to receive
recommended vaccines. A commenter stated that having to refer patients
to network pharmacies for vaccine administration can lead to confusion
and increased vaccine hesitancy and may disproportionately affect
patients who may have difficulty obtaining transportation to an in-
network pharmacy. They also noted that individuals without Part D
coverage are not able to receive ACIP-recommended adult vaccines with
no cost sharing.
Another commenter requested that we describe our expectations for
applying utilization management strategies when vaccines are
administered at an out-of-network pharmacy, such as a primary care
setting, as Part D sponsors do not have direct relationships with
providers in these settings. The commenter stated that there can be
operational barriers to imposing utilization management in these
settings and requested guidance on how to implement utilization
management when vaccines are administered by providers, such as
physicians, in out-of-network settings.
Response: We appreciate the commenters sharing their concerns about
Part D enrollees receiving ACIP-recommended vaccines out-of-network.
Part D sponsor networks are generally defined as pharmacy networks;
therefore, if an enrollee receives a vaccine at a physician's office,
this is most often out-of-network. As noted in the preamble to the
final rule titled ``Medicare Program; Medicare Prescription Drug
Benefit'' which appeared in the Federal Register on January 28, 2005
(70 FR 4194), a Part D enrollee receiving a vaccine in a physician's
office constitutes a situation in which out-of-network access would be
permitted because a beneficiary could not reasonably be expected to
obtain that vaccine at a network pharmacy. We refer the commenters to
our current regulations and guidance regarding claims for vaccines
administered out-of-network. Specifically, Sec. 423.124(a)(2)
establishes that Part D sponsors must ensure that Part D enrollees have
adequate access to vaccines and other covered Part D drugs
appropriately dispensed and administered by a physician in a
physician's office. In Chapter 5, Section 60.2, of the Prescription
Drug Benefit Manual, we note that it may be challenging for enrollees
to pay upfront and be reimbursed by their Part D plan after receiving a
vaccine in their physician's office.
We encourage the commenters to review the possible approaches
detailed in Section 60.2.2 of the Prescription Drug Benefit Manual to
improve access to Part D vaccines administered and dispensed by a
physician without requiring upfront beneficiary payment and subsequent
reimbursement by Part D sponsors. The two possible approaches are: (1)
a model vaccine notice for physicians (paper claim enhancement) where
Part D sponsors provide all enrollees with a vaccine-specific notice
that enrollees can bring to their physician with the information
necessary for a physician to receive authorization of coverage for a
particular vaccine and bill for the vaccine; and (2) web-assisted
electronic physician billing where a physician uses a commercially-
developed web-based system to electronically request out-of-network
reimbursement from Part D sponsors on behalf of enrollees. Both
approaches allow providers in primary care settings to administer ACIP-
recommended vaccines to Part D enrollees without requiring an upfront
payment.
Regarding utilization management for vaccines administered in out-
of-network settings, we would expect that any utilization management
requirements imposed on vaccines would need to be satisfied regardless
of whether the vaccine is being administered at a network or out-of-
network setting. However, we believe Part D sponsors are best situated
to determine how to operationalize the implementation of utilization
management requirements for out-of-network claims. As discussed earlier
in this preamble, the only allowable uses of utilization management for
vaccines are to assess the necessity of vaccines that are less commonly
administered in the Medicare population, facilitate the use of vaccines
in line with ACIP recommendations, and evaluate potential reimbursement
of vaccines that could be covered under Part B. We also note that,
consistent with Chapter 6, Section 10.14.3, of the Prescription Drug
Benefit Manual, in the absence of any information showing previous
immunization (that is, claims data), the Part D sponsor should make
payment available for a vaccine and its administration consistent with
ACIP recommendations. Therefore, if a Part D sponsor determines an
ACIP-recommended adult vaccine is coverable under their benefit, the
enrollee must not be subject to cost sharing regardless of whether they
received the vaccine in-network or out-
[[Page 15799]]
of-network. Alternatively, if a Part D sponsor determines a vaccine
does not meet the definition of an ``ACIP-recommended adult vaccine,''
the $0 cost-sharing requirement would not apply.
Comment: A commenter requested clarification on managing coverage
determinations in instances where a Part D sponsor requires a prior
authorization (PA) for a vaccine. The commenter stated that because
many vaccines are administered in pharmacies under standing orders,
there is not a physician writing an individual prescription for each
enrollee receiving a vaccine. Therefore, there is no physician who can
provide information in support of a PA or appeal. The commenter noted
that pharmacies are typically not involved in coverage determinations
and questioned whether a pharmacist is permitted to request a PA or
appeal and provide information in support of a PA or appeal.
Response: As described in Sec. 423.566(c), the only individuals
who can request a standard or expedited coverage determination are the
enrollee; the enrollee's representative, on behalf of the enrollee; or
the prescribing physician or other prescriber, on behalf of the
enrollee. However, as stated in Section 40.12.3 of the Parts C & D
Enrollee Grievances, Organization/Coverage Determinations, and Appeals
Guidance, Part D sponsors are permitted, but not required, to treat the
presentation of a prescription at the pharmacy as a coverage
determination. Therefore, a Part D sponsor can treat a transaction in
which a pharmacist explains to an enrollee that a drug is subject to
prior authorization as a request for a coverage determination. A
pharmacist may then communicate with the Part D sponsor and may be able
to override the point-of-sale prior authorization requirement and allow
the claim to process. As stated in Chapter 6, Section 30.2.2.1, of the
Prescription Drug Benefit Manual, Part D sponsors may decide that it is
reasonable to accept information from pharmacists in situations where
point-of-sale edits are applied. In these cases, if a network pharmacy
is able to provide the necessary information at the point-of-sale, it
negates the need for additional administrative review through the
coverage determination process and reduces delay in access to Part D
drugs, including vaccines. However, we note that a pharmacist's
involvement would occur at the initial coverage decision level,
consistent with Section 40.9 of the Parts C & D Enrollee Grievances,
Organization/Coverage Determinations, and Appeals Guidance, and not the
appeal level.
Comment: A commenter requested guidance on how to manage situations
in which PA requests are submitted for vaccines. The commenter
described a situation in which the Part D sponsor determines that a
vaccine is not being administered in accordance with ACIP's
recommendations and the enrollee is charged the applicable cost
sharing. The commenter questioned whether this would be considered a
fully favorable, partially unfavorable, or fully unfavorable decision.
If this is a partially or fully unfavorable decision, the commenter
questioned whether this decision should be classified as a denial due
to a lack of medical necessity. The commenter also requested guidance
for how plans should process requests in situations where a request is
submitted to the plan for a vaccine to be covered at $0 cost sharing,
but the plan determines the vaccine is not being administered in
accordance with ACIP recommendations. The commenter noted that CMS did
not propose allowing enrollees to request cost-sharing exceptions when
a vaccine is not being administered in accordance with ACIP
recommendations. Specifically, the commenter questioned whether these
requests should be dismissed or denied.
Response: If a request is submitted to a Part D plan asking for a
vaccine to be covered at $0 cost sharing, we would expect either: (1) a
fully favorable decision if the vaccine is covered at $0; (2) a
partially favorable decision if the vaccine is covered but subject to
cost sharing; or (3) an adverse decision if the vaccine is not covered.
If a request is submitted to a Part D plan asking for a vaccine to be
covered, but the request does not specify a preferred cost-sharing
amount, we would expect either: (1) a fully favorable decision if the
vaccine is covered but subject to cost sharing; or (2) an adverse
decision if the vaccine is not covered. In cases where a partially
favorable or adverse decision is made, an enrollee must be provided
proper notice and appeal rights, consistent with Sec. 423.568(g). We
note that it would not be appropriate to dismiss a request in any of
these scenarios. A partially favorable or adverse decision would be
considered a denial.
Comment: A commenter encouraged CMS to educate pharmacists about
direct member reimbursement (DMR) requests so they can inform their
patients that reimbursement is available for vaccines received out-of-
network.
Response: We thank the commenter for their suggestion. Part D plans
currently provide information to their enrollees regarding how to
request reimbursement when they use an out-of-network pharmacy or
provider in Chapter 5 of the Evidence of Coverage (EOC) document which
is provided to all Part D enrollees.
Comment: A commenter questioned whether direct member reimbursement
(DMR) requests for ACIP-recommended adult vaccines can only be
submitted by beneficiaries or also by providers, including physicians
and pharmacies. The commenter noted that they have seen provider-
submitted claims that charge more than the negotiated rates for
vaccines. If requests cannot be submitted by providers, the commenter
recommended that CMS issue separate guidance for provider-submitted
claims to ensure there is clarity on how these requests should be
managed. They also recommend that CMS limit reimbursement for these
claims to contracted rates. If requests can be submitted by providers,
the commenter recommended that CMS monitor claims for ACIP-recommended
vaccines as the $0 cost-sharing requirement for these vaccines may
increase both the plan and CMS' liability. The commenter also stated
that because there is no limit on the price of ACIP-recommended
vaccines, it is possible that pharmacies and providers may charge
higher cost sharing at the point-of-sale and, instead of processing
claims online, they would have the beneficiary submit the claim to
their Part D plan in order to receive a higher payment. Another
commenter questioned how, when DMR requests are submitted,
reimbursement to providers for the vaccine product and administration
fees should be addressed. The commenter noted that vaccinating
providers continue to face challenges with receiving adequate
reimbursement for providing vaccines.
Response: We thank the commenter for sharing their questions and
recommendations regarding DMR requests. We note that our reference to
DMR requests in the proposed and final rules is specific to
beneficiary-submitted requests where a beneficiary is requesting
reimbursement for an ACIP-recommended adult vaccine for which they
incurred out-of-pocket costs. With respect to DMR requests submitted by
beneficiaries for prescriptions obtained from in-network pharmacies,
Sec. 423.120(c)(3) specifies that a Part D sponsor must require its
network pharmacies to submit claims to the Part D sponsor or its
intermediary whenever the card described in paragraph (c)(1) of this
section is presented or on file at the pharmacy unless the enrollee
expressly requests that a particular claim not be submitted to the Part
D sponsor or its
[[Page 15800]]
intermediary. Network pharmacies that decline to process network claims
online and instead recommend that beneficiaries submit paper claims
would be in violation of this requirement. We continue to expect DMR
requests for prescriptions obtained from network pharmacies to be
limited and submitted only for reasons, such as the claims processing
systems being temporarily unavailable for the pharmacy or the Part D
sponsor or its intermediary when the enrollee obtains their
prescription. Any post-reimbursement reconciliation between the network
pharmacy and plan sponsor would be a contractual matter between the
parties.
With respect to provider-submitted claims for vaccines, which we do
not consider DMR requests, CMS does not prohibit Part D sponsors from
establishing arrangements with out-of-network (OON) providers or
pharmacies to facilitate OON access in accordance with the requirements
specified in Sec. 423.124. As described earlier in this preamble,
Chapter 5, Section 60.2, of the Prescription Drug Benefit Manual
provides options that Part D sponsors and OON providers may use to
facilitate access to vaccines given that vaccines are often provided in
physician offices. While we encourage such arrangements for vaccine
access, CMS guidance makes it clear that it is not a requirement and
that such facilitated approaches to OON access for vaccines would need
to be agreed upon between the Part D sponsor and provider. Therefore,
it is up to Part D sponsors to establish their own policies on whether
to accept OON claims directly from providers or pharmacies, and, if
they do, to establish an agreed upon reimbursement amount with the OON
provider or pharmacy that could include a prohibition on balance
billing the enrollee.
Our guidance for provider-submitted claims for vaccines is provided
in Chapter 5 of the Prescription Drug Benefit Manual, as discussed
previously.
4. Effective Date of ACIP Recommendations
In the July 24, 2023 HPMS memorandum, we stated that Part D
sponsors must provide $0 cost sharing for an ACIP-recommended adult
vaccine as of the date the CDC Director adopts the ACIP's
recommendation and it is posted on the CDC's website. Accordingly, we
proposed to add at Sec. 423.100 a definition of ``effective date of
the ACIP recommendation'' that means the date specified on the CDC
website noting the date the CDC Director adopted the ACIP
recommendation.
In the proposed rule, we noted that it is highly unlikely that an
ACIP recommendation will be posted without the date on which it was
adopted by the CDC Director; however, in the event that a
recommendation is posted without an effective date, we noted that CMS
would consult with the CDC to obtain the date the recommendation was
adopted by the CDC Director and provide guidance.
In the proposed rule, we noted that the ``effective date of the
ACIP recommendation'' and the date on which it is published on the
CDC's website may not always be the same date (if, for example, the
website posting occurs after the date specified as the date the CDC
Director adopted the recommendation). Nevertheless, we proposed that
the ``effective date of the ACIP recommendation'' would determine when
the cost-sharing requirements apply. Consequently, if an enrollee paid
cost sharing for an ACIP-recommended adult vaccine after the
``effective date of the ACIP recommendation'' (for example, the
enrollee received the vaccine after the ``effective date of the ACIP
recommendation,'' but prior to the recommendation being posted on the
CDC website), once the recommendation has been posted to the CDC
website, the Part D sponsor would need to reimburse the enrollee for
any cost sharing they paid for the vaccine.
In instances where ACIP expands a previous recommendation, narrows
a previous recommendation, or removes a previous recommendation, the
proposed ``effective date of the ACIP recommendation'' would be the
date the CDC Director adopted the changed recommendation once the
recommendation is posted on the CDC's website. We noted in the proposed
rule that a change to an ACIP recommendation alone does not affect a
vaccine's status as a Part D drug. Specifically, a Part D drug is
defined at Sec. 423.100, in relevant part, as including a vaccine, if
used for a medically accepted indication, as defined in section 1860D-
2(e)(4) of the Act. Since an ACIP recommendation does not affect what
is considered a medically accepted indication, as defined under section
1860D-2(e)(4) of the Act, for a particular vaccine, an ACIP
recommendation alone does not affect a vaccine's status as a Part D
drug. However, if the FDA labeling changes to align with a narrowed
ACIP recommendation, this may change what is considered a medically
accepted indication and may change what indications are coverable under
Part D for a particular vaccine. In other words, if an ACIP
recommendation is narrowed or removed, the vaccine may still be
coverable under Part D, but an enrollee may be subject to cost sharing
for the vaccine if it is not administered in accordance with the
revised ACIP recommendation.
In the proposed rule, we also noted that when an ACIP
recommendation for a particular vaccine is narrowed (for example,
additional restrictions are added or the vaccine is recommended for a
more limited patient population), Part D sponsors may implement PA to
determine whether the vaccine is being administered in accordance with
ACIP recommendations and whether the enrollee should be subject to cost
sharing. For example, if an ACIP recommendation is amended to raise the
age for which a vaccine is recommended to be administered, Part D
sponsors may implement PA to ensure a beneficiary meets this new age
requirement. However, Part D sponsors are not required to implement PA
for vaccines to determine if a vaccine is being used for an ACIP-
recommended use and is therefore subject to $0 cost sharing.
Additionally, we discussed in the proposed rule that when an ACIP
recommendation is narrowed and a Part D sponsor does not currently have
a PA requirement in place for that vaccine, the plan may submit a
negative formulary change request to add a PA requirement for that
vaccine that aligns with the newly narrowed recommendation, consistent
with Sec. 423.120(e)(1). Once the request is approved, Part D sponsors
may implement the PA requirement and, if the plan determines that the
vaccine is not being used for an ACIP-recommended use, may charge the
enrollee the applicable cost sharing. Part D sponsors are permitted,
but not required, to make retroactive determinations for claims that
were processed with $0 cost sharing after the ``effective date of the
ACIP recommendation'' and before the date on which the PA requirement
went into effect.
If ACIP withdraws a recommendation for a previously recommended
vaccine such that the vaccine no longer meets the definition of an
ACIP-recommended adult vaccine, Part D sponsors are not required to
submit a negative change request and may immediately apply cost sharing
for the vaccine for dates of service after the ``effective date of the
ACIP recommendation.''
Because the cost-sharing limits for vaccines outlined in our
proposed rule, and finalized in this final rule, have been in place
since 2023 through program instruction authority and we have annually
reviewed cost sharing in
[[Page 15801]]
plan benefit package submissions, we believe the impacts of our
proposed codification of these requirements should have minimal impact
on Part D sponsors and beneficiaries.
We received the following comments on this section of the proposed
rule, and our responses follow.
Comment: A few commenters requested that we change the definition
of the ``effective date of the ACIP recommendation.'' A commenter
recommended we use the date the recommendation is published in the
CDC's MMWR. Another commenter recommended we use the day after the last
day of the ACIP meeting at which the recommendation was approved.
Another commenter expressed concern about situations in which the CDC
Director does not adopt an ACIP recommendation.
Response: We thank the commenters for their suggestions, but we
decline to change our definition of the ``effective date of the ACIP
recommendation.'' As we explained in the proposed rule, in the April 4,
2023 HPMS memorandum titled ``Final Contract Year (CY) 2024 Part D
Bidding Instructions,'' we stated that the effective date for an ACIP
recommendation is the date on which it is adopted by the CDC Director
and published in the MMWR. However, on July 24, 2023, based on updated
instruction from the CDC, we issued a revision to the memorandum and
clarified that the effective date is the date on which the CDC Director
adopts the ACIP recommendation, as posted on the CDC's website, not the
date on which the recommendation is published in the MMWR. We noted
that if the date of publication in the MMWR was used, it is likely
there would be a delay in beneficiaries accessing new ACIP-recommended
vaccines at $0 cost sharing because of the delay in publication. For
example, on October 24, 2024, the CDC Director adopted recommendations
to update the dosing interval and schedule for a meningococcal
serogroup B vaccine (MenB-4C), but the recommendation was not published
in the MMWR until December 12, 2024.7 8
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\7\ https://www.cdc.gov/acip/vaccine-recommendations/.
\8\ https://www.cdc.gov/mmwr/volumes/73/wr/mm7349a3.htm?s_cid=mm7349a3_w.
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In the July 24, 2023 memorandum, we also stated that if the CDC
Director's adoption of an ACIP recommendation is posted as official on
the CDC website but an adoption date is not specified, the effective
date would be the day after the last day of the ACIP meeting at which
the recommendation was approved. However, we did not include this
requirement in the proposed rule. We understand from the CDC that there
may be situations in which the CDC Director amends or rejects a
recommendation after the ACIP meeting concludes. Therefore, if the day
after the last day of the ACIP meeting date was used as the ``effective
date of the ACIP recommendation,'' it is possible that a vaccine could
be inappropriately considered an ACIP-recommended adult vaccine for a
short period of time.
Our proposed definition of ``effective date of the ACIP
recommendation'' aligns with the CDC's current process for publishing
ACIP recommendations that have been adopted by the CDC Director. Based
on guidance from the CDC, it is highly unlikely that an ACIP
recommendation will be posted without the date on which it was adopted
by the CDC Director. In the unlikely event this does occur, CMS will
consult with the CDC to obtain the date the recommendation was adopted
by the CDC Director and provide guidance.
Comment: A commenter questioned CMS's expectations when an existing
ACIP recommendation is narrowed. The commenter requested clarification
regarding whether Part D sponsors are required to add a PA requirement
with respect to the vaccine and to submit a negative formulary change
request to CMS when an ACIP recommendation is narrowed. The commenter
stated that if CMS requires plans to submit a negative formulary change
request to add a PA requirement in response to a narrowed ACIP
recommendation, this would result in delays in implementing the
narrowed ACIP recommendation. Finally, the commenter recommended that
if a plan does add a PA requirement for a vaccine, CMS should allow the
plan to implement the PA requirement immediately without submitting and
waiting for approval of a negative formulary change request.
Response: As stated in the proposed rule, Part D sponsors are not
required to implement PA requirements for vaccines to determine if they
are being used in accordance with ACIP recommendations. We clarify that
Part D sponsors are not required to add a PA requirement when an ACIP
recommendation is narrowed. However, if a Part D sponsor chooses to add
a PA requirement to determine if the vaccine is being used in
accordance with the narrowed ACIP recommendation, the sponsor must
comply with the applicable negative formulary change requirements at
Sec. 423.120(e) and applicable notice requirements at Sec.
423.120(f).
In the proposed rule, we stated that unless the Part D sponsor is
otherwise notified, the negative change request will be considered
approved after 30 days, as specified in Sec. 423.120(e)(3)(i).
However, we clarify that, depending on the nature of the narrowed ACIP
recommendation, the negative formulary change could be considered
either a maintenance change or a non-maintenance change as defined at
Sec. 423.100. If the change is a maintenance change, the requirements
in Sec. 423.120(e)(3)(i) will apply, meaning that the request is
deemed approved 30 days after submission unless CMS notifies the Part D
sponsor otherwise. If the change is a non-maintenance change, the
requirements in Sec. 423.120(e)(3)(ii) will apply, meaning that the
change must not be implemented until the Part D sponsor receives a
notice of approval from CMS.
Regardless of whether a negative formulary change is considered a
maintenance or non-maintenance change, Part D sponsors are not
permitted to immediately implement the PA requirement and must wait
until the negative formulary change request is approved. Once the PA
requirement is approved, the Part D sponsor may implement the PA
requirement and may make retroactive determinations for claims that
were processed with $0 cost sharing after the ``effective date of the
ACIP recommendation'' and before the date on which the PA requirement
went into effect.
Comment: A commenter expressed concern about potential delays in
implementing $0 cost sharing when a new ACIP recommendation is posted
to the CDC website by the CDC without an effective date. The commenter
was concerned about waiting for CMS to work with CDC to obtain the
effective date and issue guidance in instances where the CDC did not
specify the date on which the recommendation was adopted by the CDC
Director. The commenter requested that CMS allow a grace period for
Part D sponsors to implement all cost-sharing changes after an ACIP
recommendation is posted online, regardless of whether a date is
specified or not, as it takes some time to implement cost-sharing
changes.
Response: We appreciate the commenter's suggestion but note that,
based on guidance from the CDC, we expect that it is highly unlikely
that an ACIP recommendation will be posted without the date on which it
was adopted by the CDC Director. We also decline to make a change to
our proposed requirements to allow Part D sponsors to have a grace
period to implement cost-sharing changes after an
[[Page 15802]]
ACIP recommendation is posted. To ensure beneficiaries can immediately
benefit from a new ACIP recommendation, the ``effective date of the
ACIP recommendation'' is the date on which cost-sharing requirements
apply. If a Part D sponsor is not able to effectuate $0 cost sharing
for an ACIP recommended adult vaccine as of the ``effective date of the
ACIP recommendation'' and an enrollee pays cost sharing for the ACIP-
recommended adult vaccine after the ``effective date of the ACIP
recommendation,'' the Part D sponsor will need to reimburse the
beneficiary for any cost sharing paid for the vaccine.
After considering the public comments we received, and for the
reasons set forth in the proposed rule and in our responses to
comments, we are finalizing the changes to Sec. Sec. 423.100 and
423.120 as proposed.
B. Cost Sharing for Covered Insulin Products Under Medicare Part D
(Sec. Sec. 423.100 and 423.120)
1. Background
Section 11406 of the Inflation Reduction Act of 2022 (IRA) amended
section 1860D-2 of the Act by adding new paragraph (9) to subsection
(b) and new paragraph (6) to subsection (c) and making other conforming
amendments to require that, effective for plan years beginning on or
after January 1, 2023, the Medicare Part D deductible shall not apply
to covered insulin products, and the Part D cost-sharing amount for a
1-month supply of each covered insulin product must not exceed the
statutorily defined ``applicable copayment amount'' for all enrollees.
For 2023, 2024, and 2025, the applicable copayment amount is $35. For
2026 and each subsequent year, the applicable copayment amount is the
lesser of: (1) $35; (2) an amount equal to 25 percent of the maximum
fair price (MFP) established for the covered insulin product in
accordance with Part E of title XI of the Act; or (3) an amount equal
to 25 percent of the negotiated price of the covered insulin product
under the PDP or MA-PD plan. Section 11406(d) of the IRA directed the
Secretary to implement section 11406 of the IRA for 2023, 2024, and
2025 by program instruction or other forms of program guidance. In
accordance with the law, CMS issued several memoranda related to cost
sharing for covered insulin products via the Health Plan Management
System (HPMS) that outlined expectations for Part D sponsors regarding
the implementation of section 11406. On September 26, 2022, CMS
released an HPMS memorandum titled ``Contract Year 2023 Program
Guidance Related to Inflation Reduction Act Changes to Part D Coverage
of Vaccines and Insulin,'' in which we provided program instructions
for the implementation of the requirements in section 11406.\9\ On
April 4, 2023, we released additional guidance in the ``Final Contract
Year (CY) 2024 Part D Bidding Instructions'' in which we provided
instructions for Part D sponsors as they prepared to submit bids for CY
2024.\10\ Lastly, on April 1, 2024, we released ``Final CY 2025 Part D
Redesign Program Instructions.'' \11\
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\9\ https://www.cms.gov/files/document/irainsulinvaccinesmemo09262022.pdf.
\10\ https://www.cms.gov/files/document/final-cy-2024-part-d-bidding-instructions.pdf.
\11\ https://www.cms.gov/files/document/final-cy-2025-part-d-redesign-program-instructions.pdf.
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We proposed to codify the cost-sharing requirements for covered
insulin products under Part D for 2026 and each subsequent plan year.
We received the following comments on this section of the proposed
rule, and our responses follow:
Comment: We received many comments that were supportive of our
proposal to codify the statutory cost-sharing requirements for covered
insulin products that were added to section 1860D-2 of the Act by
section 11406 of the IRA.
Response: We thank the commenters for their support of our
proposal.
Comment: A commenter requested that CMS publish technical
prescription drug event (PDE) reporting guidance for covered insulin
product claims.
Response: We thank the commenter for their recommendation. We have
released PDE reporting instructions for the implementation of
provisions of the IRA for contract years 2023, 2024, and 2025. Our most
recent guidance, entitled ``Prescription Drug Event Record Reporting
Instructions for the Implementation of the Inflation Reduction Act for
Contract Year 2025'' was published on April 15, 2024 and can be found
here: https://www.cms.gov/files/document/pderecordreportinginstructionsfortheimplementationoftheiraforcontractyear2025508g.pdf. We anticipate that additional guidance will be released
for contract year 2026.
2. Definition of Covered Insulin Product
Section 1860D-2(b)(9)(C) of the Act defines a covered insulin
product as ``an insulin product that is a covered Part D drug covered
under a PDP or MA-PD plan and that is approved under section 505 of the
Federal Food, Drug, and Cosmetic Act (FFDCA) or licensed under section
351 of the Public Health Service Act (PHSA) and marketed pursuant to
such approval or licensure, including any covered insulin product that
has been deemed to be licensed under section 351 of the PHSA pursuant
to section 7002(e)(4) of the Biologics Price Competition and Innovation
Act of 2009 and marketed pursuant to such section.''
We proposed to codify the statutory definition of ``covered insulin
product'' at Sec. 423.100 and, in alignment with the guidance in CMS's
September 26, 2022 HPMS memorandum, we clarified that a covered insulin
product includes products that are a combination of more than one type
of insulin. We also proposed, consistent with the September 26, 2022
HPMS memorandum, that the definition of a covered insulin product
include products that are a combination of both insulin and a non-
insulin drug or biological product. Our proposed definition of covered
insulin product would not, however, include medical supplies associated
with the injection of an insulin product, unless such medical supplies
are a device constituent part of a combination product (as defined in
21 CFR 3.2(e)) containing insulin and such combination product is
licensed under section 351 of the PHSA.
While our proposed definition of ``covered insulin product''
includes products that are a combination of more than one type of
insulin or both insulin and non-insulin drug or biological products,
the definition would be limited to those products that are FDA-licensed
biological products. Consequently, because a compounded drug product,
as described in Sec. 423.120(d), is not FDA-licensed, it would not
meet the definition of ``covered insulin product.'' As such, a
compounded drug product would not be subject to the requirements for a
``covered insulin product'' under our proposed definition at Sec.
423.100.
Section 1860D-2(b)(9)(C) of the Act specifies that a ``covered
insulin product'' is an insulin product that is a covered Part D drug
covered under a PDP or MA-PD plan. Section 423.100 defines a covered
Part D drug to be a Part D drug that is included on a Part D sponsor's
formulary, treated as being included in a Part D plan's formulary as a
result of a coverage determination or appeal, and obtained at a network
pharmacy or an out-of-network pharmacy in accordance with Sec.
423.124(a) and (c). Accordingly, we specified in our proposed
definition at Sec. 423.100 that a ``covered insulin product'' is a
covered Part D drug as defined in Sec. 423.100.
[[Page 15803]]
Additionally, we proposed at Sec. 423.100 that a ``covered insulin
product'' is licensed under section 351 of the PHSA and marketed
pursuant to such licensure. We clarified that this proposed definition,
in accordance with the statute, includes any covered insulin product
that had an approved marketing application that was deemed to be a
license for the insulin product (that is, an approved biologics license
application) under section 351 of the PHSA pursuant to section
7002(e)(4) of the Biologics Price Competition and Innovation Act of
2009 and marketed pursuant to such license. We also noted that outside
of these situations where the insulin had an approved marketing
application under section 505 of the FFDCA, that was deemed to be a
license for the insulin product (that is, an approved biologics license
application) under section 351 of the PHSA pursuant to section
7002(e)(4) of the Biologics Price Competition and Innovation Act of
2009, there is no need to reference section 505 of the FFDCA since a
biological product can no longer be approved under section 505 of the
FFDCA and must be licensed in a biologics license application under
section 351 of the PHSA. As such, a reference to section 505 is not
included in our proposed definition of a ``covered insulin product.''
We did not receive any comments on this section of the proposed
rule and are finalizing the definition of ``covered insulin product''
at Sec. 423.100 as proposed.
3. Definition of Applicable Cost-Sharing Amount for Covered Insulin
Products
Section 1860D-2(b)(9)(D) of the Act defines ``applicable copayment
amount'' with respect to a covered insulin product under a PDP or an
MA-PD plan dispensed during plan year 2026, and each subsequent plan
year, as the lesser of--
$35;
An amount equal to 25 percent of the maximum fair price
established for the covered insulin product in accordance with Part E
of title XI of the Act; or
An amount equal to 25 percent of the negotiated price of
the covered insulin product under the PDP or MA-PD plan.
We interpreted the section 1860D-2(b)(9)(D) of the Act reference to
``applicable copayment amount'' as an amount that could be either a
fixed copayment or a coinsurance percentage. Therefore, we proposed to
define this ``applicable copayment amount'' as an ``applicable cost-
sharing amount'' at Sec. 423.100. In addition, to ensure that the
reference to ``applicable cost-sharing amount'' is specific to the cost
sharing for covered insulin products described under proposed Sec.
423.120(h), and discussed in this final rule, we proposed to define the
term ``covered insulin product applicable cost-sharing amount.''
Specifically, we proposed to add at Sec. 423.100 a definition of
``covered insulin product applicable cost-sharing amount'' that means,
with respect to a covered insulin product covered under a PDP or an MA-
PD plan prior to an enrollee reaching the annual out-of-pocket
threshold during plan year 2026 and each subsequent plan year, the
lesser of--
$35;
An amount equal to 25 percent of the maximum fair price
established for the covered insulin product in accordance with Part E
of title XI of the Act; or
An amount equal to 25 percent of the negotiated price, as
defined in Sec. 423.100, of the covered insulin product under the PDP
or MA-PD plan.
For example, the August 15, 2024 publication ``Medicare Drug Price
Negotiation Program: Negotiated Prices for Initial Price Applicability
Year 2026'' establishes the maximum fair price for the covered insulin
product Fiasp; Fiasp FlexTouch; Fiasp PenFill; NovoLog; NovoLog
FlexPen; NovoLog PenFill as $119 for a 30-day supply in CY 2026.\12\
If, in this example, a plan's negotiated price, as defined in Sec.
423.100, is $95, then an amount equal to 25 percent of the maximum fair
price is $29.75 and an amount equal to 25 percent of the negotiated
price is $23.75. Therefore, the covered insulin product applicable
cost-sharing amount would be $23.75, as it is the lesser of $35,
$29.75, and $23.75.
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\12\ https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf.
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We received the following comments on this section of the proposed
rule, and our responses follow:
Comment: Several commenters requested clarification regarding the
applicable cost-sharing amount for covered insulin products that are
selected drugs under the Medicare Drug Price Negotiation Program, as
established by sections 11001 and 11002 of the IRA and added to
sections 1191 through 1198 of the Act. As described in section 1860D-2
of the Act, and our proposed definition of ``covered insulin product
applicable cost-sharing amount'' at Sec. 423.100, this amount is the
lesser of $35, an amount equal to 25 percent of the maximum fair price
(MFP), or an amount equal to 25 percent of the negotiated price. Some
of these commenters expressed concern regarding the existing guidance
for managing situations in which the applicable cost-sharing amount is
determined to be equal to 25 percent of the MFP established for the
covered insulin product in accordance with Part E of title XI of the
Act. A few commenters noted that the MFP only includes the ingredient
cost of a covered insulin product and does not include taxes and
dispensing fees and requested guidance on how plan sponsors should
treat these costs. A commenter, referring to dispensing fees but not
sales tax, noted that if reimbursement for covered insulin product
claims does not include reimbursement for the ingredient cost of the
insulin product and a dispensing fee, below cost or inadequate
reimbursement may harm pharmacies and limit beneficiary access to
insulin. Other commenters, referring to both sales tax and dispensing
fees, requested that these costs be included as part of the applicable
copayment amount when it is equal to 25 percent of the MFP, which they
note would be consistent with how cost sharing is calculated when 25
percent of the negotiated price is the applicable cost-sharing amount.
Response: We thank the commenters for their comments. The MFP
established for a covered insulin product in accordance with Part E of
title XI of the Act only includes the ingredient cost of the insulin
product. As such, the amount paid by an enrollee for a 1-month supply
of a covered insulin product cannot exceed 25 percent of the MFP, if
this amount is lower than $35 or 25 percent of the negotiated price.
Therefore, Part D plans are responsible for covering the cost of the
dispensing fee and any applicable sales tax. If the applicable covered
insulin product applicable cost-sharing amount is determined to be 25
percent of the negotiated price, we note that, consistent with the
definition of negotiated price Sec. 423.100, this price includes all
price concessions from network pharmacies or other network providers as
well as dispensing fees. If the applicable covered insulin product
applicable cost-sharing amount is determined to be $35, the amount paid
by an enrollee cannot exceed $35.
[[Page 15804]]
Comment: A commenter recommended that CMS consider allowing the
establishment of a copayment amount for insulin products that provides
flexibility for Part D plan sponsors. Specifically, the commenter
recommended that CMS permit plans to set a copayment that is equal to
no more than 25 percent of the MFP or the negotiated price, while also
allowing for a $35 copay when it is less than 25 percent of the MFP or
the negotiated price. The commenter asserted that this approach would
provide flexibility for Part D sponsors, ensure enrollees are subject
to predictable cost sharing, and encourage pharmaceutical manufacturers
to maintain or lower prices of covered insulin products.
Response: We appreciate the commenter's suggestion. In accordance
with the statute, plans are permitted to set a copayment that is less
than or equal to $35 so long as that copayment amount is no more than
25 percent of the MFP or 25 percent of the negotiated price. However,
it is not clear if the commenter is asking whether the copayment can be
greater than $35 as long as it is equal to no more than 25 percent of
the MFP or the negotiated price. While a plan may establish a copayment
that is equal to or less than $35, we clarify that the copayment cannot
exceed $35 even if such copayment would otherwise be equal to no more
than 25 percent of the MFP or the negotiated price. While we recognize
the importance of allowing Part D sponsors to have some flexibility in
how they structure their benefits, the covered insulin product
applicable cost-sharing amount that we are codifying in this rule is
statutorily defined in section 1860D-2(b)(9)(D) of the Act as the
lesser of $35, an amount equal to 25 percent of the MFP, and an amount
equal to 25 percent of the negotiated price. As noted in the proposed
rule, Part D sponsors have the flexibility to meet this cost-sharing
requirement by establishing a copayment amount that is equal to or
lower than $35 for a 1-month supply, establishing a coinsurance
percentage that is equal to or lower than 25 percent of the product's
MFP or negotiated price, or establishing both a copayment amount equal
to or lower than $35 and a coinsurance percentage equal to or lower
than 25 percent of the product's MFP or negotiated price.
We clarify that if a Part D sponsor places a covered insulin
product on a formulary tier with a copayment or coinsurance that is
lower than the statutory maximum cost-sharing amount (that is, the
lesser of $35, 25 percent of the negotiate price, or 25 percent of the
MFP), the Part D sponsor will need to use the copayment or coinsurance
amount specified for the tier when determining the enrollee's cost-
sharing amount. For example, if a covered insulin product is placed on
a formulary tier with a copayment amount of $20, the enrollee's cost-
sharing amount would be the lesser of $20, 25 percent of the negotiated
price, or 25 percent of the MFP, if the insulin product is a selected
drug. Similarly, if a covered insulin product is placed on a formulary
tier with a coinsurance percentage of 20 percent, the enrollee's cost-
sharing amount would be the lesser of the 20 percent coinsurance or
$35.
We also clarify that if a Part D sponsor places a covered insulin
product on a formulary tier with a copayment or coinsurance that is
greater than the statutory maximum cost-sharing amount, the Part D
sponsor will still need to use the defined covered insulin product
applicable cost-sharing amount to ensure that the enrollee's cost
sharing does not exceed such amount. For example, if a covered insulin
product is placed on a formulary tier with a copayment amount of $50,
the enrollee's cost-sharing amount cannot exceed the covered insulin
product applicable cost-sharing amount, which is defined as the lesser
of $35, 25 percent of the negotiated price, or 25 percent of the MFP.
Similarly, if a covered insulin product is placed on a formulary tier
with a coinsurance percentage of 30 percent, the enrollee's cost-
sharing amount cannot exceed the covered insulin product applicable
cost-sharing amount, which is defined as the lesser of $35, 25 percent
of the negotiated price, or 25 percent of the MFP.
Comment: A commenter requested that CMS adjust how it describes the
applicable cost-sharing amount for covered insulin products. The
commenter stated that the current guidance stating that cost sharing is
equal to or lower than $35 or 25 percent of the MFP or the negotiated
price is unclear. The commenter recommended rewording this requirement
to state that cost sharing cannot exceed the maximum cost sharing of
the lower of $35 per month, 25 percent of the MFP, or the negotiated
price.
Response: We thank the commenter for their suggestion. However, we
decline to adopt this change as we believe the current language
describing the covered insulin product applicable cost-sharing amount
is sufficiently clear.
4. Cost Sharing for Covered Insulin Products
Section 1860D-2(b)(9)(A) of the Act specifies that for plan year
2023 and subsequent plan years, the deductible, as described in section
1860D-2(b)(1) of the Act, shall not apply with respect to any covered
insulin product. Section 1860D-2(b)(9)(B)(ii) of the Act further
specifies that for 2025 and subsequent plan years, the coverage
provides benefits for any covered insulin product, prior to an
individual reaching the out-of-pocket threshold, with cost sharing for
a month's supply that does not exceed the applicable copayment amount.
We proposed to codify these requirements at Sec. 423.120(h)(1) and
(2).
a. Duration of Supply
In alignment with the guidance in our September 26, 2022 HPMS
memorandum, we proposed to interpret the section 1860D-2(b)(9) cost-
sharing requirements to apply separately to each prescription fill that
is dispensed. For a prescription fill dispensed in an amount up to a 1-
month supply, $35 (or a lower amount specified by the sponsor) is
considered a copayment for purposes of determining the ``covered
insulin product applicable cost-sharing amount.'' In the proposed rule,
and consistent with our current policy in the September 26, 2022 HPMS
memorandum, we specified that Part D sponsors would not be required to
prorate the $35 copayment if less than a 1-month supply is dispensed.
We believe this proposed policy is supported by section 1860D-
2(b)(9)(D) of the Act, which does not explicitly require prorating the
applicable copayment amount for less than a 1-month supply. It also
aligns with current regulations because insulin is not a solid oral
dosage form subject to daily cost-sharing requirements at Sec.
423.153(b)(4). In the proposed rule, we stated that if the ``covered
insulin product applicable cost-sharing amount'' is a coinsurance, the
coinsurance percentage would be applied to the negotiated price
regardless of the days' supply dispensed.
With respect to extended-day supplies (that is, greater than a 1-
month supply) of covered insulin products, we proposed that cost
sharing must not exceed the cumulative ``covered insulin product
applicable cost-sharing amount'' that would apply if the same days'
supply was dispensed in the fewest number of 1-month supply increments
necessary. For example, if a covered insulin product is dispensed for
greater than a 1-month supply, but less than a 2-month supply, the
lesser of $70 or 25 percent of MFP or negotiated price, whichever
applies, would remain the maximum cost-sharing amount. Similarly, the
lesser of $105 or 25 percent of the MFP or negotiated price,
[[Page 15805]]
whichever applies, would apply for a covered insulin product that is
dispensed for greater than a 2-month supply up to a 3-month supply. If
the ``covered insulin product applicable cost-sharing amount'' is a
coinsurance, the coinsurance percentage would be applied to the
negotiated price regardless of the days' supply dispensed.
While Part D sponsors must not charge cost sharing that exceeds the
``covered insulin product applicable cost-sharing amount,'' Part D
sponsors may charge cost sharing that is equal to or less than the
``covered insulin product applicable cost-sharing amount.'' This means
that Part D sponsors have the flexibility to specify cost sharing that
is equal to or lower than the lesser of: a $35 copayment, or 25 percent
coinsurance based on the MFP (if established for such product under the
Medicare Drug Price Negotiation Program for that year), or 25 percent
coinsurance based on the negotiated price. Part D sponsors could meet
this cost-sharing requirement by establishing a copayment amount that
is equal to or lower than $35 for a 1-month supply, establishing a
coinsurance percentage that is equal to or lower than 25 percent of the
product's MFP or negotiated price, or establishing both a copayment
amount equal to or lower than $35 and a coinsurance percentage equal to
or lower than 25 percent of the product's MFP or negotiated price.
b. Out-of-Network Claims
In the September 26, 2022 HPMS memorandum, we provided guidance on
managing out-of-network claims. Consistent with this guidance, we
proposed that enrollees who submit direct member reimbursement (DMR)
requests for covered insulin products accessed at either out-of-network
pharmacies or providers (in accordance with Sec. 423.124(a) and (c)),
or at in-network pharmacies or providers, must not pay more than the
``covered insulin product applicable cost-sharing amount.'' While Part
D sponsors generally may charge the enrollee for the difference between
the cash price and plan allowance for DMRs for covered Part D drugs
accessed from both out-of-network and in-network pharmacies, neither
Sec. 423.124(b) nor Chapter 14 of the Prescription Drug Benefit Manual
directly addresses covered Part D drugs that have statutorily limited
cost sharing.\13\ Therefore, for covered insulin products accessed at
either out-of-network pharmacies or providers (in accordance with Sec.
423.124(a) and (c)), or at in-network pharmacies or providers, we
proposed at Sec. 423.120(h)(4) that the Part D sponsor must reimburse
the enrollee for the full cash price paid to the pharmacy or provider
for a covered insulin product minus the ``covered insulin product
applicable cost-sharing amount.''
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\13\ Section 423.124(b) currently states that a Part D sponsor
that provides its Part D enrollees with coverage other than defined
standard coverage may require its Part D enrollees accessing covered
Part D drugs at out-of-network pharmacies to assume financial
responsibility for any differential between the out-of-network
pharmacy's (or provider's) usual and customary price and the Part D
sponsor's plan allowance. Section 50.4.3 of Chapter 14 of the
Medicare Prescription Drug Benefit Manual (https://www.cms.gov/medicare/prescription-drug-coverage/prescriptiondrugcovcontra/downloads/chapter-14-coordination-of-benefits-v09-17-2018.pdf)
provides detailed guidance on how Part D sponsors must process DMR
requests that are submitted by enrollees who paid cash at an out-of-
network (or an in-network) pharmacy (or provider) and where the
pharmacy (or provider) did not submit claim to Part D plan.
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The total gross covered drug cost (TGCDC) usually is reported
differently on prescription drug events (PDEs) depending on whether the
drug was accessed at an out-of-network or in-network pharmacy or
provider. Specifically, Part D sponsors report the cash price that the
enrollee paid to the pharmacy or provider as the TGCDC for out-of-
network DMRs but only report the negotiated price as the TGCDC for in-
network DMRs. However, we clarified in the proposed rule that with
respect to covered insulin products, as an exception to the Chapter 14
guidance, the sponsor should report the cash price paid to the pharmacy
or provider as the TGCDC on the PDE for both out-of-network and in-
network DMRs. Additionally, true out-of-pocket (TrOOP) cost
accumulation for covered insulin products would be limited to the
beneficiary's cost-sharing amount, which cannot exceed the ``covered
insulin product applicable cost-sharing amount.''
c. Tier Placement & Utilization Management
As described in the April 4, 2023 HPMS memorandum, Part D sponsors
may place covered insulin products on any tier, and apply utilization
management strategies (for example, prior authorization and step
therapy), insofar as such tier placement or utilization management
strategy is consistent with the requirements of CMS's formulary review
and approval process under Sec. 423.120(b). However, regardless of a
covered insulin product's tier placement or applicable utilization
management strategy, the statutory cost-sharing limits described in
this section of the final rule still apply.
We proposed to codify at Sec. 423.120(h)(1) and (2) that with
respect to coverage of a covered insulin product, as we proposed to
define such term at Sec. 423.100, prior to an enrollee reaching the
annual out-of-pocket threshold, a Part D sponsor must not apply a
deductible and must ensure any enrollee cost sharing for each
prescription fill up to a 1-month supply does not exceed the ``covered
insulin product applicable cost-sharing amount'' as defined at Sec.
423.100. We also proposed to codify at Sec. 423.120(h)(3) that Part D
sponsors must ensure that any enrollee cost sharing for each
prescription fill greater than a 1-month supply does not exceed the
cumulative ``covered insulin product applicable cost-sharing amount,''
that would apply if the same days' supply was dispensed in the fewest
number of 1-month supply increments necessary. Finally, we proposed to
codify at Sec. 423.120(h)(4) that these cost-sharing requirements
apply for covered insulin products obtained from either in-network or
out-of-network pharmacies and providers.
We received the following comments on this section of the proposed
rule, and our responses follow:
Comment: A few commenters requested that we monitor out-of-network
claims for covered insulin products, stating that they believe there
are limited circumstances in which a beneficiary would need to obtain a
covered insulin product from an out-of-network pharmacy, especially
considering the existing requirements for pharmacy networks and the
availability of mail order prescriptions. The commenters recommended
that CMS analyze utilization data and determine if out-of-network fills
for covered insulin products are routinely being used without a
particular need. The commenters asserted that routine use of out-of-
network fills may interfere with Part D plans' care coordination and
recommend that limits be placed on access to covered insulin products
at out-of-network pharmacies.
Response: We agree with the commenters that out-of-network access
should not routinely be used to access covered insulin products. We
reiterate our existing requirements at Sec. 423.124, under which a
Part D sponsor must ensure that enrollees have access to covered Part D
drugs at out-of-network pharmacies only if they cannot reasonably be
expected to obtain such drugs at a network pharmacy and do not access
covered Part D drugs at an out-of-network pharmacy on a routine basis.
[[Page 15806]]
Moreover, Sec. 423.124(c) requires Part D sponsors to establish
reasonable rules to appropriately limit out-of-network access to
covered Part D drugs.
Comment: A commenter requested clarification on whether direct
member reimbursement (DMR) requests for covered insulin products can
only be submitted by beneficiaries or whether DMR requests can also be
submitted by providers. The commenter recommended that CMS monitor
claims for covered insulin products, as the codification of CMS's cost-
sharing requirements for insulin products could increase both the plan
and CMS's liability. The commenter also stated that because there is no
limit on the price of covered insulin products that are not selected
drugs under the Medicare Drug Price Negotiation Program, it is possible
that pharmacies may decline to process network claims online and
instead recommend that beneficiaries submit paper claims directly to
their Part D plan in an attempt to charge higher prices at the point-
of-sale and receive higher payments.
Response: We thank the commenter for sharing their questions and
recommendations regarding DMR requests. We note that our reference to
DMR requests in the proposed and final rules is specific to
beneficiary-submitted requests where a beneficiary is requesting
reimbursement for a covered insulin product for which they incurred
out-of-pocket costs. With respect to DMR requests submitted by
beneficiaries for prescriptions obtained from in-network pharmacies,
Sec. 423.120(c)(3) specifies that a Part D sponsor must require its
network pharmacies to submit claims to the Part D sponsor or its
intermediary whenever the card described in Sec. 423.120(c)(1) is
presented or on file at the pharmacy unless the enrollee expressly
requests that a particular claim not be submitted to the Part D sponsor
or its intermediary. Network pharmacies that decline to process network
claims online and instead recommend that beneficiaries submit paper
claims would be in violation of this requirement. We continue to expect
DMR requests for prescriptions obtained from network pharmacies to be
limited and submitted only for reasons such as the claims processing
systems being temporarily unavailable for the pharmacy or the Part D
sponsor or its intermediary when the enrollee obtains their
prescription. Any post-reimbursement reconciliation between the network
pharmacy and plan sponsor would be a contractual matter between the
parties.
Comment: A commenter opposed a cumulative covered insulin product
applicable cost-sharing amount. The commenter stated that cost sharing
is determined on a claim-by-claim basis and interpreted the language in
the proposed rule to require that Part D sponsors track cost sharing
for extended-day supply claims and ensure that the cost sharing does
not exceed one of the cost-sharing thresholds cumulatively.
Response: We clarify that the reference to ``the cumulative
`covered insulin product applicable cost-sharing amount' '' in the
proposed rule was not intended to require assessment across multiple
covered insulin product claims. The covered insulin product's
applicable cost-sharing amount is assessed on a claim-by-claim basis.
For extended-day supplies, the applicable cost-sharing amount is
determined based on the days' supply for the individual claim. For
example, if a covered insulin product is dispensed with a days' supply
greater than 1 month, but less than 2 months, the lesser of $70, 25
percent of the MFP, or 25 percent of the negotiated price would be the
applicable cost-sharing amount. In other words, the Part D sponsor only
needs to look at the days' supply for an individual claim to determine
the applicable cost-sharing amount for a covered insulin product.
Comment: A commenter stated that monthly prescriptions for insulin
can create challenges for patients. The commenter requested that CMS
allow quarterly prescriptions for insulin.
Response: We do not prohibit prescriptions for covered insulin
products from being written and dispensed for greater than 1-month
supplies. In the proposed rule, we provided guidance on how to apply
cost sharing for extended-day supplies of covered insulin products. We
also proposed to codify at Sec. 423.120(h)(3) that Part D sponsors
must ensure that any enrollee cost sharing for each prescription fill
greater than a 1-month supply does not exceed the cumulative ``covered
insulin product applicable cost-sharing amount,'' that would apply if
the same days' supply was dispensed in the fewest number of 1-month
supply increments necessary.
After considering the public comments we received, and for the
reasons set forth in the proposed rule and in our responses to
comments, we are finalizing the changes to Sec. Sec. 423.100 and
423.120 as proposed.
C. Medicare Prescription Payment Plan (Sec. Sec. 423.137, 423.2265,
423.2267, and 423.2536)
1. Background
The Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169) made
several additions and amendments to the Social Security Act (the Act)
that affect the structure of the defined standard Part D drug benefit.
Section 11202 of the IRA (Maximum Monthly Cap on Cost-Sharing Payments
under Prescription Drug Plans and MA-PD Plans) added a new section
1860D-2(b)(2)(E) to the Act requiring all Medicare prescription drug
plans to offer their Part D enrollees the option to pay out-of-pocket
(OOP) Part D drug costs through monthly payments over the course of the
plan year instead of at the pharmacy point of sale (POS) beginning
January 1, 2025.
As described in the proposed rule, CMS undertook consumer focus
group testing to select a name for the program established at section
1860D-2(b)(2)(E) of the Act that would resonate with Medicare Part D
enrollees. After multiple rounds of consumer testing fieldwork and
evaluation of the results, CMS announced the official name of the
program as the ``Medicare Prescription Payment Plan.'' We refer to the
program herein using this name.
As described in more detail in the proposed rule, section 11202(c)
of the IRA directs the Secretary to implement the Medicare Prescription
Payment Plan for 2025 by program instruction or other forms of program
guidance. In accordance with the law, CMS released the Medicare
Prescription Payment Plan: Final Part One Guidance on Select Topics,
Implementation of Section 1860D-2 of the Social Security Act for 2025,
and Response to Relevant Comments (``final part one guidance'') and
Medicare Prescription Payment Plan: Final Part Two Guidance on Select
Topics, Implementation of Section 1860D-2 of the Social Security Act
for 2025, and Response to Relevant Comments (``final part two
guidance''), establishing critical operational, technical, and
communication requirements for the Medicare Prescription Payment Plan
for 2025. CMS does not have authority to implement the Medicare
Prescription Payment Plan through program instruction authority beyond
2025. As such, we pursued rulemaking to codify the requirements of the
program for 2026 and subsequent years.
With only a few exceptions, we proposed to codify, without
modification, the requirements established in the final part one
guidance and the final part two
[[Page 15807]]
guidance at Sec. 423.137 for 2026 and subsequent years.
CMS's approach in codifying the requirements established in the
final part one guidance and final part two guidance is to limit changes
to the requirements already set forth and allow stakeholders to gain
experience with the program, minimize additional burden for Part D plan
sponsors, and minimize disruption for Medicare Prescription Payment
Plan participants. Instances where we proposed to make modifications to
the requirements previously finalized for 2025 include--
Modifications to the requirements for how Part D plan
sponsors handle adjustments for Part D claims under the Medicare
Prescription Payment Plan; and
Modifications to the timing requirements for the grace
period and initial notice of failure to pay.
We also proposed new requirements for the following three
additional topics:
Requirements related to participation renewal for existing
participants in the Medicare Prescription Payment Plan and addition of
a renewal notice to the required notices related to election into the
program.
Requirements for the effective date of voluntary
terminations from the program.
Requirements for Part D plans to provide pharmacies with
easily accessible information on a Part D enrollee's costs incurred
under the program.
In addition, we proposed to modify Sec. 423.2267(e), which lists
CMS-required materials and content for Part D plan sponsors, to include
model and standardized materials for the Medicare Prescription Payment
Plan, and to modify the list of required content for Part D plan
sponsor websites at Sec. 423.2265 to include Medicare Prescription
Payment Plan information. We further proposed to modify Sec. 423.2536
to waive requirements related to the Medicare Prescription Payment Plan
for the Limited Income Newly Eligible Transition (LI NET) program.
Finally, section 1103 of Title I, Subpart B of the Health Care and
Education Reconciliation Act (Pub. L. 111-152) amended section 1857(e)
of the Act to add a medical loss ratio (MLR) requirement to Medicare
Part C (MA program). An MLR is expressed as a percentage, generally
representing the percentage of revenue used for patient care rather
than for such other items as administrative expenses or profit. Because
section 1860D-12(b)(3)(D) of the Act adopts by reference the
requirements of section 1857(e) of the Act, these MLR requirements also
apply to the Medicare Part D program. Consistent with the inclusion of
plan losses in the administrative expense portion of the Part D bid and
the treatment of Medicare Prescription Payment Plan unsettled balances
as administrative costs under section 1860D-2(b)(2)(E)(v)(VI) of the
Act, in the proposed rule, we proposed to modify Sec. Sec.
422.2420(b)(4)(i)(D) and 423.2420(b)(4)(i)(D) to codify the exclusion
of such balances from the MLR numerator, a policy which CMS initially
established in the final part two guidance for 2025.
Comment: Many commenters expressed support for the Medicare
Prescription Payment Plan program. Commenters stated that the program
addresses the burden of high OOP costs early in the year and can
improve access to medications and avoid financial hardship,
particularly for those on fixed incomes or managing multiple chronic
conditions. Commenters also expressed support for CMS's proposal to,
with only a few exceptions, codify, without modification, the
requirements established in the final part one guidance and final part
two guidance. A commenter expressed that the guidance was developed
after extensive stakeholder input, and the commenter believes it
reflects an appropriate balance between bureaucratic processes and a
positive consumer experience.
Response: CMS thanks the commenters for their support.
Comment: Some commenters expressed opposition to CMS's proposal to
codify the Medicare Prescription Payment Plan guidance in regulation. A
commenter requested that CMS delay implementation of the program for at
least one year to allow for additional stakeholder input, pilot
testing, and refinement of the program's design. Some commenters
requested that CMS defer codification of the program, except for
statutorily required items, until Part D plan sponsors have had more
time and experience with the Medicare Prescription Payment Plan.
Response: CMS thanks the commenters for their feedback. As noted in
the proposed rule, CMS does not have authority to implement the
Medicare Prescription Payment Plan through program instruction
authority beyond 2025. As section 1860D-2(b)(2)(E)(i) of the Act
requires that Part D plan sponsors offer the Medicare Prescription
Payment Plan for all plan years beginning on or after January 1, 2025,
CMS also does not have the authority to delay the implementation of the
Medicare Prescription Payment Plan. Although CMS is required to pursue
rulemaking to codify the program at this time, CMS has pursued an
approach of, with only a few exceptions, codifying the requirements
established in the final part one guidance and final part two guidance
at Sec. 423.137 for 2026 and subsequent years without modification in
order to allow stakeholders to gain experience with the program,
minimize additional burden for Part D plan sponsors, and minimize
disruption for Medicare Prescription Payment Plan participants.
Codifying only certain requirements would cause considerable confusion
and disruption in the administration of the Medicare Prescription
Payment Plan.
CMS remains committed to engaging with shareholders through
interview series, individual meetings, and other fora, and
incorporating feedback into future rulemaking, as applicable, as Part D
plan sponsors gain more experience with the program.
Comment: Some commenters expressed opposition to CMS making any
modifications to the Medicare Prescription Payment Plan program for
2026 and subsequent years, even certain limited modifications.
Commenters expressed that Part D plan sponsors will need time to
continue assessing and implementing the required changes and that,
given the extensive changes to the Part D program taking effect in
2025, finalizing additional, significant requirements on Part D plan
sponsors for 2026 and 2027 is premature. A commenter recommended that
CMS not impose new requirements for 2026 unless the requirements
provide Part D plan sponsors more flexibility and are optional rather
than mandatory.
Response: CMS thanks the commenters for their feedback. CMS agrees
that limiting changes to the requirements in place for 2025 will allow
stakeholders to gain experience with the program, minimize additional
burden for Part D plan sponsors, and minimize disruption for Medicare
Prescription Payment Plan participants. Accordingly, CMS is not
finalizing any requirements for real-time election or for Part D plans
to provide pharmacies with easily accessible information on a Part D
enrollee's costs incurred under the program. CMS believes that the
limited modifications to the Medicare Prescription Payment Plan
codified in this final rule will improve the efficiency of the program
and minimize disruptions for program participants. CMS has addressed
specific comments related to real-time election and automatic renewal
in section II.C.2.(c). of this final rule and comments related to
providing pharmacies with easily
[[Page 15808]]
accessible information on a Part D enrollee's costs in section
II.C.2.(i). of this final rule. CMS remains committed to engaging with
stakeholders and incorporating feedback into future rulemaking, as
applicable, as stakeholders gain more experience with the program.
Comment: A commenter expressed concern that the complexity of the
Medicare Prescription Payment Plan program could cause beneficiary
confusion. The commenter expressed concern that beneficiaries who fail
to opt in correctly or inadvertently miss payments may experience
disruptions in their access to essential medications, placing their
health at significant risk. The commenter further stated that
beneficiaries who struggle to meet their monthly installment
obligations due to unforeseen financial hardships could face increased
stress and uncertainty, potentially exacerbating existing health
disparities.
Response: CMS appreciates the commenter's feedback. CMS understands
that the Medicare Prescription Payment Plan program is complex and
believes that ongoing robust efforts to educate beneficiaries about the
program by CMS, plan sponsors, and other interested parties will be
important to ensuring that beneficiaries are appropriately informed
about the program. In 2024, CMS developed educational materials and
tools to help beneficiaries assess whether the program is right for
them and raise awareness of other financial assistance programs, such
as the Low-Income Subsidy (LIS) Program, and encouraged Part D plan
sponsors and other interested parties to use the language and examples
in the CMS-developed materials to craft their own educational
materials.
2. Proposed Provisions
a. Basis, Scope, and General Rule
Section 1860D-2(b)(2)(E)(i) of the Act requires that each
prescription drug plan (PDP) sponsor offering a prescription drug plan
and each MA organization offering a Medicare Advantage prescription
drug (MA-PD) plan must provide to any enrollee of such plan, including
an enrollee who is a subsidy eligible individual (as defined in
paragraph (3) of section 1860D-14(a) of the Act), the option to elect,
with respect to a plan year, to pay cost sharing under the plan in
monthly amounts that are capped in accordance with section 1860D-
2(b)(2)(E) of the Act.
In the proposed rule, CMS stated that the provision applies to all
Part D plan sponsors, including both stand-alone PDPs and MA-PD plans,
as well as Employer Group Waiver Plans (EGWPs), cost plans, and
demonstration plans. CMS further stated that for the reasons
articulated in the final part two guidance, we do not expect plans that
exclusively charge $0 cost sharing for covered Part D drugs to offer
enrollees the option to pay their OOP costs through monthly payments
over the course of the plan year or otherwise comply with the Medicare
Prescription Payment Plan requirements set forth in the proposed rule
and in the proposed new regulation at Sec. 423.137.
In the proposed rule, we proposed to codify at Sec. 423.137(a) the
requirements we established in the final part one guidance and final
part two guidance to apply to plan year 2026 and subsequent years and,
in the case of a plan operating on a non-calendar year basis, for the
portion of the plan year starting on January 1, 2026. As explained in
more detail in the proposed rule at 89 FR 99356, we intend to not
expect plans operating on a non-calendar year basis to comply with the
Medicare Prescription Payment Plan requirements set forth in this final
rule and in the new regulations finalized at Sec. 423.137 to the
extent that those requirements differ from those established in the
final part one guidance and final part two guidance during any portion
of the non-calendar plan year that starts in 2025 and continues into
2026.
We also proposed to codify our existing definitions first
established in the final part one guidance at Sec. 423.137(b) for plan
year 2026 and subsequent years with certain clarifications.
Specifically, at Sec. 423.137(b)(1), we proposed to define ``OOP costs
for the Medicare Prescription Payment Plan'' as the cost sharing amount
the Part D enrollee is directly responsible for paying. In the final
part one guidance and final part two guidance, we referred to these
costs simply as ``OOP costs.'' We also proposed to codify the more
specific definition of ``OOP costs for the Medicare Prescription
Payment Plan'' to avoid confusion with other uses of the term OOP
costs, which may be inconsistent with the use of that term in the final
part one guidance and final part two guidance.
As described in the proposed rule at 89 FR 99356 and section
II.C.2.(b) of this final rule, the formula for calculating the maximum
monthly cap differs for the first month of participation in the program
versus the remaining months of the year. The cap for the first month
for which the Part D enrollee has opted into the Medicare Prescription
Payment Plan incorporates an enrollee's True Out-of-Pocket costs
(TrOOP) prior to election into the program.\14\ However, the subsequent
month calculation is determined by calculating the sum of any remaining
OOP costs owed by the participant from a previous month that have not
yet been billed and any additional OOP costs for the Medicare
Prescription Payment Plan in the subsequent month. As such, for the
subsequent month calculation of the Part D cost sharing incurred by the
Part D enrollee, the term ``OOP costs for the Medicare Prescription
Payment Plan'' includes those Part D cost sharing amounts that the
enrollee is responsible for paying after accounting for amounts paid by
third-party payers.
---------------------------------------------------------------------------
\14\ TrOOP is spending on covered Part D drugs by the
beneficiary or on their behalf by certain third parties. TrOOP costs
determine when a beneficiary becomes an applicable beneficiary for
the Manufacturer Discount Program, reaches the annual OOP threshold,
and subsequently enters the catastrophic coverage phase.
---------------------------------------------------------------------------
Specifically, the OOP costs for the Medicare Prescription Payment
Plan do not include the covered plan pay amount or other TrOOP-eligible
amount(s), such as any amount paid by potential third-party payers,
such as State Pharmaceutical Assistance Programs or charities.
Additionally, within the definition of OOP costs for the Medicare
Prescription Payment Plan, we proposed to define ``remaining OOP costs
owed by the participant'' to be the sum of OOP costs for the Medicare
Prescription Payment Plan that have not yet been billed to the program
participant. For example, as described in more detail in section
II.C.2.(b). of this final rule, if a Medicare Prescription Payment Plan
participant incurs $2,000 in January and is billed $166.67, the
remaining OOP costs owed by the participant are $2,000 - $166.67 =
$1,833.33.
Finally, pursuant to our authority under section 1860D-14(e)(5)(B)
of the Act to waive such requirements of title XI and title XVIII of
the Act as may be necessary to carry out the purposes of the LI NET
program, we proposed to codify a waiver for the LI NET program with
respect to the requirements of the Medicare Prescription Payment Plan
for plan year 2026 and subsequent years. (Because the LI NET sponsor is
a Part D sponsor and the LI NET contract is a PDP contract, many
existing provisions in Part 423 apply to LI NET. Certain requirements
were waived by the statute (such as dissemination of information and
formulary requirements) and some requirements were waived through
rulemaking (such as medication therapy management and quality
improvement
[[Page 15809]]
activities).) Specifically, we proposed to revise Sec. 423.2536 to
include the proposed Medicare Prescription Payment Plan requirements at
Sec. 423.137 discussed in this section to the list of Part D
requirements waived for the LI NET program. We would do this by
redesignating paragraphs (c) through (k) as paragraphs (d) through (l)
and adding the new proposed waiver at paragraph (c). In addition, we
proposed to add the materials proposed at Sec. Sec. 423.2265(b)(16)
and 423.2267(e)(45) through (51) (that is, information about the
Medicare Prescription Payment Plan on sponsor websites and forms and
notices related to the program) to the list of communication
requirements waived for the LI NET program. We proposed to do this by
revising newly redesignated Sec. 423.2536(i)(1) and (4).
Comment: A commenter expressed support for CMS's policy of not
expecting plans that exclusively charge $0 cost sharing for covered
Part D drugs to offer enrollees the option to pay their OOP costs
through monthly payments over the course of the plan year or otherwise
comply with the Medicare Prescription Payment Plan requirements set
forth in the proposed rule. The commenter requested that CMS also apply
that policy to dual eligible special needs plans (D-SNPs) that offer
nominal cost-sharing. The commenter anticipates that termination of the
MA Value-Based Insurance Design (VBID) model will reduce the number of
D-SNPs that can offer $0 copays for Part D drugs and expressed concern
that an LIS enrollee in a plan with Part D cost sharing could
experience higher cost-sharing in later months under the Medicare
Prescription Payment Plan if their cost sharing in the early months of
a year is shifted to the later months.
Response: CMS thanks the commenter for their support and feedback.
CMS does not expect Part D plans that exclusively charge $0 cost
sharing for covered Part D drugs to all plan enrollees to offer the
Medicare Prescription Payment Plan because there is no practical
application for the Medicare Prescription Payment Plan in Part D plans
that do not charge cost sharing. While CMS recognizes that Part D
enrollees with low cost sharing may be less likely to benefit from the
Medicare Prescription Payment Plan, under section 1860D-2(b)(2)(E)(i)
of the Act, Part D plan sponsors must provide the option to participate
in the Medicare Prescription Payment Plan to all Part D enrollees,
including subsidy eligible individuals as defined in paragraph (3)(A)
of section 1860D-14(a) of the Act. Because the statute explicitly
requires that the Medicare Prescription Payment Plan be offered to
subsidy-eligible individuals and because such beneficiaries could
determine that they would benefit from the Medicare Prescription
Payment Plan under certain circumstances, D-SNPs that offer nominal
cost sharing are required to offer the Medicare Prescription Payment
Plan to their enrollees.
Comment: A commenter expressed support for CMS's proposal to add
the Medicare Prescription Payment Plan to the list of Part D
requirements waived for the LI NET program. Another commenter expressed
support for the definitions proposed for the Medicare Prescription
Payment Plan program and stated that they add additional clarity about
the subset of costs eligible for the program.
Response: CMS thanks the commenters for their support.
Comment: A commenter requested that CMS waive Medicare Prescription
Payment Plan requirements for EGWPs, as the commenter believes the
program will add significant administrative costs without providing
meaningful benefits to EGWP enrollees.
Response: CMS appreciates the commenter's feedback but declines to
waive the requirement to offer the Medicare Prescription Payment Plan
for EGWPs. Section 1860D-22(b) of the Act and 42 CFR 423.458(c) permit
CMS to waive or modify any requirement that hinders the design of,
offering of, or enrollment in an EGWP. Under section 1860D-
2(b)(2)(E)(i) of the Act, all Part D plan sponsors must provide the
option to participate in the Medicare Prescription Payment Plan to all
Part D enrollees. Regardless of whether EGWP enrollees are less likely
to benefit from the Medicare Prescription Payment Plan than enrollees
in other types of plans, waiving the requirements of the Medicare
Prescription Payment Plan would mean that some EGWP beneficiaries who
would be likely to benefit would not be able to take advantage of the
program. CMS believes that waiving requirements for EGWPs is not
aligned with the statutory requirement that all Part D enrollees must
be provided with the option to participate in the program.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing all proposed provisions at Sec. Sec. 423.137(a) and (b) and
423.2536 without modification.
b. Calculation of the Maximum Monthly Cap on Cost-Sharing Payments
Section 1860D-2(b)(2)(E)(iv) of the Act specifies how the monthly
caps on OOP cost sharing payments are to be calculated. The formula for
calculating the cap differs for the first month of participation in the
program versus the remaining months of the year. The maximum monthly
cap calculations include specifics of a participant's Part D drug costs
(previously incurred costs and new OOP costs), as well as the number of
months remaining in the plan year; as such, the amount can vary from
person-to-person and month-to-month. Assuming a program participant
remains in the Medicare Prescription Payment Plan through the end of
the plan year, the total amounts billed monthly through the December
payment (which would be billed and paid in the following year) will
equal the total OOP costs for the Medicare Prescription Payment Plan
during the year.
Under section 1860D-2(b)(2)(E)(iv)(I) of the Act, for the first
month for which the Part D enrollee has opted into the Medicare
Prescription Payment Plan, the term ``maximum monthly cap'' means an
amount calculated by taking the annual OOP threshold minus any Part D
costs the Part D enrollee incurred during the year before opting into
the program, divided by the number of months remaining in the plan
year. The number of months remaining in the plan year includes the
current reference month (for example, for a calendar year plan, the
months remaining in the calculation for the January maximum cap would
be 12).
Additionally, incurred costs for the Medicare Prescription Payment
Plan (as used in the statutory definition of the first month's maximum
cap calculation) means the incurred costs, with the meaning set forth
at section 1860D-2(b)(4)(C) of the Act and described in section 30 of
the Final CY 2025 Part D Redesign Program Instructions (Final 2025
Program Instructions), that were incurred prior to effectuation of an
election into the Medicare Prescription Payment Plan, including all
TrOOP-eligible costs.\15\ If election into the program occurs mid-
month, this would include Part D costs incurred within the calendar
month of election but prior to election.
---------------------------------------------------------------------------
\15\ Final CY 2025 Part D Redesign Program Instructions: https://www.cms.gov/inflation-reduction-act-and-medicare/part-d-improvements.
---------------------------------------------------------------------------
Under section 1860D-2(b)(2)(E)(iv)(II) of the Act, for each
subsequent month for which the Part D enrollee has opted into the
program, the maximum monthly cap is determined by calculating the sum
of any remaining OOP costs owed by the participant from a previous
month that have not yet been billed and any additional OOP costs for
[[Page 15810]]
the Medicare Prescription Payment Plan in the subsequent month, divided
by the number of months remaining in the plan year. The number of
months remaining includes the month for which the cap is being
calculated. This calculation repeats for each month in which the
participant remains in the Medicare Prescription Payment Plan. The
resulting maximum monthly cap will change if additional OOP costs for
the Medicare Prescription Payment Plan are incurred.
Under section 1860D-2(b)(4)(B)(i)(VII) of the Act, the annual OOP
cost threshold for 2025 is $2,000. Under section 1860D-
2(b)(4)(B)(i)(VII) of the Act, for 2026 and subsequent years, the
annual OOP cost threshold is equal to the amount specified for the
previous year, increased by the annual percentage increase described in
section 1860D-2(b)(6). ``Incurred costs'' means any costs incurred or
treated as incurred under section 1860D-2(b)(4)(C) of the Act.
The proposed rule discussed the specifics of the first and
subsequent month calculation for the maximum monthly cap on cost-
sharing payments.
Comment: A commenter expressed support for finalizing the program
calculations.
Response: CMS thanks the commenter for their support.
Comment: A commenter expressed concern that the program
calculations are not intuitive and may be confusing for program
participants.
Response: CMS appreciates the commenter's feedback. However,
section 1860D-2(b)(2)(E)(iv) of the Act specifies how the maximum
monthly caps on OOP cost sharing payments are to be calculated, and CMS
does not have the authority to change the statutory formula for the
maximum monthly cap.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing all proposed provisions at Sec. 423.137(c) without
modification.
c. Eligibility and Election
Under section 1860D-2(b)(2)(E)(i) of the Act, Part D plan sponsors
must provide the option to opt into the Medicare Prescription Payment
Plan to all Part D enrollees, including enrollees who are eligible for
LIS. Consistent with the statute, in the proposed rule, we proposed to
codify the requirement that Part D sponsors must offer the program to
all Part D enrollees, including those who are LIS eligible, at Sec.
423.137(d).
In addition, under section 1860D-2(b)(2)(E)(v)(III)(aa) of the Act,
Part D plan sponsors may not restrict the application of the Medicare
Prescription Payment Plan benefit to specific covered Part D drugs. We
proposed to codify this requirement for 2026 and subsequent years at
Sec. 423.137(d)(5).
Section 1860D-2(b)(2)(E)(v)(II) of the Act also states that a Part
D enrollee may opt into the Medicare Prescription Payment Plan prior to
the beginning of the plan year or in any month during the plan year. In
the proposed rule, we proposed the following requirements for 2026 and
subsequent years:
Part D plan sponsors must allow Part D enrollees to opt
into the Medicare Prescription Payment Plan prior to the plan year
(including the annual coordinated election period for the subsequent
plan year, the Part D initial enrollment period, and Part D special
election periods) or at any point during the plan year.
Part D plan sponsors must allow Part D enrollees to opt
into the Medicare Prescription Payment Plan after the conclusion of an
enrollment period and before the new plan enrollment effective date
(for example, an enrollee could opt into the program for the upcoming
plan year after the conclusion of the annual coordinated election
period and in advance of the January 1 new plan enrollment effective
date).
We also proposed requirements for election into the program. We
proposed that the Part D enrollee, or their authorized legal
representative, must complete an election request, provide the required
information to the Part D plan sponsor, and be approved by the Part D
plan sponsor to opt into the Medicare Prescription Payment Plan. As
discussed in more detail in the proposed rule, we also proposed to
require Part D plan sponsors to have specific election mechanisms
available to Part D enrollees who wish to opt into the Medicare
Prescription Payment Plan.
We further proposed that Part D plan sponsors must consider
Medicare Prescription Payment Plan election requests regardless of the
election mechanism or format provided it includes certain information
necessary to be complete, as described in the proposed rule.
In the proposed rule, for 2026 and subsequent years, we proposed to
codify the 24-hour effectuation requirement at Sec. 423.137(d)(4), but
requested comment on a potential requirement for Part D plan sponsors
to effectuate election requests received via phone or web in real-time
for 2026 or future years, including the operational feasibility of
implementing a real-time election requirement for 2026, what technology
and processes would be required to enable a real-time election
requirement for 2026, implications for Part D enrollees, and potential
burden on interested parties. We expressed interest in opportunities
for pharmacists to support enrollees in using any future Part D plan
sponsor-adjudicated real-time election mechanisms at the POS.
We also outlined proposed requirements for receipt of election
requests and incomplete election requests. We further proposed
requirements for Part D plan sponsors to process retroactive election
requests in cases where an enrollee cannot have immediate election into
the program and believes that any delay in filling a prescription due
to the 24-hour timeframe required to process a program election request
may seriously jeopardize their life, health, or ability to regain
maximum function and so must pay OOP to the pharmacy.
Section 1860D-2(b)(2)(E)(v)(II) of the Act requires Part D plan
sponsors to offer the Medicare Prescription Payment Plan to all Part D
enrollees in any month during the year. At Sec. 423.137(d)(8), for
2026 and subsequent years, we proposed to codify requirements for mid-
year plan switches, consistent with the requirements included in the
final part one guidance for 2025. The proposed rule outlined new
requirements related to participation in the program from year to year,
a topic CMS did not address in the final part one guidance or final
part two guidance because the IRA limited CMS's program instruction
authority to a single year of the program (that is, contract year (CY)
2025). We proposed requiring Part D plan sponsors to send a notice
alerting the Part D enrollee that their participation in the program
will continue into the next year unless they indicate that they would
like to opt out for the upcoming year. This notice would be required to
be sent out to program participants by the end of the annual
coordinated election period (no later than December 7) and must include
the Part D plan sponsor's program terms and conditions for the upcoming
year.
We also addressed other program election communications and notice
requirements for Part D plan sponsors, including timing, content, and
supplemental information requirements for the election request form,
notice of election approval, and notice of denial.
CMS issued model materials that Part D enrollees can use to fulfill
the election request and election approval requirements through the
Medicare Advantage and Prescription Drug Programs: Part C and Part D
Medicare Prescription Payment Plan Model
[[Page 15811]]
Documents (CMS-10882; OMB 0938-1475) ICR package. As established in
Sec. 423.2267(c), model materials and content are required materials
and content created by CMS as an example of how to convey beneficiary
information. If Part D plan sponsors choose to not use a CMS-developed
model version of a particular required material or content, they must
still accurately convey the vital information in the required material
or content to the beneficiary.
Comment: A few commenters expressed support for finalizing the
effectuation timeframes for election requests, including the 24-hour
effectuation requirement for election requests made during the plan
year. A commenter requested that plans be able to make exceptions to
the 24-hour requirement, such as for effectuating election requests
received via paper form and requested that CMS exercise enforcement
discretion for effectuation timeframes. Other commenters requested the
effectuation timeframe for election requests made during the plan year
be extended to 72 hours.
Response: CMS thanks the commenters for their feedback. To ensure a
seamless election process for Part D enrollees and ensure they have
timely access to the program and their Part D prescriptions, CMS is
finalizing the requirement for Part D plan sponsors to process election
requests received during the plan year within 24 hours. Through this
requirement, CMS reiterates the importance of ensuring that Part D
enrollees, once they request to participate, are able to access the
benefits of the program as timely as possible. This is particularly
important for those who may wait to pick up a prescription until their
program participation is effectuated. Additionally, CMS emphasizes that
Part D plan sponsors can encourage those who are likely to benefit from
the program to opt in prior to the plan year or during the plan year
prior to going to a pharmacy through strong education and outreach
efforts.
In response to comments regarding operational challenges
effectuating election requests received via the paper form, CMS
acknowledges these concerns but reiterates the importance of ensuring
that Part D enrollees gain timely access to the program and their
prescriptions, regardless of the means of election request.
Comment: Many commenters expressed support for real-time election,
stating that it would reduce burden on enrollees, prevent drug
dispensing delays, and reduce prescription abandonment. Many of these
commenters acknowledged that plan-facilitated real-time election may
need to be implemented as a temporary measure but expressed a strong
preference for a pharmacy-facilitated real-time election process once
it is technologically feasible.
However, many commenters opposed requirements for real-time
election, especially in the early years of the program. These
commenters pointed to technological and operational challenges with
real-time election (both plan-facilitated and pharmacy-facilitated) and
requested additional years of program experience before considering a
real-time election requirement. In addition, some commenters expressed
concerns that real-time election processing could impose additional
pharmacy burden (due to potential workflow disruption or provision of
program education to enrollees).
Response: CMS thanks the commenters for their feedback CMS agrees
that prompt access to the program is important and supports actions by
Part D plan sponsors to prevent drug dispensing delays and reduce
prescription abandonment. However, CMS also acknowledges that there are
technological barriers to industry-wide implementation of real-time
election for 2026. As noted in the proposed rule, our research
indicates that there is no mechanism at the POS for program election
information to be documented in a manner that complies with election
requirements; technological updates would be needed to support POS
election. These updates would require significant lead time and
coordination with industry standards committees that have existing
processes and timelines outside of CMS's purview.
While real-time election (facilitated by Part D plan sponsors
outside of the POS) need not involve changes to the current NCPDP
Telecommunication Standard, CMS recognizes that additional information
technology systems modifications may be necessary for sponsor-
facilitated election updates to interface in real-time with the
pharmacy benefit manager (PBM) and pharmacy systems. Finally, CMS is
cognizant of potential additional burden pharmacies may face under a
real-time election option. As such, CMS is not requiring Part D plan
sponsors to effectuate election requests received via phone or web in
real-time for 2026. CMS continues to encourage Part D plan sponsors to
process election requests within timeframes shorter than 24 hours or in
real-time if they are able.
Additionally, CMS reiterates the importance of targeted outreach
prior to the plan year to identify enrollees likely to benefit from the
program in advance of any POS notifications, which will streamline the
program election process. This requirement, alongside the 24-hour
effectuation timeframe during the plan year and the required process to
retroactively apply the program to those meeting criteria for an urgent
situation, will reduce the likelihood of dispensing delays and
prescription abandonment. CMS will continue to evaluate program
operations and election processes and consider future modifications to
effectuation requirements.
Comment: Many commenters expressed support for the proposed
automatic election renewal process, stating that automatic renewal
would reduce the burden on Medicare Prescription Payment Plan
participants. Some commenters opposed the automatic renewal
requirements, instead suggesting that automatic renewal be optional for
plans to implement in the early years of the program. Some of these
commenters also suggested that plans be able to exempt some
participants from automatic renewal, such as those with unpaid cost
sharing amounts or those who appear not likely to benefit in the
upcoming year. A commenter suggested that CMS issue criteria to help
plans identify a targeted subset of participants for renewal. Another
commenter requested that participants in long-term care settings be
exempt from automatic renewal.
Response: CMS thanks the commenters for their feedback. We agree
that automatic renewal eases burden for both participants and plan
sponsors. While there may be some participants who did not meet program
thresholds for ``likely to benefit'' in the current year or who appear
not likely to benefit in the upcoming year, we believe that consistent
standards for participation renewal for all participants promotes the
cleanest implementation of the program, especially in the early years
of the Medicare Prescription Payment Plan.
Comment: Multiple commenters suggested that CMS revise the
automatic renewal requirements to extend to participants switching
plans within the same parent organization or Part D plan sponsor. A
commenter requested that CMS clarify how automatic renewal would work
with CMS-approved crosswalks.
Response: CMS thanks the commenters for their questions. The
automatic renewal requirements are generally intended to align with
existing
[[Page 15812]]
Part D program enrollment requirements. As such, if a Part D enrollee
would be required to complete a new enrollment request for the upcoming
plan year (such as when an enrollee chooses to switch between plan
benefit packages (PBPs) within the same contract), that enrollee would
also need to re-elect into the Medicare Prescription Payment Plan.
Generally, in situations in which the Part D enrollee is not required
to complete a new Part D enrollment request for the upcoming year (such
as when someone remains in the same PBP or when their PBP is part of a
consolidated renewal plan), then the enrollee's participation in the
Medicare Prescription Payment Plan would also automatically carry over
for the upcoming year.
Comment: A commenter requested that CMS clarify when the
requirement for automatic renewal would start (that is, at the end of
2025 for CY 2026 or at the end of 2026 for CY 2027).
Response: Automatic renewal requirements will take effect for the
CY 2026 plan year. As such, Part D plan sponsors will be required to
automatically renew Medicare Prescription Payment Plan participation
for enrollees who are participating in the program in 2025.
Comment: A couple of commenters requested that CMS update technical
guidance for the submission of beneficiary-level data elements into the
MARx Medicare Advantage Prescription Drug (MARx) system upon
finalization of the rule to reflect the automatic renewal policy.
Response: CMS thanks the commenters for their recommendations. Any
potential modifications to the technical guidance for CY 2026 will be
published in Fall 2025.
Comment: Many commenters supported the requirement for a separate
renewal notice, including the requirements to include the Part D plan
sponsor's program terms and conditions for the upcoming year and a
reminder that the participant may opt out of the program at any time,
including for the upcoming plan year. Commenters requested the
opportunity to review and provide feedback for the renewal notice
through an Information Collection Request (ICR) process. Some
commenters suggested alternative mechanisms to notify participants
about automatic renewal, such as adding language to existing annual
plan documents (such as the Annual Notice of Change (ANOC) and Evidence
of Coverage (EOC), the program notice of election approval, or the
program monthly bill). A commenter also suggested that if a separate
notice is required, it should be distributed after the annual
coordinated election period to avoid confusion during times of
increased plan switching.
Response: CMS thanks the commenters for their feedback. CMS
believes that a separate notice is important to clearly communicate to
Medicare Prescription Payment Plan participants that their program
participation will continue in the upcoming plan year. The model notice
will be incorporated into the Medicare Advantage and Prescription Drug
Programs: Part C and Part D Medicare Prescription Payment Plan Model
Documents ICR package (CMS-10882; OMB 0938-1475) and will be made
available to the public for review and comment under the standard non-
rule Paperwork Reduction Act (PRA) process which includes the
publication of 60- and 30-day Federal Register notices and the posting
of the collection of information documents on our PRA website. CMS will
also consider adding educational language related to automatic renewal
of participation to other Part D materials, such as the ANOC.
Finally, CMS appreciates the suggestion to delay the timing of the
required renewal notice until after the annual coordinated election
period to account for participants who may switch plans for the
upcoming year and thus not be eligible for automatic renewal. CMS
agrees that this will reduce beneficiary confusion and promote a more
efficient automatic renewal process. At Sec. 423.137(d)(10)(iv)(A),
CMS has modified the timing requirement for the renewal notice in this
final rule, such that the renewal notice must be sent after the end of
the annual coordinated election period but prior to the beginning of
the plan year.
Comment: A commenter requested that CMS clarify whether, given the
automatic renewal process, plans would be required to send the program
fact sheet, paper election request, and ``Medicare Prescription Payment
Plan Likely to Benefit Notice'' to Part D enrollees currently
participating in the program.
Response: CMS appreciates the opportunity to clarify. Part D plan
sponsors are required to send only the renewal notice to Part D
enrollees who are currently participating in the Medicare Prescription
Payment Plan and will be automatically renewed for the upcoming year.
Part D plan sponsors are not required to perform ``likely to benefit''
analyses for current program participants, nor to send the ``Medicare
Prescription Payment Plan Likely to Benefit Notice.'' We also note that
although a Part D sponsor may choose to send the Medicare Prescription
Payment Plan mailing described at Sec. 423.137(m)(1) to all of its
Part D enrollees or only to a Part D enrollee who is receiving a new
membership ID card, we encourage Part D sponsors to not send the paper
enrollment form to current Medicare Prescription Payment Plan
participants to reduce potential beneficiary confusion.
Comment: A commenter requested that CMS remove requirements for
telephonic delivery of the notice of election approval during the plan
year. The commenter stated that the process adds to plan burden and is
often confusing for beneficiaries, who have already received a
confirmation number when they completed the telephone or electronic
election process.
Response: CMS thanks the commenter for their feedback. CMS agrees
that when a Part D plan sponsor is able to fully complete the election
request process in the course of a telephonic or electronic interaction
and at that same time provides the enrollee with the effective date of
their program effectuation (which must be within 24 hours of receipt)
and satisfies other notice of election approval requirements as
outlined at Sec. 423.137(d)(10)(ii), then a second telephonic
notification of election acceptance is redundant. CMS is modifying the
criteria at Sec. 423.137(d)(10)(ii)(A)(3) to reflect that exception.
In these cases, the Part D plan sponsor must still deliver the written
notice within 3 calendar days.
Comment: A few commenters expressed support for the requirements
for Part D plan sponsors to include information on the availability of
the LIS program and other financial assistance programs in the
election-related materials; a few commenters also requested that
information about financial assistance programs be added to either the
election request form or the educational materials required with the
election request form. A few commenters suggested modifications to the
requirements for the election request form, including adding language
stating that enrollees with low, stable drug costs are not likely to
benefit from the program and adding a field to differentiate election
requests for the current year versus the upcoming plan year. A
commenter requested that the period for opting into the Medicare
Prescription Payment Plan for the upcoming plan year be delayed until
December 10 (after the end of the annual coordinated election period)
to allow for plan switching to be completed before processing
elections.
[[Page 15813]]
Response: CMS thanks the commenters for their feedback and notes
that the CMS-developed Medicare Prescription Payment Plan fact sheet
contains information on programs, like the LIS program (also known as
Extra Help), that can lower costs for enrollees.\16\
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\16\ The Medicare Prescription Payment Plan fact sheet can be
accessed at medicare.gov/publications.
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As stated in this final rule, Part D plan sponsors are required to
furnish additional educational information on the Medicare Prescription
Payment Plan with the election request form and the notice of
acceptance; Part D plan sponsors are encouraged to use the CMS-
developed educational fact sheet to satisfy requirements to provide
supplemental information on the program. The fact sheet includes
language to help enrollees decide if they are likely to benefit from
participating in the program. With regard to the requested field to
differentiate the intended year of the election request, CMS will
consider any changes to the existing model materials through the
standard non-rule PRA process. Under section 1860D-2(b)(2)(E)(v)(II) of
the Act, a Part D enrollee may opt into the Medicare Prescription
Payment Plan prior to the beginning of the plan year or in any month
during the plan year. CMS believes that requiring Part D plan sponsors
to allow Part D enrollees to opt into the Medicare Prescription Payment
Plan prior to the plan year, including during the annual coordinated
election period for the subsequent year, simplifies the election
process for Part D enrollees.
Comment: A commenter expressed support for continuing to require
telephone and electronic election options. Some commenters suggested
that program election be integrated into Medicare Plan Finder.
Response: CMS thanks the commenters for their support and
suggestions. CMS notes that enhancements were made to Medicare Plan
Finder starting with CY 2025 to display a cost preview based on a
consumer's specific drug list, a set of consumer-selected MA or Part D
plans, and consumer-selected pharmacies, including both retail
locations and mail order options. However, CMS reiterates that
participation in the Medicare Prescription Payment Plan is an
arrangement between the Part D plan sponsor and the Part D enrollee,
and, as such, Part D plan sponsors are ultimately responsible for
managing the election process.
Comment: A few commenters expressed support for CMS's requirement
that in case of retroactive election, the Part D plan sponsor is
responsible for reimbursing the participant, not the pharmacy. A
commenter requested that the timeframe for processing retroactive
election requests be extended from 24 hours to 72 hours.
Response: CMS thanks the commenters for their support and feedback.
CMS is finalizing requirements for retroactive election requests as
proposed. With respect to retroactive election requests, CMS reiterates
the importance of ensuring that Part D enrollees, once they request to
participate, are able to access the benefits of the program as timely
as possible. CMS believes that this applies equally to a retroactive
election request as to a non-retroactive request. Accordingly, we are
finalizing this requirement as proposed.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, at Sec.
423.137(d)(9), for 2026 and subsequent years, we are finalizing the
proposed requirements related to participation renewal, with a
modification to the timing of the required notice and required
contents. The notice must be sent after the end of the annual
coordinated election period but prior to the end of the plan year; Part
D plan sponsors must include their program terms and conditions for the
upcoming plan year as part of the renewal notice or as a separate
attachment. We are also finalizing as proposed those requirements for
2026 and subsequent years at Sec. 423.137(d)(10)(ii), with one
modification. In response to comments received, we are modifying the
criteria for when an initial telephone notice of election approval is
not required. If a Part D plan sponsor is processing an election
request over the phone or electronically and at that same time provides
the enrollee with the effective date of their program effectuation
(which must be within 24 hours of receipt) and other notice of election
requirements as outlined at Sec. 423.137(d)(10)(ii), then a second
telephonic notification of election acceptance is not required. In
these cases, the Part D plan sponsor must still deliver the written
notice within 3 calendar days. We are finalizing all other provisions
as Sec. 423.137(d) as proposed.
d. Part D Enrollee Targeted Outreach
Consistent with our authority under section 11202 of the IRA and
under section 1860D-12(b)(3)(D) of the Act, in the proposed rule, we
proposed to codify the targeted outreach framework and thresholds
established in the final part one guidance and final part two guidance
at Sec. 423.137(e). The statute establishes that some Part D enrollees
will incur OOP costs that make them likely to benefit from election
into the Medicare Prescription Payment Plan. While this program is open
to all Part D enrollees, Part D enrollees incurring high OOP costs
earlier in the plan year are generally more likely to benefit. Section
1860D-2(b)(2)(E)(v)(III)(dd) of the Act requires that Part D plan
sponsors have a mechanism in place to notify a pharmacy when a Part D
enrollee incurs OOP costs with respect to covered Part D drugs that
make it likely the enrollee may benefit from participating in the
program. CMS recognizes, however, that notification of Part D enrollees
likely to benefit from the Medicare Prescription Payment Plan prior to
reaching the pharmacy POS will be a critical component to program
success. Therefore, in the 2025 guidance, CMS proposed requirements for
Part D plan sponsors to undertake targeted outreach, both prior to and
during the plan year, directly to Part D enrollees likely to benefit
from the program.
While the statute requires a likely to benefit notification, it
does not outline the specific criteria or define the profile of someone
who is likely to benefit under the program. As discussed in further
detail in the proposed rule, CMS developed a standardized, quantitative
framework for assessing ``likely to benefit,'' which was used to inform
targeted outreach requirements both prior to and during the plan year.
For 2026 and subsequent years, we proposed to codify at paragraph
(e)(1)(i)(A) of Sec. 423.137 that a Part D enrollee is likely to
benefit from participating in the program if the enrollee incurs $600
or more in OOP costs for a single prescription. Additionally, at
paragraph (e)(2), we proposed to codify that Part D plan sponsors must
notify a pharmacy when a Part D enrollee incurs OOP costs for a single
prescription that equals or exceeds the $600 POS threshold.
As discussed in the proposed rule, for 2025, CMS required Part D
plan sponsors to review their Part D claims history from the first
three quarters of the year and conduct outreach to Part D enrollees who
incurred at least $2,000 in OOP costs for covered drugs through
September of 2024. Part D plan sponsors may develop supplemental
strategies for identification of Part D enrollees likely to benefit
prior to the plan year. In the proposed rule, for 2026 and subsequent
years, we proposed to codify, at
[[Page 15814]]
paragraph (e)(1)(i)(B), this likely to benefit criteria and, at
paragraph (e)(3)(i), the related requirements for Part D plan sponsor
direct outreach to identified likely to benefit prior to the plan year.
In addition to these criteria, in the final part two guidance, CMS
established a requirement for 2025 for Part D plan sponsors to put in
place reasonable guidelines for ongoing identification of Part D
enrollees likely to benefit during the plan year. We proposed to codify
this requirement for ongoing identification and notification of
enrollees for 2026 and subsequent years at paragraph (e)(3)(ii).
Based on the required analysis to fulfill requirements at paragraph
(e)(3) and any additional analysis Part D plan sponsors conduct to
identify enrollees who may be likely to benefit from this program, we
proposed to codify at paragraph (e)(4) that the Part D plan sponsor
must send the standardized ``Medicare Prescription Payment Plan Likely
to Benefit Notice'' to identified enrollees. We proposed to add this
notice as a required standardized communication material for Part D
plan sponsors at Sec. 423.2267(e)(47). Prior to the plan year, the
notification must occur no later than the end of the annual coordinated
election period (open enrollment), which is December 7 of each year. We
proposed that this outreach may be done via mail or electronically
(based on the Part D enrollee's preferred and authorized communication
methods) and must include a Medicare Prescription Payment Plan election
request form. The outreach must also include additional information
about the Medicare Prescription Payment Plan, which may be fulfilled by
including the CMS-developed fact sheet.
In the proposed rule, we proposed to codify at paragraph
(e)(4)(i)(A) of Sec. 423.137 that if Part D plan sponsors develop and
use alternative informational materials in lieu of the CMS-developed
fact sheet to satisfy this requirement, they must ensure that these
alternative materials accurately convey program information and are
compliant with existing Part D requirements specified at 42 CFR part
423, subpart V, and in the Medicare Communications and Marketing
Guidelines (MCMG). Additionally, the initial notice may be provided via
telephone, so long as the standardized ``Medicare Prescription Payment
Plan Likely to Benefit Notice'' and additional information are sent
within 3 calendar days of the telephone notification.
As discussed in the proposed rule, Part D plan sponsors should be
aware that potential changes to a Part D enrollee's clinical condition,
medication status, or cost sharing (for example, discontinuation of
therapy or addition of supplemental payers) could affect the likelihood
that a Part D enrollee may benefit from the Medicare Prescription
Payment Plan and should counsel enrollees about their participation in
the program accordingly. There are scenarios in which a Part D enrollee
is less likely to benefit, and therefore, should not be notified that
they are likely to benefit from the program. In the proposed rule, we
proposed to codify at paragraph (e)(5) the targeted outreach
exclusions.
As noted in the proposed rule, we plan to revisit these targeted
outreach requirements in future rulemaking, as CMS gains program
experience and can evaluate program data and operations. In general, we
expect to maintain the same overall framework for targeted outreach. In
the proposed rule, we outlined an approach where CMS would assess the
targeted outreach requirements for the POS notification threshold and
prior to plan year criteria on an annual basis and make modifications,
if needed, based on review and analysis of Medicare Prescription
Payment Plan data and other Medicare data. Although CMS is not
codifying an approach to modifying targeted outreach criteria for
future years of the program, we solicited public comments on the
approach and will use feedback from interested parties to support
future policy development.
Comment: Several commenters expressed support for CMS's intent to
evaluate its targeted outreach framework and the likely to benefit
thresholds for future years based on program experience. Specifically,
a few commenters recommended that CMS use 2025 as an evaluation year to
assess the Medicare Prescription Payment Plan's current operations,
including the criteria for providing the ``Medicare Prescription
Payment Plan Likely to Benefit Notice.'' Several commenters expressed
support for CMS's proposal to maintain the current framework for
targeted outreach to enrollees that are likely to benefit, including
those who reached the $2,000 threshold by September of the previous
plan year. A commenter stated that the proposal should help to minimize
pharmacies' administrative burdens.
Response: CMS appreciates the commenters' support and feedback. As
outlined in the proposed rule, CMS plans to revisit these requirements
in future rulemaking, after gaining program experience and evaluating
program data and operations.
Comment: A few commenters recommended that CMS reevaluate the
identification criteria for likely to benefit to exclude LIS members,
dually eligible individuals, or fully integrated dual eligible special
needs plan (FIDE SNP) and highly integrated dual eligible special needs
plan (HIDE SNP) members who already have limited cost-sharing
responsibilities. A commenter recommended CMS narrow the scope of the
program and relieve administrative burden on Part D plan sponsors by
setting a higher threshold. The commenter stated that as currently
implemented, any member with any amount of cost-sharing may elect into
the program. Another commenter recommended CMS adopt a lower threshold
for determining which patients will likely benefit from participation
in the program. The commenter stated that the pharmacy POS notification
threshold is too high and should take into account the total cost of
all prescriptions a patient collects at the pharmacy that day and their
OOP costs to date.
Response: CMS thanks the commenters for their feedback. Under
section 1860D-2(b)(2)(E)(i) of the Act, Part D plan sponsors must
provide the option to opt into the Medicare Prescription Payment Plan
to all Part D enrollees, including enrollees who are eligible for LIS.
As discussed in the proposed rule, individuals with low, stable drug
costs (such as LIS enrollees) are not likely to benefit from the
program. Therefore, Part D plan sponsors are encouraged to provide
support tailored to beneficiaries' unique situations and clearly
communicate to enrollees when it appears that they are less likely to
benefit from the program (for example, enrollees with low-to-moderate
recurring OOP drug costs). Additionally, as discussed in the proposed
rule, CMS has established requirements for Part D plan sponsors to
provide information on the LIS program as part of their Medicare
Prescription Payment Plan materials, including in the billing
statement, notice of election approval, and on their websites. For the
pharmacy POS notification, CMS chose a single prescription drug cost
POS threshold of $600 because this approach strikes the best balance
between identifying Part D enrollees with a very high likelihood (~98
percent) of benefiting from the Medicare Prescription Payment Plan,
while reducing the risk of identifying Part D enrollees for whom the
program may not be as helpful.\17\
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\17\ In the final part one guidance, CMS summarized key findings
from an analysis of POS thresholds ranging from $400 to $1,000. The
proportion of identified enrollees who would benefit from the
program ranged from 90 percent to greater than 99 percent.
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[[Page 15815]]
Comment: A few commenters recommended that CMS assess the efficacy
of the targeted outreach criteria by investigating and publishing data
on OOP costs of those enrollees who are likely to benefit and who elect
into the program and of those enrollees who were notified that they
were likely to benefit but did not elect into the program.
Response: CMS appreciates the commenters' suggestions. As stated in
the proposed rule, CMS requires Part D plan sponsors to report
information related to the Medicare Prescription Payment Plan on
prescription drug event (PDE) records and through reporting
requirements at the beneficiary level through the MARx system and
contract-PBP levels through the Health Plan Management System (HPMS).
CMS will use these data to assess any potential revisions to the POS
notification threshold in future years and will consider opportunities
for publicly sharing the data.
Comment: A commenter recommended that CMS conduct broader outreach
to beneficiaries beyond the targeted outreach notification
requirements. The commenter stated that broad outreach is important for
many patients who may not fall into the likely to benefit parameters
but could still see significant positive impacts from the program.
Response: CMS thanks the commenter for their feedback. CMS agrees
that educating beneficiaries about the program is important for its
success. In advance of the implementation of the program on January 1,
2025, CMS developed new educational resources and updated existing Part
D materials, such as the ANOC, EOC, and Explanation of Benefits (EOB),
to inform Part D enrollees about the program. CMS's education and
outreach efforts discussed in the proposed rule and this final rule are
not comprehensive of the various activities CMS is undertaking to
educate Part D enrollees and other stakeholders about the program.
Supporting broad awareness of the Medicare Prescription Payment Plan
is, however, a shared responsibility between CMS and Part D sponsors.
To ensure all prospective and current Part D enrollees are aware of the
program, CMS has also established general Part D plan sponsor outreach
and education requirements, which are discussed in further detail in
the proposed rule and this final rule. After considering the comments
we received and for the reasons outlined in the proposed rule and our
responses to comments, we are finalizing our proposed provisions at
Sec. 423.137(e) without modification.
e. Termination of Election, Reinstatement, and Preclusion
Section 1860D-2(b)(2)(E)(v)(IV)(aa) of the Act requires a Part D
plan sponsor to terminate an enrollee's Medicare Prescription Payment
Plan participation if that enrollee fails to pay their monthly billed
amount. In addition, under section 1860D-2(b)(2)(E)(v)(IV)(bb) of the
Act, Part D sponsors may preclude an enrollee from opting into the
Medicare Prescription Payment Plan in a subsequent year if the enrollee
fails to pay the amount billed for a month as required under the
program.
We proposed standards for termination of election, reinstatement,
and preclusion consistent with the statutory requirements. CMS
established procedures for voluntary termination of election, under
which Part D plan sponsors are required to have a process to allow a
participant who has opted into the Medicare Prescription Payment Plan
to opt out during the plan year. For 2025, we required Part D plan
sponsors to process the participant's voluntary termination request and
send the individual a notification confirming the termination within 10
calendar days of receipt of the request but did not specify the
effective date of termination. For 2026 and subsequent years, we
proposed to maintain the requirement for Part D plan sponsors to send
the notice of voluntary termination within 10 calendar days of receipt
but require that the effective date of termination must be within 24
hours of receipt of the voluntary termination request. We solicited
public comment on this proposal.
When a participant opts out of the Medicare Prescription Payment
Plan, a Part D plan sponsor must provide the individual with a notice
of voluntary termination after the individual notifies the Part D plan
sponsor that they intend to opt out under the Part D plan sponsor's
established process. At Sec. 423.137(f)(2)(i)(A)(2)(ii) of the
proposed rule, we outlined required contents for the notice of
voluntary termination. As discussed in the proposed rule, a Part D plan
sponsor must offer the enrollee terminating their program participation
the option to repay the full outstanding amount in a lump sum but is
prohibited from requiring full immediate repayment from a participant.
For 2026 and subsequent years, we proposed to codify the voluntary
termination process and notice requirements at Sec. 423.137(f)(2)(i)
and to add the voluntary termination notice as a required material and
content for Part D plan sponsors at Sec. 423.2267(e)(50).
We also proposed standards for involuntary termination, including
requirements for the provision of a grace period of at least two months
when an individual has failed to pay the billed amount by the payment
due date and requirements for reinstatement. If an individual fails to
pay the billed amount within 15 calendar days of the payment due date,
the Part D plan sponsor must send the individual an initial notice of
failure to pay. The required contents of the notice of failure to pay
are detailed in the proposed rule and at Sec.
423.137(f)(2)(ii)(C)(2)(i). If the individual fails to pay the amount
due by the end of the grace period, the Part D plan sponsor must send
the individual an involuntary termination notice explaining that the
individual has been terminated from the Medicare Prescription Payment
Plan. We proposed that the involuntary termination notice must be sent
within 3 business days following the last day of the end of the grace
period and must include the contents detailed in the proposed rule and
at Sec. 423.137(f)(2)(ii)(D)(2). For 2026 and subsequent years, we
proposed to codify these notice requirement standards at Sec.
423.137(f)(2)(ii) and to add the notice of failure to pay and notice of
involuntary termination as required model materials and content for
Part D plan sponsors at Sec. 423.2267(e)(48) and (49). For the grace
period, we proposed to make certain modifications to the timing
requirements for the grace period and initial notice of nonpayment
established in the final part one guidance. Specifically, for 2025, we
required that the grace period must begin on the first day of the month
for which the balance is unpaid or the first day of the month following
the date on which the payment is requested, whichever is later. For
2026 and subsequent years, we proposed to change the date on which the
grace period must begin to the first day of the month following the
date on which the initial notice is sent. As discussed in the proposed
rule, we believe this would simplify the timing requirements for the
notice of nonpayment and the required grace period. We solicited
comment on the proposed change.
We proposed that if a participant fails to pay their monthly billed
amount with fewer than two full calendar months remaining in the
calendar year, the grace period must carry over into the next calendar
year. If the program
[[Page 15816]]
participant is within their grace period from the prior year, the Part
D plan sponsor must allow the participant to opt into the program for
the next year, but if the participant fails to pay the amount due from
the prior year during the required grace period, the Part D plan
sponsor may terminate the individual's participation in the program in
the new year.
A participant must be allowed to pay the overdue balance in full
during the grace period to remain in the program. Additionally, Part D
plan sponsors must reinstate an individual who has been terminated from
the Medicare Prescription Payment Plan within a reasonable timeframe if
the individual demonstrates good cause for failure to pay the program
billed amount within the grace period and pays all overdue amounts
billed. As discussed in the proposed rule, CMS proposed to adopt the
same meaning of ``good cause'' outlined in section 60.2.4 of the
Medicare Prescription Drug Benefit Manual, Chapter 3--Eligibility,
Enrollment and Disenrollment that applies to reinstatements when an
enrollee fails to pay their Part D premiums. A Part D plan sponsor may
reinstate an individual who has been terminated from the Medicare
Prescription Payment Plan and pays all overdue amounts billed in full,
at the sponsor's discretion and within a reasonable timeframe, even if
the individual does not demonstrate good cause. For 2026 and subsequent
years, we proposed to codify these grace period and reinstatement
requirements at Sec. 423.137(f)(3).
In the proposed rule, we clarified that, consistent with the
statute, a Part D plan sponsor may only preclude an individual from
participating in the Medicare Prescription Payment Plan in a subsequent
year if the individual owes an overdue balance to that plan sponsor. If
an individual enrolls in a Part D plan offered by a different Part D
plan sponsor than the Part D plan sponsor to which the individual owes
an overdue balance, that individual cannot be precluded from opting
into the Medicare Prescription Payment Plan in a subsequent year by
that different Part D plan sponsor. We also stated that preclusion may
extend beyond the immediate subsequent plan year if a Part D enrollee
remains in a plan offered by the same Part D plan sponsor and continues
to owe an overdue balance. For 2026 and subsequent years, we proposed
to codify requirements related to preclusion of election in a
subsequent plan year at Sec. 423.137(f)(4).
We proposed to prohibit Part D enrollment penalties for failure to
pay a Medicare Prescription Payment Plan amount billed. Additionally,
we outlined that a Part D plan sponsor is prohibited from disenrolling
a Part D enrollee from a Part D plan or declining future enrollment
into a Part D plan for failure to pay any amount billed under the
Medicare Prescription Payment Plan. We also proposed that if a
participant in the Medicare Prescription Payment Plan is disenrolled
voluntarily or involuntarily from their Part D plan under the
provisions at 42 CFR 423.44(b), the participant is also terminated from
the Medicare Prescription Payment Plan in that plan. For 2026 and
subsequent years, we proposed to codify these requirements at Sec.
423.137(f)(5) and (6).
Comment: Several commenters expressed support for CMS's proposal to
clearly identify the grace period start date and simplify the grace
period timing requirements by changing the start of the grace period to
the first day of the month following the issuance of the initial
failure to pay notice. A commenter stated that the change will provide
a better member experience and simplify plan sponsor operations and
management of the program. However, a few commenters expressed
opposition to the proposal, noting that it will extend the grace period
by up to a month from the initial claim in some cases. The commenters
expressed concern that this will allow for potential program abuse by
extending the time to accumulate unpaid claims before Part D plan
sponsors can end beneficiaries' participation in the program. Another
commenter stated that the grace period should begin on the due date of
missed payment because this is a date that is known by all parties.
A commenter expressed opposition to the proposed grace period
length and recommended CMS shorten the minimum grace period to reduce
potential risk for non-payments.
Response: CMS thanks commenters for their feedback. CMS will
continue to engage stakeholders on issues related to implementation and
program integrity. While CMS appreciates the recommendation to have the
grace period begin on the due date of the missed payment, we do not
agree with the suggestion. Requiring the grace period to begin on the
first day of the month following the date on which the initial notice
is sent simplifies the program requirements, reducing the burden on
Part D plan sponsors.
Comment: A few commenters recommended that CMS add information
about retroactive LIS eligibility to the notice of voluntary
termination, notice of failure to pay, involuntary termination notice,
and billing statement in order to provide timely information about
accessing LIS assistance. A commenter recommended that the involuntary
and voluntary termination notices for the program include reminders to
beneficiaries to continue to pay monthly Part D premiums to maintain
drug coverage.
Response: CMS thanks commenters for their feedback. As discussed in
the proposed rule, CMS has established requirements for Part D plan
sponsors to provide information on the LIS program as part of their
Medicare Prescription Payment Plan materials. Part D plan sponsors are
required to include general information about the LIS program,
including how LIS enrollment for eligible individuals is likely to be
more advantageous than participation in the Medicare Prescription
Payment Plan, on their websites. In addition, the notice of election
approval must include an overview of other Medicare programs that can
help lower costs, including the LIS Program (also known as Extra Help),
the Medicare Savings Program, the State Pharmaceutical Assistance
Program, and the Manufacturer's Pharmaceutical Assistance Program, and
how to learn more about these programs. Additionally, CMS notes that
the involuntary termination and voluntary termination notices are both
required to include a statement clarifying that the notice only applies
to participation in the Medicare Prescription Payment Plan.
Comment: Several commenters expressed concern about the proposed
requirement that voluntary terminations take effect within 24 hours.
They recommended that CMS extend the timeframe for the effective date
of termination to 3 business days or 72 hours from the time the plan
sponsor receives the voluntary termination request to accommodate the
need for greater flexibility in processing times in some cases,
including weekends and holidays. A commenter stated that changing the
requirement to 3 business days would provide plan sponsors with
adequate time to process the request within the allotted time, provide
uniformity across the industry for the program, and simplify data
submission processes. A few commenters expressed support for the 24-
hour timeframe for the effective date of termination. A commenter
stated that CMS has not specified the termination events that fall
within the 24-hour requirement. The commenter recommended that CMS
provide guidance on the effective program termination date for all plan
disenrollment events.
[[Page 15817]]
Response: CMS thanks commenters for their feedback. While the 24-
hour requirement aligns with the required timeframe for processing
election requests during the plan year, CMS agrees that extending the
timeframe reduces burden on Part D plan sponsors while still ensuring a
timely response to opt out requests during the plan year. Consequently,
we are modifying our proposal of 24 hours and finalizing the
requirement as 3 calendar days. We are not adopting the recommendation
of 3 business days as suggested by a few commenters in order to
simplify program requirements by making all timeframe requirements in
calendar days. All scenarios in which the Part D enrollee requests to
voluntarily terminate their participation in the program must be
processed within the 3-calendar day window. CMS is not providing
guidance on the effective date for Part D plan sponsors to process
involuntary terminations at this time but continues to welcome
stakeholder feedback on the issue.
Comment: A commenter stated that patients and pharmacies are
concerned that a plan would attempt to collect the unpaid balance at
the pharmacy counter after the required 2-month grace period. The
commenter recommended that CMS make it easy for beneficiaries and
pharmacists to file a complaint with CMS if they suspect incorrect
cost-sharing calculations and wrongful termination from the program.
Another commenter expressed support for proposals to protect enrollees
from improper termination.
Response: CMS appreciates the commenters' feedback and recognizes
concerns about protecting beneficiaries from wrongful termination. As
described in the proposed rule, Part D sponsors must use their existing
coverage determination, appeals, and grievance procedures for the
Medicare Prescription Payment Plan to ensure that Part D enrollees have
the ability to contest copay amounts and any adverse decisions related
to participation in the Medicare Prescription Payment Plan.
Additionally, CMS tracks plan grievances and beneficiary complaints
entered in the Medicare Complaints Tracking Module (CTM) to assess
compliance with all Medicare Prescription Payment Plan requirements and
ensure program integrity.
Comment: A commenter recommended that the calculation in the first
paragraph of the model notice of failure to pay be aligned with the
changes in the final rule and provide the updated model as soon as
possible.
Response: CMS thanks the commenter for their suggestion. CMS issued
model materials that Part D enrollees can use to fulfill the failure to
pay, involuntary termination, and voluntary termination notice
requirements through the Medicare Advantage and Prescription Drug
Programs: Part C and Part D Medicare Prescription Payment Plan Model
Documents (CMS-10882; OMB 0938-1475) ICR package. We will make any
necessary changes to align the existing model materials with this final
rule through the standard non-rule PRA process, which includes the
publication of 60- and 30-day Federal Register notices.
Comment: A commenter stated that in section 80.3 of the final part
one guidance, CMS states that ``preclusion is only permitted in plans
that are offered by the same parent organization.'' The commenter
recommended that CMS aligns the language in the proposed rule with the
final part one guidance by replacing ``Part D sponsor'' with ``parent
organization'' to provide additional clarity and to ensure preclusion
is applied consistently by Part D plan sponsors. Another commenter
stated that the proposal for Sec. 423.137(f)(4) may be partially
unenforceable. The commenter observed that section 1860D-
2(b)(2)(E)(v)(IV) of the Act states that ``if an enrollee fails to pay
the amount billed for a month as required under this subparagraph [. .
.] the PDP sponsor or MA organization may preclude the enrollee from
making an election pursuant to clause (i) in a subsequent plan year.''
The commenter argued that, based on their interpretation of the
statute, enrollees with the same Part D plan sponsor can be denied
participation even after they pay off the outstanding Medicare
Prescription Payment Plan balance.
Response: With respect to the comment regarding the use of ``Part D
sponsor'' versus ``parent organization'' as it pertains to preclusion,
we acknowledge that the final part one guidance referred to ``parent
organization'' and replacing ``Part D sponsor'' with ``parent
organization'' in the final rule would be consistent with the final
part one guidance. However, we believe that using ``Part D sponsor''
instead of ``parent organization'' is more consistent with the
statutory language in section 1860D-2(b)(2)(E)(v)(IV)(bb) of the Act
without substantively changing the standards for preclusion in election
stated in the final part one guidance. Therefore, we are finalizing the
reference to ``Part D sponsor'' in the final rule. With respect to the
comment regarding the meaning of failure to pay the amount billed, we
disagree that section 1860D-2(b)(2)(E)(v)(IV) of the Act permits a Part
D plan sponsor to preclude an enrollee from participating in the
Medicare Prescription Payment Plan even after they pay off an
outstanding Medicare Prescription Payment Plan balance. We do not
believe that this interpretation, which would permit a Part D sponsor
to forever preclude an enrollee from the program even after they pay
any outstanding balance, is consistent with the statute. We consider
the best reading of the statute to be that an individual who pays a
Medicare Prescription Payment Plan balance is no longer considered to
have failed to pay an amount billed, even if the balance was overdue at
the time of payment. As such, preclusion would not apply to such an
individual.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing all proposed provisions at Sec. 423.137(f) without
modification except for the proposals at Sec. 423.137(f)(2)(i)(A)(1)
and (f)(2)(ii)(D)(1) which we are finalizing with modifications.
f. Participant Billing Rights
Section 1860D-2(b)(2)(E)(iii) of the Act requires Part D plan
sponsors, on a monthly basis, to bill participants who are in the
Medicare Prescription Payment Plan and incur OOP costs for the Medicare
Prescription Payment Plan an amount that cannot exceed the applicable
maximum monthly cap.
As discussed in the proposed rule, we proposed to codify the
requirements established for calendar year 2025 in the final part one
guidance for 2026 and subsequent years at Sec. 423.137(g) with an
exception. In the final part one guidance, we stated that the plan must
work with the participant to determine if they should either refund the
difference directly to the Part D enrollee or apply the overpayment to
the remaining OOP costs owed by the participant. In the proposed rule,
we proposed to require a plan follow its normal processes for
adjustments and issuing refunds. We believe this modification will
simplify operational processes on the part of Part D plan sponsors
without negatively impacting Medicare Prescription Payment Plan
participants.
In addition, in the proposed rule, we proposed to modify the
approach when Part D claims adjustments result in increased amounts
owed by the participant; instead of stating that Part D plan sponsors
``should'' include the additional costs in the revised calculations of
remaining OOP costs owed by the participant, we proposed that Part D
plan sponsors ``must''
[[Page 15818]]
include the increased amount in this manner. This is consistent with
the requirement established in the final part one guidance and included
in section II.C.2.b. of the proposed rule, which states that once a
participant incurs an OOP Part D drug cost, all their OOP costs for all
covered Part D drugs will be billed on a monthly basis as long as the
participant remains in the program, as well as the uniform benefits
requirements at Sec. 423.104(b)(2).
Comment: Multiple commenters expressed support for CMS's proposal
to codify the Medicare Prescription Payment Plan billing requirements
with certain modifications.
Response: CMS thanks the commenters for their support.
Comment: Several commenters opposed CMS's proposal to require that
Medicare Prescription Payment Plan bills be sent separately from
monthly billing statements for Part D premiums. Commenters expressed
concern that requiring separate bills could cause beneficiary confusion
and lead to nonpayment of Medicare Prescription Payment Plan balances,
PDP or MA premiums, or both. Commenters requested that CMS allow Part D
plan sponsors the flexibility to send either two separate billing
statements for monthly premiums owed and amounts owed under the
Medicare Prescription Payment Plan, or a single monthly bill that
clearly shows monthly premium amounts owed, any cost sharing amounts
owed for the prior month under the Medicare Prescription Payment Plan,
and the total amount owed to the plan for the month.
Response: CMS appreciates the feedback from commenters on the
program's monthly billing statement. The separate monthly program bill
is to ensure that program participants do not confuse their payments
for incurred OOP costs with their premium or other bills sent from the
plan. CMS believes that there is a greater risk of beneficiary
confusion from a combined bill rather than separate bills for the
Medicare Prescription Payment Plan and Part D premiums. As such, CMS is
finalizing this requirement as proposed. CMS intends to continue to
engage with stakeholders and incorporate feedback into future
rulemaking, as applicable, as Part D plan sponsors gain more experience
with the current requirements.
Comment: A commenter expressed opposition to our proposal to
require that Part D plan sponsors allow Medicare Prescription Payment
Plan participants with unpaid past due balances under a previous plan
and who switch plans to elect into the Medicare Prescription Payment
Plan under a new plan offered by a different plan sponsor. The
commenter expressed concern that carrying a past due invoice from a
former plan and joining the program in a new plan may cause beneficiary
confusion. The commenter also requested that CMS develop stronger
incentives to prevent enrollees from switching plans solely to avoid
paying their outstanding cost-sharing bills.
Response: CMS appreciates the commenter's concern but declines to
allow Part D plan sponsors to preclude Medicare Prescription Payment
Plan participants with unpaid past due balances under a previous plan
and who switch plans from electing into the Medicare Prescription
Payment Plan. We believe the plain text of the statute limits
preclusion of election to only that Part D plan sponsor to which a
participant has failed to pay an amount billed. Section 1860D-
2(b)(2)(E)(v)(IV)(bb) of the Act requires that, if an enrollee fails to
pay the amount billed for a month as required under the Medicare
Prescription Payment Plan, ``the PDP sponsor or MA organization may
preclude the enrollee from making an election'' to participate in the
Medicare Prescription Payment Plan in a subsequent plan year. The
statute's use of the definite article ``the'' when referring to the PDP
sponsor or MA organization that may preclude an enrollee limits the
ability to preclude an enrollee's election to only the PDP sponsor or
MA organization that is owed the overdue balance and that terminated
the enrollee's election pursuant to section 1860D-2(b)(2)(E)(v)(IV)(aa)
of the Act.
Comment: A commenter requested that CMS consider allowing Part D
plan sponsors to require a single final Medicare Prescription Payment
Plan payment upon an enrollee's termination from the Medicare
Prescription Payment Plan, rather than providing the option of
continued monthly billing after termination, particularly if the
enrollee has completely left the PDP or MA-PD plan.
Response: CMS appreciates commenters' feedback regarding billing
after a participant is terminated from the Medicare Prescription
Payment Plan. CMS included the prohibition of a Part D sponsor from
requiring full immediate repayment from a participant who has been
terminated from the Medicare Prescription Payment Plan to ensure that
individuals are offered maximum flexibility in paying their outstanding
balances after termination from the program (either voluntary or
involuntary). CMS notes that Part D plan sponsors must offer an
individual the option of paying off the outstanding balance as a lump
sum amount and anticipates that some individuals may choose that
option.
Comment: Several commenters expressed support for CMS's proposal to
revise the requirements related to payment adjustments to require that
a Part D plan sponsor follow its normal processes for adjustments and
issuing refunds and to require that Part D plan sponsors ``must''
include additional costs in the revised remaining OOP costs owed by the
participant when Part D claims adjustments result in increased amounts
owed by the participant. Commenters expressed that these revisions
support program efficiency and transparency. A commenter opposed CMS's
proposal to require plan sponsors to include additional costs resulting
from Part D claims adjustments in the revised remaining OOP costs owed
by a participant and stated that the commenter would prefer for Part D
plan sponsors to retain flexibility in the application of these costs
until there is at least one year of program experience.
Response: CMS thanks the commenters for their feedback. While CMS
appreciates the concerns raised about retaining flexibility in the
application of these costs, CMS believes that its revised approach
simplifies the requirements for Part D plan sponsors and ensures a
uniform experience for Medicare Prescription Payment Plan participants
across plans.
Comment: A commenter expressed support for the proposed list of
information to be included in the participant billing statement and
anticipated that billing statements should not vary significantly from
one Part D plan sponsor to another given the specific information
required.
Response: CMS thanks the commenter for their support.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposed provisions at Sec. 423.137(g) without
modification.
g. Participant Disputes
As discussed in the proposed rule at 89 FR 99368, in the proposed
rule, CMS proposed to codify at Sec. 423.137(h) requirements for Part
D plan sponsors to apply their existing Part D coverage determination,
appeal, and grievance procedures to the Medicare Prescription Payment
Plan, consistent with the requirements established in the final part
one guidance.
In the proposed rule, we stated that Part D plan sponsors must
apply their
[[Page 15819]]
established Part D coverage determination and appeals procedures, as
required under section 1860D-4(g) and (h) of the Act and Sec.
423.566(a), to any dispute made by a Medicare Prescription Payment Plan
participant about the amount of Part D cost sharing owed by that
participant for a covered Part D drug. We also stated that Part D plan
sponsors must apply their established Part D grievance procedures,
which Part D plan sponsors are required to have in place under section
1860D-4(f) of the Act and Sec. 423.562, to any dispute made by a
Medicare Prescription Payment Plan participant related to any aspect of
the Medicare Prescription Payment Plan. This includes election
requests, billing requirements, and termination-related issues other
than disputes related to the amount of Part D cost sharing owed by a
participant for a drug. We also clarified that a decision on the amount
of cost sharing for a drug is a coverage determination and directed
readers to Sec. 423.566(b)(5) and to the latest Parts C & D Enrollee
Grievances, Organization/Coverage Determinations, and Appeals Guidance
for requirements related to grievances, coverage determinations, and
redeterminations. We stipulated that Part D plan sponsors must use
their existing coverage determination, appeals, and grievance
procedures for the Medicare Prescription Payment Plan to ensure that
Part D enrollees have the ability to contest copay amounts and any
adverse decisions related to participation in the Medicare Prescription
Payment Plan. Applying existing procedures required under Part D also
reduces the need for Part D plan sponsors to develop new processes and
allows Part D enrollees to use procedures to which they are accustomed.
No comments were received on this proposal. In this final rule, we
finalize these requirements as proposed for 2026 and subsequent years.
h. Pharmacy POS Notification Process
Under section 1860D-2(b)(2)(E)(v)(III)(dd) of the Act and discussed
in section (d) of this final rule, Part D plan sponsors must have a
mechanism to notify a pharmacy when a Part D enrollee incurs OOP costs
with respect to covered Part D drugs that make it likely the Part D
enrollee may benefit from participating in the program. Furthermore,
section 1860D-2(b)(2)(E)(v)(III)(ee) of the Act requires Part D plan
sponsors to ensure that a pharmacy, after receiving such a notification
from the Part D plan sponsor, informs the Part D enrollee that they are
likely to benefit from the Medicare Prescription Payment Plan.
In the proposed rule, we proposed that all Part D plan sponsors
must use the standard code values developed by NCPDP for communication
with network pharmacies about enrollees' Medicare Prescription Payment
Plan status, as appropriate. This includes the mechanism to notify the
pharmacy that a Part D enrollee has been identified as likely to
benefit based on OOP costs at the POS.
The proposed rule also outlined POS requirements for the
distribution of the ``Medicare Prescription Payment Plan Likely to
Benefit Notice,'' including different processes based on pharmacy
setting type. In pharmacy settings in which there is direct contact
with enrollees (for example, community pharmacies where enrollees
present in person to pick up prescriptions), the proposed rule set
forth that the Part D plan sponsor must ensure that a hard copy of the
``Medicare Prescription Payment Plan Likely to Benefit Notice'' is
provided to enrollees identified as likely to benefit (or the person
acting on their behalf) at the time the prescription is picked up. The
proposed rule also set forth that if the pharmacy is in contact with a
Part D enrollee identified as likely to benefit and the enrollee
declines to complete the prescription purchase, the Part D plan sponsor
must ensure that the pharmacy provides the ``Medicare Prescription
Payment Plan Likely to Benefit Notice'' to the Part D enrollee.
Finally, the proposed rule noted that some pharmacy types may not have
direct contact with Part D enrollees and/or may lack a practical means
for providing the physical standardized ``Medicare Prescription Payment
Plan Likely to Benefit Notice'' directly to the Part D enrollee and
proposed standards for those settings.
The proposed rule discussed the unique situation of long-term care
pharmacies in the preamble and noted that because these pharmacies
typically do not have a POS encounter with the enrollee, when the POS
notification is received by a long-term care pharmacy, the Part D plan
sponsor should not require that the long-term care pharmacy provide the
``Medicare Prescription Payment Plan Likely to Benefit Notice'' prior
to dispensing the medication. Instead, the Part D plan sponsor should
require the long-term care pharmacy to provide the notice to the Part D
enrollee (or their authorized representative) at the time of its
typical enrollee cost-sharing billing process.
The proposed rule also discussed special approaches to the POS
notification requirements for Indian Health Service (IHS), Tribe and
Tribal Organization, and Urban Indian Organization (I/T/U) pharmacies,
which provide no-cost prescription drugs to eligible IHS enrollees.
When IHS-eligible Part D enrollees fill a prescription at an I/T/U
pharmacy, their covered Part D prescription drug cost sharing, as
defined by their plan's benefit structure, is not collected at the POS.
As such, if a high-cost prescription drug claim for a Part D enrollee
is submitted to a Part D sponsor from an I/T/U pharmacy, the Part D
sponsor is not required to return the pharmacy notification indicating
the enrollee is likely to benefit from the program. Part D sponsors
should also ensure that their customer service representatives are
aware of this situation regarding I/T/U pharmacies when receiving
inquiries from Part D enrollees regarding program election.
In the proposed rule, we also proposed that for other pharmacy
types without in-person encounters (such as mail order pharmacies),
Part D sponsors must require the pharmacy to notify the Part D enrollee
via a telephone call or their preferred contact method. We noted that
this proposed requirement should not, however, be interpreted as a
requirement to delay dispensing the medication. Pharmacies are
encouraged to utilize existing touchpoints with Part D enrollees, such
as outreach to review medication instructions or collect a method of
payment, to convey the content of the ``Medicare Prescription Payment
Plan Likely to Benefit Notice'' prior to processing payment for the
prescription that triggered the notice. Finally, in the proposed rule,
we noted that, given the statutory requirement for notification of
enrollees likely to benefit at the pharmacy POS, Part D plan sponsors
must ensure that their pharmacy network contracts include a provision
requiring pharmacies to provide this notification to Part D enrollees.
Comment: A commenter expressed support for the POS notification
requirement. Another commenter requested that the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' only be required
to be distributed at the POS for initial prescription fills and
transfers. A commenter opposed the requirement to provide a hard copy
of the ``Medicare Prescription Payment Plan Likely to Benefit Notice''
to enrollees identified as likely to benefit and instead requested that
pharmacies be allowed to provide the likely to benefit notice via other
mechanisms, such as via text messaging, QR codes, patient portal, or
[[Page 15820]]
other electronic methods, and make a hard copy available upon request.
Response: CMS thanks the commenters for their feedback. As
described in the proposed rule, in pharmacy settings with direct
contact with Part D enrollees, the Part D plan sponsor must ensure that
a hard copy of the ``Medicare Prescription Payment Plan Likely to
Benefit Notice'' is provided to enrollees identified as likely to
benefit (or the person acting on their behalf) at the time the
prescription is picked up for every prescription that meets the likely-
to-benefit notification threshold. For pharmacy types without in-person
encounters (such as mail order pharmacies), Part D plan sponsors must
require the pharmacy to notify the Part D enrollee via a telephone call
or their preferred contact method. These notification strategies are a
minimum requirement; pharmacies are encouraged to leverage additional
notification strategies (such as those mentioned by the commenters
previously).
Comment: A few commenters expressed support for the requirement to
use NCPDP code values for communicating with pharmacies. A few
commenters requested additional pharmacy education and training,
including resources related to the NCPDP-approved message codes used to
notify the pharmacy.
Response: CMS thanks the commenters for their feedback. We are
finalizing the requirement that the Part D plan sponsor must use
standard NCPDP code values for notifying the pharmacy that an enrollee
has been identified as likely to benefit at Sec. 423.137(i)(1). CMS
will continue to work with Part D plan sponsors to ensure they provide
educational materials to pharmacies, providers, and other interested
parties.
Comment: A commenter expressed concern that Part D plan sponsors or
PBMs will undertake pharmacy audits related to Medicare Prescription
Payment Plan pharmacy processes and distribution of the ``Medicare
Prescription Payment Plan Likely to Benefit Notice,'' while another
commenter stated that Part D plan sponsors are limited in the ways they
can compel a pharmacy to distribute the notice. A commenter expressed
support for CMS's statement that additional tracking or documentation
by the pharmacy or on behalf of the pharmacy by the Part D plan sponsor
that the notice has been delivered to the identified enrollee is not
required.
Response: CMS thanks the commenters for their feedback. Under
section 1860D-2(b)(2)(E)(v)(III)(dd) of the Act, Part D plan sponsors
must have a mechanism to notify a pharmacy when a Part D enrollee
incurs OOP costs with respect to covered Part D drugs that make it
likely the Part D enrollee may benefit from participating in the
program. Furthermore, section 1860D-2(b)(2)(E)(v)(III)(ee) of the Act
requires Part D plan sponsors to ensure that a pharmacy, after
receiving such notification from the Part D plan sponsor, informs the
Part D enrollee that they are likely to benefit from the Medicare
Prescription Payment Plan. Given this statutory requirement, we are
finalizing at Sec. 423.137(i)(3) that Part D plan sponsors must ensure
that their pharmacy network contracts include a provision requiring
pharmacies to provide this notification to Part D enrollees. This
provision is sufficient to meet the requirements for Part D plan
sponsors to ensure that a pharmacy, after receiving such a notification
from the Part D plan sponsor, informs the Part D enrollee that they are
likely to benefit from the Medicare Prescription Payment Plan.
Additional tracking or documentation by the pharmacy or on behalf of
the pharmacy by the Part D plan sponsor that the notice has been
delivered to the identified enrollee is not required.
Comment: A commenter noted that pharmacists are a trusted source of
healthcare information for enrollees and suggested that CMS offer
targeted information about the program via the pharmacy. Another
commenter expressed support for the CMS's statement that the
requirement to provide the ``Medicare Prescription Payment Plan Likely
to Benefit Notice'' in no way obligates the pharmacy to provide
additional Medicare Prescription Payment Plan counseling or
consultation to the Part D enrollee.
Response: CMS thanks the commenters for their feedback. We agree
pharmacists play a key role in cost-of-care conversations with their
patients, and we encourage Part D plan sponsors to include information
about the Medicare Prescription Payment Plan in their communications
with network pharmacies. CMS notes, however, that the requirement to
provide the ``Medicare Prescription Payment Plan Likely to Benefit
Notice'' in no way obligates the pharmacy to provide additional
Medicare Prescription Payment Plan counseling or consultation to the
Part D enrollee.
In addition, pharmacies are encouraged, but not required, to
provide educational material related to the Medicare Prescription
Payment Plan, such as the CMS-developed fact sheet, at the time they
provide an enrollee with the notice.
Comment: Some commenters expressed concern that language in the
preamble noting operational differences for long-term care pharmacies
and potential different approaches to distributing the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' were not codified
in regulatory text; these commenters requested revisions to the
regulatory language. A commenter also suggested that CMS modify the
regulatory language in certain provisions related to the POS
notification process to reflect long-term care pharmacy processes (that
is, that the notification may take place as part of typical enrollee
cost-sharing billing, not at the POS).
Response: We appreciate the commenters' feedback. In this final
rule, we have modified the regulatory text at Sec. 423.137(i) to
include language related to distribution of the ``Medicare Prescription
Payment Plan Likely to Benefit Notice'' by long-term care pharmacies at
the time of their typical enrollee cost-sharing billing process. We
believe that this modification is sufficient to address the unique
circumstances of the long-term care pharmacy notification, and we
decline to modify the use of ``point of sale notification'' in other
locations in the regulatory text. As noted in the proposed rule, we
encourage Part D plan sponsors to assess the particular circumstances
of their network long-term care pharmacies when establishing timing
requirements for pharmacy distribution of the notice.
Comment: A commenter expressed concern about the potential
administrative burden specialty pharmacies may experience as the
program is implemented and support for flexibilities in program
requirements for non-retail pharmacies. The commenter recommended CMS
collect feedback from specialty and non-specialty pharmacies and
patients about their experience with the first year of implementation
before making additional changes to the Medicare Prescription Payment
Plan.
Response: CMS appreciates the commenter's support and
recommendations and recognizes that pharmacies play an important role
in operationalizing the Medicare Prescription Payment Plan. CMS will
continue to engage external stakeholders on program implementation.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposed provisions at Sec. 423.137(i) with the
following modifications. The NCPDP Telecommunication Standard
[[Page 15821]]
uses specific code values for various fields. As such, to better align
with NCPDP and industry terminology, we are modifying the language at
Sec. 423.137(i) from ``standard codes'' to ``standard code values.''
Based on commenters' feedback, we have added language to the regulatory
text at Sec. 423.137(i)(2)(iii) to state that the Part D plan sponsor
should require the long-term care pharmacy to provide the notice to the
Part D enrollee (or their authorized representative) at the time of its
typical enrollee cost-sharing billing process. As such, the provision
that was previously at Sec. 423.137(i)(2)(iii) is now codified at
Sec. 423.137(i)(2)(iv).
i. Pharmacy Claims Processing
In accordance with section 1860D-2(b)(2)(E)(v)(III)(ff) of the Act,
Part D plan sponsors must ensure that enrollee participation in the
Medicare Prescription Payment Plan does not affect the amount paid to
pharmacies or the timing of such payments. In the final part one
guidance, we established that Medicare Prescription Payment Plan
participants will pay $0 at the POS instead of the OOP cost sharing
they would normally pay at the POS when filling a prescription.
Consequently, Part D plan sponsors must pay the pharmacy the enrollee's
cost-sharing amount in addition to the Part D plan sponsor's portion of
the payment. The proposed rule outlined requirements related to
pharmacy claims processing.
Consistent with our authority under section 11202 of the IRA and
under section 1860D-12(b)(3)(D) of the Act, in the proposed rule, we
stated that to ensure a uniform, consistent claims adjudication process
and to leverage existing Part D processes to minimize operational
burdens, we require that Part D sponsors and pharmacies to use standard
electronic claims processing methodology including a distinct Bank
Identification Number (BIN) and/or Processor Control Number (PCN) for
applicable Medicare Prescription Payment Plan transactions.
The proposed rule also discussed situations in which final patient
pay amounts returned to the pharmacy by a supplemental payer for a
covered Part D drug may occasionally be higher than the original Part D
patient pay amount. In these cases, for the program participant's
portion of the claim (what they would have paid directly to the
pharmacy), we proposed that the Part D plan sponsor may only include in
the Medicare Prescription Payment Plan the participant's original Part
D cost sharing, as determined by their plan-specific benefit structure.
We also proposed that Part D plan sponsors must ensure that there
is no impact to PDE cost/payment field reporting as a result of this
claims processing methodology. PDE submissions must reflect participant
and plan liability amounts as if the Medicare Prescription Payment Plan
did not apply.
Additionally, we proposed that the claims processing methodology
should have no impact to prescriber or participant real-time benefit
tools, meaning participant liability amounts must be represented as if
the Medicare Prescription Payment Plan did not apply.
Except as proposed in Sec. 423.137(d)(6), the proposed rule stated
that Part D plan sponsors are not required to include under this
program paper claims submitted to the Part D plan sponsor by a Medicare
Prescription Payment Plan participant. ``Paper claims'' refer to any
claims for which the participant requests retroactive reimbursement by
the Part D plan sponsor (whether the request is made via a paper form,
telephonically, or electronically), including requests for direct
member reimbursement for OON claims.
The proposed rule outlined requirements for the readjudication of
eligible prescription drug claims for new Medicare Prescription Payment
Plan participants. When a Part D enrollee receives the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' from the pharmacy,
we proposed that they may choose to take time to consider opting into
the program and leave the pharmacy without the prescription that
triggered the notification. As such, when the Part D enrollee returns
to the pharmacy to pick up their prescription after successfully opting
into the program, we proposed that the prescription claim that
triggered the notification must be readjudicated to allow for
appropriate processing by the Part D plan sponsor or PBM. Should a Part
D enrollee have other unpaid claims at the same pharmacy for covered
Part D drugs from prior dates of service, in addition to the
prescription that may have triggered the likely to benefit
notification, we proposed that they may also request that those claims
be readjudicated, so as to be included in the Medicare Prescription
Payment Plan. CMS encouraged Part D plan sponsors to provide their
enrollees with education and information on how to proceed with
readjudication of other unpaid claims for covered Part D drugs.
The proposed rule also described the processing of covered Part D
claims for Medicare Prescription Payment Plan participants in special
pharmacy settings. As discussed in the proposed rule, CMS is aware that
there are multiple types of payment arrangements between long-term care
pharmacies and long-term care facilities and/or Part D enrollees. In
some situations, long-term care pharmacies do not collect Part D cost
sharing from the enrollee but instead bill the long-term care facility
for the final patient OOP responsibility. When such an arrangement is
in place between a long-term care pharmacy and a long-term care
facility, and an enrollee in a long-term care facility is participating
in the Medicare Prescription Payment Plan, billing the participant's
Part D plan's Medicare Prescription Payment Plan BIN/PCN for the
participant's OOP costs (when the pharmacy would not have otherwise
directly billed the enrollee) may result in additional financial burden
on that participant. Given our understanding of the variation in how
long-term care pharmacies dispense and bill covered Part D drugs, we
did not propose specific requirements for Part D sponsors related to
the use of the Medicare Prescription Payment Plan BIN/PCN with long-
term care pharmacies.
Additionally, as noted in section II.C.2.h. of this final rule, I/
T/U pharmacies provide no-cost prescription drugs to eligible IHS
enrollees. When IHS-eligible Part D enrollees fill a prescription at an
I/T/U pharmacy, their covered Part D prescription drug cost sharing, as
defined by their plan's benefit structure, is not collected at the POS.
In the proposed rule, we stated that if an IHS-eligible Part D enrollee
is also participating in the Medicare Prescription Payment Plan, the
Part D plan sponsor must ensure that the I/T/U pharmacy does not bill
the Part D plan's Medicare Prescription Payment Plan BIN/PCN. Instead,
the Part D plan sponsor must ensure that the I/T/U pharmacy processes
the claim as if the IHS-eligible enrollee were not participating in the
Medicare Prescription Payment Plan. If a Part D sponsor receives a
claim from an I/T/U pharmacy that was submitted to the Medicare
Prescription Payment Plan-specific BIN/PCN, the Part D sponsor must
reject the claim. To help prevent this situation from occurring, Part D
sponsors must also put in place processes to prevent Medicare
Prescription Payment Plan BIN/PCNs from being returned on paid claim
responses to I/T/U pharmacies. These requirements apply only with
respect to I/T/U pharmacies that dispense prescriptions at no cost to
the IHS enrollee. The Part D sponsor must
[[Page 15822]]
ensure other network pharmacies providing services to Part D enrollees
process claims in accordance with the Medicare Prescription Payment
Plan requirements.
Finally, in the proposed rule, we noted concerns about the
potential lack of participant visibility into their OOP costs for the
Medicare Prescription Payment Plan at the POS and sought comments about
how to provide additional support for OOP cost transparency for
Medicare Prescription Payment Plan participants, including suggested
processes for how Part D plan sponsors can provide this information to
pharmacies in a manner that conforms with existing standards.
Comment: In response to the request for comment on opportunities to
increase OOP cost transparency, most commenters agreed that enrollees
participating in the Medicare Prescription Payment Plan would benefit
from knowing at the POS the OOP cost of a claim which will be included
in their future Medicare Prescription Payment Plan billing statement.
However, most commenters noted that the normal cost sharing amount is
already provided in the paid claim billing response provided to the
pharmacy. A commenter sought clarification on whether CMS was asking
Part D plan sponsors to provide the cost share on the claim being
processed or the accumulated OOP amount on the Medicare Prescription
Payment Plan coordination of benefits (COB) response to the pharmacy.
Some commenters stated that the OOP cost information is readily
available to pharmacies within their dispensing systems and could be
verbally conveyed upon request, but they also noted the complexities
involved with providing written information to the enrollee at the POS.
Written documentation would involve additional programming costs to
transcribe the OOP amounts from the paid claim transaction onto a paper
document. Further, a few commenters also questioned what enrollee-
facing document would be used to convey the information to the
participant. A commenter stated that the prescription receipt did not
include sufficient space to print the patient pay amount and patient
safety messaging.
In addition to the technical complexities involved to produce a
written document, a commenter stated that it is unclear what the term
``at the POS'' refers to in various pharmacy settings and that CMS
would need to consider how the proposal would apply in different
pharmacy settings to ensure that cost transparency effectively reaches
those who need it most. To support OOP cost transparency, a commenter
noted that they have created tools to help enrollees assess their costs
within the program; they suggested incorporating similar support tools
within Medicare Plan Finder. Finally, several commenters suggested that
before implementing any changes in pharmacy operational processes, CMS
should gather at least a full year's data to assess the current
system's effectiveness and identify potential gaps, before introducing
discussion about new requirements. Commenters suggested that any new
requirements be delayed until 2027 or 2028.
Response: CMS thanks commenters for their feedback. By way of
clarification and in response to a commenter, we can confirm that the
OOP cost that would be provided by the Part D plan sponsor to the
pharmacy is the OOP cost the patient would have incurred if the
Medicare Prescription Payment Plan COB transaction had not been
submitted for the specific Part D claim, rather than the accumulated
OOP to date for the patient (which would be complicated to report). We
are seeking to ensure that the beneficiary is aware of the OOP cost of
a claim which will be included in a future Medicare Prescription
Payment Plan billing statement. We agree that accumulations are a
dynamic dollar amount that can best be explained by the Part D plan
sponsor rather than the pharmacy.
CMS thanks commenters for supporting price transparency at the POS
for participants in the Medicare Prescription Payment Plan. As a result
of the comments received, we continue to encourage pharmacies to
leverage standard industry transaction set data to provide OOP costs to
participants verbally upon request. CMS will consider additional
requirements in the future.
Comment: A few commenters noted issues with the BIN/PCN electronic
claims processing methodology for Medicare Prescription Payment Plan
transactions in the early months of program operations. A commenter
requested that CMS monitor for issues with the current process before
making any changes. Finally, a commenter suggested that CMS provide
additional education and support for pharmacists related to Medicare
Prescription Payment Plan claims processing.
Response: CMS appreciates the comments. We are actively monitoring
program operations, including feedback on pharmacy processes. We
understand that the Medicare Prescription Payment Plan is a new program
and that its operational complexities may result in additional issues
being identified in the early months of implementation. In general, we
encourage Part D plan sponsors to promptly resolve any errors with
pharmacy claims processing for Medicare Prescription Payment Plan
participants and work with the impacted participants to reconcile any
payment inaccuracies. In addition, CMS will continue to work with Part
D plan sponsors to ensure they provide pharmacies with the information
needed to effectively operationalize this program.
Comment: A commenter stated that the BIN/PCN electronic claims
processing methodology for the Medicare Prescription Payment Plan was
not outlined in the IRA and by requiring that method, CMS is exceeding
its statutory authority. Another commenter noted that requiring the
BIN/PCN claims processing methodology places additional burden on
pharmacies; they requested that CMS instead require a pre-funded card
system for processing Medicare Prescription Payment Plan claims.
Response: As discussed in the proposed rule, in addition to the
agency's authorities with respect to the Medicare Prescription Payment
Plan under section 11202 of the IRA, CMS has authority under section
1860D-12(b)(3)(D) of the Act to impose additional contractual terms and
conditions on Part D plan sponsors that are necessary and appropriate.
The BIN/PCN claims processing methodology ensures a single, uniform
method of adjudicating and managing the patient liability for the
Medicare Prescription Payment Plan at the POS; it also leverages
existing Part D processes to minimize operational burdens. As such,
this requirement is necessary and appropriate for implementation of the
Medicare Prescription Payment Plan. In addition, in response to the
part one guidance and part two guidance for the Medicare Prescription
Payment Plan, issued in 2023 and 2024, CMS heard broad support for this
policy from stakeholders, including the importance of a single, uniform
method that allows implementation of the program across large and small
pharmacies.
As noted in the final part one guidance, the proposals for use of a
pre-funded card to operationalize the Medicare Prescription Payment
Plan raises concerns related to the level of Part D plan sponsor
oversight; timeliness of issuing payment cards; and participants
needing to present a physical card at the POS, which could be
forgotten, lost, or stolen, potentially causing delays in obtaining
prescription drugs, elevated risk of fraud, additional costs to the
Part D program and
[[Page 15823]]
potential card processing fees for pharmacies. CMS is also aware that
not all organizations have the financial capabilities established to
enable a pre-funded payment card system.
Comment: A commenter expressed support for CMS's statement that
Part D plan sponsors are not required to provide that pharmacies
reverse and reprocess claims under the Medicare Prescription Payment
Plan that have already been paid for by the Part D enrollee.
Response: CMS thanks the commenter for their support.
Comment: A commenter objected to CMS not proposing specific
requirements for Part D plan sponsors related to the use of the
Medicare Prescription Payment Plan BIN/PCN with long-term care
pharmacies, stating that Part D plans should be required to use the
program BIN/PCN for all participants, including those served by long-
term care pharmacies, so that the long-term care pharmacy knows the
claim is subject to the Medicare Prescription Payment Plan. The
commenter expressed concern that exempting Part D plan sponsors from
the BIN/PCN would not allow long-term care pharmacies to know that a
claim is exempt from cost sharing requirements and would reduce the
effectiveness of the Medicare Prescription Payment Plan.
Response: CMS thanks the commenter for their feedback. In most
circumstances, we expect Part D plan sponsors to provide the Medicare
Prescription Payment Plan BIN/PCN for participating enrollees to all
pharmacies, including long-term care pharmacies. The intent of CMS not
proposing specific requirements for Part D plan sponsors related to the
use of the Medicare Prescription Payment Plan BIN/PCN with long-term
care pharmacies is to allow flexibilities for certain situations where
long-term care pharmacies do not collect Part D cost sharing from the
enrollee but instead bill the long-term care facility for the final
patient OOP responsibility. In these scenarios, billing a participant's
Part D plan's Medicare Prescription Payment Plan BIN/PCN for the OOP
cost that would have been paid by the long-term care facility would
result in an additional financial burden for that participant.
Therefore, CMS encourages Part D plan sponsors to consider a
participant's particular circumstances when developing Medicare
Prescription Payment Plan billing practices and to work with the
participant, their authorized representative, and the long-term care
pharmacy to understand the best billing approach for that participant.
As a reminder, like any other participant in the Medicare Prescription
Payment Plan, an enrollee residing in a long-term care facility may
voluntarily opt out of the Medicare Prescription Payment Plan during
the plan year if the program no longer benefits them.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposed provisions at Sec. 423.137(j) with the
following modification. Based on commenters' feedback, we have removed
the requirements for Part D sponsors to ensure that pharmacies are
prepared to provide information regarding OOP costs for the Medicare
Prescription Payment Plan to a participant at the POS. Although CMS is
not finalizing any OOP cost transparency proposals at this time, CMS
continues to strongly encourage Part D plan sponsors to educate program
participants on the options for assessing OOP costs for the Medicare
Prescription Payment Plan prior to arriving at the pharmacy POS (such
as utilizing interactive prescription drug cost tools available on the
Part D plan sponsor's website or calling the plan's customer service
line).
j. Pharmacy Payment Obligations
Consistent with section 1860D-12(b)(4) of the Act and Sec.
423.520, and as stated in the proposed rule, Part D plan sponsors must
reimburse a network pharmacy the total of a participant's OOP costs for
the Medicare Prescription Payment Plan and the Part D plan sponsor
portion of the payment for a covered Part D drug no later than 14
calendar days after the date on which the claim is received for an
electronic claim or no later than 30 calendar days after the date on
which the claim is received for any other claim. The timing of payment
of the total of a participant's OOP costs for the Medicare Prescription
Payment Plan and the Part D plan sponsor portion of the payment for
long-term care and home infusion pharmacies should follow current
practices for payment of the Part D plan sponsor portion to be
consistent with this requirement.
As finalized in section (f) of this rule, it is not permissible for
Part D plan sponsors to charge program participants fees related to the
Medicare Prescription Payment Plan. Additionally, section 1860D-
2(b)(2)(E)(v)(III)(ff) of the Act requires Part D plan sponsors to
ensure that enrollee participation in the Medicare Prescription Payment
Plan does not affect the amount paid to pharmacies or the timing of
such payments. As a result, Part D plan sponsors cannot impose any fees
or costs related to program implementation on pharmacies, as such fees
or costs would affect the amount paid to pharmacies in violation of the
statute. Participation in the Medicare Prescription Payment Plan is an
arrangement between the Part D plan sponsor and the Part D enrollee;
pharmacies cannot be held responsible for any unsettled balances of a
participant or for collecting unpaid balances from the participant on
the Part D plan sponsor's behalf.
Comment: A few commenters expressed support for the requirement
that Part D plan sponsors cannot impose any fees or costs related to
program implementation on pharmacies and that pharmacies cannot be held
responsible for any unsettled balance. However, several commenters
expressed concern about the financial burden on pharmacies from program
operations. A commenter expressed specific concern about the potential
negative impact of increased costs on long-term care pharmacies. Some
of these commenters requested that CMS require Part D plan sponsors to
reimburse pharmacies for costs associated with implementing the
Medicare Prescription Payment Plan.
A commenter also requested CMS implement real-time monitoring and
enforcement to ensure Part D plan sponsors do not impose program fees
on pharmacies.
Response: CMS appreciates the commenters' concerns and thanks the
commenters for their feedback. Consistent with section 1860D-11(i) of
the Act, CMS may not interfere with the negotiations between Part D
plan sponsors and pharmacies and may not institute a price structure
for the reimbursement of covered Part D drugs (except as provided under
section 1860D-11(i)(3) of the Act related to the Medicare Drug Price
Negotiation Program). That said, CMS recognizes the important role that
pharmacies will play in the implementation of this program and strongly
encourages Part D plan sponsors to ensure that pharmacies receive
adequate reimbursement for services provided to Part D enrollees
related to participation in the Medicare Prescription Payment Plan.
As stated in the proposed rule, any additional transaction fees or
other costs pharmacies incur from processing claims under the Medicare
Prescription Payment Plan or otherwise related to such program are
considered allowable pharmacy costs associated with the dispensing of a
covered Part D drug that may be paid through applicable dispensing
fees. Should Part D plan
[[Page 15824]]
sponsors and pharmacies come to contractual arrangements that reimburse
pharmacies for program operations through a non-dispensing fee
mechanism (for example, remuneration for administrative services),
these arrangements must be reported appropriately via the bid pricing
tool and direct and indirect remuneration (DIR) reporting, as
necessary.
Finally, CMS appreciates commenters' concerns related to additional
program monitoring and will take them into consideration in the future.
Comment: A few commenters expressed support for CMS's requirement
that Part D plan sponsors must reimburse a network pharmacy the total
of a participant's OOP costs for the Medicare Prescription Payment Plan
and the Part D plan sponsor portion of the payment for a covered Part D
drug no later than 14 calendar days after the date on which the claim
is received for an electronic claim or no later than 30 calendar days
after the date on which the claim is received for any other claim. A
commenter also suggested that CMS monitor Part D plan sponsors to
confirm they are adhering to prompt pay requirements.
Response: CMS thanks the commenters for their support. As noted
previously, CMS appreciates commenters' concerns related to additional
program monitoring and will take them into consideration in the future.
Comment: A commenter suggested that concerns about pharmacy
reimbursement could be addressed through the framework of medication
therapy management (MTM) encounters. The commenter suggested that CMS
could include Medicare Prescription Payment Plan participants as a
group targeted for MTM, which would provide a potential mechanism for
pharmacy reimbursement.
Response: CMS thanks the commenter for the suggestion. As noted
previously, CMS strongly encourages Part D plan sponsors to ensure that
pharmacies receive adequate reimbursement for services provided to Part
D enrollees related to participation in the Medicare Prescription
Payment Plan. Given that the Medicare Prescription Payment Plan is in
its very early stages, CMS will continue to monitor the program and
will evaluate program data and operations before implementing
additional changes.
Regarding MTM program eligibility section 1860D-4(c)(2)(A)(ii) of
the Act requires Part D plan sponsors to target those Part D enrollees
who have multiple chronic diseases, are taking multiple covered Part D
drugs, and are identified as likely to incur annual costs for covered
Part D drugs that exceed a level specified by the Secretary. 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) \18\ in their Part D
drug management program (DMP) for MTM. These requirements are codified
in the regulation at Sec. 423.153(d)(2).
---------------------------------------------------------------------------
\18\ Defined at Sec. 423.100.
---------------------------------------------------------------------------
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing as proposed the requirement that the Medicare Prescription
Payment Plan does not affect the amount or timing of payment to
pharmacies at Sec. 423.137(k), including that Part D plan sponsors
cannot impose any fees or costs related to program implementation on
pharmacies and that pharmacies cannot be held responsible for any
unsettled balances of a participant or for collecting unpaid balances
from the participant on the Part D plan sponsor's behalf.
k. Monitoring, Compliance and Data Submission Requirements
In the proposed rule, we stated that existing requirements in 42
CFR 423.514(a) governing data collection for Part D plan sponsors apply
to the Medicare Prescription Payment Plan. We reminded Part D plan
sponsors that they must report information related to the Medicare
Prescription Payment Plan on PDE records and through reporting
requirements at the beneficiary level and contract-PBP levels. Part D
plan sponsors must report data at the beneficiary-level on election
status in the program through the MARx System and contract-PBP-level
data about the program through HPMS. These data elements were formally
issued for public comment through the Office of Management and Budget
(OMB) ICR process.
As CMS noted in the proposed rule, CMS will use this data, along
with data about plan grievances and beneficiary complaints entered in
the CTM, to assess compliance with all Medicare Prescription Payment
Plan requirements and ensure program integrity. We stated our
expectation that Part D plan sponsors incorporate the Medicare
Prescription Payment Plan into their compliance programs in accordance
with 42 CFR 423.504(b)(4)(vi) to ensure they are meeting program
requirements. We also reiterated in the proposed rule that CMS and/or
its contractors may conduct specific audits of Part D plan sponsors'
implementation of the Medicare Prescription Payment Plan and may
initiate audit activity that requires additional data collection or
site visits, as stated in 42 CFR 422.504(e) and 423.505(e).
Comment: Several commenters expressed general support for strong
monitoring and oversight of the program to ensure implementation
remains compliant with regulations and guidance.
Response: CMS thanks commenters for their support.
Comment: Several commenters recommended CMS release program
participation data including PDE data associated with enrollees,
quarterly data releases, and detailed breakdowns by beneficiary
subgroups and demographics.
Response: CMS thanks the commenters for their suggestions. The main
objective in collecting data for CY 2026 is to continue to assess the
operations of the Medicare Prescription Payment Plan and ensure
financial stability in the Medicare Part D program. CMS will evaluate
data submissions once we review them and consider opportunities for
publicly sharing the data.
Comment: A commenter requested we create a new CTM category for
program complaints. Another commenter recommended that CMS use CTM and
grievance data points to allow plans to demonstrate the value of the
program from the enrollee perspective.
Response: CMS thanks the commenters for their suggestions. The CTM
was updated in October 2024 to revise CTM category 2.54 as follows:
``Beneficiary has a cost-sharing/co-insurance issue, including Medicare
Prescription Payment Plan costs''. CMS will monitor and collect data
about beneficiary complaints and grievances reported via the CTM to
assess compliance with program requirements and consider whether an
additional CTM category for the program is needed in future years. With
regard to demonstrating the value of the program, CMS thanks the
commenter for the recommendation but does not plan to release
aggregated complaints and grievances data at this time.
Comment: Several commenters recommended CMS utilize existing audit
protocols and processes to monitor program activities and encouraged
CMS to use caution in adjudicating the efforts of plan sponsors to
implement the program.
Response: CMS thanks the commenters for their feedback and
acknowledges the challenges associated with rapidly operationalizing a
new
[[Page 15825]]
program. CMS does not intend to conduct any audits of plan sponsors'
Medicare Prescription Payment Plan programs in CY 2025. CMS will
monitor the program using the data sources outlined in section 60.3 of
the final part two guidance to inform audit and oversight methods and
processes in future years. CMS intends to engage with plan sponsors
throughout the first year of the program to identify educational
opportunities and disseminate best practices, with the goal of
supporting all plan sponsors in offering compliant programs and will
provide advance notice to plan sponsors regarding any future audit
activities.
Comment: Several commenters expressed support for the proposed data
collection efforts and recommended CMS collect data that could be used
to ensure the program is implemented fairly, captures differences in
outreach efforts to beneficiary subgroups, and monitors the program for
potential unintended consequences.
Response: CMS thanks the commenters for their suggestions. CMS
recognizes the importance of collecting data that assesses whether
programs like the Medicare Prescription Payment Plan are aligning with
the needs of communities and individuals. CMS is collecting
beneficiary-level data on participation in the Medicare Prescription
Payment Plan through the MARx System (OMB control number 0938-1468) and
will begin collecting contract- and plan-level data through the Part D
reporting requirement in HPMS beginning in CY 2025.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing all proposed provisions at Sec. 423.137(k).
l. General Part D Sponsor Outreach and Education Requirements
Under section 1860D-2(b)(2)(E)(v)(III)(bb) of the Act, Part D plan
sponsors must notify prospective Part D enrollees prior to the plan
year through promotional materials of the option to participate in the
Medicare Prescription Payment Plan. Additionally, under section 1860D-
2(b)(2)(E)(v)(III)(cc) of the Act, Part D plan sponsors must also
provide information on such option in educational materials to Part D
enrollees.
To ensure all prospective and current Part D enrollees are aware of
the program, we proposed to require Part D plan sponsors to provide
general education on the program via a mailing and through their
websites for 2026 and subsequent years at Sec. 423.137(m)(1) and
(m)(2), respectively. We proposed requiring Part D plan sponsors to
send a program election request form and additional educational
information on the program either in the membership ID card mailing,
described at Sec. 423.2267(e)(32), or in a separate mailing sent out
within the same timeframe. Under Sec. 423.2267(e)(32), membership ID
cards must be provided to new enrollees within 10 calendar days from
receipt of CMS confirmation of enrollment or by the last day of the
month prior to the plan effective date, whichever is later. We noted
that Part D plan sponsors may send the Medicare Prescription Payment
Plan mailing described at Sec. 423.137(m)(1) to only new plan
enrollees who typically receive the membership ID card mailing or to
all of their Part D enrollees. Further, for 2026 and subsequent years,
we proposed to codify requirements at Sec. 423.137(m)(2) for plans to
include certain information on their publicly available websites,
described at Sec. 423.128(d)(2). As we discussed in the proposed rule,
Part D plan sponsors are encouraged to use the CMS-developed
educational fact sheet to satisfy requirements to provide supplemental
information on the program.
We also explained that CMS has updated existing Part D resources
that are required to be furnished to Part D enrollees under Sec.
423.2267(e) to include information about the program. These include the
ANOC, described at Sec. 423.2267(e)(3), the EOC, described at Sec.
423.2267(e)(1), and the EOB, described at Sec. 423.128(e)(7). Each has
been updated to include program information through the OMB ICR process
(for the EOB) or through the general annual issuance of Part D model
materials (for the ANOC and EOC).
In addition to meeting these requirements, we proposed to codify at
Sec. 423.137(m)(2) for 2026 and subsequent years required content that
a Part D plan sponsor must include on its website and amend Sec.
423.2265(b) to add paragraph (b)(16) to include information on the
Medicare Prescription Payment Plan as required content for Part D plan
sponsor websites. Additionally, Part D plan sponsors may also include
information on the Medicare Prescription Payment Plan in their
marketing materials. In developing their materials, Part D plan
sponsors must ensure that the materials accurately convey program
information and are compliant with existing Part D requirements
specified at 42 CFR part 423, subpart V.
Comment: Several commenters expressed opposition to including D-SNP
and LIS members in general outreach and education for the Medicare
Prescription Payment Plan, given that they receive other financial
assistance for their prescription drugs. A commenter recommended CMS
allow plans to use alternative language when communicating about the
program with members who are unlikely to benefit from the program and
recommended excluding LIS recipients from the election request form
requirements. The commenter expressed concern that after the
termination of the VBID model, D-SNPs formerly in the VBID model will
be required to inform members about the Medicare Prescription Payment
Plan even though most members are LIS recipients and therefore unlikely
to benefit.
Response: CMS recognizes commenters' concerns about those who are
less likely to benefit receiving program materials. As noted in the
proposed rule and this final rule, CMS understands that the Medicare
Prescription Payment Plan has no practical application for enrollees in
plans that exclusively charge $0 cost sharing for covered Part D drugs.
As such, we do not expect plans that exclusively charge $0 cost sharing
for covered Part D drugs to offer enrollees the option to pay their OOP
costs through monthly payments over the course of the plan year or
otherwise comply with the Medicare Prescription Payment Plan
requirements set forth in this final rule. However, we recognize that
some plans that do not exclusively charge $0 cost sharing for covered
Part D drugs may still have a high proportion of enrollees with low,
stable drug costs (such as LIS enrollees) who are not likely to benefit
from the program. CMS has encouraged Part D plan sponsors to provide
support tailored to beneficiaries' unique situation and clearly
communicate to enrollees when it appears that they are less likely to
benefit from the program (for example, enrollees with low-to-moderate
recurring OOP drug costs). Although Part D plan sponsors must provide
the option to opt into the Medicare Prescription Payment Plan to all
Part D enrollees, including enrollees who are eligible for LIS, CMS
agrees that requiring D-SNPs to provide the same level of outreach and
education could cause confusion for their enrollees given many receive
other financial assistance for their prescription drugs. As such, CMS
believes that it is sufficient for D-SNPs to provide information to
their enrollees on the Medicare Prescription Payment Plan through the
ANOC, EOC, EOB, and information available on their websites.
Additionally, if any enrollee meets the likely to benefit threshold for
[[Page 15826]]
targeted outreach, a D-SNP would still be required to send the
``Medicare Prescription Payment Plan Likely to Benefit Notice''.
Therefore, we are modifying Sec. 423.137(m)(1) to exempt D-SNPs from
the requirement to provide a Medicare Prescription Payment Plan
election request form and additional educational information on the
program in a hard copy mailing.
Comment: A commenter expressed appreciation that CMS has nimbly
responded to stakeholder feedback on required communications to
prospective Medicare Prescription Payment Plan participants and
anticipates future revisions to these requirements as program
experience accrues. The commenter recommended CMS not adopt ``one-size-
fits-all'' outreach requirements and believes that plan sponsors should
retain some flexibility in identifying and facilitating communications
that best serve member needs. Another commenter stated that engaging
stakeholders, including patient organizations, is critical to the
program's success, and recommended CMS collaborate with these groups to
co-develop and review educational materials and to disseminate the
information to beneficiaries.
Response: CMS appreciates the commenters' feedback and
recommendations. While CMS acknowledges concerns about strict program
requirements, CMS believes that the Medicare Prescription Payment Plan
requirements finalized in this final rule strike the appropriate
balance between ensuring a uniform experience for program participants
across plans and providing flexibility for Part D plan sponsors based
on their members' needs. For example, in response to stakeholder
concerns about those who are less likely to benefit receiving program
materials, CMS is modifying Sec. 423.137(m)(1) in this final rule to
exempt D-SNPs from the requirement to provide a Medicare Prescription
Payment Plan election request form and additional educational
information on the program in a hard copy mailing because many of their
enrollees already receive other financial assistance for their
prescription drugs. CMS will consider how to continue to engage
external stakeholders on program implementation and incorporate
stakeholder feedback into program requirements.
Comment: Several commenters recommended CMS strengthen requirements
for beneficiary outreach and education. A commenter stated that the gap
in awareness about the program presents an opportunity for stakeholders
to support the older adult and disability communities in the enrollment
process and help beneficiaries understand how the plan will help them
manage their prescription drug payments. A commenter stated that the
program is a key affordability measure. A commenter expressed that
education through the calendar year is important so that there is a
greater chance that the beneficiary will read about the program and
have some knowledge of the program prior to the annual open enrollment
period in the fall. A commenter stated that without further education
there is and will continue to be a lack of understanding from D-SNP LIS
eligible enrollees about which program is best for their prescription
drug needs. A commenter expressed support for codifying the Part D plan
sponsor education and outreach requirements. Another commenter
recommended that educational materials for the program explain how
beneficiaries' OOP payments will change over time if they opt into the
payment plan and clearly identify the circumstances under which a
beneficiary will benefit the most from this payment plan.
Response: CMS appreciates commenters' feedback and will consider
additional opportunities to enhance education efforts for the program.
CMS agrees that educating beneficiaries about the program is important
for its success. For potential Medicare Prescription Payment Plan
participants who are already enrolled in the LIS program, Part D plan
sponsors are encouraged to provide support tailored to their unique
situation and clearly communicate to enrollees when it appears that
they are less likely to benefit from the program.
Comment: A few commenters expressed opposition to CMS's proposal
and recommend CMS not include language on the Medicare Prescription
Payment Plan in all EOBs as it will drive beneficiary confusion about
whether or not an enrollee has elected coverage. The commenters stated
that including the language in the EOBs does not target messaging to
enrollees who are likely to benefit. A commenter recommended that CMS
add language to the notice of election approval that clarifies that the
EOB will not reflect participation in the program. A commenter stated
that the 2025 Medicare & You handbook could have included more helpful
information about whether one is likely to benefit from enrolling in
the Medicare Prescription Payment Plan.
Response: CMS appreciates the commenters' concerns about updating
CMS's Part D EOB model to include language on the Medicare Prescription
Payment Plan but does not agree with the recommendation. Updating the
ANOC, EOC, and EOB models with Medicare Prescription Payment Plan
information will help to ensure all prospective and current Part D
enrollees are aware of the program. CMS appreciates the recommendation
related to the Medicare & You handbook and will continue to consider
how to educate beneficiaries about the Medicare Prescription Payment
Plan in Medicare program materials.
Comment: A commenter stated that it will be informative to
understand how much pharmacies and physicians utilize the model
documentation to inform members who may benefit about the program and
recommended additional member research to understand if there are
enhancements needed to improve members' understanding of the program. A
few commenters expressed the importance of further pharmacy education.
A commenter recommended CMS establish one education resource that uses
consistent formatting and documents. A commenter recommended that CMS
prohibit Part D plan sponsors from forcing pharmacies through contract
terms to distribute additional educational materials.
Response: CMS appreciates the commenters' support and
recommendations and recognizes that pharmacies play an important role
in operationalizing the Medicare Prescription Payment Plan. CMS
understands the commenters' concerns about pharmacy contract terms but
declines to address this issue at this time. CMS will consider how to
continue to engage external stakeholders, including pharmacies, on
program implementation.
Comment: A commenter expressed support for requiring Part D plan
sponsors to include program information on their Part D plan sponsor
websites.
Response: CMS thanks the commenter for their support.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing all proposed provisions at Sec. 423.137(m), with one
modification to Sec. 423.137(m)(1). CMS is exempting D-SNPs from
requirements at Sec. 423.137(m)(1) that Part D sponsors must provide a
Medicare Prescription Payment Plan election request form and additional
educational information on the program in a hard copy mailing. We are
finalizing the proposed change to Sec. 423.137(m)(1):
[[Page 15827]]
m. Medical Loss Ratio
Section 1860D-2(b)(2)(E)(v)(VI) of the Act specifies that any
unsettled balances with respect to amounts owed under the Medicare
Prescription Payment Plan ``shall be treated as plan losses and the
Secretary shall not be liable for any such balances outside of those
assumed as losses estimated in plan bids.''
Under section 1860D-12(b)(3)(D) of the Act, which adopts by
reference section 1857(e) of the Act into Part D, Part D plan sponsors
are required to maintain a MLR of at least 85 percent. In the final
part two guidance, CMS established that, consistent with the inclusion
of plan losses in the administrative expense portion of the Part D bid,
unsettled balances from the Medicare Prescription Payment Plan will be
considered administrative costs for purposes of the MLR calculation and
therefore be excluded from the MLR numerator.
In the proposed rule, with respect to the treatment of unsettled
balances from the Medicare Prescription Payment Plan, we proposed to
exclude such unsettled balances from the from the MLR numerator at
Sec. Sec. 422.2420(b)(4)(i)(D) and 423.2420(b)(4)(i)(D).
Comment: Most commenters opposed CMS's proposal to exclude
unsettled balances under the Medicare Prescription Payment Plan program
from the MLR numerator. Commenters raised both policy and legal
arguments. Multiple commenters stated that they believe that unsettled
Medicare Prescription Payment Plan balances represent expenditures on
drugs and, as such, should be considered medical spending included in
the numerator for purposes of calculating the MLR. Some commenters
further stated that excluding Medicare Prescription Payment Plan
balances fails to reflect their connection to beneficiary care,
diminishes the accuracy of the MLR calculation, and would result in an
incomplete representation of a Part D plan sponsor's financial picture.
A few commenters stated that CMS's proposal is inconsistent with the
intent of MLR, which is to encourage Part D plan sponsors to control
their administrative costs and devote more of their resources to
covering prescription drug costs and quality improvement activities.
Several commenters also stated that CMS's proposal unfairly penalizes
Part D plan sponsors for costs that are largely out of their control.
Commenters also raised legal arguments. Several commenters stated that
they believe section 1860D-2(b)(2)(E)(v)(VI) of the Act, which
specifies that any unsettled balances with respect to amounts owed
under the Medicare Prescription Payment Plan ``shall be treated as plan
losses and the Secretary shall not be liable for any such balances
outside of those assumed as losses estimated in plan bids,'' does not
require that unsettled Medicare Prescription Payment Plan balances be
excluded from the MLR numerator because that statutory requirement says
nothing about MLR requirements. A commenter further stated that CMS's
interpretation of section 1860D-2(b)(2)(E)(v)(VI) of the Act is not the
best interpretation because it would require overriding the statutory
language on the calculation of the MLR without explicit language to
this effect or any stated rationale for doing so. Another commenter
stated that CMS's proposal violates the Social Security Act. That
commenter argued that the amounts paid by a Part D plan sponsor to the
pharmacy for the beneficiary's covered drugs should be included in
incurred claims except to the extent and in the amount that the
beneficiary subsequently reimburses the plan. Because all amounts
included in incurred claims represent amounts paid by the plan for
covered services, the commenter believes that Medicare Prescription
Payment Plan unpaid balances should be included in the MLR numerator.
Response: CMS thanks the commenters for their feedback. CMS
declines to include unsettled balances in the numerator of the MLR.
Section 1860D-2(b)(2)(E)(v)(VI) of the Act requires Part D plan
sponsors to treat any unsettled balances with respect to amounts owed
by participants under the Medicare Prescription Payment Plan as plan
losses. Because CMS considers plan losses as part of the Part D plan
sponsor's administrative costs in its bid, CMS believes that unsettled
Medicare Prescription Payment Plan balances must be excluded from the
MLR numerator so as not to incentivize Part D plan sponsors to avoid
collecting unsettled balances and instead rely on their inclusion as
administrative costs to recoup losses related to unsettled balances.
While CMS recognizes that Part D plan sponsors may have less control
over unsettled Medicare Prescription Payment Plan balances than other
administrative costs, we note that this is also true of plan losses
generally. Furthermore, Part D plan sponsors are permitted to recoup
unsettled balances, so these costs are not entirely outside of their
control. CMS disagrees that its proposal is inconsistent with the MLR
requirements at section 1857(e) of the Act as adopted by reference into
Part D under section 1860D-12(b)(3)(D) of the Act. The statutory
requirements merely require that Part D plan sponsors have an MLR of at
least 85 percent for each contract year. Since the MLR requirement was
established, CMS has excluded administrative costs, including plan
losses, from the MLR numerator. As explained earlier in this comment
response, unsettled Medicare Prescription Payment Plan balances are
plan losses for bidding purposes, which CMS has always treated as
administrative expenses for MLR purposes. For the same reasons, we do
not agree that such losses should be included in incurred claims except
to the extent and in the amount that the beneficiary subsequently
reimburses the plan.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposed provisions at Sec. Sec. 422.2420(b)(4)(i)(D)
and 423.2420(b)(4)(i)(D) without modification.
n. Severability
We proposed that the Medicare Prescription Payment Plan provisions
finalized herein would be separate and severable from one another.
Further, we proposed that if any of these provisions 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 is our
intention that such provision shall be severable from this rule and not
affect the remainder thereof, or the application of such provision to
other persons not similarly situated or to other, dissimilar
circumstances.
We received no comments on this proposal and are finalizing this
proposed provision without modification.
D. Timely Submission Requirements for Prescription Drug Event (PDE)
Records (Sec. 423.325)
CMS requires that Part D sponsors submit certain prescription drug
claims information to CMS for specified Medicare Part D-related
purposes as described in the Social Security Act (the Act). In
accordance with the authority under sections 1860D-15(c)(1)(C), 1860D-
15(d)(2), and 1860D-15(f) of the Act, CMS conditions Medicare Part D
program payments to Medicare Part D plans upon the disclosure and
provision of information needed to carry out payment. In addition,
section 1860D-15(f)(2)(A) of the Act allows CMS to utilize information
collected under
[[Page 15828]]
section 1860D-15(f) of the Act for the purposes of, and to the extent
necessary in, conducting oversight, evaluation, and enforcement under
Title XVIII of the Act and carrying out section 1860D-15 of the Act or
the Medicare Drug Price Negotiation Program (``Negotiation Program'')
under Part E of Title XI of the Act. Under sections 1860D-14A(c)(1)(C)
and 1860D-14C(c)(3) of the Act, CMS collects information from Part D
sponsors that allows for discounts under the Coverage Gap Discount
Program and Manufacturer Discount Program, respectively, to be provided
to applicable beneficiaries for applicable drugs. Part D sponsors
submit this prescription drug claims information to CMS on prescription
drug event (PDE) records through the CMS Drug Data Processing System
(DDPS).\19\
---------------------------------------------------------------------------
\19\ OMB 0938-0982, CMS-10174, expiration April 30, 2027
(available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=202403-0938-002).
---------------------------------------------------------------------------
A PDE record is data summarizing the final adjudication of a Part D
dispensing event that is reported to CMS by the Part D sponsor using a
CMS-defined file layout.\20\ CMS requires that PDE records are
accurate, complete, and truthful since they are used for the purposes
of obtaining Federal reimbursement.\21\ These records are critical not
only for accurate payment, but also for a wide range of sponsor
compliance assessment activities, and other Part D program integrity
audits. To that end, CMS performs checks (or edits) on the PDE data to
validate and help ensure its accuracy.\22\ This process results in the
PDE records being accepted or rejected by CMS. Accepted PDE records may
be subsequently adjusted or deleted by the Part D sponsor by submitting
adjustment PDE records or deletion PDE records to CMS.\23\ Rejected PDE
records must be reviewed, resolved, and, if appropriate, resubmitted by
the plan to CMS. The resubmitted PDE record goes through the same
editing process and results in CMS accepting or rejecting the
resubmitted PDE record.
---------------------------------------------------------------------------
\20\ The PDE file layouts are available at https://www.csscoperations.com/internet/csscw3.nsf/DID/M7XCJKG0JI.
\21\ 42 CFR 423.505(k)(3).
\22\ For PDE edits, see generally, DDPS Edit Lookup, available
at https://www.csscoperations.com/internet/csscw3.nsf/DIDC/
FGSMOX8LWK~Prescription%20Drug%20Program%20(Part%20D)~References
(click Download).
\23\ For additional information and examples that result in
adjustment and deletion PDE records, see HPMS memorandum, PDE
Guidance for Post Point-of-Sale Claim Adjustments, July 3, 2013,
available at https://www.cms.gov/about-cms/information-systems/hpms/hpms-memos-archive-annual.
---------------------------------------------------------------------------
CMS uses accepted PDE records in the Part D payment reconciliation
described at Sec. Sec. 423.336 and 423.343(c) and (d), reopenings of
Part D payment reconciliations described at Sec. 423.346, the Coverage
Gap Discount Program invoicing process described generally at Sec.
423.2315, and the Manufacturer Discount Program invoicing process.\24\
PDE records for selected drugs (as described at section 1192(c) of the
Act) will also be used to administer the Negotiation
Program.25 26 In order for CMS to make payments, conduct
oversight, administer the various programs under Medicare Part D and
the Negotiation Program, as well as perform other statutory
obligations, the PDE records must be received from Part D sponsors in a
timely manner. Part D sponsors that do not submit PDE data in a timely
manner (as explained in the following Background and Requirements
sections) may be determined to be out of compliance consistent with
Sec. 423.505(n)(1)(i) and may be subject to compliance actions
described at Sec. 423.505(n)(3).
---------------------------------------------------------------------------
\24\ HPMS memorandum, Medicare Part D Manufacturer Discount
Program Final Guidance, December 20, 2024 (available at https://www.cms.gov/files/document/manufacturer-discount-program-final-guidance.pdf).
\25\ Medicare Drug Price Negotiation Program: Revised Guidance,
Implementation of Sections 1191-1198 of the Social Security Act for
Initial Price Applicability Year 2026 https://www.cms.gov/files/document/revised-medicare-drug-price-negotiation-program-guidance-june-2023.pdf.
\26\ Medicare Drug Price Negotiation Program: Final Guidance,
Implementation of Sections 1191-1198 of the Social Security Act for
Initial Price Applicability Year 2027 and Manufacturer Effectuation
of the Maximum Fair Price in 2026 and 2027 https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf.
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In this rule, we proposed to codify the general PDE submission
timeliness guidance that currently applies and that addresses three
types of PDE submissions: initial PDE records submitted after a
pharmacy claim is received by the Part D sponsor (hereinafter referred
to as ``initial PDE records''), adjustment and deletion PDE records
that update previously submitted records that have been accepted by
CMS, and records to resolve PDE records that were rejected by CMS.\27\
Further, we proposed to codify a specific PDE submission timeliness
requirement for initial PDE records when those PDE records are for
selected drugs.
---------------------------------------------------------------------------
\27\ HPMS memorandum, Revision to Previous Guidance Titled
``Timely Submission of Prescription Drug Event (PDE) Records and
Resolution of Rejected PDEs'', October 6, 2011, available at https://www.cms.gov/httpseditcmsgovresearch-statistics-data-and-systemscomputer-data-and-systemshpmshpms-memos-archive/hpms-memo-qtr1-4.
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1. Background--General PDE Submission Timeliness
CMS has always required that Part D sponsors submit their PDE data
to CMS in a timely manner. Timely PDE submissions assist in the
effective quality review of PDE data prior to CMS using the data in
payment reconciliations and invoicing to manufacturers for the Coverage
Gap Discount Program and Manufacturer Discount Program (hereinafter
referred to collectively as the discount programs). We conduct analysis
and validation of PDE data on an ongoing basis and identify data
quality issues for Part D sponsors' review and action. This pre-
reconciliation data quality review initiative promotes accuracy in the
plan-reported financial data used in the Part D payment reconciliation
and the invoice and reconciliation processes for the discount programs.
Accordingly, in 2011, we released guidance on the timely submission
of PDE records. On May 16, 2011, CMS released a memorandum ``Timely
Submission of Prescription Drug Event (PDE) Records and Resolution of
Rejected PDEs.'' \28\ The guidance described the PDE submission
timeframes for initial PDE records, adjustment and deletion records,
and records to resolve PDE records that CMS rejected through the PDE
editing process. After consideration of industry comments, CMS modified
the PDE submission timeframes and released revised PDE submission
timeliness guidance on October 6, 2011.\29\ As described in that
guidance, initial PDE records are due within 30 days following the date
the claim is received by the Part D sponsor or the date of service,
whichever is greater. Adjustment and deletion PDE records are due
within 90 days following discovery of the issue requiring a change to
the PDE. Resolution of rejected PDE records are due within 90 days
following the receipt of rejected record status from CMS. We proposed
to codify PDE submission timeframes similar to those timeframes
described in the October 2011 guidance and refer to
[[Page 15829]]
those timeframes as the General PDE Submission Timeliness Requirements.
---------------------------------------------------------------------------
\28\ HPMS memorandum, Timely Submission of Prescription Drug
Event (PDE) Records and Resolution of Rejected PDEs, May 16, 2011,
available at https://www.cms.gov/httpseditcmsgovresearch-statistics-data-and-systemscomputer-data-and-systemshpmshpms-memos-archive/hpms-memo-qtr1-4.
\29\ HPMS memorandum, Revision to Previous Guidance Titled
``Timely Submission of Prescription Drug Event (PDE) Records and
Resolution of Rejected PDEs'', October 6, 2011, available at https://www.cms.gov/httpseditcmsgovresearch-statistics-data-and-systemscomputer-data-and-systemshpmshpms-memos-archive/hpms-memo-qtr1-4.
---------------------------------------------------------------------------
2. Background--Selected Drugs PDE Submission Timeliness
On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) (Pub.
L. 117-169) was signed into law. It established the Negotiation Program
to negotiate maximum fair prices (MFPs) for certain high expenditure,
single source drugs and biological products (i.e., selected drugs). The
requirements for this program are described in sections 1191 through
1198 of the Act, as added by sections 11001 and 11002 of the IRA.
Under section 1193(a) of the Act, participating manufacturers must
not only provide access to the MFP for a selected drug to MFP-eligible
individuals (as defined in section 1191(c)(2) of the Act), but they
must also provide access to the MFP to pharmacies, mail order services,
and other dispensing entities with respect to such MFP-eligible
individuals who are dispensed the selected drug during a price
applicability period (as defined in section 1191(b)(2) of the Act).
This distinguishes the Negotiation Program from Part D programs such as
the Coverage Gap Discount Program and the Manufacturer Discount Program
where there is no such statutory requirement for the manufacturer to
provide a specified price to a pharmacy or other dispensing entity. CMS
stated in section 40.4 of the Medicare Drug Price Negotiation Program:
Final Guidance, Implementation of Section 1191-1198 of the Social
Security Act for Initial Price Applicability Year 2027 and Manufacturer
Effectuation of the Maximum Fair Price in 2026 and 2027 (hereinafter
referred to as the final guidance) that a Primary Manufacturer (as
defined in section 40 of the final guidance) must provide access to the
MFP in one of two ways: (1) prospectively ensuring that the price paid
by the dispensing entity when acquiring the drug is no greater than the
MFP; or (2) retrospectively providing reimbursement for the difference
between the dispensing entity's acquisition cost and the MFP.\30\
---------------------------------------------------------------------------
\30\ Medicare Drug Price Negotiation Program: Final Guidance,
Implementation of Sections 1191-1198 of the Social Security Act for
Initial Price Applicability Year 2027 and Manufacturer Effectuation
of the Maximum Fair Price in 2026 and 2027 https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf.
---------------------------------------------------------------------------
To help operationalize dispensing entity access to the MFP, in
section 40.4 of the final guidance, CMS stated it will engage with a
Medicare Transaction Facilitator (MTF) to facilitate the exchange of
data and payment between Primary Manufacturers and dispensing entities
and to support the verification that the selected drug was dispensed to
an MFP-eligible individual. The MTF will use the PDE records submitted
by Part D sponsors to CMS through DDPS to verify that the selected drug
was dispensed to an MFP-eligible individual. Additionally, the MTF will
furnish Primary Manufacturers with certain claim-level data elements,
including from PDE records, confirming that a selected drug was
dispensed to an MFP-eligible individual and identifying which
dispensing entity dispensed the selected drug to the MFP-eligible
individual. In the final guidance, unless the dispensing entity's
acquisition cost for the selected drug is equal to or less than the
MFP, or, as detailed in section 40.4.5 of the final guidance, the
Primary Manufacturer establishes that section 1193(d)(1) of the Act
(related to 340B discounts) applies, CMS requires that the Primary
Manufacturer transmit payment of an amount that provides access to the
MFP within 14 calendar days of when the MTF sends the claim-level data
elements that verify the selected drug was dispensed to an MFP-eligible
individual to the Primary Manufacturer (``14-day prompt MFP payment
window''). CMS notes that the 14-day prompt MFP payment window aligns
with the timing requirement in the longstanding prompt pay rules in
Part D for plan sponsors.\31\ However, dispensing entities should be
aware that they may not receive payment from a Part D plan sponsor for
the Part D claim on the same date that the Primary Manufacturer
provides a retrospective MFP refund to the dispensing entity. Due to
operational differences between the Part D program and the Negotiation
Program, the respective prompt payment windows for a particular
dispensed prescription may start on different dates for the Part D
sponsor and the Primary Manufacturer.
---------------------------------------------------------------------------
\31\ See 42 CFR 423.520, Prompt Payment by Part D Sponsors,
which requires Part D sponsor to transmit payment to pharmacies
within 14 days after receiving an electronic Part D claim that is a
clean claim.
---------------------------------------------------------------------------
To help ensure prompt payments by Primary Manufacturers to
dispensing entities to provide access to the MFP, initial PDE records
for selected drugs under the Negotiation Program warrant a PDE
submission timeliness requirement that is different from the general
PDE submission timeliness requirement for initial PDE records. Under
the current general PDE submission timeliness requirements, dispensing
entities could wait up to approximately six weeks to receive access to
the MFP (for example, 30 calendar days for the Part D sponsor to submit
PDE data to the DDPS, plus approximately 1 to 3 days for the PDE data
to move from DDPS to the MTF to the Primary Manufacturer, plus up to an
additional 14 days for the Primary Manufacturer to transmit an MFP
refund payment). If the Primary Manufacturer does not prospectively
make the MFP available to the dispensing entity, then the lag between
when the dispensing entity receives payment from the Part D plan and
when the dispensing entity receives the MFP refund payment from the
Primary Manufacturer could impose a financial strain on dispensing
entities given that anticipated MFP refunds could be a material percent
of the dispensing entity's purchase price. To mitigate potential
financial hardship on dispensing entities such as pharmacies, which
could impact Part D beneficiary access to selected drugs, and to more
closely align MFP refund payments with the timing requirements in the
longstanding prompt pay rules in the Part D program, CMS believes it is
appropriate to create a specific new requirement for PDE submission
timeliness requirements for selected drugs. Therefore, CMS proposed to
shorten the PDE submission timeliness requirements for selected drugs
to reduce the maximum amount of time a dispensing entity could wait to
receive access to the MFP.
On May 3, 2024, when CMS released draft guidance describing the
implementation of the Negotiation Program for initial price
applicability year 2027 and manufacturer effectuation of the MFP in
2026 and 2027 (draft guidance), CMS noted that it was evaluating a PDE
submission timeliness requirement for PDE records that is different
from the general PDE submission timeliness requirement for initial PDE
records.\32\ To ensure that dispensing entities receive timely payment
of MTF refunds, CMS stated that it was evaluating whether the 30-day
window for Part D sponsors to submit PDE records should be shortened to
7 days of receipt of the claim to help
[[Page 15830]]
ensure dispensing entities receive timely payment of MFP refunds.
---------------------------------------------------------------------------
\32\ Medicare Drug Price Negotiation Program: Draft Guidance,
Implementation of Sections 1191-1198 of the Social Security Act for
Initial Price Applicability Year 2027 and Manufacturer Effectuation
of the Maximum Fair Price (MFP) in 2026 and 2027 https://www.cms.gov/files/document/medicare-drug-price-negotiation-draft-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf.
---------------------------------------------------------------------------
CMS received and reviewed comments from interested parties on the
draft guidance related to the consideration of a shorter PDE submission
timeliness requirement for selected drugs and addressed those comments
on page 53 of the final guidance.\33\ To inform policy development for
this rulemaking, in addition to reviewing the comments received on this
proposed rule, CMS revisited the comments received on the draft
guidance on the topic of PDE submission timeliness requirements. Many
commenters supported CMS shortening the PDE submission window and
agreed with the 7-day timeliness requirement or recommended other
timeliness requirements shorter than 30 calendar days. Some commenters
recommended CMS not change the PDE reporting general timeliness
requirement and keep the 30-day window for selected drugs. Many
commenters noted that shortening the PDE submission window could
increase the volume of claim adjustments and reversals during and after
the 14-day prompt MFP payment window. These commenters noted that it
typically takes pharmacies up to 14 days to reverse a claim when a
beneficiary does not pick up a prescription and asked CMS to provide
more detail on how the MTF will address claim reversals and
adjustments. One commenter asserted that if CMS shortens the PDE
submission window, plan sponsors would need additional implementation
time to revise agreements and internal processes. While CMS addressed
these comments in the final guidance by stating that it intends to
propose to shorten the current 30-day window for plans to submit PDE
records for selected drugs to 7 calendar days, CMS also received
several comments posing technical questions on the PDE reporting
process and DDPS operations, and offering input on other PDE
operational matters, which CMS considered out of scope for the final
guidance. However, CMS recognizes the importance of public feedback on
potential operational concerns surrounding a shorter PDE submission
window for selected drugs. CMS solicited comments in the proposed rule
on the operational considerations of shortening the timeframe for
initial PDE records for selected drugs to 7 calendar days, including
potential challenges Part D sponsors may face in implementing the
proposed timeframe.
---------------------------------------------------------------------------
\33\ https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf.
---------------------------------------------------------------------------
CMS also solicited comments on whether it should shorten the
submission timeline for selected drugs for adjustment and deletion of
PDE records, and for records to resolve PDE records that were rejected
by CMS. CMS stated that it was particularly interested in comments on
operational feasibility, as well as comments that address whether a
shorter submission timeline would help facilitate timely payments by
Primary Manufacturers to dispensing entities, or whether the 90-
calendar day submission timeframe for adjustments and deletions and/or
for the resolution of rejected records is sufficient for the purpose of
the Negotiation Program.
We proposed to codify this 7-calendar day timeframe for initial PDE
records for selected drugs and refer to this timeframe as the Selected
Drugs PDE Submission Timeliness Requirement.
3. Requirements--General PDE Submission Timeliness
We proposed to codify the existing 30-day and 90-day general PDE
submission timeframes, with two slight modifications. First, we
proposed that the 30-day and 90-day requirements refer to calendar
days, as opposed to business days. Second, we proposed to modify the
timing of the initial PDE records submission, which currently begins
from the date the claim is received by the Part D sponsor or the date
of service, whichever is greater. Given that the claim cannot be
received by the Part D sponsor (or its contracted first tier,
downstream, or related entity (for example, pharmacy benefit manager
(PBM))) until on or after the date of service, we proposed to clarify
that initial PDE records must be submitted within 30 calendar days of
when the Part D sponsor (or its contracted first tier, downstream, or
related entity) receives the claim.
Based on our experience with the Part D program, these proposed 30-
calendar day and 90-calendar day PDE submission timeframes are
appropriate, striking a balance between allowing sufficient time for
the Part D sponsors to submit PDE records while providing sufficient
time for CMS to review and flag data quality issues that may require
action from the Part D sponsor prior to the PDE record being used in
the invoicing and reconciliation processes for the discount programs
and the Part D payment reconciliations. These proposed timeframes,
which CMS developed with industry feedback, have been in subregulatory
guidance since 2011 and have worked well for Part D sponsors and CMS.
Therefore, we proposed the following general PDE submission
timeliness requirements. We proposed that the Part D sponsor must
submit an initial PDE record within 30 calendar days from the date the
Part D sponsor receives the claim. We proposed that the Part D sponsor
must submit adjustment or deletion PDE records within 90 calendar days
of the discovery or notification of an issue requiring a change to the
previously submitted PDE records. We proposed that the Part D sponsor
must resolve rejected PDE records within 90 calendar days of the
rejection. We proposed that these general PDE submission timeliness
requirements apply unless, for the initial PDE records submissions, the
proposed selected drugs PDE submission timeliness requirement applies.
Comment: Commenters supported codifying the existing general PDE
submission timeliness requirements as proposed. Commenters agreed that
the 30-day and 90-day requirements described in existing guidance
should be codified as calendar days. Commenters also agreed with
clarifying that the 30-calendar day submission timeline for initial PDE
records should be based on when claims are received, as opposed to the
greater of claim receipt date or date of service, as described in
guidance, because claims cannot be received until on or after the date
of service.
Response: We thank the commenters for their support.
After consideration of the public comments received, and for the
reasons outlined in the proposed rule, we are finalizing as proposed
the general PDE submission timeliness requirements at Sec. 423.325(a).
4. Requirement--Selected Drugs PDE Submission Timeliness
We proposed to establish a selected drugs PDE submission timeliness
requirement, in which CMS requires that a Part D sponsor must submit
initial PDE records for selected drugs (as described at section 1192(c)
of the Act) within 7 calendar days from the date the Part D sponsor (or
its contracted first tier, downstream, or related entity) receives the
claim. The proposed PDE submission timeliness requirement is consistent
with CMS' authority under section 1860D-15(f) of the Act, which
authorizes CMS to collect PDE data for the purposes of, and to the
extent necessary in, carrying out both section 1860D-15 of the Act and
part E of title XI of the Act (that is, the Negotiation Program).
[[Page 15831]]
Table 1A illustrates the general and selected drugs PDE submission
timeline requirements.
Table 1A--Proposed PDE Submission Timelines for Non-Selected and
Selected Drug Claims
------------------------------------------------------------------------
Submission timeframe Non-selected drug Selected drugs
------------------------------------------------------------------------
Initial PDE................. 30 calendar days 7 calendar days
following date following date
claim received by claim received by
Part D plan sponsor Part D plan sponsor
or its contracted or its contracted
first tier, first tier,
downstream, or downstream, or
related entity. related entity.
-------------------------------------------
Resolution of Rejected 90 calendar days following receipt of
Records. rejected record status from CMS.
-------------------------------------------
Adjustment and Deletion..... 90 calendar days following discovery of
issue requiring change.
------------------------------------------------------------------------
CMS believes Part D sponsors are compliant with the longstanding
guidance pertaining to 30- and 90-day PDE submission timelines, and
thus, CMS stated that it does not expect the proposed change to result
in additional costs or savings and are not scoring these requirements
in the Regulatory Impact Analysis section. We also noted that we are
not imposing any new reporting requirements for drugs other than
selected drugs. We do not believe that our proposal pertaining to 7-,
30-, and 90-day PDE submission timeline will result in additional
paperwork burden and have not incorporated a burden increase in the
Collection of Information section.
Comment: Some commenters opposed the proposal to establish a
requirement that Part D sponsors must submit initial PDE records for
selected drugs within 7 calendar days of the date the Part D sponsor
(or its contracted first tier, downstream, or related entity) receives
the claim (hereinafter referred to as the ``7-day timeliness
requirement'') because these commenters stated that it would create
administrative and operational challenges for Part D sponsors, with a
commenter stating these challenges would make timeline adherence
infeasible. A couple of commenters noted that the proposed 7-day
timeliness requirement would create challenges relating to CMS' Drug
Data Processing System (DDPS) operations, file transmission timelines,
and processes for vendors in addition to those for submitters. A few
commenters recommended that CMS require initial PDE submissions to be
submitted in no earlier than 10 days or 14 days. Another commenter
recommended that CMS require initial PDE submissions to be submitted in
no earlier than 21 days.
A couple of commenters recommended CMS allow Part D sponsors to
submit initial PDE data for selected drugs to CMS on a weekly basis. A
commenter noted that, while they currently submit PDE files on the same
day every week, it would be more feasible to have flexibility on the
time of submission to ensure processing is complete before submission.
The other commenter stated that weekly submission would allow them to
submit PDE records as one unified file on the same day of each week and
would reduce PDE reversals and adjustments. Another commenter stated
that a 7-day timeliness requirement would necessitate submission of
PDEs at least twice per week.
Response: CMS thanks these commenters for their input on this
topic. CMS recognizes that the proposed 7-day timeliness requirement
may pose some administrative and operational challenges for Part D
sponsors, vendors, and other interested parties. CMS also recognizes
the importance of ensuring timely payment of MFP refunds to dispensing
entities while maintaining a PDE submission timeliness requirement for
selected drugs that is operationally feasible for Part D sponsors. In
evaluating the impact of this proposed policy, CMS' analysis of PDE
record submissions shows that a majority of PDE records are currently
submitted within 7 days of receipt from Part D sponsors. Given the
importance of ensuring timely payment of MFP refunds to dispensing
entities starting in 2026 when the MFPs for selected drugs are in
effect along with the data showing that the majority of PDE record
submissions are currently being submitted within 7 days of receipt, CMS
believes that a 7-day timeliness requirement strikes the right balance
between ensuring timely payment to dispensing entities and setting a
standard that is operationally feasible for Part D sponsors.
Comment: Some commenters encouraged CMS to align the timeframe to
submit initial PDE records for selected drugs with the timeframe for
non-selected drugs to allow for Part D sponsors to continue workflows
to submit PDE records for selected and non-selected drugs in the same
files. A commenter stated that it is infeasible to send separate files
for selected and non-selected drugs due to the current system for
calculation edits performed by DDPS and accumulations as beneficiaries
move through benefit phases. This commenter asserted that submitters
would need to separate claims from a beneficiary's history which would
create ``holes'' in a beneficiary's benefit phases and impact
accumulation. The commenter also requested that CMS issue sub-
regulatory guidance to provide detail on how to submit subsections of
PDE data that would otherwise be included in the current PDE editing
practices. Finally, the commenter asserted that due to these
operational concerns the 7-day timeliness requirement would effectively
apply to both selected and non-selected drugs because these challenges
with submitting PDE separately by drug would result in Part D sponsors
needing to accelerate all PDEs to be submitted within 7 days.
Response: As discussed in our proposal, the 7-day PDE submission
timeframe does not apply to all PDE records. The general PDE submission
requirement for initial PDE record submissions is within 30 calendar
days from the date the Part D sponsor (or its contracted first tier,
downstream, or related entity) receives the claim, which is consistent
with guidance in place since 2011. Despite this long-standing guidance
that gives sponsors up to 30 days to submit PDE records, current
analysis of PDE records submissions shows that a majority of PDE
records are submitted within 7 calendar days. This analysis leads us to
believe that systems and operational impacts are not insurmountable.
Regarding the comment stating that the 7-day timeliness requirement
would separate claims from a beneficiary's history and would create
``holes'' in a beneficiary's benefit phases and impact accumulation, it
will not be necessary to
[[Page 15832]]
relax PDE editing to implement the 7-day PDE submission requirement for
selected drugs. DDPS performs checks on PDE data for format, integrity,
and validity. These checks (or edits) are at the PDE-level, meaning
that, when editing, DDPS does not edit an individual PDE against other
PDE records in the beneficiary's history.
The PDE record includes accumulator fields, including a Total Gross
Covered Drug Cost (TGCDC) Accumulator and a True Out-of-Pocket (TrOOP)
Accumulator. DDPS uses those accumulators to edit multiple data
elements on an individual PDE record, not across PDE records. For
example, if the PDE record is for a covered drug, and the TrOOP
Accumulator is at least equal to the OOP threshold, then the Gross Drug
Cost Above the OOP threshold (GDCA) on the PDE record must be greater
than $0, otherwise the PDE record will reject. Likewise, if the PDE is
for a covered drug and the TrOOP Accumulator is less than the OOP
threshold, then the Gross Drug Cost Below the OOP threshold (GDCB) must
be greater than $0, otherwise the PDE record will reject. However, DDPS
does not edit to validate that the TrOOP Accumulator or the TGCDC
Accumulator on an individual PDE record are accurate given all prior
records in a beneficiary's history.
Outside of the PDE submission process, Part D sponsors are required
to administer and track their enrollee's benefits in real time. See,
for example, Sec. Sec. 423.504(b)(8)(ii) and 423.505(i)(6)(ii). This
7-day PDE submission requirement for selected drugs does not modify
that requirement for real time tracking of a beneficiary's
accumulators. Therefore, the 7-day PDE submission requirement will not
create accumulator ``holes'' in the beneficiary's accumulators in
actuality or from a PDE editing perspective.
Comment: A commenter recommended that CMS allow submitters to use
existing processes to extract necessary data from Part D claims to
facilitate MFP refund payment from manufacturers rather than require a
separate PDE submission for selected drugs. Specifically, the commenter
suggested that CMS allow submitters to use a payment and billing
approach like a prompt pay 835 transaction to enable submitters to take
data from the claim instead of submitting a separate PDE for selected
drugs.
Response: Comments regarding MFP effectuation and MTF operations,
including MTF processes for payment facilitation, are outside the scope
of this rule. CMS refers commenters to the final guidance for more
information and responses to comments on these and related topics and
may consider such feedback in future guidance related to the
Negotiation Program.
Comment: A few commenters raised concerns about relying on PDE data
to validate claims for MFP-eligible individuals. A couple of these
commenters noted that there are some instances in which PDEs are never
accepted, for example if there is an eligibility change or a change in
which PDEs are reversed, and the dispenser may be at risk of repaying
the Primary Manufacturer or not receiving the MFP refund in these
cases. A commenter noted that payment reconciliation may not be
completely resolved until 6 months after the plan year ends. A couple
of commenters asked that CMS provide guidance to ensure dispensing
entities are made aware by Part D sponsors if PDE records for an MFP
claim are rejected and cannot be corrected by the Part D sponsor.
A commenter also recommended that CMS clarify that if a PDE is
rejected and that prevents the MFP refund process from occurring, or if
a PDE is later deleted due to an audit, that the Part D sponsor is not
required to pay the dispensing entity the amount they would have
otherwise received from the manufacturer had the PDE been successfully
submitted and not deleted.
Response: CMS thanks these commenters for the input. These comments
relate to various aspects of MFP effectuation and MTF operations,
including MTF processes for handling PDE data and the credit/debit
ledger system. Such comments are outside the scope of this rule, which
establishes PDE submission timeliness requirements for Part D plan
sponsors. We refer commenters to the final guidance for more
information regarding verification of MFP eligibility, how the MTF will
use PDE data to generate claim-level data elements, the MTF credit/
debit ledger system, MFP effectuation and payment of MFP refunds, and
other related issues. We may consider commenters' feedback in the
development of future guidance related to the Negotiation Program.
Comment: A few commenters opposed CMS establishing shorter
timeliness requirements for adjustment and deletion PDE records for
selected drugs, and for resolving PDE records that CMS rejected,
stating that this would create administrative and operational
challenges for Part D sponsors, particularly considering the increased
volume of adjustments and reversals that Part D sponsors may experience
due to the proposed 7-day timeliness requirement for selected drugs. A
commenter stated that if CMS does shorten the timeliness requirements
for adjustments, deletions, and for resolving PDE records that CMS
rejected, the window should be at least 30 days. Another commenter
urged CMS to significantly shorten the 90-calendar day submission
timeframe for adjustments and deletions and/or for the resolution of
rejected records to 7 days.
Response: CMS thanks these commenters for their input. CMS
acknowledges commenters' concerns with the operational feasibility of
shortening the submission timeline for selected drugs for adjustment
and deletion PDE records, and for resolving PDE records that were
rejected by CMS. Based on the comments received, CMS does not believe
that a 7-day timeliness requirement is operationally feasible for Part
D sponsors for adjustments, deletions, and for resolving PDE records
that CMS rejected and believes that the 90-calendar day submission
timeframe for adjustments and deletions and/or for the resolution of
rejected records is sufficient for the purpose of the Negotiation
Program.
Comment: A commenter recommended that CMS exercise enforcement
discretion for a minimum of 1 year while the new PDE submission
timeframe is evaluated for operational effectiveness. Another commenter
noted that CMS is putting forth a significant change to the initial PDE
submission window for selected drugs while Part D sponsors are in the
early phase of implementing other major changes to Part D. The
commenter requested that if CMS does finalize the proposed 7-day
timeliness requirement, it should take more time to fully analyze the
effects and implications of the proposed PDE submission timeframe.
A commenter recommended that in the event of a DDPS PDE submission
blackout, files submitted directly after the blackout containing data
that would have been timely had the blackout not been in effect should
be considered timely. Another commenter raised concerns about the 7-day
timeliness requirement for selected drugs, noting that in rare cases
CMS has taken up to 6 days to accept PDEs.
Response: CMS understands the concerns a 7-day timeliness
requirement for selected drug claims may have on Part D sponsor
operations. However, to enable manufacturers to promptly provide an MFP
refund to dispensing entities, which is critical to mitigating
potential financial hardship on dispensing entities, and which could
impact Part D beneficiary access to selected drugs, CMS is finalizing
its policy. We also reiterate the above
[[Page 15833]]
statement that, in evaluating the impact of this proposed policy, CMS'
analysis of PDE record submissions shows that a majority of PDE records
are currently submitted within 7 days of receipt from Part D sponsors.
We appreciate the input from the commenter who expressed concern
for timeliness considerations in the context of a potential DDPS
blackout. To the extent that CMS identifies a technological issue with
the DDPS system that temporarily renders PDE submissions impossible,
CMS anticipates issuing guidance to Part D sponsors to address those
operational constraints.
Comment: A commenter recommended that CMS identify and establish
guidance on certain rejected PDE edits which should allow the data
elements from these PDE edits to flow to the MTF and then to the
manufacturer for the MFP refund process to occur.
A commenter recommended that CMS use submitted PDE data, rather
than accepted PDE data, for the purpose of manufacturer payment of an
MFP refund to the dispensing entity. Another commenter recommended that
Part D sponsors continue to pay pharmacies based on PDEs submitted and
not PDEs accepted. The commenter noted that PDEs that are later
rejected will be updated and resubmitted as appropriate and the MTF
will true-up appropriate credit or debit amounts.
Response: CMS thanks these commenters for their input and notes
that nothing in this provision is intended to impact the timing of or
decisions regarding Part D sponsors paying pharmacies. Comments
regarding MFP effectuation and MTF operations, including MTF processes
for handling PDE data, generating claim-level data elements that are
transmitted to the Primary Manufacturer, and maintaining the credit/
debit ledger system, are outside the scope of this rule. CMS refers
commenters to the final guidance for more information on these and
related topics and may consider such feedback in future guidance
related to the Negotiation Program.
Comment: Many commenters expressed support for CMS' goal of
ensuring that dispensing entities receive timely payments for
retrospective MFP refunds and agreed that shortening the timeliness
requirement to 7 days, at minimum, may help ensure timely payment of
MFP refunds to dispensers. However, many of these commenters also
stated that, to expedite payment to pharmacies, CMS should prefund the
MTF because, they asserted, the current proposal essentially places an
unfunded mandate on dispensing entities to prefund the Negotiation
Program, which CMS does not have the authority to mandate. If CMS does
not prefund the Negotiation Program, these commenters urged CMS to
shorten the timeliness requirement for selected drugs to 1 day, and to
require the MTF to provide data to the Primary Manufacturer on a daily
basis. The commenters stated that dispensing entities must be paid
within 14 days of adjudicating a claim to ensure their financial
viability, particularly because dispensing entities must pay their
wholesalers on an approximate 2-week payment cycle, and a 7-day
timeliness requirement would result in dispensing entities waiting
longer than 14 days to receive MFP refunds.
A few commenters strongly supported the 7-day timeliness
requirement because of its importance to dispensing entities but said
that the shortened timeframe does not alleviate concerns about the
financial risk associated with MFP effectuation. These commenters urged
CMS to take steps to address the financial and operational challenges
beyond the PDE submission timeline, such as through opportunities to
shift primarily to purchasing prospectively at the MFP. A commenter
asked CMS to consider how PDE submissions to DDPS could be done in real
time on a daily basis.
Response: CMS appreciates the support for shortening the current
30-day timeliness requirement for selected drugs. CMS recognizes the
critical importance of ensuring timely payment of MFP refunds to
dispensing entities but believes that shortening the PDE submission
timeframe for selected drugs to 1 day would not be operationally
feasible for Part D sponsors. CMS believes that a 7-day timeliness
requirement strikes the right balance between ensuring timely payment
to dispensing entities while setting a standard that is operationally
feasible for Part D sponsors. Comments requesting that CMS take
additional steps to address operational and financial concerns with
regard to the MTF, such as prefunding or prospective access to the MFP,
are outside the scope of this rule. We refer these commenters to the
final guidance for discussion of these topics.
Comment: Some commenters raised a concern that the 7-day timeliness
requirement could impact the volume of claims adjustments during and
after the 14-day prompt MFP payment window. A couple of commenters
noted that there are many claim reversals that occur within the first
48 hours. A few commenters noted that individuals typically have up to
14 days to pick up prescriptions from pharmacies once they are filled
and, therefore, if CMS shortens the timeliness requirement for selected
drugs to 7 days, more PDE submissions would need to be reversed if
individuals do not pick up their drugs within the first 7 days. A
commenter noted that their organization's data shows that only one
third of claims that are reversed get reversed in the first 7 days.
Some of these commenters opposed the proposed 7-day timeliness
requirement due to these concerns about claim adjustments. A few other
commenters supported the proposed 7-day timeliness requirement but
recommended that CMS closely monitor whether the reduced submission
timeframe leads to an increase in claims adjustments and assess the
implications for the MFP payment process. Noting that the credit/debit
ledger system described in the final guidance may see an increased
volume of claim adjustments resulting from a shortened PDE data
timeline, a commenter asked CMS to ensure this process is streamlined
and allows for claims to be reopened instantaneously, eliminating the
need for additional requests and reducing payment timelines. These
commenters also encouraged CMS to provide Primary Manufacturers with
the ability to audit the PDE data submitted by Part D sponsors for
selected drugs to address underlying data quality issues and improve
data integrity.
Response: CMS thanks these commenters for their input. Although the
7-day timeliness requirement may lead to some increase in claim
adjustments or reversals, CMS does not anticipate a significant uptick
because CMS' analysis of PDE record submissions, as noted above, shows
that a majority of PDE records are currently submitted within 7 days of
receipt from Part D sponsors. CMS maintains detailed data on PDE record
submissions, including claim adjustments and deletions, and will
continue to monitor this data as the 7-day timeliness requirement for
selected drugs takes effect.
While comments regarding the MTF's credit/debit ledger system
described in the final guidance and manufacturers' ability to audit PDE
data are outside the scope of this rule, CMS notes that to address any
claim adjustments or reversals that occur after the Primary
Manufacturer has issued an MFP refund, the MTF will maintain a credit/
debit ledger system that tracks credits and debits related to MFP
refunds at the dispensing entity NPI-level, for each selected drug, for
each Primary
[[Page 15834]]
Manufacturer that participates in the MTF PM and where payment is
facilitated through the MTF PM. For additional information on the
credit/debit ledger system maintained by the MTF, including how the
system will handle reversals or adjustments originating from updated
PDE information received from DDPS, please refer to section 40.4.3.2 of
the final guidance.
Comment: A commenter expressed support for CMS' efforts to enhance
the timeliness of PDE record submissions but recommended a phased-in
implementation timeline of the 7-day timeliness requirement to ensure a
smooth transition and mitigate potential operational challenges for
Part D sponsors. The commenter stated that many Part D sponsors will
need to invest significant resources to enhance their data submission
processes, and a phased-in timeline would provide Part D sponsors with
sufficient time to adapt to the new requirements without risking
disruptions in data submission or compliance.
Response: CMS appreciates the support for enhancing the timeliness
of PDE record submissions for selected drugs. Timely implementation of
the 7-day timeliness requirement will be critical to mitigating
potential hardships on dispensing entities such as pharmacies, which
could impact Part D beneficiary access to selected drugs. As stated in
section 40.4.2.2 of the final guidance, CMS is concerned that material
cashflow pressures on dispensing entities will be most acute in the
transition period when MFPs for selected drugs first become effective
in January 2026 (and at the start of each subsequent initial price
applicability year when MFPs for new selected drugs first become
effective). CMS is therefore finalizing the 7-calendar day timeliness
requirement for selected drugs without delay.
Comment: Many commenters submitted comments on issues not directly
related to the proposed 7-day timeliness requirement for selected
drugs. Examples of these topics include the Primary Manufacturers' MFP
effectuation plan deadline; the 14-day prompt MFP payment window; data
transmissions between the MTF DM and Primary Manufacturers; dispensing
entities' concerns regarding price concessions and payment at the MFP;
nonduplication of the MFP with the 340B ceiling price; and CMS or
Primary Manufacturer prefunding of MTF accounts.
Response: These comments were addressed in the final guidance, and
CMS refers commenters to the final guidance for more information. We
consider these comments out of scope for this rulemaking.
After consideration of the public comments we received, we are
finalizing this proposal without modification at Sec. 423.325(b).
5. Severability
We proposed that the general PDE submission timeliness requirements
and the selected drugs PDE submission timeliness requirement provisions
finalized herein would be separate and severable from one another.
Further, we proposed that if either provision 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 is our
intention that such provision shall be severable from this rule and not
affect the remainder thereof, or the application of such provision to
other persons not similarly situated or to other, dissimilar
circumstances.
We received no comments on this proposal and therefore are
finalizing this provision without modification.
E. Medicare Transaction Facilitator Requirements for Network Pharmacy
Agreements
The Inflation Reduction Act of 2022 (IRA) (Pub. L. 117-169),
enacted August 16, 2022, established the Medicare Drug Price
Negotiation Program (hereinafter the ``Negotiation Program'') to
negotiate maximum fair prices (MFPs) for certain high expenditure,
single source drugs and biological products. The requirements for the
Negotiation Program are described in sections 1191 through 1198 of the
Act, as added by sections 11001 and 11002 of the IRA. Sections 11001(c)
and 11002(c) of the IRA direct the Secretary of the United States
Department of Health and Human Services (hereinafter ``the Secretary'')
to implement the Negotiation Program provisions in sections 11001 and
11002 of the IRA, including amendments made by such sections, for 2026,
2027, and 2028 by program instruction or other forms of program
guidance. In accordance with the law, CMS issued the Medicare Drug
Price Negotiation Program: Draft Guidance, Implementation of Sections
1191-1198 of the Social Security Act for Initial Price Applicability
Year 2027 and Manufacturer Effectuation of the Maximum Fair Price (MFP)
in 2026 and 2027 on May 3, 2024 (hereinafter ``draft guidance''), and
the Medicare Drug Price Negotiation Program: Final Guidance,
Implementation of Sections 1191-1198 of the Social Security Act for
Initial Price Applicability Year 2027 and Manufacturer Effectuation of
the Maximum Fair Price (MFP) in 2026 and 2027 on October 2, 2024
(hereinafter ``final guidance'').\34\ In the final guidance, CMS noted
that it also planned to engage in rulemaking to propose certain
policies under Medicare Part D that relate to or have implications for
the Negotiation Program but involve exercising authorities under the
Act that are not subject to the IRA's program instruction requirement.
Accordingly, as discussed in more detail below, in this rule, CMS
proposed at Sec. 423.505(q) to require that Part D sponsors' network
contracts with pharmacies require such pharmacies to be enrolled in the
Negotiation Program's Medicare Transaction Facilitator (MTF) Data
Module (DM) (hereinafter ``MTF DM'').
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\34\ Medicare Drug Price Negotiation Program: Final Guidance,
Implementation of Sections 1191--1198 of the Social Security Act for
Initial Price Applicability Year 2027 and Manufacturer Effectuation
of the Maximum Fair Price in 2026 and 2027 https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf.
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1. Background on the Medicare Transaction Facilitator
Section 1193(a) of the Act instructs CMS to enter into agreements
(a ``Medicare Drug Price Negotiation Program Agreement,'' hereinafter
referred to as a ``Negotiation Program Agreement'') with willing
manufacturers of selected drugs (as described in section 1192(c) of the
Act) for a price applicability period (as defined in section 1191(b)(2)
of the Act). After entering into a Negotiation Program Agreement with
CMS and in accordance with section 1193(a) of the Act, any ``Primary
Manufacturer'' (as defined in section 40 of the final guidance) of a
selected drug that continues to participate in the Negotiation Program
and reaches agreement upon an MFP must provide access to the MFP to
MFP-eligible individuals (defined in section 1191(c)(2)(A) of the Act)
and to pharmacies, mail order services, and other dispensing entities
that dispense drugs covered under Medicare Part D (hereinafter
``dispensing entities'') with respect to such MFP-eligible individuals.
In section 40.4 of the final guidance, CMS stated that a Primary
Manufacturer must provide access to the MFP in one of two ways: (1)
prospectively ensuring that the price paid by the dispensing entity
when acquiring the drug is no greater than the MFP, or (2)
retrospectively providing reimbursement for the difference between the
dispensing entity's
[[Page 15835]]
acquisition cost and the MFP. Consistent with longstanding Part D
prompt pay rules regarding payment by Part D sponsors to network
pharmacies,\35\ CMS will require that a Primary Manufacturer electing
to provide retroactive reimbursement will meet its obligation to make
MFP available by transmitting payment of an amount that provides access
to the MFP within 14 calendar days of when certain claim-level data
elements are sent to the Primary Manufacturer by the MTF DM.
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\35\ See 42 CFR 423.520, Prompt Payment by Part D Sponsors,
which requires the Part D sponsor to transmit payment to network
pharmacies within 14 days after receiving an electronic Part D claim
that is a clean claim.
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In section 40.4 of the final guidance, CMS stated, based on CMS'
continuous engagement with and extensive feedback from interested
parties, for 2026 and 2027, CMS will engage with MTF contractors to
facilitate the exchange of data and payment between pharmaceutical
supply chain entities for the purposes of the Negotiation Program. The
MTF will have two distinct modules, the MTF DM and the MTF Payment
Module (hereinafter ``MTF PM''), a voluntary option to pass payment for
MFP refunds from Primary Manufacturers to dispensing entities. The
combined data and payment facilitation functionalities present in the
MTF DM and the MTF PM will attempt to address the interest expressed by
dispensing entities and manufacturers to have a single platform for
transmitting the data necessary for program administration and
supporting MFP refund payments to create greater efficiency,
standardization, and predictability in the execution of a high volume
of continuous payments.
The MTF DM will facilitate the exchange of certain claim-level data
elements and claim-level payment elements for selected drugs to support
the verification that the selected drug was dispensed to an MFP-
eligible individual, as described in section 40.4.2 of the final
guidance. The data supplied by the MTF DM to Primary Manufacturers will
have been verified by both the Part D sponsor and CMS' Drug Data
Processing System (DDPS) resulting in dual verification of both an
individual's eligibility for Part D, and Part D coverage of the
selected drug for each claim being transmitted. For context, when a
Part D sponsor receives a claim for a selected drug from a dispensing
entity, the Part D sponsor verifies that the beneficiary listed on the
claim paid by the Part D sponsor is enrolled in Medicare Part D and
coverage is provided under Part D for the dispensed drug. After the
Part D sponsor verifies Medicare eligibility and coverage of the
selected drug, the plan pays the dispensing entity no more than the MFP
plus any dispensing fees for the selected drug. Then, the Part D
sponsor sends the data on the Part D claim as a Prescription Drug Event
(PDE) record (that is, claim summary records submitted by Medicare Part
D sponsors to CMS for every prescription filled by a dispensing entity
for a Medicare Part D beneficiary) to DDPS. CMS uses DDPS to perform
verification steps to validate that the individual was an eligible Part
D enrollee at the time of the claim, as described in section 40.4.2.1
of the final guidance. After CMS verifies MFP eligibility for the
individual related to the claim, DDPS will transmit the PDE record for
the Part D claim for the selected drug to the MTF DM. Therefore,
because MFP eligibility status has been twice validated before the data
elements are sent from the MTF DM to the Primary Manufacturer, the data
elements will have been verified as involving a selected drug that was
dispensed to an MFP-eligible individual.
As stated in section 40.4.2.1 of the final guidance, enrollment in
the MTF DM will be mandatory for Primary Manufacturers. CMS will
require all Primary Manufacturers to register with the MTF DM by a
deadline to be specified by CMS and to maintain the functionality
necessary to receive certain claim-level data elements from the MTF DM
and return certain claim-level payment elements to the MTF DM. Each
Primary Manufacturer will be required to sign data use, privacy, and
security agreements with CMS and comply with data use, privacy, and
security requirements to protect the data elements received from and
transmitted to the MTF.
As discussed in section 40.4.2.2 of the final guidance and in more
detail below, dispensing entity enrollment in the MTF DM is also needed
for the administration of the Negotiation Program and the Part D
program. Dispensing entity enrollment in the MTF DM allows for several
key functionalities that help ensure accurate Part D claims information
and payment and continued access for beneficiaries and dispensing
entities to selected drugs. These functionalities include collecting
and sharing of banking information from dispensing entities to Primary
Manufacturers; creating and sending of Electronic Remittance Advice
that uses the X12 835 standard adopted under the Health Insurance
Portability and Accountability Act of 1996 (hereinafter ``ERAs'') (for
electronic transfer of funds) or remittances (for paper checks) to
dispensing entities; a streamlined ability to submit complaints and
disputes regarding selected drugs dispensed; and the ability for
dispensing entities to identify themselves as anticipating material
cashflow concerns at the start of a price applicability period with
respect to selected drugs as a result of potential delays created by
reliance on retrospective MFP refunds within the 14-day prompt MFP
payment window. Accordingly, CMS proposed to require Part D sponsors to
include in their network pharmacy agreements provisions requiring
dispensing entities to be enrolled in the MTF DM.
If a Primary Manufacturer elects to utilize the MTF PM, then the
MTF PM will facilitate payment of an MFP retrospective refund on MFP-
eligible claims of selected drugs from the participating Primary
Manufacturer to the dispensing entity. Specifically, as discussed in
section 40.4.3 of the final guidance, the MTF PM will: (1) provide
Primary Manufacturers with a mechanism for electronic transfer of funds
or payment by paper check to facilitate MFP refund payments from
Primary Manufacturers to dispensing entities; and (2) provide Primary
Manufacturers with a credit/debit ledger system to track the flow of
MFP refunds and to handle reversals, adjustments, and other claim
revisions inevitable in a dynamic claim payment system. Participation
in the MTF PM will be voluntary for Primary Manufacturers, which will
have the option of passing MFP refund payments to dispensing entities
through the MTF PM or using their own processes outside of the MTF PM
to effectuate the MFP. Primary Manufacturers that elect to use the MTF
PM to pass through payments will be required to execute MTF agreements
with the MTF PM outlining each party's rights, responsibilities, and
potential liabilities associated with the transfer and receipt of funds
through the MTF PM.
2. Network Pharmacy Contracts With Part D Sponsors
CMS has broad contracting authority with respect to Part D sponsors
under section 1860D-12 of the Act. As applied to the Part D program
through section 1860D-12(b)(3)(D) of the Act, section 1857(e)(1) of the
Act authorizes the Secretary to adopt contract terms and conditions as
necessary and appropriate and not inconsistent with the Part D statute.
Additionally, section 1860D-12(b)(3)(D)(i) of the Act specifies that
information provided to the Secretary under the application of section
1857(e)(1) of the Act may be used (in
[[Page 15836]]
relevant part) for the purposes of carrying out the Part D program or
Part E of Title XI of the Act (that is, the Negotiation Program).
Pursuant to these authorities, CMS proposed to require Part D sponsors
(or first tier, downstream, or related entities, such as PBMs, acting
on the sponsors' behalf) to include in their network participation
agreements with contracting pharmacies a provision that requires the
pharmacy to be enrolled in the MTF DM (or any successor to the MTF DM)
in a form and manner to be determined by CMS. CMS emphasized that under
the proposed regulation, such provision must require the pharmacy ``to
be enrolled'' in the MTF DM, as opposed to merely requiring the
pharmacy ``to enroll'' in the MTF DM, to establish an ongoing
obligation that the pharmacy maintain its enrollment in the MTF DM. CMS
also proposed that such provision must require the pharmacy to maintain
and certify to CMS that the enrollment information provided in the MTF
DM is accurate, complete, and up to date, pursuant to applicable terms
and conditions of participation with the MTF DM, in a form and manner
to be determined by CMS. CMS proposed amending Sec. 423.505 by adding
paragraph (q) to codify this requirement.
Consistent with section 1860D-12(b)(3)(D) of the Act, such a
requirement would be necessary and appropriate and not inconsistent
with the Part D statute. As previously mentioned, the MTF DM will
contain several key functionalities that are necessary and appropriate
for operations related to administration of the Negotiation Program and
the Part D program. Through each of the functionalities outlined below,
dispensing entity enrollment in the MTF DM would help ensure continued
access to selected drugs that are covered under Part D for
beneficiaries and dispensing entities and help maintain the accuracy of
Part D claims information and payment.
First, the MTF DM will provide dispensing entities enrolled in the
MTF DM with remittances or ERAs to reconcile MFP refund payments when a
Primary Manufacturer chooses to pass payment to the dispensing entity
through the MTF PM. Interested parties strongly requested that
electronic MFP refunds be accompanied by an ERA or remittance. To meet
industry standards in the creation of an accurate ERA or remittance,
up-to-date banking information for a dispensing entity is needed.
Dispensing entities will be required to provide up-to-date banking
information and, if applicable, payment center information during MTF
DM enrollment. For Primary Manufacturers that make payments outside of
the MTF PM, CMS plans to make available through the MTF DM dispensing
entities' banking information, payment center information (if
applicable), and designated destination for ERAs or remittances, as
applicable.
These ERAs or remittances will assist dispensing entities in
closing out their open accounts receivable, thereby minimizing cashflow
interruptions. Specifically, the information contained in the ERA or
remittance will connect claims payment determination and amount with
how the payment was made, including the electronic funds transfer
information, if applicable. CMS expects this will enable dispensing
entities to review their accounts receivables (consistent with each
dispensing entity's own standard business practices) for each claim for
which a Primary Manufacturer owes an MFP refund and determine whether a
Primary Manufacturer has paid all the claims the dispensing entity
believes are MFP-eligible claims, in the amounts the dispensing entity
believes are sufficient to effectuate the MFP. Moreover, CMS has
consistently heard from interested parties that without an ERA or
remittance, MFP refund payments may be rejected, and, in these
scenarios, dispensing entities would not have means to reconcile
received payments against outstanding MFP-eligible claims.
Second, there will be streamlined access for dispensing entities
enrolled in the MTF DM to submit complaints and disputes within the MTF
DM to help identify issues with timely MFP refund payment, supporting
dispensing entities to continue efficient operations and prevent undue
financial hardship, while maintaining accuracy of Part D claims
information and payment. Allowing dispensing entities streamlined
access to this system will support the administration of the
Negotiation Program and Part D program. Through the MTF DM, a
dispensing entity can submit a complaint related to MFP availability,
which CMS will review. Additionally, all Primary Manufacturers will be
required to utilize the MTF DM to report to the MTF DM information
(claim-level payment elements) about how the Primary Manufacturer has
made the MFP available for each claim for which the Primary
Manufacturer received data from the MTF DM or indicate why no MFP
refund payment has been made on a claim. While dispensing entities are
encouraged to remediate with the manufacturer directly if they believe
that they have not received a retrospective refund payment that
effectuates the MFP, dispensing entities may use the complaints process
within the complaint and dispute system in the MTF DM to alert CMS if
the dispensing entity believes program requirements are not being met.
Third, the MTF DM will serve as a central repository for
information about dispensing entities enrolled in the MTF DM that self-
report that they anticipate material cashflow concerns due to the
reliance on retrospective MFP refunds within the 14-day prompt MFP
payment window. Interested parties have noted that small pharmacies
that rely primarily on prescription revenue to maintain business
operations would face material cashflow pressures due to the shift from
payment by the Part D sponsor to a combination of Part D sponsor
payment plus a potentially lagged MFP refund. Based on this input, CMS
is concerned that this challenge will be most acute in the transition
period when MFPs for selected drugs first become effective in January
2026 and at the start of each subsequent initial price applicability
year when MFPs for new selected drugs first become effective (for
example, at the start of a price applicability period with respect to a
selected drug). CMS does not anticipate this challenge to continue with
respect to a selected drug once MFP refunds for that selected drug are
flowing and dispensing entities become accustomed to the 14-day prompt
MFP payment window. Consider a scenario in which the dispensing entity
purchases a selected drug at a price discounted from the wholesale
acquisition cost (WAC), for example, at WAC minus four percent, for ten
units. Initially, this expenditure creates a temporary cashflow gap.
However, upon receiving the MFP refund payment, the dispensing entity's
upfront cost is offset, effectively restoring its financial position.
Assuming a consistent utilization rate for the drug, any temporary
negative cashflow should be offset by the subsequent MFP refund
payment. The timing and consistency of this pattern should lead to
stable cashflow and avoid a long-term cash deficit over time. During
MTF DM enrollment, CMS will ask dispensing entities to self-identify
whether they are a dispensing entity that anticipates having material
cashflow concerns in connection with the effectuation of MFP. The types
of entities CMS anticipates may self-report through this process
include sole proprietor rural and urban pharmacies with high volumes of
Medicare Part D prescriptions dispensed, pharmacies who predominantly
rely on prescription
[[Page 15837]]
revenue to maintain business operations, long-term care pharmacies,
340B covered entities with in-house pharmacies, and I/T/U pharmacies.
The information self-reported by dispensing entities will be provided
to Primary Manufacturers to assist in the development of their MFP
effectuation plans, which should describe a process for mitigating
material cashflow concerns for dispensing entities. The MTF DM will
also be available to dispensing entities enrolled in the MTF that need
to update their self-identification with respect to material cashflow
concerns, as CMS anticipates that indication could change over time.
Fourth, CMS intends that dispensing entities will be able to view
the status of MFP refunds from Primary Manufacturers through the MTF
DM. The ability to track MFP refunds could also help dispensing
entities better manage their cashflow or aid their financial planning
to meet other administrative burdens or operational costs.
Fifth, the MTF DM will collect and share financial information
belonging to dispensing entities enrolled in the MTF DM with Primary
Manufacturers that pay MFP refunds to dispensing entities outside the
MTF PM. Through CMS' engagement with interested parties, both
manufacturers and dispensing entities have expressed the concern that
they typically do not have direct financial relationships with one
another, increasing dispensing entities' risk of experiencing payment
delays. As such, during MTF DM enrollment, dispensing entities must
provide their bank account information. CMS believes that the
collecting and sharing of dispensing entities' bank account information
with Primary Manufacturers will address interested parties' concerns
related to the lack of an established channel to support MFP refund
payments made outside the MTF PM, and help dispensing entities to
continue efficient operations.
In sum, CMS believes that enrollment in the MTF DM by dispensing
entities would facilitate continued beneficiary and dispensing entity
access to selected drugs that are covered Part D drugs. Manufacturers
and dispensing entities have asked the agency to undertake a role in
assuring that MFP refund payments to dispensing entities can be made
efficiently, and the development of an MTF DM has an important role in
that process. With less financial uncertainty, dispensing entities are
better positioned to keep dispensing selected drugs covered under Part
D. Given the wide number and scope of dispensing entities that dispense
drugs to Part D beneficiaries--which is currently approximately 60,000-
plus community pharmacies and 80,000-plus dispensing entities in
total--CMS believes that the requirement would help reach a substantial
number of entities that serve Medicare beneficiaries. Requiring network
pharmacy agreements to require enrollment by pharmacies in the MTF DM
will help promote successful MFP effectuation under the Negotiation
Program and facilitate continued access to selected drugs covered under
Part D for Medicare beneficiaries.
For the reasons stated previously, CMS proposed to require Part D
sponsors (or first tier, downstream, or related entities, such as
pharmacy benefit managers (PBMs), acting on the sponsors' behalf) to
include in their network participation agreements with contracting
pharmacies a provision that requires the pharmacy to be enrolled in the
MTF DM (or any successor to the MTF DM), which would entail an ongoing
obligation that the pharmacy maintain its enrollment in the MTF DM, in
a form and manner to be determined by CMS. CMS also proposed that such
provision must require the pharmacy to maintain and certify to CMS that
the enrollment information provided in the MTF DM is accurate,
complete, and up to date, pursuant to applicable terms and conditions
of participation with the MTF DM, in a form and manner to be determined
by CMS. CMS received comments on this proposal, which are summarized
and responded to as follows.
Comment: Many commenters expressed general support for the
proposal. A few commenters expressed that the requirement for
pharmacies to be enrolled in the MTF DM is necessary for success of the
Negotiation Program. A commenter stated that the requirement would also
help ensure beneficiary access to selected drugs and their maximum fair
prices (MFPs).
Response: CMS thanks these commenters for their comments in support
of our proposal.
Comment: A couple commenters requested CMS clarify the role of Part
D sponsors and/or PBMs in enforcing the proposed contractual provision.
Specifically, these commenters asked whether Part D sponsors and/or
PBMs would be required to monitor or audit pharmacies' enrollment in
the MTF DM and take enforcement actions where, for example, a pharmacy
does not enroll in the MTF DM, provides inaccurate enrollment
information, or does not keep their enrollment information up to date.
A commenter stated that such actions would be difficult for Part D
sponsors to carry out without access to MTF DM enrollment data. In the
event that Part D sponsors and/or PBMs are required to do so, these
commenters also asked how such pharmacies should be penalized. A
commenter noted that their network agreement with contracting
pharmacies, for example, states that the penalty for non-compliance may
be termination from the network. Another commenter stated that, should
CMS finalize its proposal, CMS should retain oversight responsibilities
in monitoring pharmacies' compliance with the requirement to be
enrolled in the MTF DM.
Response: CMS thanks the commenters for their questions. To
clarify, CMS intends to monitor, oversee, and facilitate enrollment in
the MTF DM, and intends to establish a participation agreement with
each enrolling dispensing entity to include, among other provisions,
potential penalties surrounding their engagement with and use of the
MTF system.\36\ This participation agreement will complement the new
requirements on Part D sponsors to contractually require their network
pharmacies to be enrolled in the MTF DM. Recognizing that Part D
sponsors will not be users of the MTF DM, CMS also plans to work
together with Part D sponsors to communicate MTF DM enrollment
requirements to their network pharmacies and may also share reports
with Part D sponsors and/or PBMs regarding pharmacies' enrollment in
the MTF DM to assist Part D sponsors in monitoring their network
pharmacies' compliance with the new requirement. Our requirement on
Part D sponsors and/or PBMs to incorporate a specific contractual
provision in their network pharmacy agreements does not alter the
established roles of Part D sponsors and/or PBMs in monitoring
compliance and enforcing terms and conditions of their own contracts.
Therefore, Part D sponsors and PBMs should apply their usual
enforcement actions in the event of pharmacy non-compliance, consistent
with their existing contractual rights and obligations.
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\36\ CMS published these in draft form on the CMS IRA website
(https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation) and solicited public feedback beginning on
December 17, 2024, through January 31, 2025. CMS plans to finalize
and post the final agreements on the CMS IRA website in Spring 2025.
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Comment: A couple commenters found the proposal unnecessary and
expressed general opposition to codifying network pharmacies'
participation in the MTF DM. A commenter explained that pharmacies
[[Page 15838]]
are already incentivized to enroll in the MTF DM, and another commenter
stated that pharmacies' information can be collected from a database
owned by the National Council for Prescription Drug Programs (NCPDP).
Response: While CMS agrees that dispensing entities are
incentivized to enroll in the MTF DM, the absence of an enrollment
requirement may lead to variability in dispensing entities'
participation in the MTF DM given the wide number and scope of
pharmacies that dispense drugs to Part D beneficiaries, which is
currently over 60,000-plus community pharmacies and 80,000-plus
dispensing entities in total. Such variability in dispensing entity
participation could result in uneven access to selected drugs that are
covered Part D drugs by an MFP-eligible individual. CMS also
appreciates the commenter's input regarding NCPDP; CMS intends to use
NCPDP databases to the extent possible for enrollment but notes that
banking information necessary for the pass through of MFP refunds to
dispensing entities (and, if applicable to their third-party support
entities, such as Pharmacy Services Administrative Organizations
(PSAOs)), is not available in NCPDP databases.
Comment: Many commenters asserted that the proposal would result in
CMS interfering with network pharmacy agreements and cited the
noninterference clause at section 1860D-11(i) of the Act. Specifically,
these commenters stated that CMS is interfering with PBM contracts to
facilitate implementation of the IRA despite previously stating that it
would not interfere in other circumstances, where interested parties,
for instance, requested that CMS protect pharmacies from unfair PBM
reimbursement rates and practices. A commenter stated that, if CMS has
the legal authority to interfere with PBM contracts to support IRA
implementation, then it should ensure fair and reasonable payment by
Part D sponsors to pharmacies.
Response: CMS thanks the commenter for their comment. CMS considers
the issue of Part D sponsors' reimbursement rates out of scope for this
rulemaking and CMS disagrees with the commenters' assertion that the
requirement on Part D sponsors to include a contractual provision in
its network pharmacy agreements is in violation of the noninterference
clause. As explained in the final rule titled ``Medicare Program;
Contract Year 2015 Policy and Technical Changes to the Medicare
Advantage and the Medicare Prescription Drug Benefit Programs'' (79 FR
29874 and 29875), we reiterated that the noninterference clause does
not limit our authority to require the inclusion of terms and
conditions in agreements when necessary to implement and enforce
requirements under the Act. As applied to the Part D program through
section 1860D-12(b)(3)(D) of the Act, section 1857(e)(1) of the Act
authorizes the Secretary to adopt contract terms and conditions as
necessary and appropriate and not inconsistent with the Part D statute.
Section 1860D-12(b)(3)(D)(i) of the Act also specifies that information
provided to the Secretary under the application of section 1857(e)(1)
of the Act may be used (in relevant part) for the purposes of carrying
out the Part D program or Part E of Title XI of the Act (that is, the
Negotiation Program). The requirement on Part D sponsors to include a
contractual provision in its network pharmacy agreements related to
enrollment in the MTF DM is consistent with implementation of these
authorities, necessary to promote effective administration of the Part
D program and the Negotiation Program and does not violate the non-
interference clause.
Comment: A couple commenters stated that CMS lacks statutory
authority to require pharmacies' participation in the MTF DM as a
prerequisite for participation in Part D.
Response: CMS disagrees with the commenters that CMS lacks
statutory authority to propose the requirement specified at Sec.
423.505(q). As applied to the Part D program through section 1860D-
12(b)(3)(D) of the Act, section 1857(e)(1) of the Act authorizes the
Secretary to adopt contract terms and conditions as necessary and
appropriate and not inconsistent with the Part D statute. Additionally,
section 1860D-12(b)(3)(D)(i) of the Act specifies that information
provided to the Secretary under the application of section 1857(e)(1)
of the Act may be used (in relevant part) for the purposes of carrying
out the Part D program or Part E of Title XI of the Act (that is, the
Negotiation Program). The MTF DM will contain several key
functionalities that are necessary and appropriate for operations
related to administration of the Negotiation Program and the Part D
program. Through each of the functionalities discussed in more detail
above, dispensing entity enrollment in the MTF DM will help ensure
continued access to selected drugs that are covered under Part D for
beneficiaries and dispensing entities and help maintain the accuracy of
Part D claims information and payment.
Comment: A couple of commenters requested CMS delay the proposed
requirement until after the MTF DM is fully operational, tested, and
all enrollment and/or operational are known.
Response: CMS appreciates the commenters' suggestion for delayed
implementation but does not agree. Primary Manufacturers will be
statutorily required to provide access to any MFP for drugs selected
for initial price applicability year 2026 starting on January 1, 2026,
which requires timely enrollment in order for the MTF to facilitate the
exchange of data and payment. In addition, CMS has been actively
engaging with interested parties through MTF system calls to consider
and address their feedback regarding the development of the MTF user
interface.
Comment: A couple commenters who expressed support for the proposal
also provided recommendations to CMS on pharmacy enrollment
implementation, such as suggesting a need for CMS to conduct outreach,
provide technical assistance, and offer education to pharmacies, as
well as to explore leveraging existing databases to automate the MTF DM
enrollment process. A commenter urged that CMS, once pharmacies are
enrolled in the MTF DM, reconsider providing a deidentified beneficiary
ID to Primary Manufacturers to allow them to better identify duplicate
claims sent by the MTF to the Primary Manufacturer; this commenter also
recommended that CMS conduct regular audits of claims submitted to the
MTF.
Response: CMS thanks the commenters for their input. While these
comments are out of scope for this rulemaking, CMS will consider these
suggestions as part of ongoing pharmacy outreach and engagement and
intends to use NCPDP databases to the extent possible for enrollment.
Further, CMS notes that in section 40.4.2.1 of the ``Medicare Drug
Price Negotiation Program: Final Guidance, Implementation of Sections
1191-1198 of the Social Security Act for Initial Price Applicability
Year 2027 and Manufacturer Effectuation of the Maximum Fair Price in
2026 and 2027'' \37\ (final guidance), CMS stated that an individual's
eligibility for Part D and Part D coverage of the selected drug for
each claim will be twice validated before the data elements are sent
from the MTF DM to the Primary
[[Page 15839]]
Manufacturer; in other words, the claim-level data elements will be
derived from claims that been verified for Medicare eligibility by both
the Part D plan and CMS' Drug Data Processing System (DDPS), a CMS
system used to process all Medicare Prescription Drug Event (PDE)
records and related data, obviating the need for additional
verification by the Primary Manufacturer.
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\37\ Medicare Drug Price Negotiation Program: Final Guidance,
Implementation of Sections 1191-1198 of the Social Security Act for
Initial Price Applicability Year 2027 and Manufacturer Effectuation
of the Maximum Fair Price in 2026 and 2027 available at https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf.
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Comment: Many commenters did not support the proposal because of
broad disagreement with CMS' implementation of the Negotiation Program.
Specifically, these commenters stated that CMS is shifting the
financial and operational burden of the Negotiation Program onto
pharmacies. They stated this will be a nonviable solution due to
insufficient reimbursement by plans and their PBMs, coupled with the
time it will take for pharmacies to wait for MFP refund payments from
the manufacturers, and the cadence on which dispensing entities are
required to pay their wholesalers.
Response: CMS appreciates the commenters' input. While CMS
considers these comments out of scope, CMS is aware of the concerns of
pharmacies regarding the Negotiation Program, and has tried, within the
framework of applicable law, to implement policies that will mitigate
any potential adverse impact. This new requirement will assure that
dispensing entities that dispense Part D drugs are able to track and
receive their MFP refund payments from Primary Manufacturers. We refer
readers to the ``Medicare Drug Price Negotiation Program: Final
Guidance, Implementation of Sections 1191-1198 of the Social Security
Act for Initial Price Applicability Year 2027 and Manufacturer
Effectuation of the Maximum Fair Price in 2026 and 2027'' (final
guidance), where similar comments were raised and addressed, for more
information.
Comment: Many commenters submitted comments on issues relating to
the Negotiation Program and not directly related to the proposed MTF
enrollment requirement in network pharmacy agreements. Examples of
these topics include: CMS' implementation of the Negotiation Program;
Primary Manufacturer effectuation of the MFP; the effectiveness of
Primary Manufacturers' MFP effectuation plans; the 14-day prompt MFP
payment window; MTF requirements for data privacy and security;
pharmacies' concerns regarding administrative and operational burden in
using the MTF DM; nonduplication with the 340B ceiling price; the
retrospective refund amount to effectuate the MFP and the Standard
Default Refund Amount (SDRA); Primary Manufacturers' voluntary
participation in the MTF Payment Module; a Coverage Gap Discount
Program (CGDP) derivative refund model; prefunding of MTF accounts; and
pharmacies' financial challenges in waiting for retrospective MFP
refund payments.
Response: These comments were addressed in the final guidance and
CMS refers commenters to the final guidance for more information.\38\
CMS considers these comments out of scope for this rulemaking.
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\38\ Medicare Drug Price Negotiation Program: Final Guidance,
Implementation of Sections 1191-1198 of the Social Security Act for
Initial Price Applicability Year 2027 and Manufacturer Effectuation
of the Maximum Fair Price in 2026 and 2027 available at https://www.cms.gov/files/document/medicare-drug-price-negotiation-final-guidance-ipay-2027-and-manufacturer-effectuation-mfp-2026-2027.pdf.
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After careful consideration of all the comments received, and for
the reasons set forth in the proposed rule and in our responses to the
comments, we are finalizing as proposed the provision at Sec.
423.505(q).
III. Strengthening Current Medicare Advantage and Medicare Prescription
Drug Benefit Program Policies
A. Clarifying MA Organization Determinations To Enhance Enrollee
Protections in Inpatient Settings (Sec. Sec. 422.138, 422.562,
422.566, 422.568, 422.572, 422.616, and 422.631)
We proposed four modifications to existing regulations at 42 CFR
part 422, subpart M, to clarify and strengthen existing rules related
to organization determinations. First, we proposed to clarify the rule
that if an enrollee has no further liability to pay for services
furnished by a MA organization, a determination regarding these
services is not subject to appeal. Specifically, we proposed to clarify
that an enrollee's further liability to pay for services cannot be
determined until an MA organization has made a determination on a
request for payment. Second, we proposed to modify the definition of an
organization determination to clarify that a coverage decision made by
an MA organization contemporaneously to when an enrollee is receiving
such services, including level of care decisions (such as inpatient or
outpatient coverage), is an organization determination subject to
appeal and other existing requirements. Third, we proposed to
strengthen the notice requirements to ensure that a provider who has
made a standard organization determination or integrated organization
determination request on an enrollee's behalf, or when it is otherwise
appropriate, receives notice of the MA organization's decision.
Finally, we proposed a change to the reopening rules to curtail an MA
organization's authority to reopen and modify an approved authorization
for an inpatient hospital admission on the basis of good cause for new
and material evidence. We address each of these provisions in detail.
1. Clarifying When a Determination Results in No Further Financial
Liability for the Enrollee (Sec. 422.562)
Section 1852(g)(1)(A) of the Act requires an MA organization to
have a procedure for making determinations regarding whether an
enrollee is entitled to receive a health service and the amount (if
any) that the individual is required to pay with respect to such
service. Under section 1852(g)(2) of the Act, an MA organization must
provide for reconsideration of an adverse determination upon an
enrollee's request. The existing regulations at part 422, subpart M,
set forth the administrative appeals process available to enrollees who
wish to dispute an organization determination made by an MA
organization. Section 422.562(c) describes limits on the applicability
of the administrative appeals process in part 422, subpart M. The
limitation in Sec. 422.562(c)(1) states that if an enrollee receives
immediate Quality Improvement Organization (QIO) review (as provided in
Sec. 422.622) of a determination of noncoverage of inpatient hospital
care, then the enrollee is not entitled to review of that issue by the
MA organization. The second limitation at Sec. 422.562(c)(2) states
that if an enrollee has no further liability to pay for services that
were furnished by an MA organization, a determination regarding these
services is not subject to appeal.
The organization determination and reconsideration regulations of
part 422, subpart M, broadly distinguish between two categories of
decisions: coverage decisions (that is, a decision on whether the MA
organization will furnish, authorize, or arrange for an item, service,
or Part B drug) and payment decisions (that is, a decision whether to
pay or deny payment for services furnished to an enrollee). These
divergent categories of organization determinations have distinct
requirements related to processing timeframes (including the
applicability of processing timeframe extensions), the parties eligible
to submit an
[[Page 15840]]
organization determination or reconsideration request, notice
requirements, and whether an MA organization must expeditiously process
an organization determination or reconsideration request upon receiving
a valid request.
When a coverage request is received, or when the MA organization
issues an unsolicited coverage decision related to ongoing services,
the MA organization will apply applicable coverage criteria and either
approve, furnish, arrange for, or deny coverage for the services at
issue. An approved coverage decision should result in the enrollee
receiving the services at issue and the MA organization making payment
to the treating provider when a request for payment is eventually
submitted. When a request for payment for furnished services is
received without a previously approved coverage decision, the MA
organization will apply coverage criteria and must either make payment
or deny the request within the timeframes specified in the ``prompt
payment'' provisions of Sec. 422.520. In addition, the MA organization
must calculate the enrollee's applicable cost-sharing and/or financial
liability for the furnished service (when issuing a partially or fully
adverse decision) including considering applicable beneficiary
protections related to plan-directed care. ``Plan-directed care''
occurs when a contract provider furnishes a service or refers an
enrollee for a service that an enrollee reasonably believes is a plan-
covered service. Upon receiving plan-directed care, an enrollee cannot
be financially liable for more than the applicable cost-sharing for
that service (see Sec. 422.105). Accordingly, under existing Sec.
422.562(c)(2), if a payment determination related to services furnished
by a MA organization results in no remaining financial liability for
the enrollee, including adverse decisions that fall within the plan-
directed care beneficiary protections, the decision is not subject to
the appeal requirements of part 422, subpart M.\39\ This means that
neither the enrollee nor any other party may appeal an adverse payment
decision under subpart M after an MA organization determines the
enrollee is not financially liable for more than the applicable cost-
sharing of the services for which payment was requested.\40\
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\39\ We note that a state Medicaid agency has a specific right
to appeal an adverse payment decision for a qualified Medicare
beneficiary (QMB) or other full-benefit dually eligible individual
for services in which the state Medicaid agency has made payment or
may be liable, pursuant to Sec. 405.908 and incorporated into part
422, subpart M, through Sec. 422.562(d)(1). The right for a state
Medicaid agency to appeal an adverse payment decision may exist even
when Sec. 422.562(c)(2) would otherwise preclude the right to
appeal.
\40\ We note that the provision at Sec. 422.562(c)(2) only
applies to services ``furnished by an MA organization'' which, as we
have explained, generally occurs when a contract provider, as an
agent of the MA organization, renders covered services to an MA
organization's enrollee. Section 422.562(c)(2) does not limit the
right for parties to appeal adverse payment determinations related
to services provided by a non-contract provider as non-contract
providers are not considered agents of an MA organization due to the
lack of a mutual contractual relationship. Instead, non-contract
providers may become assignees of an enrollee by formally agreeing
to waive any right to payment from the enrollee, in accordance with
Sec. 422.574(b), and then may utilize the administrative appeals
process established at Sec. Sec. 422.578 through 422.616 to appeal
adverse payment determinations in their capacity as an assignee of
the enrollee.
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CMS has historically interpreted the limitations of Sec.
422.562(c)(2) to apply to payment determinations, not coverage
decisions (that is, those addressed under Sec. 422.566(b)(3) and (4)).
From a practical perspective, a coverage decision will affect the care
an enrollee is to receive or is receiving in addition to the enrollee's
cost-sharing liability. Nevertheless, we had identified that some MA
organizations misapply the appeal limitation provision of Sec.
422.562(c)(2) to certain coverage decisions, specifically those related
to an enrollee's inpatient admission or level of care. These MA
organizations often improperly label these adverse coverage decisions
as ``contractual denials'' or ``payment decisions'' even though no
request for payment has been submitted and, oftentimes, the services
are still being rendered at the time of the MA organization's decision.
We had seen instances, for example, where an MA organization would deny
an enrollee coverage for ongoing inpatient services being received in a
contract hospital and take the position that because MA beneficiary
protection policies on plan-directed care prevent the enrollee from
being financially liable for more than their applicable cost-sharing,
when a request for payment is ultimately submitted, Sec. 422.562(c)(2)
prevents the enrollee from appealing the coverage denial. Consequently,
these enrollees were left without an avenue to appeal decisions that
directly affect their immediate medical care and may also alter the
amount of their applicable cost-sharing if the enrollee's level of care
is changed from inpatient to outpatient during their hospital stay.
Further, the application of Sec. 422.562(c)(2) in this manner may also
contravene section 1852(g)(2) of the Act which requires MA
organizations provide reconsideration of denials of enrollee coverage,
in whole or in part, upon request by the enrollee involved.
To eliminate potential confusion related to identifying when
organization determinations may not be appealable due to the lack of
enrollee financial liability, we proposed modifying Sec. 422.562(c)(2)
to clarify that the provision is only applicable to contract provider
payment disputes arising from a claim payment decision in which the
enrollee has no additional financial liability. The reference to ``no
further liability to pay'' in Sec. 422.562(c)(2) means the enrollee's
financial liability will not be affected by whether the payment
determination is upheld or overturned. In scenarios where an enrollee
may still have a balance due for their cost sharing amount, this amount
would not be considered ``further liability to pay'' if this amount
would not be affected by resolution of the payment dispute.
Specifically, we proposed to modify this paragraph to state that,
based on an MA organization's determination on a request for payment,
if an enrollee has no further liability to pay for services that were
furnished by an MA organization, a determination regarding these
services is not subject to appeal. In other words, we proposed to
clarify that this limitation is only applicable if there's been a claim
payment determination, which necessarily requires a submission of a
claim or other request for payment from a contract provider or
enrollee. Coverage decisions, whether approved or denied, will continue
to be subject to the subpart M appeals process. Under our proposal, an
enrollee would be considered potentially liable to pay for a service
until the MA organization makes a determination in response to a
request for payment, including the submission of a provider's claim for
the furnished service.
As stated in the proposed rule, the proposed clarification to Sec.
422.562(c)(2) properly reestablishes the intent to exclude contract
provider payment appeals from the subpart M administrative appeals
process when the enrollee no longer has any interest in the dispute
because the enrollee has received the services in question and has no
further liability to pay for those services. In addition, the proposed
clarification would safeguard enrollees' right to appeal adverse
coverage decisions that may affect the type, duration, or level of
services to be, or being, furnished. However, simply because a contract
provider payment decision may not implicate the subpart M
administrative appeals process, an MA organization is not discharged of
its obligation to pay its contract providers for services rendered.
Section 1852(a)(1)
[[Page 15841]]
of the Act and CMS regulations at Sec. 422.101(a) and (b) require all
MA organizations to provide coverage of, by furnishing, arranging for,
or making payment for (emphasis added), all items and services that are
covered by Part A and Part B of Medicare and that are available to
beneficiaries residing in the plan's service area. We expect MA
organizations to establish networks of providers to deliver plan-
covered benefits and pay them in accordance with terms of the contracts
established. Failure to abide by contract terms and contract disputes
can have a negative impact on providers, their ability to properly
deliver benefits, and ultimately adversely impact patients in the
health care system.
We received a number of public comments on our proposals. Our
summaries and responses to the comments we received are discussed
below:
Comment: Numerous commenters supported the proposed modification.
Many commenters expressed strong support for the proposed limitation
that Sec. 422.562(c)(2) may only be applied upon the MA organization's
adjudication of a request for payment. A commenter appreciated that the
proposal would protect MA enrollees' access to care in inpatient
settings. Another commenter believed that the right to appeal adverse
coverage decisions is an important enrollee protection that allows
providers to deliver care that meets the enrollees' needs. A commenter
supported CMS' observation in the proposed rule that MA plans often
improperly label coverage decisions as ``contractual denials'' or
``payment decisions'', which may leave those enrollees without an
avenue to appeal adverse decisions that directly affect their immediate
medical care and applicable cost-sharing. A different commenter
described the proposal as a critical protection for enrollees as the
denial of an inpatient admission or the change from an inpatient to
outpatient could have significant financial implications for the
enrollee and could effectively prevent access to post-acute care.
Response: We appreciate the commenters' support and suggestions
related to our proposed modification to Sec. 422.562(c)(2). We
appreciate the commenters recognizing that our proposal ensures
compliance with the requirements of section 1852(g) of the Act and that
enrollees are afforded sufficient due process when an MA organization
makes adverse coverage decisions that affect an enrollee's current
care, applicable cost-sharing, and/or access to additional covered
services.
Comment: Numerous commenters suggested CMS either change or add to
the proposed regulatory text at Sec. 422.562(c)(2) to explicitly state
that a ``request for payment'' must include a submission of a claim for
the services at issue from either the provider or the enrollee. The
commenters acknowledged CMS likely included claims within the phrase
``request for payment'' but strongly suggested CMS be explicit when
modifying the regulation since MA organizations have historically
misinterpreted the regulation and, therefore, may mislabel notice of
admissions or concurrent coverage requests as ``requests for payment.''
Many of the same commenters suggested CMS further modify Sec.
422.562(c)(2) to permit contract providers to appeal adverse payment
decisions and adverse post-payment review reopening decisions through
the MA administrative appeals process. These commenters believed MA
organizations strategically focus on using post-payment review to deny
contract provider claims with minimal clinical justification because
contract providers may only receive external review of the denials
through judicial action. The commenters posited that contract provider
payment denials do not concern the ``price structure for payment'' and,
therefore, would not violate the non-interference statute.
Response: In the proposed rule, we explained that existing Sec.
422.562(c)(2) establishes a limit on the applicability of the
administrative appeals process established in part 422, subpart M, by
restricting any party from appealing an organization determination when
the enrollee has no further liability to pay for services furnished by
an MA organization. We proposed a modification to Sec. 422.562(c)(2)
to ensure the regulation is only applied to contract provider payment
disputes and not to adverse pre-service or concurrent coverage
decisions. Specifically, we proposed to modify Sec. 422.562(c)(2) to
state ``[b]ased on an MA organization's determination on a request for
payment, if the enrollee has no further liability to pay for services
that were furnished by an MA organization, a determination regarding
these services is not subject to appeal.'' (Emphasis added). We
explained that because the proposed modification requires the
submission and adjudication of a request for payment, coverage
decisions (that is, MA organization determinations made before or
during the course of treatment that are not made in response to a
request for payment) and unsolicited retrospective review decisions
(further discussed in section III.A.2. of this rule) would remain
appealable by enrollees under the subpart M appeals process.
When proposing the change to Sec. 422.562(c)(2), we chose to use
the phrase ``request for payment'' to ensure the regulation applies to
payment requests submitted by contract providers and enrollees in any
format. We appreciate commenters' concerns that using the phrase
``request for payment'' could result in confusion or misinterpretation
of the types of requests that would trigger the appeal limitation of
Sec. 422.562(c)(2), especially considering that some MA organizations
have previously miscategorized coverage decisions related to an
inpatient admission or the provision of inpatient services as ``payment
denials'' when no request for payment was ever submitted. However, we
do not believe that the proposed regulation text would lead to similar
mis categorizations as the phrase ``requests for payment'' is already
frequently used in our organization determination and reconsideration
regulations.
We explained in the proposed rule that the organization
determination and reconsideration regulations of part 422, subpart M,
broadly distinguish between two categories of decisions: coverage
decisions (that is, a decision on whether the MA organization will
furnish, authorize, or arrange for an item, service, or Part B drug)
and payment decisions (that is, a decision whether to pay or deny
payment for services furnished to an enrollee). These two categories of
organization determinations have distinct requirements related to
processing timeframes (including the applicability of processing
timeframe extensions), the parties eligible to submit an organization
determination or reconsideration request, notice requirements, and
whether an MA organization must expeditiously process an organization
determination or reconsideration request upon receiving a valid
request. The existing organization determination and reconsideration
regulations at subpart M label the requirements related to coverage
decisions using the phrases ``requests for service or item'' (see
Sec. Sec. 422.568, 422.572, 422.590, and 422.619) and ``requests for a
Part B drug'' (see Sec. Sec. 422.568, 422.572, 422.590, 422.618, and
422.619) while payment decision requirements apply in the context of
``requests for payment'' (see Sec. Sec. 422.568, 422.570, 422.584,
422.590, and 422.618). We used the phrase ``request for payment'' in
proposed
[[Page 15842]]
Sec. 422.562(c)(2) in the same manner as it is used in existing
subpart M (that is, a post-service organization determination request).
While most requests for payment will be submitted on a claim form, as
we explained in the proposed rule, enrollees will often submit requests
for payment in non-claim formats. In addition, parties may at times
submit retrospective review requests, which are organization
determination requests submitted after the services at issue have been
furnished and the only matter for an MA organization to decide is
whether to make or deny payment. Therefore, we decline the commenters'
suggestion to limit the applicability of Sec. 422.562(c)(2) to when a
provider submits a claim for payment.
We are, however, finalizing a modified version of our proposal
that, as some commenters suggested, conditions the applicability of
Sec. 422.562(c)(2) on the submission and adjudication of a contract
provider's request for payment. As we previously discussed, our
proposal intended to include requests for payment submitted by contract
providers and enrollees. We do not believe it necessary to include an
enrollee's request for payment within the scope of this provision as
the regulation is only applicable to services performed by contract
providers who are typically obligated, under their contractual
arrangements with MA plans, to submit a claim for payment for services
furnished to an enrollee. We also believe this clarification will
reinforce in plain language that non-contract provider requests for
payment do not trigger the application of Sec. 422.562(c)(2). We are
therefore finalizing that the applicability of Sec. 422.562(c)(2) is
conditioned on the submission and adjudication of a contract provider's
request for payment.
In addition, we are also replacing the proposed text in Sec.
422.562(c)(2) that read ``a determination regarding these services is
not subject to appeal'' with more precise language in the final rule to
clarify that the limitation on appeal rights is only applicable to the
adjudicated payment determination. The language of Sec. 422.562(c)(2)
that we are finalizing in this rule states, ``If a contract provider's
request for payment has been adjudicated and the enrollee is determined
to have no further liability to pay for the services furnished by the
MA organization, the claim payment determination is not subject to the
appeal process in this subpart.'' The proposed text could be
interpreted to suggest that any determination related to an adjudicated
request for payment where there is no further enrollee financial
liability would not be appealable. This would mean that a pending
coverage appeal submitted by the enrollee would become a non-appealable
determination after a contract provider's payment request is
adjudicated. However, as we explained in our proposed rule, and
discussed further in this final rule, an enrollee's interest in a
denied inpatient admission or reduction in level of care extends beyond
the potential cost-sharing implications, such as determining access to
other services in which coverage is conditioned on an approved
inpatient stay. This change between the proposed and final regulation
text at Sec. 422.562(c)(2) is necessary to prevent an illogical result
where a contract provider could inadvertently foreclose an enrollee's
right to appeal (or continue to appeal) an adverse coverage decision by
merely submitting a request for payment that is then adjudicated by the
MA organization.
We are making these changes to clarify the intended limits of the
applicability of the MA administrative appeal process of part 422,
subpart M. More specifically, that enrollees always maintain the right
to appeal an adverse coverage decision, while, pursuant to our long-
held interpretation of the non-interference provision at section
1854(a)(6)(B)(iii) of the Act, contract provider payment disputes are
to be excluded from the MA appeals process when an enrollee no longer
has any interest in the dispute.
Comment: A couple of commenters expressed opposition to the
proposed modification to Sec. 422.562(c)(2), stating that the proposal
would insert enrollees into contract provider and MA organization
payment disputes. A commenter stated the proposed change was
unnecessary since MA organizations, when making adverse coverage
decisions related to inpatient stays, are already holding enrollees
financially harmless and also afford contract providers the opportunity
to dispute the adverse decision through internal resolution processes.
Additionally, the commenter posited that proposed changes would require
MA organizations to issue more denial notices and process more appeals.
Another commenter suggested the proposed modification to Sec.
422.562(c)(2) would introduce confusion into the MA appeal process and
would be potentially inconsistent with other statutory and regulatory
requirements. The commenter explained that the proposal would create
situations where an enrollee's appeal of a concurrent coverage denial
could be adjudicated after the enrollee ceased receiving the services
at issue and that the proposal failed to provide clear guidance on how
MA organizations should address these status changes during the appeal
process. The commenter requested clarification on whether appeal
requests received after the completion of services should be treated as
requests for payment under the proposal.
The commenter also suggested that the adjudication of appeals after
an enrollee has ceased receiving the services at issue would be
inconsistent with section 1852(g)(5) of the Act, which limits an MA
enrollee's access to the administrative appeals process to
circumstances where the enrollee is ``dissatisfied by reason of the
enrollee's failure to receive any health service to which the enrollee
believes the enrollee is entitled and at no greater charge than the
enrollee believes the enrollee is required to pay.'' The commenter
stated that merely because an organization determination was initially
made on a pre-service or concurrent basis does not ``lock-in'' an
appeal of that decision as a coverage dispute throughout the pendency
of the appeal. The commenter concluded that an enrollee must,
therefore, through each phase of appeal, have a live dispute related to
either: (1) an enrollee's entitlement to receive services on an ongoing
basis or in the future or (2) a charge incurred by an enrollee that is
greater than what the enrollee believes they should be required to pay.
Finally, the same commenter suggested the proposal could result in
the abuse of the appeal process by contract providers appealing a
coverage denial to advance their own interests and to the detriment of
the enrollee. The commenter provided a hypothetical example of a
contract provider being appointed the enrollee's representative upon
admission and, after the MA organization denies inpatient coverage,
refraining from submitting a claim so it could pursue the enrollee's
appeal of the coverage determination.
Response: We disagree that our proposal improperly inserts
enrollees into disputes that merely concern contract provider payment
amounts. We also disagree that the proposal is unnecessary even when MA
organizations hold enrollees harmless from financial liability and
allow providers to utilize internal dispute resolution processes. As we
discussed in the proposed rule, an MA organization decision to deny an
enrollee's inpatient admission to a hospital or to reduce an enrollee's
level of care from inpatient to outpatient adversely affects more than
how much the contract provider is paid, if
[[Page 15843]]
anything, for the services being (or about to be) rendered. In fact,
such decisions also adversely impact an enrollee's right to receive
services at the level of care they believe they require. In addition,
as we explained in the proposed rule, adverse coverage decisions on
inpatient hospital services may also adversely impact an enrollee's
cost-sharing amounts depending on the duration of the hospital stay,
the items, services, and Part B drugs provided during the hospital
stay, and the enrollee's cost-sharing responsibilities. Further,
adverse coverage decisions on an enrollee's inpatient hospital services
can negatively affect the types of covered services the enrollee could
receive in the hospital and the types of services that are available
immediately after the enrollee is released from the hospital. For
example, many MA organizations condition coverage for certain services
on whether the enrollee is leaving or was recently in an inpatient
hospital stay--this could include covered transportation from the
hospital, personal home care, meal benefits, and/or post-acute care
coverage. If an enrollee's admission is denied or is changed to an
outpatient stay, then these services would be unavailable to the
enrollee that otherwise could be covered if their inpatient admission
was approved or not reduced. We believe that the failure to allow an
enrollee to appeal the denial of inpatient services, despite the
resulting impacts described previously, would deprive enrollees of
access to benefits without adequate due process.
We agree with the first commenter that, if finalized, our proposal
would result in an increase in delivered enrollee notices (as MA rules
require MA organizations to timely deliver enrollees notice of adverse
organization determinations) and MA organizations would have to process
more appeals (as some enrollees currently being denied appeal access
would file an appeal if given the opportunity). We acknowledged that,
collectively, our proposed provisions would likely modestly increase
required notices and appeal adjudications in the Collection of
Information (COI) section of the proposed rule. We also provided
estimates in the COI section of the burden associated with our proposed
provisions. We note that the commenter did not dispute our proposed
estimates.
We agree with the second commenter that the proposed text to Sec.
422.562(c)(2) could have confused MA organizations as to how to treat
enrollee appeals of a coverage denial after the MA organization
adjudicated a request for payment and determined the enrollee had no
further liability for the services. As we explained previously, we are
finalizing a modified version of the proposed text that better defines
the limits to the applicability of Sec. 422.562(c)(2) and how the
provision will affect, or not affect, related coverage appeals.
Specifically, we are finalizing the regulation to state ``[i]f a
contract provider's request for payment has been adjudicated and the
enrollee is determined to have no further liability to pay for the
services furnished by the MA organization, the claim payment
determination is not subject to the appeal process in this subpart.''
We believe this modification appropriately balances the rights of
enrollees to appeal adverse coverage decisions, while also explicitly
excluding all contract provider payment disputes from the
administrative appeal processes of subpart M. This change should
resolve any potential confusion the commenter identified. Simply put,
the modified text for Sec. 422.562(c)(2) would not implicate an
enrollee appeal of an adverse coverage decision because the provision
is only applicable to the claim payment decision.
We strongly disagree with the comment stating the proposal is
inconsistent with applicable statute. As explained in the proposed
rule, section 1852(g)(2) of the Act establishes that an MA organization
must provide for reconsideration (that is, a first level appeal) of a
determination that denies coverage, in whole or in part, upon an
enrollee's request. Section 1852(g)(4) of the Act creates a second
level of administrative review by providing that an Independent Review
Entity will adjudicate first level reconsiderations that affirm a
denial of coverage, in whole or in part. Notably, the statute cited by
the commenter, section 1852(g)(5) of the Act, establishes the
requirements for an enrollee to appeal an adverse second level
reconsideration decision to an Administrative Law Judge (ALJ) (third
level appeal), the Medicare Appeals Council (fourth level appeal), and
finally to Federal district court, when certain ``amount-in-
controversy'' thresholds are met. The MA organization determination and
administrative appeals process has long been implemented by regulation
at part 422, subpart M.
Section 1852(g)(5) of the Act plainly does not apply to all phases
of the administrative appeals process. It is not correct to apply a
portion of the statute that establishes the third and fourth level
appeals and availability of judicial review as a necessary requirement
for the entire appeals process. Instead, it is section 1852(g)(2) and
(4) that establish the parameters necessary to appeal an adverse
organization determination to the first and second level. In any event,
we disagree with the commenter's belief that an MA organization's
denial of inpatient hospital services would not meet the requirements
of section 1852(g)(5) of the Act if the enrollee is no longer actively
receiving services. As discussed in further detail below, a denial of
an inpatient admission or the provision of inpatient services prevents
an enrollee from receiving covered services at the level of care to
which the enrollee believes they are entitled, could increase the
enrollee's applicable cost-sharing amounts, and precludes the
enrollee's access to other coverable services which require an
inpatient hospital stay as a condition of coverage. CMS has
consistently explained that an enrollee does not have to explicitly
state that they believe they are entitled to receive a particular
service in order to submit an organization determination request or
appeal. Instead, we impute the understanding that an enrollee believes
they are entitled to receive the service at issue based on the
enrollee's act of requesting an organization determination or appeal.
Therefore, because a denial of an inpatient admission or the provision
of inpatient services prevents the enrollee from receiving additional
coverage for inpatient hospital services and forecloses their access to
additional services that require an inpatient hospital stay, an
enrollee for whom inpatient hospital services have been denied has met
the threshold requirement of section 1852(g)(5) of the Act that the
enrollee has ``fail[ed] to receive any health service to which the
enrollee believes the enrollee is entitled. . . .''
The commenter stated that the proposed policy fails to address
changes in an enrollee's ``status'' during the appeals process and that
``merely because an organization determination was initially made on a
pre-service or concurrent basis does not `lock in' its appeal status as
a coverage dispute throughout the pendency of the appeal.'' The
commenter provided an example in which an MA organization makes an
adverse coverage decision before or during the provision of services,
but the services are completed at some point during the appeals
process.
We disagree. Section 1852(g)(2) of the Act and Sec. 422.580
provide MA enrollees with the right to request reconsideration of
adverse organization determinations when there is a denial of coverage,
in whole or in part. There is no statutory or regulatory requirement
that limits an enrollee's right to appeal to the
[[Page 15844]]
timeframe in which services are still being rendered. Instead, once a
valid reconsideration request is submitted to an MA organization, it
must either dismiss the request (under one of the stated rationales at
Sec. 422.582(f)) or issue a substantive decision. Further, there is no
statutory or regulatory mechanism by which plans may convert a valid
appeal of an adverse coverage decision to something else. Therefore,
despite commenter's suggestion otherwise, a timely, valid appeal of an
adverse coverage decision is to be fully adjudicated by the plan
regardless of whether the appeal was submitted and/or the appeal is
still being adjudicated after the services at issue have ceased being
rendered. We note that similar policies exist for other types of
coverage denials. For example, after an MA organization determines that
covered inpatient care is no longer necessary, the enrollee may file an
expedited appeal of the discharge decision to the QIO. If the QIO
upholds the MA organization's decision, and the enrollee has left the
hospital, in accordance with Sec. 422.622(g)(2), the enrollee may
continue their appeal to the ALJ, Departmental Appeals Board (DAB), and
ultimately Federal court (if other conditions are met). In these
circumstances, enrollees are provided an explicit right to continue
pursuing an appeal regardless of whether they have ceased receiving
services or how long the appeal process takes.
Beyond the fact that existing authority does not require or permit
the termination of an appeal because the services at issue are no
longer being provided, we do not believe that it would be prudent to
enact such a policy. If an enrollee could only appeal a coverage denial
while receiving services, then we would simultaneously disincentivize
MA organizations from speedily processing these types of appeals while
also incentivizing enrollees to take substantial financial risk by
continuing to receive non-covered services just to maintain an appeal.
In plain terms, if we were to adopt the commenter's approach, enrollees
would not have a meaningful avenue to appeal coverage denials related
to inpatient admissions or the provision of inpatient services. We do
not believe such a policy would align with section 1852(g)(2) of the
Act, which requires MA organizations to provide reconsideration of
denials of enrollee coverage, in whole or in part, upon request by the
enrollee involved.
Finally, we do not believe that a significant number of contract
providers will intentionally abuse the MA appeal process to advance
their own interests to the detriment of the enrollee. A physician,
acting on behalf of the enrollee, may request an expedited
reconsideration of an adverse coverage decision pursuant to Sec.
422.578 or a standard reconsideration, if treating the enrollee,
pursuant to Sec. 422.582. Alternatively, any individual, including a
contract physician, may be appointed by an enrollee as their
representative to pursue an appeal on the enrollee's behalf. We have
long maintained that an enrollee will welcome their physician's
expertise and willingness to pursue an appeal of an adverse coverage
decision on their behalf. In fact, as we explained in the proposed
rule, we believe an enrollee's physician is often in the best position
to receive, explain, and timely act upon an adverse organization
decision on behalf of an enrollee. This may be truer for enrollees
involved in a hospital stay due to the complex medical criteria at
issue and the fact that the enrollee's condition may not afford an
opportunity to timely and adequately pursue their appeal. In addition,
we do not believe appeals of the denial of inpatient services would
offer physicians more opportunity to abuse the appeal process than in
any other instance. Many times, when a physician files an appeal for
the enrollee, both the enrollee and the physician stand to benefit from
a favorable determination. For example, a physician that successfully
appeals a prior authorization denial has ensured that they will receive
payment for the services to be rendered, while the enrollee has ensured
coverage for their necessary care. We do not believe that merely
because a physician potentially stands to benefit from a successful
appeal, in addition to the enrollee, that there is a likelihood of
abuse significant enough to not finalize this policy. Nevertheless, we
will monitor feedback from the appeals process and will consider future
rulemaking if the changes to Sec. 422.562(c)(2) are being implemented
in a manner that is inconsistent with our stated intent to exclude
contract provider payment disputes from the MA administrative appeals
process.
Comment: A couple commenters requested CMS clarify the meaning of
``no further liability to pay'' as used in the proposed change to Sec.
422.562(c)(2). More specifically, a commenter questioned whether, in
the context of an appeal of an inpatient admission denial, the phrase
meant that the copay amount for the inpatient stay must match the copay
amount for observation payment status. Another commenter recommended
CMS clarify the phrase refers only to circumstances where an appeal
overturn would result in less financial responsibility.
Response: In the preamble discussion of the proposed rule, we
stated that we interpret existing Sec. 422.562(c)(2) to restrict any
party from appealing an adverse payment decision under the appeal
processes of subpart M after an MA organization determines the enrollee
is not financially liable for more than the applicable cost-sharing of
the services for which payment was requested. We further explained that
``no further liability to pay'' in Sec. 422.562(c)(2) means the
enrollee's financial liability will not be affected by whether the
payment determination is upheld or overturned. We further stated that
merely because the enrollee has a balance due for their cost-sharing
amount does not mean that the enrollee has further liability to pay
when the amount would not be affected by the resolution of the payment
dispute. We agree with commenters that these two statements, while
similar, are inconsistent.
We, therefore, clarify that ``no further liability to pay'' in
Sec. 422.562(c)(2) means the MA organization's determination on the
enrollee's financial liability amount will not decrease whether the
payment determination is upheld or overturned. In scenarios where an
enrollee may still have a balance due for their cost sharing amount,
this amount would not be considered ``further liability to pay'' if
this amount would not decrease regardless of the appeal outcome. We
thank the commenters for identifying the need for clarification on this
point.
Comment: Multiple commenters requested CMS to confirm that,
pursuant to existing Sec. 422.568(c)(2), enrollees already possessed
the right to appeal inpatient admission and concurrent review denials
before the proposed rule.
Response: Commenters are correct in their understanding. As we
explained in the proposed rule, CMS has historically interpreted
existing Sec. 422.562(c)(2) to limit enrollees right to appeal adverse
payment decisions from contract providers. In addition, we do not
believe the regulation applies to coverage decisions that are made pre-
service or concurrent to services being rendered. As explained, we
proposed the modification to Sec. 422.562(c)(2) in order eliminate
potential confusion and create uniformity across the MA program as we
understood many MA organizations have been misapplying the regulation
and improperly denying enrollees appeal access for adverse coverage
decisions.
[[Page 15845]]
Comment: A commenter requested CMS confirm that the proposed
modification to Sec. 422.562(c)(2) does not restrict a non-contract
provider from appealing a partial payment denial, such as downcoding a
billed diagnosis related group (DRG) code, even when the enrollee does
not have cost-sharing implications.
Response: We confirm that our modification to Sec. 422.562(c)(2)
does not alter non-contract provider appeal rights. Both the existing
Sec. 422.562(c)(2) and the revised version of Sec. 422.562(c)(2) we
are finalizing in this rule only apply to services ``furnished by an MA
organization'' which, as we have explained in our proposed rule,
generally occurs when a contract provider renders covered services to
an MA organization's enrollee on behalf of the MA organization. Neither
existing Sec. 422.562(c)(2), nor the revised version being finalized
in this rule, limit the right for parties to appeal adverse payment
determinations related to services provided by a non-contract provider
as such services are not considered to be ``furnished by an MA
organization.'' Thus, a non-contract provider may utilize the
administrative appeals process established at Sec. Sec. 422.578
through 422.616 to appeal an adverse payment decision by becoming an
assignee of an enrollee once the non-contract provider formally agrees
to waive any right to payment from the enrollee, in accordance with
Sec. 422.574(b). In accordance with Sec. 422.566(b), an MA
organization makes an adverse organization determination if it fully or
partially denies payment for billed services. This includes, but is not
limited to, when an MA organization, either on initial review or upon
reopening, denies a DRG code or pays a different code altogether,
bundles services which were separately billed, or makes payment at a
lower level of service than billed.
Comment: Several commenters requested CMS reinterpret the phrase
``furnished by an MA organization'' in Sec. 422.562(c)(2) in a way to
ensure MA organizations pay contract providers for services performed
under section 1852(d) of the Act and Sec. 422.113(b).
Response: Pursuant to our long-held interpretation of the non-
interference provision at section 1854(a)(6)(B)(iii) of the Act,
contract provider payment disputes are to be excluded from the MA
appeals process when an enrollee no longer has any interest in the
dispute. The primary purpose of our proposed modification to Sec.
422.562(c)(2) is to maintain the exclusion of contract provider claims
from the administrative appeals process while limiting confusion to
avoid the improper processing of valid enrollee appeals. Therefore, to
adopt such an interpretation would be antithetical to our proposal's
primary purpose.
Comment: A commenter recommended CMS provide explicit guidance on
whether MA organizations should dismiss as invalid any appeal request
that implicates Sec. 422.562(c)(2). The same commenter also
recommended CMS provide instructions to the Part C independent review
entity to ensure proper processing by appeals forwarded by MA
organizations for adjudication.
Response: We appreciate the recommendation and plan to update
related subregulatory guidance after finalization of this rule.
Guidance related to the MA organization determination and appeals
processes is published in the Parts C & D Enrollee Grievances,
Organization/Coverage Determinations, and Appeals Guidance, available
for download at https://www.cms.gov/medicare/appeals-grievances/managed-care. Pursuant to standard operating procedures, we will also
update the Part C IRE on this rule and the implications on second level
reconsiderations and dismissed first-level reconsideration requests.
Comment: A commenter questioned whether CMS would require updates
be made to the letter which would indicate services rendered would not
be subject to appeal if the enrollee has no further liability to pay.
Response: We do not believe it would be necessary to update the
standardized denial notice, the Notice of Denial of Medical Coverage or
Payment (Form CMS-10003-NDMCP), also known as the Integrated Denial
Notice (IDN). Our proposed modification to Sec. 422.562(c)(2)
clarifies that the provision would only limit an enrollee's right to
appeal an adverse decision when the MA organization determines the
enrollee has no further financial liability after adjudicating a
contract provider claim. Because the provision only applies to contract
provider claim payment decisions, pursuant to Sec. 422.111(k), the
enrollee would receive notice of the payment decision through an
explanation of benefits--not the IDN. MA organizations should not need
to edit their EOB templates, as MA organizations currently process
contract provider payment decisions that do not provide enrollee appeal
rights, in accordance with existing Sec. 422.562(c)(2).
Comment: Multiple commenters provided feedback that was out of
scope with the proposed provisions. Several commenters questioned the
extent of which MA organizations may establish and enforce, through
payment denials, prior authorization requirements. Specifically, the
commenters requested CMS confirm whether MA organizations may deny
otherwise coverable, medically necessary services as ``technical
denials'' and whether such actions comply with the prior authorization
protections codified through CY 2024 final rule (88 FR 22120, April 12,
2023).
Multiple commenters requested CMS reconsider the incentive
structure for MA organizations in order to focus on improving enrollee
health rather than focusing on cost savings through administrative
denials. The commenters noted that fair adjudication is difficult and
costly to obtain.
Response: We thank the commenters for their suggestions and
perspective. However, these comments are outside the scope of our
proposed rule. We may consider these comments when undertaking future
rulemaking.
Upon consideration of the public comments received, we are
finalizing our proposed revisions to Sec. 422.562(c)(2) with
modifications. Specifically, we are finalizing Sec. 422.562(c)(2) to
state that if a contract provider's request for payment has been
adjudicated and the enrollee is determined to have no further liability
to pay for the services furnished by the MA organization, the claim
payment determination is not subject to the appeal process in this
subpart.
2. Clarifying the Definition of an Organization Determination To
Enhance Enrollee Protections in Inpatient Settings (Sec. Sec. 422.138
and 422.566)
Section 1852(g)(1)(A) of the Act requires MA organizations to have
a procedure for making determinations regarding whether an enrollee is
entitled to receive health services or payment under the program. In
accordance with section 1852(g)(1)(A) of the Act, Sec. Sec. 422.566
through 422.572 establish the requirements related to organization
determinations. Existing Sec. 422.566(b) defines an organization
determination as any determination made by an MA organization that
falls within a prescribed set of discrete actions. These include, at
paragraph (b)(3), an ``MA organization's refusal to provide or pay for
services, in whole or in part, including the type or level of services,
that the enrollee believes should be furnished or arranged for by the
MA organization'' and, at paragraph (b)(4), the ``[r]eduction, or
premature discontinuation, of a previously authorized ongoing course of
treatment,'' among several others. Taken
[[Page 15846]]
collectively, this means an organization determination may be made
prior to the receipt of services (for example, prior authorization),
after the receipt of services (for example, payment requests), or
during receipt of services (for example, continuation or termination of
services) the enrollee receives from either contract or non-contract
providers.
An ``organization determination,'' as defined by Sec. 422.566, is
a decision ``regarding the benefits an enrollee is entitled to receive
under an MA plan . . . and the amount, if any, that the enrollee is
required to pay for a health services'' to include, among other
actions, ``the MA organization's refusal to provide or pay for
services, in whole or in part, including the type or level of services,
that the enrollee believes should be furnished or arranged for by the
MA organization.'' When an MA organization makes an adverse
organization determination (for example, denying coverage for a
service), it must adhere to certain requirements that include providing
notice of the decision to the enrollee in a format prescribed by CMS
(see Sec. 422.568(e)), within designated timeframes (see Sec. Sec.
422.568 and 422.572), and, if the adverse decision was based on medical
necessity, ensuring the decision was reviewed by a physician or other
appropriate heath care professional with expertise in the field of
medicine appropriate for the services at issue (see Sec. 422.566(d)).
In accordance with Sec. 422.576, an ``organization determination is
binding on all parties unless it is reconsidered under Sec. Sec.
422.578 through 422.596 or is reopened and revised under Sec.
422.616.'' An enrollee or physician who is acting on behalf of the
enrollee (regardless of their affiliation with an MA organization) may
request an expedited reconsideration of an adverse organization
determination concerning the type or level of services that the
enrollee believes they should receive (see Sec. Sec. 422.578 and
422.584(a)). However, pursuant to Sec. 422.562(c)(2), if an ``enrollee
has no further liability to pay for services that were furnished by the
MAO, a determination regarding these services is not subject to
appeal.''
Historically, we have interpreted the definition of an organization
determination to include when an MA organization makes a coverage
decision on the appropriateness of an inpatient admission, or the
appropriateness of inpatient services (that is, a level of care
determination), contemporaneously with an enrollee's receipt of the
services at issue. This would be true whether the MA organization
ultimately approved the enrollee's admission to a facility, determined
that the enrollee's level of care in the same facility should be
reduced, or determined that the enrollee should be discharged (see
Sec. Sec. 422.620 through 422.624). Accordingly, these decisions would
have to comply with all applicable notice and appeal requirements for
organization determinations and would be binding on all parties unless
they are reconsidered under Sec. Sec. 422.578 through 422.596 or are
reopened and revised under Sec. 422.616.
We acknowledge that many MA organizations understand these
decisions are organization determinations subject to the existing rules
in subpart M including, but not limited to, timely notice of the
decision. However, through routine audits, feedback from the provider
community, and discussions with MA organizations, CMS identified
circumstances where some MA organizations have misinterpreted the
organization determination provisions to exclude decisions that rescind
a previously authorized inpatient admission, deny coverage for
inpatient services, or downgrade an enrollee's hospital coverage from
inpatient to outpatient (often either simultaneously denying inpatient
coverage while approving coverage for outpatient observation services
or instructing the provider to only bill for outpatient services when
submitting a subsequent claim), when the decision is made concurrently
to the enrollee receiving such services. These types of decisions most
often occur while enrollees are receiving inpatient services in an in-
network hospital and are at times referred to as ``concurrent review
decisions,'' ``level of care determinations,'' ``clinical utilization
review decisions,'' or ``inpatient authorization denials.'' For the
sake of clarity and consistency in describing these types of decisions,
we will use the term ``concurrent review'' for purposes of this
rulemaking.
We understand MA organizations conduct concurrent review on
hospitalizations and other services that require review for continued
care, such as long-term care stays in skilled nursing facilities
(SNFs), long-term acute care hospitals (LTACHs), or inpatient
rehabilitation facilities (IRFs), home health agency (HHA) services,
partial hospitalizations, or intensive outpatient programs. Such review
includes utilization management activities that occur during inpatient
level care, post-acute care, or an ongoing outpatient course of
treatment. In general, the concurrent review process includes obtaining
necessary clinical information from the treating physician and other
providers to determine medical necessity based on the clinical status
of the enrollee and applicable Medicare coverage criteria. Concurrent
review involves the evaluation of the appropriateness of the ongoing
level of care, including decisions related to the extension of
previously approved care.
We offer the following example to illustrate a common scenario we
have seen, although we note that certain details may vary depending on
the MA organization making the decision. An enrollee will present to an
in-network hospital and the treating physician will order the enrollee
admitted to an inpatient status. During the admission process, the
hospital will provide the enrollee's MA organization with a Notice of
Admission, in accordance with the contract between the hospital and MA
organization, that alerts the MA organization of the admission but (in
most circumstances) does not request approval for the admission. After
receiving the Notice of Admission, the MA organization will monitor the
enrollee's condition by reviewing the medical documentation on its own
accord and, when applicable, will notify the hospital that it has made
an adverse concurrent review decision related to the enrollee's
inpatient admission or receipt of inpatient services on the basis that
the enrollee's condition does not meet certain inpatient coverage
criteria. Accordingly, if the hospital submits an inpatient claim for
the services, whenever it ultimately submits a request for payment, the
MA organization will automatically deny payment for inpatient services
based on the concurrent review decision. In its concurrent review
decision, the MA organization may either approve outpatient observation
services for the enrollee or suggest that the hospital bill the entire
hospital stay as outpatient services. If the treating physician
disagrees with the decision, the physician may engage the MA
organization in a peer-to-peer discussion with a plan physician or may
appeal using the plan's internal dispute resolution processes.\41\ It
is important to note that in many circumstances the MA organization
does not inform the enrollee of the concurrent review determination and
the enrollee is not afforded the opportunity to appeal the decision (or
have an appeal submitted
[[Page 15847]]
on their behalf) as required. The result of the concurrent review is
the hospital may either continue to provide non-covered inpatient
services or it may reclassify the enrollee's hospital status from
inpatient to outpatient. Many times, the enrollee does not know a
change in status has occurred until they are required to pay the
outpatient deductible and applicable cost-sharing.\42\
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\41\ We have received conflicting information on the nature of
peer-to-peer discussions from MA organizations. Some describe the
process as solely educational in nature and that it has no bearing
on the prior decision. Other MA organizations appear to use the
discussion either to supplement or as a part of a contract
provider's appeal.
\42\ We note that because an adverse concurrent review decision
is a denial of inpatient hospital coverage, such a decision could
also affect an enrollee's eligibility for covered post-hospital
extended care services furnished in a SNF. Section 1861(i) of the
Act requires Medicare beneficiaries receive at least 3 consecutive
days in a covered inpatient hospital stay within the preceding 30
calendar days in order to qualify for covered skilled SNF care.
While we understand that most, if not all, MA organizations
currently waive this coverage requirement, they are not required to
continue to do so in future plan years. Therefore, if an MA
organization that does not waive the 3-day inpatient hospital stay
requirement makes an adverse concurrent review decision, the
enrollee may not accrue the 3-day inpatient hospital stay necessary
to receive covered skilled SNF care they otherwise could receive. A
similar impediment to covered skilled SNF care could occur for
enrollees that have opted into Traditional Medicare for the
following year when an adverse concurrent review is made in the last
30 days of the plan year.
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We have seen several different justifications for why an MA
organization may not process a determination to deny an enrollee's
inpatient admission, or deny coverage for inpatient services, made
concurrently to the provision of such services under the requirements
for other organization determinations. Some MA organizations have
posited that these concurrent reviews are outside the definition of an
organization determination because the timing of the decision is made
during an ongoing course of treatment. These MA organizations appear to
mistakenly believe that the existing definition of an organization
determination is limited to decisions made before services begin and
payment decisions that are made after a claim is submitted, and thus, a
decision on inpatient coverage made concurrent to the services being
rendered does not meet the definition of an organization determination
or need to comply with the applicable organization determination notice
and appeal right requirements.
We have also seen other situations where an MA organization
appropriately considers the downgrading of an enrollee from receiving
inpatient to outpatient services as an organization determination and
yet will still fail to provide proper notice of the decision to the
enrollee, process a timely appeal request, or both. We have received
many complaints from the provider community that when the enrollee's
treating physician requests an expedited reconsideration of an adverse
concurrent review decision, pursuant to Sec. 422.578, the MA
organization will not process the appeal for a myriad of reasons. Some
MA organizations have concluded that a level of care denial is not an
appealable subject matter, while others believe reconsideration
requests may not be processed while an enrollee is receiving the
services at issue. The most common reason cited by plans for not
processing appeals of adverse concurrent review decisions is the
erroneous view that concurrent reviews made while an enrollee is being
treated in an in-network hospital are ``contractual denials'' that are
ineligible for review under the administrative appeals process of part
422, subpart M. This line of reasoning relates to the provision at
Sec. 422.562(c)(2) which states that ``[i]f an enrollee has no further
liability to pay for services that were furnished by an MA
organization, a determination regarding these services is not subject
to appeal.'' MA organizations reason that because contract providers
are contractually restricted from billing the enrollee for denied
services and must accept the contractual payment as ``payment in
full,'' coupled with the enrollee protections against financial
liability at Sec. Sec. 422.504(g) and 422.562(c)(2), a concurrent
review decision will ultimately result in the enrollee having no
further financial liability for the inpatient services being rendered
so there is no right to appeal the decision. As we have explained in
section III.A.1. of this rule, this interpretation overlooks the fact
that the MA organization has made an adverse decision on the
authorization or provision of inpatient services which not only impacts
the type of care the enrollee receives but also directly impacts the
amount of deductible and cost-sharing for which the enrollee is liable,
when a request for payment is eventually submitted.
CMS does not agree with the previous interpretations of the
existing organization determination and appeal regulations of part 422,
subpart M. In the past, we have addressed these types of
misinterpretations and non-compliance by MA organizations on a case-by-
case basis as those issues were presented to us. However, we realize
that the inconsistent application or misapplication of MA policies
governing concurrent review is becoming increasingly varied and
widespread across the industry, creating substantial confusion to MA
organizations and, at times, variable outcomes to providers and
enrollees. In addition, we recognize that the direct consequence of the
misapplication of MA policies is that many enrollees do not receive
notice of a decision to downgrade their level of care from inpatient to
outpatient, nor are they given opportunity to appeal such decisions as
provided under Sec. 422.562(b)(4) (the right to a reconsideration of
an adverse organization determination by an MAO). After considering
other options available to CMS to clarify this matter, including
increasing outreach and updating non-regulatory guidance, we decided
the most appropriate and effective manner to address this issue is to
clarify and strengthen the existing requirements related to
organization determinations.
Therefore, we, proposed to clarify that decisions made based on the
review of an enrollee's need for continued care, commonly known as
concurrent review, are organization determinations under the rules at
Sec. 422.566(b). Specifically, we proposed to revise Sec.
422.566(b)(3) to clarify that a decision by an MA organization made
pre-service, post-service, or concurrent with the enrollee's receipt of
services in an inpatient or outpatient setting is an organization
determination subject to the rules in part 422, subpart M, which
includes providing the enrollee (and the provider, as appropriate) with
timely notice and applicable appeal rights. We noted that while the
primary focus of the previous discussion relates to the denial of
inpatient hospital coverage as a result of an MA organization's
concurrent review, our proposed clarification to the definition of an
organization determination is inclusive of all other types of services.
In addition to adding a reference to decisions made concurrently to
the enrollee's receipt of services, we also proposed to add to Sec.
422.566(b)(3) a reference regarding applicable decisions made prior to
the enrollee's receipt of services and after the services have been
completed. Similar to our previous discussion related to concurrent
review, we proposed these additions to clarify that the subject-matter
of an MA organization decision dictates whether it has made an
organization determination, regardless of when in the continuum of an
enrollee seeking and receiving covered medical care the decision is
made. We used the term pre-service in proposed Sec. 422.566(b)(3) to
refer to a request for an MA organization to approve coverage for a
service before the service is received by the enrollee. An enrollee,
enrollee's representative, or
[[Page 15848]]
a provider on behalf of an enrollee, has the right to request the
enrollee's MA organization approve an item, service, or Part B drug in
circumstances where there is a question whether the item, service, or
Part B drug will be covered. This right to receive prior approval
applies to services for which an MA organization may require prior
authorization as a condition for coverage as well as services for which
there is no prior authorization requirement. When an MA organization
receives a request for an item, service, or Part B drug, it must
process the request according to the timeframes at Sec. 422.568(b) or
Sec. 422.572(a).\43\
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\43\ Beginning January 1, 2026, a request for a service or item
that is subject to an MA organization's prior authorization
requirement must be processed within 7 calendar days. The timeframe
for processing requests for items and services not subject to an MA
organization's prior authorization requirement remains 14 calendar
days. See the February 8, 2024 final rule titled ``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'' (89 FR 8976).
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The reference to post-service in our proposed addition to Sec.
422.566(b)(3) refers to applicable decisions that have been requested
(or made by an MA organization in the absence of an organization
determination request) after the enrollee has finished receiving the
services at issue. The vast majority of post-service organization
determinations are made in response to receiving a claim or other
request for payment from an enrollee or provider. We are, however,
aware that some MA organizations are denying payment for services
before receiving a claim or other request for payment. More
specifically, we have seen MA organizations decide on the
appropriateness of an enrollee's inpatient admission, or the
appropriateness of inpatient services, after an enrollee has been
discharged from the hospital but before a request for payment has been
received. These decisions have been referred to as ``retrospective
reviews'' and, similar to our previous discussion on concurrent review
decisions, many MA organizations making these decisions fail to comply
with all applicable organization determination requirements, including
providing appropriate notice and appeal rights to enrollees.
As a point of clarity, we regularly observe MA organizations making
retrospective organization determinations when performing a post-
payment review (a review that occurs after payment is made on the
selected claim in order to determine whether the initial determination
for payment was appropriate (see definition at Sec. 405.902)).\44\ The
retrospective review decisions we are discussing here, however, are not
reviews of an MA organization's prior payment decisions but are initial
determinations impacting payment for inpatient hospital services that
are made after the enrollee has been released from a hospitalization,
but before a request for payment is received.
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\44\ Post-payment reviews are performed under the reopening
rules at Sec. Sec. 405.980 through 405.986 and 422.616 (see Sec.
405.929). Pursuant to Sec. 422.616(d), when a payment determination
is revised on reopening (including through post-payment review), any
party may file an appeal of the revised determination. However,
similar to initial payment determinations, when an MA organization
revises a contract provider payment determination that results in no
additional financial liability or cost-sharing for the enrollee,
Sec. 422.562(c)(2) precludes any party from appealing the revised
payment determination under the administrative appeals processes of
part 422, subpart M. Contract providers may appeal adverse payment
determination revisions under the terms of the contract between the
provider and the MA organization.
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We have primarily observed MA organizations make retrospective
review decisions on inpatient hospital services in a similar fashion as
concurrent review. For example, an enrollee may be admitted as an
inpatient in a hospital contracted with the enrollee's MA organization.
During the hospital stay (or shortly thereafter), the MA organization
will become aware of the inpatient admission, generally upon the
hospital sending the MA organization a Notice of Admission. The
hospital will finish providing services and discharge the enrollee in
accordance with Sec. Sec. 422.620 through 422.622. At some point after
discharge, but before a claim for payment is submitted, the MA
organization will notify the hospital that it is denying payment for
all inpatient services and will instruct the hospital to submit an
outpatient claim, while sometimes simultaneously approving the provider
to bill for observation services. The MA organization does not send a
notice of the denial to the enrollee. The hospital receives an
opportunity to dispute the decision under the MA organization's
internal dispute resolution processes, but the enrollee has no
opportunity to dispute the decision under the rules of part 422,
subpart M.
We find that retrospective reviews are conducted very similarly to
concurrent reviews in that both reviews involve obtaining necessary
clinical information from the treating physician or other providers to
determine medical necessity for the services rendered, using the
clinical status of the enrollee and applicable Medicare coverage
criteria. In addition, both concurrent and retrospective review
decisions are often made without the MA organization first receiving a
request for coverage or payment. The primary difference between the two
review types is that concurrent review occurs while the services are
being rendered while retrospective review occurs after the services at
issue are fully furnished. This means that a concurrent review decision
concerns the delivery of care being received by the enrollee, while a
retrospective review decision concerns whether the MA organization will
make payment for the services the enrollee received. Put simply, a
concurrent review decision (whether made unsolicited or in response to
a request) is a coverage decision while a retrospective review decision
(whether made unsolicited or in response to a request) is a payment
decision.
An MA organization's refusal to pay for services, in whole or in
part, including the type or level of services, the enrollee believes
should be furnished or arranged for by the MA organization is an
organization determination under the rules at existing Sec.
422.566(b)(3). As we mentioned previously, we proposed adding
references to Sec. 422.566(b)(3) to clarify that the definition of an
organization determination includes decisions made before, during, and
after the enrollee's receipt of the services at issue. Under our
proposed clarifications to what actions constitute an organization
determination, a post-service payment decision, even if made without
the MA organization first receiving a payment request, is subject to
the rules in subpart M. In addition, as we explained in section
III.A.1. of this final rule, the regulations of part 422, subpart M,
treat organization determinations related to coverage for services to
be or contemporaneously being rendered (coverage decisions) differently
from determinations related to payment for services already furnished
(payment decisions). As such, a retrospective review decision would be
subject to all applicable subpart M requirements related to payment
organization determinations, including those related to notice and
appeal rights.\45\
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\45\ While the focus of this discussion is on unsolicited
retrospective reviews, we acknowledge that enrollees or providers
may, at times, submit a request for ``authorization'' for services
which have already been fully rendered. Indeed, we understand that
some MA organizations currently permit the submission of late
``authorization'' requests for certain services subject to prior
authorization requirements within designated timeframes after a
service has been rendered and, if approved, would consider the
applicable prior authorization requirements met when separately
considering payment. However, as we have explained previously, once
a service has been fully furnished, the only matter for an MA
organization to decide is whether to make payment and any resulting
enrollee financial liability or cost-sharing. Thus, similar to
unsolicited retrospective review decisions, post-service
authorization requests, whether permitted by MA organizations or
not, must be processed as payment requests, under the applicable
payment timeframes and policies. We note that our proposed policies
do not prevent MA organizations from waiving prior authorization
requirements on a case-by-case basis, based on good cause or any
other consideration, during the claim adjudication or subsequent
appeal processes when such processes are described in their EOC.
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[[Page 15849]]
In accordance with Sec. 422.568(d)(1), an MA organization must
give the enrollee written notice when denying payment in whole or in
part. The payment denial notice must use approved language in a
readable and understandable form (Sec. 422.568(e)(1)), state the
specific reasons for the denial (Sec. 422.568(e)(2)), inform the
enrollee of their right to appeal (Sec. 422.568(e)(3)), describe the
standard reconsideration process and the rest of the appeal process
(Sec. 42.568(e)(4)(ii)), and comply with any other notice requirements
specified by CMS (Sec. 422.568(e)(5)). CMS created the Notice of
Denial of Medical Coverage or Payment (form CMS-10003-NDMCP), more
commonly known as the Integrated Denial Notice (IDN), as a standardized
notice for MA organizations to use when making adverse coverage or
payment decisions. Alternatively, an MA organization may use the model
Explanation of Benefits (EOB), when making an adverse payment decision
as long as it includes the approved standard language from the IDN.\46\
We explain in sub-regulatory guidance that an MA organization must
provide notice of an adverse payment decision to an enrollee using the
IDN or EOB when the enrollee submitted the request or through an EOB
when the payment request was submitted by a provider (the provider
would receive a corresponding remittance notice or similar notice).\47\
We have not previously considered the proper notice for MA
organizations to use when making payment decisions without first
receiving a request for payment.
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\46\ An EOB is a model communication material which must also
contain the information required under Sec. 422.111(k).
\47\ See section 40.12.1 of the Parts C & D Enrollee Grievances,
Organization/Coverage Determinations, and Appeals Guidance available
at https://www.cms.gov/Medicare/Appeals-and-Grievances/MMCAG/Downloads/Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf.
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As we previously discussed, it is our understanding that
retrospective review decisions are most often, if not exclusively, made
on inpatient services performed by hospitals that are contracted with
the MA organization. In most instances (excluding those which fall
outside the plan-directed care beneficiary protection), when an MA
organization makes a payment decision on contract provider services,
existing Sec. 422.562(c)(2) would preclude a party's appeal of a
decision as the enrollee would generally have no additional financial
liability under the terms of the contract between the MA organization
and the provider. However, as we discussed in section III.A.1. of this
final rule, revisions to Sec. 422.562(c)(2) would not be applicable
until an MA organization makes a decision on an enrollee's financial
liability in response to a request for payment. Under proposed Sec.
422.562(c)(2), an enrollee would not be precluded from appealing an
adverse retrospective review decision as the MA organization would not
yet have received a request for payment when the retrospective review
decision is made. We believed this would be an appropriate outcome as
an adverse retrospective review decision on inpatient hospital services
typically results in the MA organization instructing the hospital to
submit an outpatient claim (at times including an approval for
observation services), thereby changing the cost-sharing amount for
which the enrollee would be responsible. Cost-sharing, which may
include deductibles, co-payments, and co-insurance, varies across the
MA program, but most often has different requirements for inpatient and
outpatient hospital services. Therefore, whether a hospitalization is
billed as an inpatient or an outpatient stay would likely result in
different out-of-pocket costs for the enrollee. We note that the
difference in cost-sharing liability could be higher or lower for an
enrollee after an adverse retrospective review decision on inpatient
hospital services. The exact difference in amounts would depend on the
enrollee's cost-sharing requirements of their particular plan, the
length of their hospitalization, and, potentially, the amount and types
of services which were rendered. We believed that ensuring an enrollee
has adequate notice of an adverse MA organization payment decision,
which may negatively affect their out-of-pocket expenses for a
hospitalization, is paramount for providing a meaningful opportunity to
appeal. However, because we had not previously considered which
existing notice type (that is, the IDN or an EOB) would be most
appropriate for MA organizations to use when making a retrospective
review decision without first receiving a request, we requested
comments on the type of notice MA organizations should utilize to
ensure enrollees have adequate notice of the organization determination
and its implications on the enrollee's cost-sharing responsibilities.
Based on this feedback, CMS indicated that we may consider clarifying
in future guidance how MA organizations can ensure compliance with
existing notice requirements when issuing retrospective review
decisions prior to receiving a request for payment.
Finally, we also proposed to make a corresponding change at Sec.
422.138(c), to include concurrent reviews as a type of determination
subject to the rules at Sec. 422.138(c). Per CMS regulations at Sec.
422.138(c), if the MA organization approved the furnishing of a covered
item or service through a prior authorization or pre-service
determination of coverage or payment, it may not deny coverage later on
the basis of lack of medical necessity and may not reopen such a
decision for any reason except for good cause (as provided at Sec.
405.986) or if there is reliable evidence of fraud or similar fault per
the reopening provisions at Sec. 422.616. We proposed to add
concurrent review decisions to Sec. 422.138(c) as subject to this
requirement. In the same way that a provider and enrollee reasonably
rely upon an MA organization's approval of a prior authorization before
services are rendered, an approval of inpatient or outpatient services
during a concurrent review is an organization determination that is
relied upon by the enrollee and provider to continue delivering
medically necessary services that they expect to be covered and paid
for by the MA organization. As a result, an MA organization should not
be able to later deny the services based on a lack of medical necessity
if the continued treatment had already been approved during a
concurrent review.
We received the following comments on our proposal to clarify
organization determinations.
Comment: Several commenters were in support of the proposal to
modify the definition of an organization determination. These
commenters expressed appreciation for the clarification that such
decisions are subject to timely notice and appeal rights and believe it
will provide greater opportunities for providers and enrollees to
challenge what the commenters referred to as unfair
[[Page 15850]]
determinations of coverage or payment. A commenter noted that this
change is important to protect the provider's appropriate application
of the two-midnight rule requirements. Commenters were also in support
of the proposal to include concurrent reviews as a type of
determination subject to the rules at Sec. 422.138(c). These
commenters noted that providers and enrollees reasonably rely on
concurrent review decisions when rendering medically necessary care,
similar to providers' reliance on prior authorization approvals before
services are rendered. Commenters believed this change will provide
greater consistency, improve care coordination, and protect both
enrollees and providers from unnecessary coverage denials.
Response: We thank the commenters for their support of this
proposal. As noted in the proposed rule, we believe these amendments to
the definition of an organization determination at Sec. 422.566(b)
constitute a reasonable approach to addressing the many concerns that
CMS has received and identified through routine audits related to MA
organizations' misinterpretation of what constitutes an organization
determination.
Comment: A commenter urged CMS to ensure that any changes to the
definition of organization determination achieve the goal of providing
a seamless care experience for the enrollee, and ensure enrollees are
properly notified of any changes regarding their care and right to
appeal, while minimizing confusion.
Response: We appreciate the commenter's concern regarding the need
to ensure seamless care, and CMS believes the proposed clarification of
what constitutes an organization determination will achieve the goal of
ensuring an improved care experience for enrollees. As noted in the
proposed rule, we recognize that the direct consequence of the
misapplication of MA policies is that many enrollees do not receive
notice of a decision to downgrade their level of care from inpatient to
outpatient, nor are they given opportunity to appeal such decisions as
provided under Sec. 422.562(b)(4). By providing notification to the
enrollee as well as the physician or provider, as appropriate, we
believe this will improve continuity of care and ensure appropriate
access to the subpart M administrative appeals process.
Comment: A commenter requested that CMS ensure the proposal does
not interfere with MA organizations' ability to enforce Medicare's
reasonable and necessary standard.
Response: We thank the commenter for expressing this concern. We do
not believe this provision interferes with the proper application of
the reasonable and necessary standard in section 1862(a)(1) of the Act.
We noted in the proposed rule that, in general, the concurrent review
process includes obtaining necessary clinical information from the
treating physician and other providers to determine medical necessity
based on the clinical status of the enrollee and applicable Medicare
coverage criteria. This provision does not prohibit plans from
continuing to make decisions related to care, which includes making
decisions related to whether the care being rendered is reasonable and
necessary. This provision simply clarifies that decisions made based on
the review of an enrollee's need for continued care, commonly known as
concurrent review, are organization determinations subject to the rules
in part 422, subpart M, which includes providing the enrollee (and the
provider, as appropriate) with timely notice and applicable appeal
rights. As part of the organization determination process, it is
incumbent on the MA organization to obtain and review all relevant
clinical information to make an organization determination on a request
and to comply with requirements for basic benefits as described in
Sec. 422.101(c)(1). The intersection of these requirements ensures
that MA organization decisions are made consistent with the standards
related to medical necessity.
Comment: A commenter requested CMS clarify whether this proposal
intends to protect enrollees from balance billing from a hospital
versus to restrict a plan from assessing cost-sharing.
Response: As explained in the proposed rule, the intent of
clarifying in regulation what constitutes an organization determination
is to ensure enrollees receive proper notice and appeal rights,
regardless of what point in the care continuum a decision is made. Our
proposal related to determining whether an enrollee has any further
financial liability is addressed in section III.A. of this final rule.
Comment: A commenter requested CMS provide clear guidance on
enrollee liability for cost-sharing during the appeal process for
concurrent denials.
Response: Under our proposal, which we are finalizing, we clarify
that concurrent review is an organization determination subject to the
requirements in part 422, subpart M, including notice and appeal
rights. As we further explain in section III.A.1. of this final rule,
an MA organization only makes a determination on the enrollee's
financial liability for services received, including any applicable
cost-sharing amounts, when it adjudicates a claim for payment. As we
explained in the proposed rule, concurrent review decisions are
coverage decisions, similar to pre-service decisions, and are not
considered payment decisions. Therefore, an enrollee would only be
liable for cost-sharing amounts, when applicable, after the MA
organization makes a determination on such matters in response to a
claim for payment. After an MA organization makes a payment
determination on the enrollee's cost-sharing, in response to a claim
for payment, the determination is binding and final upon the enrollee
unless it is revised on appeal or reopening (see Sec. 422.576). We
acknowledge that a pending appeal on the concurrent review denial could
alter the plan's payment determination if the enrollee's concurrent
review appeal is ultimately successful. However, we did not propose for
enrollees to receive financial liability protection during the pendency
of a concurrent review appeal.
Comment: A few commenters also requested that CMS clarify what
happens in the case of observation stays versus inpatient due to the
change in enrollee liability. A commenter expressed concern that the
proposed language regarding the denial of payment for inpatient
services, while approving outpatient/observation care, could confuse
enrollees regarding their financial responsibilities. This commenter
stated that many enrollees may interpret a denial of inpatient coverage
as an indication that no services are being covered, even though the
outpatient/observation services may ultimately be more beneficial. The
commenter believes this confusion may lead to unnecessary appeals,
placing an undue burden on enrollees, providers, and plans alike.
Response: We appreciate the commenters' remarks on how an
enrollee's liability is impacted by a decision regarding whether an
inpatient hospital admission is medically necessary versus outpatient
observation services. As we discussed in the proposed rule, whether a
hospitalization is billed as an inpatient or an outpatient stay would
likely result in different out-of-pocket costs for the enrollee. The
difference in cost-sharing liability could be higher or lower for an
enrollee and depends on the enrollee's cost-sharing requirements of
their particular plan, the length of their hospitalization and,
potentially, the amount and types of
[[Page 15851]]
services rendered. We believe that ensuring an enrollee has adequate
notice of an adverse MA organization coverage decision, which may
negatively affect their out-of-pocket expenses for a hospitalization as
well as their ability to access other types of covered services, is
paramount for providing a meaningful opportunity to appeal. We do not
view this as undue burden but, rather, as ensuring the enrollee is
afforded the reconsideration and appeal rights guaranteed by section
1852(g) of the Act.
Comment: A commenter requested CMS clarify how it envisions the
interaction between the two-midnight presumption, followed by the
Independent Review Entity (IRE), and MA organizations that are not
bound by this presumption. Specifically, if the IRE approves inpatient
status on appeal based on the admitting physician's order for inpatient
care, how will this be reconciled with the fact that MA organizations
do not have to adhere to the two-midnight presumption and may not find
medical complexity in the record to support inpatient status. The
commenter noted that a potential consequence of this change is the
confusion and frustration experienced by enrollees who are in a
hospital bed when they are informed that an inpatient stay has been
denied, but observation status has been approved instead. This
situation could lead to significant enrollee abrasion, as enrollees may
not understand why they were initially admitted for inpatient status
only to have their coverage status changed mid-course. Even though the
care provided does not differ, the commenter noted that the change in
status will create confusion regarding the increased financial
responsibility or the perceived quality of care.
Response: We appreciate the commenter's concern about the potential
for confusion regarding the enrollee's financial responsibility or
perceived quality of care. We believe the proposed changes that we are
finalizing in this rule on what constitutes an organization
determination, the determination of enrollee liability, notice, and
limiting the reopening of previously approved inpatient hospital
admissions will mitigate confusion for enrollees and providers.
We did not propose a modification to the two-midnight rule or two-
midnight presumption and offer the following only as clarification on
existing policies. Pursuant to Sec. 422.101(b)(2), MA organizations
must comply with requirements related to basic benefits, including
coverage and benefit conditions included in Traditional Medicare laws,
unless superseded by laws applicable to MA organizations. This includes
criteria for determining whether an item or service is a benefit
available under Traditional Medicare and includes payment criteria for
inpatient admissions at Sec. 412.3. The term ``two-midnight rule'' is
sometimes used to describe different things: either the ``two-midnight
presumption'' or the ``two-midnight benchmark'' admission criteria. The
commenter is correct that MA organizations do not have to follow the
``two-midnight presumption,'' which is the presumption that all
inpatient claims that cross two midnights following the inpatient
admission order are ``presumed'' appropriate for payment under Medicare
Part A and are not the focus of medical review absent other evidence.
The ``two-midnight presumption'' relates to medical review instructions
for contractors in Traditional Medicare. However, another colloquial
use of the term ``two-midnight rule'' is to describe the inpatient
admission criteria in Sec. 412.3, which include a ``two-midnight
benchmark;'' MA organizations are required to follow these inpatient
admission criteria.
In regard to the two-midnight presumption, we explained in the
preamble of the CY 2024 final rule \48\ that the ``two-midnight
presumption'' does not apply to MA organizations' decision about when
and how to engage in review of a particular inpatient stay.
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\48\ 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, published April 12, 2023 (88 FR 22191 and
22192).
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The two-midnight presumption is a medical review instruction given
to Medicare post-payment audit and compliance contractors (for example,
Recovery Audit Contractors, or Quality Improvement Organizations) to
help them in the selection of claims for post-payment medical necessity
reviews in Traditional Medicare, which are conducted to ensure that
claims have been appropriately paid under Medicare rules. Any sub-
regulatory guidance issued by these contractors does not directly apply
to MA organizations but likely contain useful explanations and
interpretations of Traditional Medicare policies.
As clarified in the CY 2024 final rule, MA organizations are not
required to use the two-midnight presumption to decide which claims to
review, but may instead decide which claims are subject to review in
accordance with procedures for making determinations as provided by
section 1852(g)(1)(A) of the Act. MA organizations may still use prior
authorization or concurrent case management review of inpatient
admissions to determine whether the complex medical factors documented
in the medical record support medical necessity of the inpatient
admission under Sec. 412.3. MA medical necessity reviews may be
conducted before the service is provided (that is, prior
authorization), during (that is, concurrent case review), or after the
service is provided (that is, claim review). In all of these
circumstances, MA organizations must comply with the rules on medical
necessity determinations at Sec. 422.101(c).
Finally, with respect to IRE review, if the IRE's reconsideration
decision is that it was reasonable and necessary for the enrollee to
receive inpatient hospital services pursuant to the inpatient hospital
admission rules at Sec. 412.3, the MA organization is responsible for
effectuating that decision under the rules at Sec. 422.618(b).
Again, we believe the clarifications on what constitutes an
organization determination subject to the rules in part 422, subpart M,
will enhance transparency in the MA organization decision making
process for enrollees and providers.
Comment: A few commenters requested clarification around the
decision-making timeframe for concurrent and retrospective reviews. A
commenter requested CMS clarify that by amending the definition of
organization determination to include concurrent reviews, this change
would also mean that plans must make concurrent review decisions within
the required decision timeframes specified in Sec. 422.572. Another
commenter recommended that concurrent and post-service requests not be
subject to expedited processing and CMS should remove the requirement
for plans to downgrade the request and send the ``Notice of Right to an
Expedited Grievance''. The commenter explained that this requirement
creates inefficiencies and administrative complexities without
providing meaningful benefit to the enrollee who has already accessed
the care, and expedited processing in such cases may delay the
resolution of other urgent requests and divert resources from areas
where they are most needed. The commenter suggested that by excluding,
or at a minimum, clearly defining the circumstances under which
concurrent or post-service requests can be excluded from expedited
processing, CMS can help streamline operations for both plans and
providers.
[[Page 15852]]
A commenter recommended CMS establish specific timeframes for MA
organizations to make organization determinations for concurrent and
retrospective reviews, like the existing timeframes for pre-service
requests so as to ensure timely decisions and minimize disruptions in
care.
Another commenter requested clarification regarding whether SNF
services are considered ``inpatient services'' for the purpose of
expedited reviews. This commenter noted that SNF and home health
services are often critical to enrollees' ability to regain maximum
function, and delays in accessing and receiving these services can
jeopardize their health. The commenter recommended that SNF services
also be treated as expedited reviews in most cases.
Response: We appreciate the commenters' recommendations and request
for clarification. By amending the definition of organization
determination to include concurrent reviews, this would require MA
organizations to make a decision on such requests in accordance with
the timeframes at Sec. Sec. 422.568(b) and 422.572(a), as appropriate.
As noted in the proposed rule, in the case of an MA organization
conducting pre-service or concurrent review for inpatient services,
CMS' expectation is that the facts and circumstances around that type
of review will often satisfy the medical exigency standard. Therefore,
CMS expects in most circumstances an MA organization must provide an
expedited determination because applying the standard timeframe for
making a determination could seriously jeopardize the life or health of
the enrollee or the enrollee's ability to regain maximum function,
consistent with the provisions at Sec. Sec. 422.570(c)(2) and
422.631(c)(3). We wish to clarify that it was not our intention in the
proposed rule to imply that all concurrent and retrospective reviews
must be processed under the expedited timeframes. However, we continue
to believe that many cases involving pre-service and concurrent review
will be processed under the expedited timeframe depending on the nature
of the request or decision. Currently, MA organizations in conjunction
with providers make the determination regarding whether to expedite a
request, and CMS does not believe it would be appropriate to establish
circumstances in which the expedited timeframe would or would not apply
because of the uniqueness of each case. Plans must treat each case in a
manner that is appropriate for the facts and circumstances of the
enrollee's medical condition.
With regard to expedited review for SNF services, again, it was not
our intention to imply that inpatient hospital services are the only
services that lend themselves to expedited review. As noted previously,
it is up to the discretion of the provider and the MA organization
depending on the facts and circumstances of each case to determine the
timeframe in which a request should be processed. We also note that, as
stated in the proposed rule, while the primary focus of the discussion
related to the denial of inpatient hospital coverage as a result of an
MA organization's concurrent review, our proposed clarification to the
definition of an organization determination is inclusive of all other
types of services.
We appreciate the commenter's suggestion that CMS establish
specific timeframes for these types of reviews. We believe the current
timeframes strike the appropriate balance to afford plans sufficient
time to gather and review the facts and circumstances of each case,
while providing timely notice and appeal rights to enrollees and their
providers. We will continue to monitor enrollee access and plan
compliance to determine if the development of additional timeframes
would be appropriate in the future.
Comment: A few commenters requested CMS make clear that this
proposal is a clarification of long-standing policy and not new policy.
Response: We thank the commenters for requesting this
clarification. As noted in the proposed rule, historically, we have
interpreted the definition of an organization determination to include
when an MA organization makes a coverage decision on the
appropriateness of an inpatient admission, or the appropriateness of
inpatient services (that is, a level of care determination),
contemporaneously with an enrollee's receipt of the services at issue.
This would be true whether the MA organization ultimately approved the
enrollee's admission to a facility, determined that the enrollee's
level of care in the same facility should be reduced, or determined
that the enrollee should be discharged (see Sec. Sec. 422.620 through
422.624). Accordingly, these decisions would have to comply with all
applicable notice and appeal requirements for organization
determinations and would be binding on all parties unless they are
reconsidered under Sec. Sec. 422.578 through 422.596 or are reopened
and revised under Sec. 422.616.
Comment: A few commenters expressed concern related to MA
organizations' refusal to make decisions on certain types of requests
and the lack of appeal rights for the enrollee or the provider on such
refusals. A commenter recommended that CMS include that a refusal by an
MA organization to make any decision on a pre-service, post-service, or
concurrent request by the enrollee is an organization determination and
can be appealed. Similarly, a commenter recommended CMS explicitly
state that an MA organization must issue a pre-service medical
necessity determination in a timely manner when requested by an
enrollee, provider or other authorized third party, which may include
written requests and peer-to-peer communications, and that the decision
or the failure or refusal to make such a decision is eligible for
appeal. Another commenter recommended that CMS define in regulation the
term ``pre-service'' to mean ``a request for an MA organization to
approve coverage and payment for a service before the service is
received by the enrollee.'' This commenter also urged CMS to clarify in
regulation that enrollees have a right to receive a prior determination
regardless of whether there is a prior authorization requirement or
not.
Response: We thank the commenters for expressing their concerns and
providing recommendations. The proposed rule does not intend to address
situations where an MA organization refuses to make a decision on an
organization determination (pre-service, post-service, or concurrent),
and we do not believe further modification to the definition of an
organization determination is necessary to address these situations at
this time. When an MA organization receives an organization
determination request, it is required to provide a decision within the
timeframes specified at Sec. Sec. 422.568 and 422.572, as applicable.
Sections 422.568(f) and 422.572(f) state that if the MA organization
fails to provide the enrollee with timely notice of an organization
determination as specified in this section, this failure itself
constitutes an adverse organization determination and may be appealed;
therefore, if the MA organization does not issue timely notification,
they are required to provide the enrollee with appeal rights. Again, we
thank the commenter for the recommendation and may consider addressing
this matter in future rulemaking.
We did not propose establishing a regulatory definition for the
term ``pre-service'' and we do not intend to amend the regulation to
this effect at this time.
[[Page 15853]]
We appreciate the recommendations and will consider these in future
rulemaking.
We also did not propose to expand through regulation the
requirement for MA organizations to process requests for prior approval
even when the service being requested does not require prior
authorization by the MA organization. We believe that existing
regulations sufficiently address this matter. As we discussed in the
proposed rule, an enrollee, enrollee's representative, or a provider on
behalf of an enrollee, has the right to request the enrollee's MA
organization approve an item, service, or Part B drug in circumstances
where there is a question whether the item, service, or Part B drug
will be covered. This right to receive prior approval applies to
services for which an MA organization may require prior authorization
as a condition for coverage as well as services for which there is no
prior authorization requirement (see generally Sec. 422.566(b)). When
an MA organization receives a request for an item, service, or Part B
drug, it must process the request according to the timeframes at Sec.
422.568(b) or Sec. 422.572(a).
Comment: A few commenters requested CMS clarify that this proposal
applies to services and settings other than inpatient hospital
coverage. A commenter agreed that the focus on inpatient hospital
coverage denials is important, but recommended CMS clarify that the
proposal applies to all service types across all care settings. The
commenter stated that clear and consistent rules will help protect
enrollees and reduce confusion for providers navigating the appeals
process. Another commenter requested CMS clarify whether modifying the
definition is intended to include all acute inpatient admissions (for
example, from emergency room to inpatient admission) as organization
determinations subject to appeal and other existing requirements,
particularly for contract providers and facilities. A commenter
requested CMS clarify whether retrospective review decisions apply to
outpatient services since these reviews can occur with the provision of
outpatient services, such as physical therapy, occupational therapy and
durable medical equipment.
Response: We thank the commenter for requesting this clarification.
As noted in the proposed rule, we proposed to revise Sec.
422.566(b)(3) to clarify that a decision by an MA organization made
pre-service, post-service, or concurrent with the enrollee's receipt of
services in an inpatient or outpatient setting is an organization
determination subject to the rules in part 422, subpart M, which
includes providing the enrollee (and the provider, as appropriate) with
timely notice and applicable appeal rights. We also noted in the
proposed rule that while the primary focus of the discussion related to
the denial of inpatient hospital coverage as a result of an MA
organization's concurrent review, our proposed clarification to the
definition of an organization determination is inclusive of all other
types of services. We did not propose restricting this provision to
inpatient hospital coverage alone. We believe the regulatory text is
clear that this provision is not limited to certain services or
settings.
With respect to whether this provision applies to contract
providers and facilities, as explained in the proposed rule, an
organization determination may be made prior to the receipt of service
(for examples, prior authorization), after the receipt of service (for
example, payment requests) or during the receipt of service (for
example, continuation or termination of services) the enrollee receives
from either contract or non-contract providers.
Comment: A commenter recommended CMS expand the scope of Sec.
422.138(c) to include retrospective (pre-claim) approvals as well as
concurrent approvals. The commenter noted that as described in the
proposed rule, retrospective and concurrent reviews arise in a similar
fashion, such that whether a review is retrospective or concurrent is
what the commenter called ``an accident of timing''. If the MA
organization approves the admission before discharge, it is a
concurrent approval, but if the enrollee is discharged first, the same
determination would be a retrospective approval. Because these are
essentially the same types of determinations, this commenter believes
that Sec. 422.138(c) should apply with equal force to both. In
addition, the commenter expressed concern that limiting the scope of
Sec. 422.138(c) to prior authorizations and concurrent approvals would
create an inappropriate incentive to delay review and approval of care
so that what would otherwise be a concurrent approval converts to a
retrospective approval by virtue of the enrollee's discharge or
completion of the course of care. Such delays would burden providers
and serve no appropriate purpose.
Response: We appreciate the feedback, but the suggested changes to
Sec. 422.138 are outside the scope of this rule. The content of Sec.
422.138 relates exclusively to prior authorization rules and in the
case of paragraph (c), pre-service approvals. As we stated in the
proposed rule, a retrospective review decision (whether made
unsolicited or in response to a request) is a payment decision.
We solicited comment in the proposed rule regarding which existing
notice type (that is, the IDN or an EOB) would be most appropriate for
MA organizations to use when making a retrospective review decision
without first receiving a request for payment. We received a few
comments in response to this solicitation.
Comment: A few commenters were in support of using the IDN to
communicate these decisions. A commenter recommended that the IDN be
required because it is more conducive to relaying the level of detail
warranted in a retrospective denial. This commenter noted that the EOB
is generally used for payment determinations resulting from a claim,
which may not clearly convey that a prior authorization approval has
been rescinded and the reasoning behind such recission. The commenter
requested CMS give an example of its intent and confirm that this
proposal indicates that plans should not reverse an approved decision
and should notify providers of a denial. Another commenter recommended
that all decisions to downgrade should be communicated directly and
immediately via an IDN. This commenter suggested that an EOB should not
be allowed because it is frequently not timely and is likely to be
confusing for individuals.
In contrast, a commenter was in support of using the existing EOB
to communicate information regarding both retrospective and concurrent
organization determinations. This commenter explained that the EOB is a
well-established and clear document with which enrollees are already
familiar, making it an effective tool for conveying details about
financial liability and appeal rights, and building upon the EOB will
be best for enrollees, as it avoids introducing additional paperwork or
confusion and streamlines communication.
A commenter suggested CMS develop new standardized notice templates
with clear and concise language for communicating concurrent and
retrospective denials to enrollees. The commenter suggested the notices
should include: a clear explanation of the reason for denial,
information on applicable appeal rights, and a statement regarding
potential enrollee liability for cost-sharing during the appeal
process. Another commenter suggested CMS consider the Medicare
[[Page 15854]]
Change of Status Notice recently created for implementation of appeals
of patient status in traditional Medicare. The commenter noted that the
MA notice could similarly state that the enrollee's hospital bill ``may
be lower or higher,'' due to the MA organization's decision, and that
the ``MA plan can give you more information.'' Further, the notice
could then describe how to start an appeal.
Response: We thank the commenters for providing feedback on which
existing notice (the IDN or an EOB) would be most appropriate for MA
organizations to use when making retrospective review decisions without
first receiving a request for payment. We wish to make clear that the
use of the IDN or EOB in this context would be for situations where the
plan makes a retrospective review decision, without first receiving a
payment request. In other words, the MA organization has not previously
made a pre- or concurrent coverage decision and, therefore, would not
be modifying a prior decision as some commenters suggested. A prior
approval that has been rescinded under the reopening requirements is
subject to the rules at Sec. Sec. 422.138(c) and 422.616.
CMS will further consider the best approach to ensure enrollees and
providers, as appropriate, have adequate notice of organization
determinations, implications on cost sharing responsibilities, and
proper access to the subpart M administrative appeals process. We will
convey instructions on which notice plans should utilize through sub-
regulatory guidance published in the Parts C & D Enrollee Grievances,
Organization/Coverage Determinations, and Appeals Guidance, available
for download at https://www.cms.gov/medicare/appeals-grievances/managed-care.
Comment: A few commenters opposed this proposal. A commenter stated
that organization determinations are currently being made during the
time in which care or services are being received (concurrent review)
and at times, after an enrollee is discharged and before a claim
(provider request for payment) is received and MA organizations already
provide notice to providers that holds them accountable and liable with
no enrollee liability. A few commenters suggested that this proposal
would add a new appeal process for enrollees resulting in two redundant
appeal processes for enrollees and contract providers, with separate
appeal review entities, for one single appeal request. The commenters
suggested the proposal will cause a significant amount of confusion for
enrollees and providers, and an unreasonable number of administrative
tasks and undue burden. These commenters recommended that CMS not
finalize this proposal until this level of detail and impact is
thoroughly researched and developed, and if CMS does intend to finalize
this proposal, they request information on CMS' expectations for
reconciling discrepancies between an Independent Review Entity decision
for the enrollee and a MA organization decision for the provider. The
commenters encouraged CMS to carefully evaluate the increased
complexity, risk for enrollee and provider confusion, and significant
resource investments, including increases in clinical and
administrative staffing to manage the additional workload thoroughly
before finalizing the proposal to ensure the policy achieves its
intended goals. A commenter also suggested that CMS reflect these
additional significant costs in its cost projections.
Response: We appreciate the commenters' perspectives; however, we
disagree that providing notice of an adverse concurrent review decision
solely to the provider, and processing any appeal under the MA
organization's internal dispute resolution processes, is in accordance
with our organization determination or reconsideration requirements or
provides sufficient due process to enrollees that are directly affected
by the adverse decisions. As we explained in the proposed rule, adverse
coverage decisions on inpatient hospital services may also adversely
impact an enrollee's cost-sharing amounts based on the duration of the
hospital stay, the items, services, and Part B drugs provided during
the hospital stay, and enrollees' cost-sharing responsibilities.
Further, adverse coverage decisions on an enrollee's inpatient hospital
services can negatively affect the types of covered services the
enrollee could receive in the hospital and the types of services that
are available immediately after the enrollee is released from the
hospital. For example, many MA organizations condition coverage for
certain services on whether the enrollee is leaving or was recently in
an inpatient hospital stay--this could include covered transportation
from the hospital, personal home care, meal benefits, and/or post-acute
care coverage. If an enrollee's admission is denied or is changed to an
outpatient stay, then these services would be unavailable to the
enrollee that otherwise could be covered if their inpatient admission
was approved or not reduced. We believe that the failure to allow an
enrollee to appeal the denial of inpatient services, despite the
directly resulting impacts described previously, could deprive
enrollees of access to benefits without adequate due process. CMS
believes our proposed amendments to the definition of an organization
determination at Sec. 422.566(b) constitute a reasonable approach to
addressing these concerns.
We disagree that this proposal would require MA organizations to
provide two separate, overlapping appeal processes for enrollees and
contract providers when appealing a single adverse concurrent coverage
decision. Under our proposal, when an MA organization issues an adverse
coverage decision contemporaneously to when the enrollee is receiving
the services at issue or a retrospective review decision after the
services have been furnished, the enrollee (or physician on the
enrollee's behalf) would appeal the denial under the existing appeal
procedures at part 422, subpart M. In these cases, similar to all other
MA administrative appeals under subpart M, the MA organizations'
internal dispute resolution processes that apply to contract provider
disputes would be inapplicable. As always, MA organizations and
contract physicians may engage in voluntary peer-to-peer discussions as
a means for the physician to present evidence in support of the
enrollee's appeal when necessary.
With respect to reconciling decisions made by the IRE and the MA
organization's decision for the provider, if the IRE makes a favorable
determination, the MA organization must effectuate the decision,
pursuant to the requirements at Sec. Sec. 422.618 and 422.619. Payment
issues involving participating (contract/network) providers are subject
to the terms and conditions set forth in contracts between MAOs/
providers and should be handled accordingly. However, as we noted in
the proposed rule, a concurrent review decision is not considered a
payment decision and, thus, would not be excluded from the appeals
process under our proposed Sec. 422.562(c)(2). We more fully discuss
this matter in section III.A.1. of this final rule.
We appreciate the comments related to the burden associated with
the proposed clarification and have addressed these comments in the
Collection of Information section of this rule.
Comment: A commenter expressed concern related to what it described
as a potential technical error in the proposed rule. Specifically, at
89 FR 99465, CMS states ``. . . a retrospective review decision
(whether made
[[Page 15855]]
unsolicited or in response to a request) is a payment decision.''
However, in the proposed regulatory text at Sec. 422.566(b), CMS
appears to classify retrospective review as an organization
determination. The commenter recommended CMS not finalize this proposal
until it can meet with MA organizations and providers to better
understand the issue. The commenter noted that while the change seems
technical, it is important that both MA organizations and providers
share a clear understanding of CMS' regulations, as it appears the
stated intent of the preamble is not conveyed in the regulatory text,
and plans need to clearly understand how CMS is classifying each of
these decisions to ensure the appropriate notice and appeal processes
in each situation.
Response: We disagree with the commenter that there is a technical
error in the proposed rule. The existing definition of an organization
determination includes both coverage decisions and payment decisions
(see Sec. 422.566(b)). As explained in the proposed rule, a
retrospective review decision (whether made unsolicited or in response
to a request) is a payment decision. Under our proposed clarifications
to what actions constitute an organization determination, a post-
service payment decision, even if made without the MA organization
first receiving a payment request, is subject to the rules in subpart
M. In addition, the regulations of part 422, subpart M, treat
organization determinations related to coverage for services to be or
contemporaneously being rendered (coverage decisions) differently from
determinations related to payment for services already furnished
(payment decisions). As such, a retrospective review decision would be
subject to all applicable subpart M requirements related to payment
organization determinations, including those related to notice and
appeal rights. It was our intention to classify retrospective review
decisions as a type of payment decision which is subject to the
organization determination process, and we believe the regulatory text
and relevant discussion in the proposed rule is accurate.
Comment: A commenter recommended CMS categorize post-service
payment decisions as ``claims'' to help improve operational
efficiencies and support uniformity. For example, it would ensure that
notification of appeal rights could be included on the explanation of
benefits for the enrollee and is beneficial for accurate reflection in
annual reporting and audit protocols across MA organizations. This
commenter recommended that if CMS classifies post-service payment
decisions as ``service,'' MA organizations should be provided 30 days
to review the request, in alignment with claims timeframes, to promote
operational consistency and efficiency. The commenter suggested that
since the service in question has already been rendered, aligning the
review period to 30 days would not adversely impact the enrollee's
ability to receive care.
Response: We thank the commenter for their recommendations. We
believe that by suggesting we treat all initial post-service payment
decisions as claims, the commenter was requesting that we require
retrospective review decisions be processed under the existing
requirements applicable to payment decisions (for example, appeal
processing timeframes). We explained in the proposed rule that a post-
service payment decision, even if made without the MA organization
first receiving a payment request, is subject to all applicable subpart
M requirements related to payment organization determinations,
including those related to notice and appeal rights. In line with the
discussion in the proposed rule, we agree with the commenter that post-
service payment decisions would be subject to the processing timeframes
for payment organization determinations at Sec. 422.568(c).
After consideration of the comments received, we are finalizing the
revisions to Sec. 422.566(b)(3) and the corresponding change at Sec.
422.138 on what constitutes an organization determination to include an
MA organization's refusal, pre- or post-service or in connection with a
decision made concurrently with an enrollee's receipt of services, to
provide or pay for services, in whole or in part, including the type or
level of services, that the enrollee believes should be furnished or
arranged for by the MA organization.
3. Strengthening Requirements Related to Notice to Providers
(Sec. Sec. 422.568, 422.572, and 422.631)
Section 1852(g)(1)(B) of the Act requires MA organizations to
provide an explanation of determinations regarding whether an
individual enrolled with a plan is entitled to receive a health service
under this section and the amount (if any) that the individual is
required to pay with respect to such service. In accordance with
section 1852(g)(1)(B) of the Act, Sec. 422.568 establishes the
timeframe and notice requirements for standard organization
determinations. Section 422.568(e)(5) establishes an additional
framework for promulgating expanded notice requirements. Under Sec.
422.568(f), if a MA organization fails to timely meet applicable notice
requirements, the failure constitutes an appealable adverse
organization determination.
Existing Sec. 422.568(d) requires MA organizations to provide
enrollees written notice if an MA organization decides to deny coverage
for a service or an item, Part B drug, or payment in whole or in part,
or decides to reduce or prematurely discontinue the level of care for a
previously authorized ongoing course of treatment. Section 422.568(e)
specifies that an MA organization's written notice of a coverage denial
must use approved notice language, state the specific reasons for the
denial, inform the enrollee of their right to request and the
procedures for requesting a standard or expedited reconsideration, and
must also comply with other notice requirements specified by CMS.\49\
CMS created the Notice of Denial of Medical Coverage or Payment (Form
10003-NDMCP), also known as the Integrated Denial Notice (IDN), as a
standardized denial notice that MA organizations may use to comply with
the written notice requirements of Sec. 422.568(e). This notice is
approved by the Office of Management and Budget, subject to Paperwork
Reduction Act procedures and is posted on the CMS website.\50\ While MA
organizations are required to provide timely notice of an approved
organization determination, written notice is not required. This means
that MA organizations may provide oral notice of approved coverage
decisions.
---------------------------------------------------------------------------
\49\ Section 422.568(e) also regulates the notice requirements
for payment denials, which are largely the same, with the exception
that payment denial notices do not need to include information on
expedited reconsideration processes.
\50\ https://www.cms.gov/medicare/forms-notices/beneficiary-notices-initiative/ma-denial-notice.
---------------------------------------------------------------------------
The existing notice requirements for standard organization
determinations at Sec. 422.568(b)(1) only specify that MA
organizations must provide the enrollee with notice of its decisions.
This is a notable difference from the requirements related to expedited
organization determinations at existing Sec. 422.572(a) and (b) that
require MA organizations to provide timely notice of any expedited
organization determination to the enrollee and the physician or
prescriber involved, as appropriate. Likewise, for Part B drug
requests, regulations at Sec. 422.568(b)(3) require notice to the
prescribing physician or other prescriber involved, as appropriate.
However, existing CMS guidance instructs MA organizations to notify
the provider, as well as the enrollee, whenever a provider submits an
[[Page 15856]]
organization determination on behalf of the enrollee (see Section
40.12.1 of the Parts C & D Enrollee Grievances, Organization/Coverage
Determinations, and Appeals Guidance \51\). Similar references are also
made in the text of the IDN, as CMS explains to enrollees that ``If
your doctor requested coverage on your behalf, [the MA organization
has] sent a copy of this decision to your doctor.''
---------------------------------------------------------------------------
\51\ https://www.cms.gov/medicare/appeals-and-grievances/mmcag/
downloads/parts-c-and-d-enrollee-grievances-organization-coverage-
determinations-and-appeals-guidance.pdf.
---------------------------------------------------------------------------
We do not find a compelling reason that a provider should not
receive notice of a standard organization determination when the
provider submitted a request on behalf of an enrollee or when it is
otherwise appropriate for the provider to receive notice of the
determination. Indeed, under existing regulations at Sec.
422.566(c)(1)(ii), a provider is already permitted to request an
organization determination on an enrollee's behalf. This longstanding
policy is premised on a reasonable belief that an enrollee will welcome
and be informed of their provider or physician's willingness to pursue
an organization determination on their behalf. We saw no reason that a
provider or physician to whom an enrollee has already entrusted their
care or has sought to request coverage for their care, should not
receive notice of an organization determination that directly affects
such care. In fact, we believe an enrollee's provider is often in the
best position to receive, explain, and timely act upon the MA
organization decision for an enrollee.
Similar requirements for integrated organization determinations
apply to applicable integrated plans at Sec. 422.631. Under Sec.
422.631(d)(1)(i), applicable integrated plans are required to send an
enrollee a written notice of any adverse decision on an integrated
organization determination (including a determination to authorize a
service or item in an amount, duration, or scope that is less than the
amount previously requested or authorized for an ongoing course of
treatment) within the timeframes set forth in Sec. 422.631(d)(2).
Existing Sec. 422.631(d)(1)(ii) states that an integrated organization
determination not reached within the timeframes specified constitutes a
denial and thus is an adverse decision. Section 422.631(d)(1)(iii)
specifies the integrated organization determination notice requirements
for applicable integrated plans must be written in plain language,
available in a language and format accessible to the enrollee, include
the date the determination was made and will take effect, the reason
for the determination, the enrollee's right to an integrated
reconsideration and to have someone file an appeal on their behalf,
procedures for an integrated reconsideration, circumstances for an
expedited resolution and enrollee's rights to continue benefits while
their appeal is pending. CMS created the coverage decision letter (CDL)
(Form CMS-10716), an OMB approved notice, for use by applicable
integrated plans to comply with the written notice requirements at
Sec. 422.631(d)(1)(iii). The existing notice requirements at Sec.
422.631(d)(1)(i) only specify that an applicable integrated plan must
provide the enrollee with notice of its decisions. However, integrated
organization determinations for Part B drug requests are governed by
the provisions at Sec. 422.568(b)(3) that require notice to the
prescribing physician or other prescriber involved, as appropriate.
Likewise, existing CMS guidance instructs applicable integrated plans
to notify the provider, as well as the enrollee.
We, therefore, proposed strengthening requirements related to
notice of a standard organization determination at Sec. 422.568 in
paragraph (b)(1) and the introductory text for paragraph (d) and
integrated organization determinations at Sec. 422.631(d)(1)(i) to
require MA plans and applicable integrated plans to notify an
enrollee's physician or provider, as appropriate, of an organization
determination or integrated organization determination on a request for
a non-drug item or service (in addition to the existing requirement
related to notifying an enrollee). We noted that ``as appropriate''
meant, as with similar requirements in Sec. Sec. 422.568(b)(3) and
422.572(a), that notice should be given to the provider or prescriber
who submitted an organization determination request on behalf of an
enrollee or in other circumstances where it would be in the enrollee's
best interest for their provider or prescriber to receive notice of a
decision related to an enrollee-submitted request.
We also proposed corresponding amendments to Sec. Sec. 422.568(f),
422.572(f), and 422.631(d)(1)(ii) to state that if the MA organization
or applicable integrated plan fails to provide the enrollee, physician,
or provider involved, as appropriate, with timely notice of an
organization determination or integrated organization determination as
specified in this section, this failure itself constitutes an adverse
organization determination and may be appealed. We noted that the
proposed change at Sec. 422.572(f) is a technical change to expedited
organization determination requirements. Under existing rules at Sec.
422.572(a), MA organizations are required to provide notice of an
expedited organization determination to the physician or prescriber, as
appropriate. However, existing Sec. 422.572(f), which establishes that
a MA organization's failure to timely meet expedited organization
determination notice requirements constitutes an adverse decision, only
refers to the MA organization's responsibility to provide timely notice
to the enrollee. We, therefore, proposed a technical change to Sec.
422.572(f) to clarify that the failure to provide timely notice of an
expedited organization to the enrollee and the physician or prescriber,
when appropriate, would itself constitute an appealable adverse
organization determination.
In addition, we proposed a technical change at Sec. 422.631(a) to
reference the correct Part B drug regulation at Sec. 422.568(b)(3)
rather than the current reference to Sec. 422.568(b)(2) to govern the
timeframes and notice requirements for integrated organization
determinations for Part B drugs. The final rule titled ``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 February 8, 2024 Federal Register,
redesignated Sec. 422.568(b)(2) as Sec. 422.568(b)(3).
We did not believe this proposal would have a substantial impact on
the practices of MA organizations or applicable integrated plans as we
are codifying longstanding guidance that we believe the majority of
plans already implement based on the relatively few complaints from
providers and enrollees. In addition, we also understood that due to
the contractual relationship MA organizations have with their
providers, most contract providers should already receive notice of
relevant organization determinations, including those that the provider
submitted on behalf of the enrollee. However, we noted that the few
complaints that we do receive on this issue reinforce how disruptive
the lack
[[Page 15857]]
of provider notice can be for enrollees attempting to promptly receive
covered medical services. When an enrollee is the only party to receive
written notice of a decision, not only can this result in a delay in
their receipt of approved medical care but could also delay the
submission of a valid appeal when coverage is denied.
As explained in the proposed rule, this approach supports the
modification to the definition of an organization determination at
Sec. 422.566(b) by ensuring providers will always receive notice of a
decision notwithstanding when in the continuum of care the decision is
made. As discussed in section III.A.2. of this final rule, CMS
identified that some MA organizations routinely misinterpret existing
organization determination provisions related to decisions that rescind
prior authorization of an inpatient admission, deny coverage for
inpatient services, or downgrade an enrollee's hospital coverage, from
inpatient to outpatient, when the decision is made concurrently to the
enrollee receiving such services. In these cases, the MA organizations
were not providing enrollees or their providers proper notice of the
adverse organization determination or providing appeal rights. Our
proposed clarifications to the definition of an organization
determination at Sec. 422.566(b)(3) sought to clarify that applicable
decisions made before, during, or after the enrollee's receipt of
services are organization determinations and thus are subject to notice
requirements pursuant to Sec. Sec. 422.568, 422.572, and 422.631. Our
proposal at Sec. Sec. 422.568 and 422.631 would, therefore, require
the MA organization or applicable integrated plan to provide notice to
the enrollee and physician or provider that must comply with the
standard organization determination or integrated organization
determination requirements. We noted, however, that in the case of an
MA organization conducting pre-service or concurrent review for
inpatient services, our expectation was that the facts and
circumstances around that type of review will often satisfy the medical
exigency standard. Therefore, we expected in most circumstances an MA
organization must provide an expedited determination because applying
the standard timeframe for making a determination could seriously
jeopardize the life or health of the enrollee or the enrollee's ability
to regain maximum function, consistent with the provisions at
Sec. Sec. 422.570(c)(2) and 422.631(c)(3).
We received the following comments regarding our proposal to
strengthen requirements related to notice to providers.
Comment: Several commenters expressed appreciation and support for
our proposal to require MA organizations and applicable integrated
plans to notify an enrollee's physician or provider, as appropriate, of
an organization determination or integrated organization determination
on a request for a non-drug item or service. Commenters stated that
this change would increase communication and transparency between the
enrollee, the provider, and the MA organization, and put the provider
in a better position to advocate on behalf of the enrollee in the event
care alternatives need to be explored or adverse decisions appealed.
Commenters also noted that requiring notices be sent to providers will
put them in a better position to provide assistance in a timely manner,
which will increase care coordination and efficiency.
Response: We thank the commenters for their support. As noted in
the proposed rule, we believe this change is of benefit to enrollees,
physicians and providers and is likely the existing practice of many MA
organizations.
Comment: Multiple commenters agreed with our expectation that MA
organizations conducting pre-service or concurrent review for inpatient
services should apply the medical exigency standard and, therefore,
should provide an expedited determination with appropriate notice to
the physician or provider. Commenters further recommended that this
expectation be codified.
Response: We appreciate the commenters' agreement with our
expectation that MA organizations conducting pre-service or concurrent
review for inpatient services should provide an expedited determination
and appropriate notice to the physician or provider. As we explained in
the proposed rule, existing Sec. Sec. 422.570(c)(2) and 422.631(c)(3)
establish the ability for physicians to request and automatically
receive an expedited organization determination when a physician
indicates that applying the standard timeframe for making a
determination could seriously jeopardize the life or health of the
enrollee or the enrollee's ability to regain maximum function. This
means that a coverage request for inpatient hospital services, made
concurrently or before services begin, could be automatically expedited
when properly justified by a physician. Because this existing process
for requesting expedited review already provides an avenue for
physicians (and enrollees) to request expedited review for pre-service
and concurrent review request, we do not believe it necessary to codify
new processing timeframes unique to these coverage requests at this
time. We may address this matter in future rulemaking.
Comment: A commenter, while supporting the proposal, recommended
that an enrollee's physician be notified in addition to their provider
as set forth in the proposal. They stated that many physicians
practicing in inpatient rehabilitation hospitals are not employees of
the inpatient rehabilitation facility (IRF) but practice with
privileges in these hospitals. Further, they indicated that
notification to both the physician and the IRF provider would ensure
all involved in the care of the MA enrollee are aware of the status and
decision of the MA organization's determination and can expedite the
admission or appeal once notice is received from the MA organization.
Response: While we appreciate this comment, we proposed this policy
in a manner that balances enrollees and their treating providers
receiving timely notice of relevant decisions while minimizing new
burden placed on MA organizations. We believe that requiring notice to
multiple points of contact within a single provider entity could be
duplicative, unnecessary and unduly burdensome to MA organizations. To
this end, and in an effort to minimize the burden related to the
proposed requirements, we will monitor the implementation of the rule
and may engage in future rulemaking on this matter, as necessary.
Comment: A commenter expressed concern with the proposed
corresponding language at Sec. Sec. 422.568(f), 422.572(f), and
422.631(d)(1)(ii) stating that if the MA organization or applicable
integrated plan fails to provide timely notice of an organization
determination (or integrated organization determination) to the
enrollee, physician, or provider involved, the failure itself would
constitute an adverse organization determination that may be appealed.
They believed this revision would encourage MA organizations to avoid
reviewing organization determinations because it would benefit MA
organizations for those requests to be denied. Instead, they
recommended untimely organization determinations--whether standard or
expedited--be considered favorable organization determinations.
Response: We appreciate the commenter's perspective but disagree
with the recommendation. The
[[Page 15858]]
proposed change at Sec. 422.572(f) provides that when an MA
organization fails to provide the enrollee, physician, or provider
involved, as appropriate, with timely notice of an expedited
determination, the MA organization's inaction constitutes an adverse
organization determination and may be appealed. We proposed this
modification as a technical change to have Sec. 422.572(f) mirror
existing regulations at Sec. 422.572(a), requiring MA organizations to
provide notice of an expedited organization determination to the
physician or prescriber, as appropriate. The change at Sec. 422.631(a)
was made to reference the correct Part B drug regulation at Sec.
422.568(b)(3) rather than the current reference to Sec. 422.568(b)(2)
to govern the timeframes and notice requirements for integrated
organization determinations for Part B drugs. Finally, similar to the
previous provisions, Sec. 422.631(d)(1)(ii) states that an integrated
organization determination not reached within the required timeframes
constitutes a denial and thus is an adverse decision. We did not
propose reversing the underlying policy to have an MA organization's
failure to timely process and respond to organization requests to
result in constructive approval of the request. We believe such a
policy would have profound ramifications that were not considered here
and are out of the scope of our proposed technical change.
Comment: A commenter requested clarification on how SNF discharge
information would be communicated to providers and whether this
notification would be in writing. The commenter further raised concerns
regarding what they believed to be misaligned timeframes for MA
organizations to notify enrollees that they are terminating SNF
coverage and the 72-hour timeframe for expedited determinations. The
commenter noted that the discrepancy could lead to medically necessary
services being discontinued before a decision is received and
recommended that CMS align these two timeframes to better protect
enrollees from disrupted care. Another commenter suggested we extend
our proposal to post-acute care discharge appeals submitted by the
enrollee.
Response: We thank the commenters for inquiring about notice and
timeframe requirements when an MA organization is discharging an
enrollee from a covered stay in a post-acute care setting. The notice
and appeal requirements related to non-hospital inpatient services are
codified at Sec. Sec. 422.624 through 422.626. Our proposal did not
address nor modify the notice or timeframe requirements for post-acute
care discharge notices or the related appeals process. We also do not
believe it necessary to extend this proposal to post-acute care
discharge appeals as pursuant to Sec. 422.624(b), enrollees currently
receive notice, in person and from the provider, of the MA
organization's or provider's decision to terminate covered services
through the standardized CMS-10123-NOMNC, Notice of Medicare Non-
Coverage. In addition, in accordance with existing Sec. 422.626(d)(5),
the IRE already is responsible for providing notice of an appeal
decision to the enrollee, MA organization, and the provider of
services.
Comment: A few commenters questioned how denial notices should be
delivered to enrollees in specific situations. A commenter questioned
how notices should be delivered to the enrollee in an inpatient setting
when either oral or written delivery may not be appropriate or timely
given the enrollee's condition. They further questioned if the
provider/physician would be responsible for communicating the contents
of the denial notice to the enrollee and whether notice requirements
apply in a substance use disorder residential facility when there is no
difference in the enrollee's cost share by level of care. Another
commenter questioned if providers, in addition to the MA organization,
were required to provide notice regarding discharge to the enrollee in
writing.
Response: We proposed, among other items, adding a requirement that
MA organizations provide notice to an enrollee's provider, in addition
to notice to the enrollee, when making an organization determination on
a non-drug item or service. We did not propose changing the existing
notice delivery requirements. CMS provides guidance on delivery
requirements in the Parts C & D Enrollee Grievances, Organization/
Coverage Determinations, and Appeals Guidance, available for download
at https://www.cms.gov/medicare/appeals-grievances/managed-care.
We agree with the commenter that delivery of a notice by an MA
organization to an enrollee could be difficult when the enrollee is
receiving care as an inpatient. We believe MA organizations should
continue to make their best efforts to meet all delivery requirements,
and we appreciate when MA organizations strive to provide actual notice
to the enrollee when the MA organization is aware that the enrollee is
located in a contract facility. However, we believe that our proposed
requirement for physicians and providers to receive notice of
organization determinations, as appropriate, would assist in ensuring
that the enrollee's treating provider also receives notice and will
have the opportunity to discuss the decision with the enrollee or the
enrollee's representative. We reiterate that we did not propose
modifying the inpatient discharge notice requirements established at
Sec. Sec. 422.622 through 422.626, nor did we propose a requirement to
make providers responsible for communicating organization
determinations to enrollees on behalf of the MA organization.
Comment: A commenter supported our proposal but recommended that we
go further and require MA organizations to provide plain language in
their notifications around denial of coverage and ensure that
communications clearly articulate information related to appeal rights.
They stated that providers are often placed in the middle between the
health plan and the enrollee and the burden often falls on them to not
only explain coverage to the enrollee, but be blamed if coverage is
denied.
Response: We thank the commenter for their support and appreciate
providers' efforts, when necessary, to articulate denial and appeals
information to MA enrollees. We did not propose changing the existing
model notices used to notify enrollees of an organization determination
(such as the CMS-10003-NDMCP, Notice of Denial of Medical Coverage or
Payment, also known as the Integrated Denial Notice (IDN)). We note
that our current enrollee notices are written in plain language,
consumer tested for understandability and frequently updated to ensure
readability and accuracy. Additionally, form instructions corresponding
with our notices, such as the IDN, provide detailed guidance to MA
organizations--including instructions regarding completion of the
denial rationale (see section titled ``Why did we deny your
request?''). The IDN is available at: https://www.cms.gov/medicare/medicare-general-information/bni/downloads/integrated-denial-notice-instructions-cms-10003.pdf. We will continue to strive to improve our
notices to ensure enrollee understanding of denials, terminations and
appeal rights.
We appreciate the feedback we received from commenters on the
proposed requirements. We are adopting the proposed revisions to
Sec. Sec. 422.568, 422.572, and 422.631 without modification.
[[Page 15859]]
4. Modifying Reopening Rules Related to Decisions on an Approved
Hospital Inpatient Admission (Sec. Sec. 422.138 and 422.616)
Under the regulations at Sec. 422.576, an organization
determination is binding on all parties unless it is reconsidered under
the rules at Sec. Sec. 422.578 through 422.596 or is reopened and
revised under Sec. 422.616. The reopening rules at Sec. 422.616
permit an organization or reconsidered determination made by an MA
organization that is otherwise final and binding to be reopened and
revised by the MA organization under the applicable rules in part 405,
subpart I, at Sec. Sec. 405.980 through 405.986. The reopening rules
in part 405, subpart I, are implementing section 1869(b)(1)(G) of the
Act, which states that the Secretary may reopen or revise any initial
determination or reconsidered determination described in this
subsection under guidelines established in regulations. While the
reopening rules in Sec. Sec. 405.980 through 405.986 are applicable to
the Traditional Medicare program, the regulatory provisions at 42 CFR
part 405 historically have been cross-referenced in the managed care
regulations and have been applied to the MA program consistent with the
provisions at Sec. Sec. 422.562(d) and 422.616 since the inception of
the MA program (and to MA's predecessor, the Medicare+Choice program).
Thus, the ability of an MA organization to reopen and revise an
organization determination for the reasons set forth in regulation is
well established in the MA program. For purposes of this provision, the
discussion is specific to the application of the reopening rules to
organization determinations made by an MA organization that involve
inpatient hospital admission decisions.
Section 422.616(b) permits a reopening at the instigation of any
party and, in accordance with Sec. 422.616(d), once an adjudicator
issues a revised determination, any party may file an appeal. Pursuant
to the applicable reopening regulations at Sec. 405.980(b), an
organization determination or reconsideration may be reopened by an MA
organization within 1 year from the date of the initial determination
or redetermination for any reason. However, in recently promulgated
prior authorization rules at Sec. 422.138(c), if an MA organization
approved the furnishing of a covered item or service through a prior
authorization or pre-service determination of coverage or payment, it
may not deny coverage later on the basis of lack of medical necessity
and may not reopen such a decision for any reason except for good cause
(as provided at Sec. 405.986) or if there is reliable evidence of
fraud or similar fault per the reopening provisions at Sec.
422.616.\52\ Under Sec. 422.138(c), in the case of an approved
organization determination for the furnishing of a covered item or
service made through prior authorization or a pre-service
determination, an MA organization is not permitted to reopen that
decision within 1 year from the date of determination for any reason as
is otherwise permitted at Sec. 405.980(b)(1). While the rules at Sec.
422.138(c) currently allow for reopening of a favorable prior
authorization decision within 4 years from the date of the initial
determination or redetermination for good cause, as defined in Sec.
405.986, we believe a proposed modification to the MA reopening rules
at Sec. 422.616 is necessary with respect to favorable organization
determinations on inpatient hospital admissions.
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\52\ See 88 FR 22120, 22185 through 22217.
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We are aware that some MA organizations are reopening and revising
or otherwise rescinding a prior approval for an inpatient hospital
admission based on a medical necessity determination during the
enrollee's receipt of the previously authorized services or during the
adjudication of the subsequent inpatient claim for payment. For
example, when deciding to admit an enrollee, the hospital requests and
receives approval for the admission from the enrollee's MA
organization. Later, however, the MA organization obtains and reviews
additional medical documentation and determines that the enrollee does
not meet the necessary criteria to support payment for inpatient
hospital services and rescinds or overrides its prior approval. As
discussed in the context of our proposal to strengthen the notice
requirements in Sec. 422.568, some MA organizations are not
consistently providing notice or appeal rights to the enrollee for
these decisions.
The rules at Sec. 405.980(b) permit reopening of a decision if
there is a finding of good cause as defined in Sec. 405.986. If good
cause is found, an organization determination may be reopened within 4
years from the date of the determination. Under the rules at Sec.
405.986, good cause may be established when (1) there is new and
material evidence that was not available or known at the time of the
determination and that may result in a different conclusion; or (2) the
evidence that was considered in making the determination or decision
clearly shows on its face that an obvious error was made at the time of
the determination or decision. New and material evidence is evidence
that was not readily available or known to the person or entity
requesting or initiating the reopening at the time the initial
determination was made by the MA organization and may result in a
different conclusion than reached in the initial determination. Such
evidence may include any record used in the furnishing of care and
supporting the medical necessity of such care. This includes, but is
not necessarily limited to, medical records, progress notes, and
physician orders. Under the reopening rules, a change of legal
interpretation or policy by CMS in a regulation, ruling, or general
instruction is not a basis for reopening an organization determination.
Under existing rules at Sec. 422.138(c), in cases where an
enrollee's inpatient admission into the facility is approved prior to
admission, this decision is binding and may not be reopened and revised
by the MA organization unless there is good cause for a reopening
pursuant to the rules at Sec. 405.986. The inpatient hospital
admission rules at Sec. 412.3(d)(1) and (3) are clear that the
coverage criteria set forth therein are based on the admitting
physician's expectation at the time of admission about whether the
hospital care will cross two-midnights or is otherwise appropriate, as
supported by the medical record. Since the physician's expectation at
the time of admission is based on the clinical information known at
that time as well as the documented medical record at the time of
admission, any subsequent clinical information obtained after an MA
organization has made its initial organization determination would not
have the effect of creating a good cause reopening on the basis of new
and material evidence that was not available or known at the time of
the determination or decision and that may result in a different
conclusion. As part of the organization determination process, it is
incumbent on the MA organization to obtain and review all relevant
clinical information to make an organization determination on a request
for inpatient hospital admission and to comply with requirements for
basic benefits as described in Sec. 422.101(b)(2).
Due to the ongoing issues we have seen with previously approved
inpatient hospital admissions later being inappropriately revised or
rescinded, and to augment the regulations at Sec. 422.138(c), we
proposed to amend Sec. 422.616(a) to state that the reopening
provisions are subject to the rules at Sec. 422.138(c) and proposed a
new paragraph (e) of Sec. 422.616 that would place a limitation on
reopening
[[Page 15860]]
determinations related to favorable inpatient hospital admissions.
Specifically, we proposed Sec. 422.616(e) to state that if an MA
organization approved an inpatient hospital admission under the rules
at Sec. 412.3(d)(1) or (3), any additional clinical information
obtained after the initial organization determination cannot be used as
new and material evidence to establish good cause for reopening the
determination.
These proposed amendments to the reopening rules at Sec. 422.616
present a reasonable approach to curtailing the reopening of approved
hospital admission decisions and are consistent with the rules on
inpatient admission decision-making. Decisions on inpatient admissions
under Sec. 412.3(d)(1) or (3) are based on whether the complex medical
factors documented in the clinical record support the admitting
physician's clinical expectation or judgment. Section 412.3(d)(1)
states that, except as specified in paragraphs (d)(2) and (3) of Sec.
412.3, an inpatient admission is generally appropriate for payment
under Medicare Part A when the admitting physician expects the
beneficiary to require hospital care that crosses two midnights.
Section 412.3(d)(1)(i) states that the expectation of the physician
should be based on such complex medical factors as patient history and
comorbidities, the severity of signs and symptoms, current medical
needs, and the risk of an adverse event. The factors that lead to a
particular clinical expectation must be documented in the medical
record to be granted consideration (with respect to determining the
appropriateness of payment for an inpatient stay). Section
412.3(d)(1)(ii) states that if an unforeseen circumstance, such as a
beneficiary's death or transfer, results in a shorter beneficiary stay
than the physician's expectation of at least two midnights, the
beneficiary may be considered to be appropriately treated on an
inpatient basis, and payment for an inpatient hospital stay may be made
under Medicare Part A. The exception in Sec. 412.3(d)(2) relates to
inpatient admission for a surgical procedure specified by Medicare as
inpatient only under Sec. 419.22(n). The exception in Sec.
412.3(d)(3) states that where the admitting physician expects a
beneficiary to require hospital care for only a limited period of time
that does not cross two midnights, an inpatient admission may be
appropriate for payment under Medicare Part A based on the clinical
judgment of the admitting physician and medical record support for that
determination. The physician's decision is based on such complex
medical factors as patient history and comorbidities, the severity of
signs and symptoms, current medical needs, and the risk of an adverse
event. In these cases, the factors that lead to the decision to admit
the beneficiary as an inpatient must be supported by the medical record
in order to be granted consideration.
Based on these rules, we determined it was appropriate to limit
reopening of a decision involving inpatient hospital admission by
prohibiting reopening for good cause based on new and material
evidence. Any additional clinical information obtained after the
initial organization determination cannot have the effect of creating a
good cause reopening because the determination was made based on what
was known by the physician and documented in the medical record at the
time of admission. Under the rules at Sec. 405.986(a)(2), good cause
for reopening may also be established if the evidence that was
considered in making the determination clearly shows on its face that
an obvious error was made at the time of the determination or decision.
The proposed rule did not seek to modify or limit the applicability of
reopening for obvious error per the rules at Sec. 405.986(a)(2) with
respect to favorable inpatient hospital admission decisions. For
example, there could be a situation where the admitting physician
documents something related to the enrollee's condition incorrectly
into the clinical record that the plan relied upon when making the
favorable decision and the facts and circumstances of such a mistake,
including the significance and materiality of the error, may support a
reopening of the favorable decision on the basis of obvious error. The
need for a plan to reopen a favorable inpatient hospital admission
decision on the basis of obvious error under the rules at Sec.
405.986(a)(2) should be a rare occurrence given the breadth of clinical
documentation that is considered when making a decision on an inpatient
hospital admission.
We acknowledged that our proposed limitation on the type of
clinical information that may be considered new and material evidence
to form the basis to reopen a favorable determination related to an
inpatient hospital admission is a departure from corresponding
Traditional Medicare reopening policies and would, at times, restrict
certain clinical information from forming the basis of new and material
evidence to reopen that would otherwise be available in Traditional
Medicare. While we strive to create and apply policies consistently
between the MA program and Traditional Medicare, the programs' inherent
differences require a tailored approach in this scenario. In
particular, under Traditional Medicare, an initial determination
related to an inpatient admission would only be made after a
beneficiary had received the service and a claim for payment has been
submitted (see Sec. 405.920) and, therefore, generally after a
beneficiary's medical record supporting that service has been fully
developed. In contrast, MA enrollees may receive a favorable
determination related to an inpatient hospital admission before or
contemporaneously to the enrollee's receipt of services (see Sec.
422.566(b)(3)). This means the enrollee's medical records are
continuing to be updated to reflect the changing medical circumstances.
Thus, it is more likely that clinical information obtained after an
initial organization determination could lead to an MA organization
reopening a decision for an enrollee than a beneficiary in Traditional
Medicare, even though the inpatient admissions criteria in Sec. 412.3
apply in the same manner to both programs. MA enrollees should be able
to rely upon an approved inpatient admission made in advance of the
receipt of services, or concurrently with the receipt of services,
despite changing medical circumstances. They should not be concerned
that an MA organization may revise or rescind an approved admission due
to clinical information that was not available or in existence when the
provider determined the need for admission and the MA organization
approved the admission.
Finally, for clarity in the applicability of the reopening rules to
prior authorization and pre-service determinations, we also proposed a
technical amendment to the parenthetical text in paragraph (c) of Sec.
422.138 to add a cross reference to the rules at Sec. 422.616,
including proposed new paragraph (e) related to decisions to approve an
inpatient hospital admission.
We received the following comments on our proposal to modify our
rules related to reopening determinations for good cause.
Comment: Commenters primarily expressed strong support for this
proposal. These commenters noted that this change will be critical to
improving timely and appropriate reimbursement, limiting retroactive
denials by MA organizations, and reinforcing the two-midnight rule's
focus on physician judgment at the time of admission (that is, time of
the inpatient order).
Response: We thank the commenters for their support of this
proposal. As
[[Page 15861]]
noted in the proposed rule, we believe these amendments to the
reopening rules at Sec. 422.616 constitute a reasonable approach to
curtailing the unsubstantiated review of previously approved inpatient
hospital admission decisions and are consistent with the rules on
inpatient admission decision-making at Sec. 412.3. Any additional
clinical information obtained after the initial organization
determination cannot have the effect of creating a good cause reopening
because the determination was made based on what was known by the
physician and documented in the medical record at the time of
admission.
Comment: A few commenters, while expressing support for our
proposal, recommended that CMS expand this proposal to include other
care settings and services and requested that we clarify why the
proposal was limited to inpatient hospital admissions. A commenter
suggested we revise the regulatory text to cover items and services
regardless of site of service. This commenter was concerned that MA
plans could misconstrue the proposal to only include hospital services.
Other commenters suggested we expand this provision to include SNF,
HHA, and IRF services. Noting that providers in post-acute care
settings encounter similar situations in their interactions with
various MA organizations, a commenter recommended this expansion to
safeguard financial stability and the ability to provide high quality
care in these settings. Similarly, another commenter was concerned that
the proposal does not go far enough to protect enrollees from increased
out of pocket costs that may be associated with downgrades and to
protect providers, or hospitals, from significant erosion of payment
amounts after prior authorization was provided for inpatient level of
care. This commenter recommended that CMS consider being more explicit
about MA plans being required to pay for covered items or care at the
setting or location for which it has provided prior authorization. A
commenter recommended that CMS expand this proposal to limit
retrospective down coding and payment denials for services other than
inpatient care to curtail plan behavior that harms physician practices
and their ability to deliver care.
Response: We thank the commenters for their support of our
approach. We agree this change will establish more certainty for
providers and enrollees and will also reduce the volume of post-service
appeals. We also appreciate hearing perspectives that may inform the
need for future rulemaking in this area involving other service
settings. Our proposal was intentionally focused and limited in this
rulemaking, given that we had identified approved inpatient hospital
admissions as being the area of greatest concern. We addressed the
issue of reopenings with respect to inpatient hospital admissions first
because of unique circumstances, such as urgent and emergent admissions
where prior approval may not be permitted, but is often requested, as
well as the prevalence of concurrent review in this setting. We also
note that inpatient hospital admission determinations are unique among
covered items or services in that they are dependent on physician
judgement at the time of the inpatient order. We reiterate that under
existing prior authorization rules at Sec. 422.138(c), if an MA
organization approves the furnishing of a covered item or service
through a prior authorization or pre-service determination of coverage
or payment, it may not deny coverage later on the basis of lack of
medical necessity and may not reopen such a decision for any reason
except for good cause or if there is reliable evidence of fraud or
similar fault per the reopening provisions at Sec. 422.616. The rule
at Sec. 422.138(c) applies to all MA covered items and services, so
there is a safeguard under existing regulations if there has been prior
approval for an item or service. Again, we appreciate the comments and
will take them under consideration for potential future rulemaking.
Comment: A commenter requested clarification in the case where
additional clinical information includes significant new and material
information relevant to an organization decision, such as an indication
of a ``never event.'' Specifically, the commenter questioned if an MA
organization would be permitted to reopen the organization
determination in this case. This commenter requested that CMS permit
the reopening of an approved hospital admission when additional
clinical information indicates a never event.
Response: We appreciate the commenter's request for clarification
in the case of a never event. Never events are events that are
preventable, serious and unambiguous adverse events that should never
occur. These events are subject to national coverage determinations
(NCDs) that establish uniform national policies to prevent Medicare
from paying for certain serious, preventable errors in medical
care.\53\ Our proposed changes to Sec. 422.616 were limited to
reopening inpatient hospital admission decisions on the basis of good
cause for new and material evidence and did not seek to modify an MA
organization's ability to reopen an approved inpatient hospital
admission decision for other reasons pursuant to the rules at Sec.
405.980, such as good cause for obvious error or for fraud or similar
fault. Nonetheless, since a never event that occurs during the
inpatient hospital admission would likely not be a factor at the time
the inpatient admission was approved, the change being made in this
rule wouldn't impact applicable requirements for submitting claims for
payment in the case of a never event, such as submission of a no-
payment claim.
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\53\ https://www.cms.gov/newsroom/press-releases/cms-issues-three-national-coverage-determinations-protect-patients-preventable-surgical-errors.
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Comment: A commenter expressed concern that because the proposal
would foreclose MA organizations' ability to reopen determinations for
good cause, MA plans will increase efforts to find obvious error to
reopen approved initial determinations. This commenter requested that
CMS provide greater clarity about reopening for obvious error, and
clearly delineate the confines of this pathway to restrain the
potential for abuse by MA organizations.
Response: We appreciate the commenter's perspective that
foreclosing the opportunity to reopen for new and material evidence
will incentivize plans to reopen for obvious error. The regulation at
Sec. 405.986(a)(2) permits reopening if the evidence that was
considered in making the determination or decision clearly shows on its
face that an obvious error was made at the time of the determination or
decision. As we stated in the proposed rule, there could be a situation
where the admitting physician documents something related to the
enrollee's condition incorrectly into the clinical record that the plan
relied upon when making the favorable decision and the facts and
circumstances of such a mistake, including the significance and
materiality of the error, may support a reopening of the favorable
decision on the basis of obvious error. We reiterate our belief that
the need for a plan to reopen a favorable inpatient hospital admission
decision on the basis of obvious error under the rules at Sec.
405.986(a)(2) should be a rare occurrence given the breadth of clinical
documentation that is considered when making a decision on an inpatient
hospital admission. Nonetheless, we will monitor the use of reopening
for
[[Page 15862]]
obvious error and provide sub-regulatory guidance, as necessary.
Comment: A commenter suggested CMS clarify that there are limited,
valid reasons for reopening an approved inpatient hospital stay. This
commenter noted that in addition to suspected fraud, waste, or abuse,
CMS should articulate an exception for when a pre-service request for
an admission for a service or procedure was approved, but during
concurrent review, it is discovered that the service or procedure was
not provided. The commenter suggested that, in these rare
circumstances, MA plans should be able to reopen an approved admission
to confirm whether a different service was provided instead.
Response: We thank the commenter for the suggestion, but we do not
believe an exception for this circumstance is warranted. Under the
rules at Sec. 412.3, an inpatient admission is generally appropriate
for payment under Medicare Part A when the admitting physician expects
the beneficiary to require hospital care that crosses two midnights
(that is, the two-midnight rule). This expectation of the physician is
based on such complex medical factors as patient history and
comorbidities, the severity of signs and symptoms, current medical
needs, and the risk of an adverse event. The regulations at Sec. 412.3
require that, as a condition of payment, an order for inpatient
admission must be present in the medical record. Under Sec.
412.3(d)(1), the admitting physician's order specifies the
beneficiary's need for acute hospital care and the expectation that
this acute hospital care will cross two midnights, not the need for a
particular procedure or service. We acknowledge that an inpatient
hospital admission might also be appropriate for a procedure included
on the inpatient-only list per the rules at Sec. 412.3(d)(2) and under
the case-by-case exception to the two-midnight rule at Sec.
412.3(d)(3). The revision to Sec. 422.616 we are finalizing in this
rule specifically refers to approved inpatient admissions under Sec.
412.3(d)(1) and (3). In the case of a prior approval for an inpatient
admission per Sec. 412.3(d)(2), plans will continue to be able to
reopen those decisions on the basis of good cause for new and material
evidence.
Comment: A few commenters requested CMS clarify that both prior
authorization and pre-service organization determinations are subject
to this proposal.
Response: The commenter is correct that the proposed change to the
reopening rules applies to approved hospital inpatient admission
decisions made because of a request for a pre-service organization
determination, including those pre-service organization determinations
that involve prior authorization. Even if a service is not subject to
an MA organization's prior authorization rules, an enrollee has the
right to request an organization determination on a pre-service basis.
Under the rules in Sec. 422.138(c), in the case of an approved
organization determination for the furnishing of a covered item or
service made through prior authorization or a pre-service
determination, an MA organization is not permitted to reopen that
decision within one year from the date of determination for any reason
as is otherwise permitted at Sec. 405.980(b)(1). The rules at Sec.
422.138(c) allow for reopening of a favorable prior authorization
decision, as modified under this final rule to include concurrent
review decisions, within 4 years from the date of the initial
determination or redetermination for good cause, as defined in Sec.
405.986. In this final rule, we are modifying the MA reopening rules at
Sec. 422.616 to prohibit the reopening of a favorable inpatient
hospital admission decision, including a decision subject to Sec.
422.138(c), for good cause based on additional clinical information
obtained after the initial decision.
Comment: A commenter expressed concern that this proposal may
increase initial denials which could disrupt patient care and increase
administrative burden. This commenter recommended that CMS provide
additional policy guidance to ensure MA organizations do not increase
their rate of initial denials.
Response: We appreciate the commenter's concern but believe that,
overall, this modification to the reopening rules will result in more
robust MA organization decision making on inpatient hospital
admissions, consistent with Medicare criteria for inpatient admission,
which include the requirements of Sec. 412.3. Following
implementation, we will monitor any changes that may indicate increased
denials of these types of requests.
Comment: A few commenters opposed our proposal and/or expressed
concern that further limiting MA organizations' discretion to reopen
decisions on inpatient hospital admissions would hamper efforts to
identify and correct fraud, waste, and abuse. These commenters
recommended that CMS maintain the ability for MA organizations to
reopen inpatient admission decisions for new and material evidence.
Response: We thank the commenters for sharing this perspective.
However, we do not agree that it would hamper efforts related to
identifying potential fraud and abuse, as the right to reopen for that
reason remains available to MA organizations under the rules at Sec.
405.980(b)(3).
Comment: A commenter suggested that this proposal would apply a
more stringent standard on MA organizations in comparison to the
Traditional Medicare program and result in penalizing plans for using
prior authorization, as permitted by statute.
Response: We disagree with the commenter's concern that this change
would impose a more stringent standard and would result in penalizing
MA organizations for utilizing prior authorization. With the exception
of the rule at Sec. 422.138(c) and the proposed change to Sec.
422.616, MA organizations retain the right to reopen a decision
consistent with the applicable rules in part 405, subpart I, at
Sec. Sec. 405.980 through 405.986. We believe any variance between
Traditional Medicare and the MA program in how the reopening rules are
applied is fully supported by the nature of the MA program. As stated
by the commenter, MA organizations are permitted to use utilization
management tools such as prior authorization. Prior authorization
affords MA organizations the opportunity to review the medical
necessity of care prior to such care being furnished. Plans are
responsible for making thorough decisions on prior authorization
requests consistent with the rules at Sec. 422.138. We acknowledged in
the proposed rule that limiting the type of clinical information that
may be considered new and material evidence to support reopening a
favorable determination related to an inpatient hospital admission is a
departure from corresponding traditional reopening policies, but
reiterated that this departure was necessitated by differences in the
timing of inpatient hospital admission determinations between MA and
Traditional Medicare. This approach would, at times, restrict certain
clinical information from being used as new and material evidence to
reopen a decision that would otherwise be available in Traditional
Medicare. While we strive to create and apply policies consistently
between the MA program and Traditional Medicare, including by
continuing to apply the inpatient admissions criteria in Sec. 412.3 in
the same manner to both programs, the programs' inherent differences
require a tailored approach in this scenario that considers the timing
of available clinical information. Under Traditional Medicare, an
initial determination related to an inpatient
[[Page 15863]]
admission would only be made after a beneficiary had received the
service and a claim for payment has been submitted (see Sec. 405.920)
and, therefore, generally after a beneficiary's medical record
supporting that service has been fully developed. In contrast, MA
enrollees may receive a favorable determination related to an inpatient
hospital admission before or contemporaneously to the enrollee's
receipt of services (see Sec. 422.566(b)(3)). This means the
enrollee's medical records are continuing to be updated to reflect the
changing medical circumstances. Thus, it is more likely that clinical
information obtained after an initial organization determination could
lead to an MA organization reopening a decision for an MA enrollee than
a beneficiary in Traditional Medicare, even though the inpatient
admissions criteria in Sec. 412.3 apply in the same manner to both
programs. MA enrollees should be able to rely upon an approved
inpatient admission determination made by the MA plan in advance of the
receipt of services, or concurrently with the receipt of services,
despite changing medical circumstances. Enrollees should not be
concerned that an MA organization may revise or rescind an approved
inpatient hospital admission due to clinical information that was not
available or in existence when the provider determined the need for
admission and the MA organization approved the admission.
Comment: A few commenters expressed concern related to a perception
that CMS would be inserting itself into MA organization and
participating provider contractual relationships. A commenter stated
that the proposal would also include cases in which enrollees are
unaffected, and the only issue involves the level of payment from plans
to providers. This commenter suggested that such a limitation would be
inconsistent with the Part C non-interference statutory clause, and
that these situations are addressed through private sector negotiation.
Response: We thank the commenter for this perspective but disagree
that limiting the ability to reopen an approved inpatient hospital
admission for new and material evidence runs afoul of the non-
interference clause at section 1854(a)(6)(B)(iii) of the Act. The
proposed limitation related to reopenings does not relate to the
payment arrangements negotiated between MA organizations and contract
providers. Instead, what we proposed would reinforce the inpatient
hospital admission rules at Sec. 412.3(d)(1) and (3) that the coverage
criteria are based on the admitting physician's expectation at the time
of admission about whether the hospital care will cross two-midnights
or is otherwise appropriate, as supported by the medical record. Since
the physician's expectation at the time of admission is based on the
clinical information known at that time as well as the documented
medical record at the time of admission, any subsequent clinical
information obtained after an MA organization has made its initial
organization determination would not have the effect of creating a good
cause reopening for new and material evidence that was not available or
known at the time of the determination or decision and that may result
in a different conclusion.
Comment: A commenter stated that CMS did not address the scenario
where the requesting provider failed to provide an accurate or complete
medical record or other pertinent information to the health plan in the
first place. The commenter also stated that a plan may require the
requestor to provide certain information through prompts in an
electronic authorization portal and that, in some cases, that
information may not be accurate or complete. Under these circumstances,
pertinent information may not have been available or known at the time
the MA organization made its decision. In that scenario, the commenter
states that an MA organization would be left trying to either establish
fraud or similar fault that the evidence considered in making the
decision clearly shows on its face that an obvious error was made. The
commenter believes that failing to provide an accurate or complete
medical record may not rise to the level of fraud, or indicate an
obvious error made at the time of the determination.
Response: We thank the commenter for this perspective but disagree
that foreclosing the opportunity for an MA organization to reopen a
previously approved inpatient hospital admission for new and material
evidence is unduly restrictive. We believe this approach is appropriate
given the inpatient hospital admission rules, coupled with the nature
of the MA program and MA organizations' responsibility to make thorough
decisions on pre-service requests. The inpatient hospital admission
rules at Sec. 412.3(d)(1) and (3) are clear that the coverage criteria
set forth therein are based on the admitting physician's expectation at
the time of admission about whether the hospital care will cross two-
midnights or is otherwise appropriate, as supported by the medical
record. Since the physician's expectation at the time of admission is
based on the clinical information known at that time as well as the
documented medical record at the time of admission, any subsequent
clinical information obtained after an MA organization has made its
initial organization determination would not have the effect of
creating a good cause reopening on the basis of new and material
evidence that was not available or known at the time of the
determination or decision and that may result in a different
conclusion. As part of the organization determination process, it is
incumbent on the MA organization to obtain and review all relevant
clinical information to make an organization determination on a request
for inpatient hospital admission and to comply with requirements for
basic benefits as described in Sec. 422.101(b)(2). Any additional
clinical information obtained after the initial organization
determination cannot have the effect of creating a good cause reopening
because the determination was made based on what was known by the
physician and documented in the medical record at the time of
admission. We note that whether fraud or obvious error could support
the reopening of a previously approved inpatient admission would be
based on the unique facts and circumstances of a given case, such as if
there's evidence that pertinent clinical information was intentionally
withheld in order to secure approval of an inpatient admission.
Comment: A few commenters expressed concern related to the
unintended impact the proposal may create on expediting seamless care
for the enrollee and stated the belief that MA organizations should be
permitted to revisit the decision to approve a request once all the
information is received. These commenters further noted that there are
already guardrails to prevent arbitrary reopening, and that prior to
finalizing this proposal, CMS should ensure this change does not
interfere with MAOs' ability to enforce Medicare's reasonable and
necessary standard.
Response: We thank the commenters for expressing their concerns. We
do not believe this provision interferes with the proper application of
the reasonable and necessary standard in section 1862(a)(1) of the Act.
As noted in the proposed rule, the inpatient hospital admission rules
at Sec. 412.3(d)(1) and (3) are clear that the coverage criteria set
forth therein are based on the admitting physician's expectation at the
time of admission about whether the hospital care will cross two-
midnights or is otherwise appropriate, as supported by the medical
record. Since the physician's expectation at the time of
[[Page 15864]]
admission is based on the clinical information known at that time as
well as the documented medical record at the time of admission, any
subsequent clinical information obtained after an MA organization has
made its initial organization determination would not have the effect
of creating a good cause reopening on the basis of new and material
evidence that was not available or known at the time of the
determination or decision and that may result in a different
conclusion. Thus, we disagree with the commenter's belief that the MA
organization should be allowed to revisit the admission decision based
on information received at a later time. As part of the organization
determination process, it is incumbent on the MA organization to obtain
and review all relevant clinical information to make an organization
determination on a request for inpatient hospital admission and to
comply with requirements for basic benefits as described in Sec.
422.101(b)(2). The intersection of these requirements ensures that MA
organization decisions are made consistent with the standards related
to medical necessity.
Comment: A commenter recommended that CMS continue to allow changes
to existing prior authorizations when such changes do not result in
increased financial responsibility for the enrollee. The commenter
further suggested if changes to a prior authorization are appropriate
as additional information becomes available, those changes should
continue to be allowed if the enrollee is held harmless. The commenter
also stated that changes to the approved level of care should not
require additional enrollee notification or be subject to enrollee
appeal unless the enrollee faces higher out of pocket cost due to the
change.
Response: Under the existing prior authorization rules at Sec.
422.138(c), if an MA organization approves the furnishing of a covered
item or service through a prior authorization or pre-service
determination of coverage or payment, it may not deny coverage later on
the basis of lack of medical necessity and may not reopen such a
decision for any reason except for good cause or if there is reliable
evidence of fraud or similar fault per the reopening provisions at
Sec. 422.616. In this final rule, we are modifying the rules at
Sec. Sec. 422.616 and 422.138(c) to state that an inpatient hospital
admission that was approved on a pre-service or prior authorization
basis or through a concurrent determination cannot be reopened for good
cause on the basis of new and material evidence. The change in this
rule to restrict reopening for good cause on the basis of new and
material evidence is limited to approved hospital inpatient admissions.
So, for example, if there's good cause under the rules at Sec. 405.986
for an MA plan to reopen a previously approved service that does not
involve an inpatient hospital admission, the plan retains the authority
to do so.
We disagree with the commenter's suggestion that level of care
changes should not require notice to the enrollee unless the enrollee
faces higher out of pocket costs due to the change and that prior
authorization approvals that do not impact an enrollee's financial
responsibility should be permitted. As we discuss elsewhere in this
rule in the context of the provision related to when notice of a
decision is required, decisions related to changes in level of care are
organization determinations that affect enrollee services and warrant
notice and an opportunity to appeal.
Comment: A commenter requested that CMS clarify that this change
would not apply to situations where an authorization was previously
denied but the MA plan received additional information that may
subsequently lead to an approval.
Response: We thank the commenter for requesting this clarification.
The change we proposed to the reopening rules at Sec. 422.616 to
prohibit an MA organization from reopening a decision for new and
material evidence applies exclusively to any approved prior
authorization or pre-service approval on an inpatient hospital
admission.
Comment: A few commenters urged CMS to consider the impact of MA
organizations reopening prior authorizations on approved physician
services. A commenter noted that, under this proposal, enrollees and
their contract providers will still have no CMS administrative remedy
to appeal under part 422, subpart M, any denials that occur after claim
submission, and given the growth in post-service claim denials and the
tactics to circumvent CMS rules governing coverage determinations by
labeling them as payment policies, CMS should strengthen enrollee and
provider appeal rights that occur after claim submission. This
commenter was concerned that without further CMS intervention, many
types of denials for coverage and payment that occur after the claim
will continue to be invisible to CMS and affected parties will have no
appealable interest to remedy them. Some commenters recommended that
CMS set further parameters around post-claim audit activity for other
types of services and urged CMS to curtail the use of post-payment
audit schemes that create unnecessary barriers and increases
administrative costs.
Response: We appreciate this feedback, but as we did not propose to
modify existing post-payment review activities or appeal rights for
contract providers these recommendations are outside the scope of this
rulemaking. Payment disputes between MA organizations and contract
providers are subject to the plan's internal dispute resolution
process. With respect to reevaluation of prior authorizations for
services provided by physicians, these reviews are subject to the rules
at Sec. Sec. 422.138(c) and 422.616. We will take the commenter's
concerns into consideration for potential future rulemaking.
Comment: A commenter recommended revising the remainder of Sec.
422.138 to reference both concurrent and retrospective reviews. This
commenter noted that paragraph (b) sets out the appropriate purposes of
prior authorizations, and the commenter does not believe there is any
policy rationale for permitting other pre-payment coverage review
processes (that is, concurrent and retrospective reviews) to be
conducted for purposes other than those set forth in paragraph (b).
They also suggested paragraph (a) be revised to reflect the section's
applicability to the full range of pre-payment coverage determinations
(prior authorizations, concurrent reviews, and retrospective reviews).
Response: We appreciate the commenter's remarks, but note that
referencing retrospective reviews in Sec. 422.138, as the commenter
suggests, would be in conflict with our position that a retrospective
review decision is an organization determination that relates solely to
payment. The rules in Sec. 422.138(c), related to prior authorization
and pre-service approval of items and services, as modified under this
final rule to include concurrent review, are designed to address
circumstances where an MA organization would use information that is
received after the initial approval as a means to reopen and overturn
the approval decision. As a retrospective review decision (whether made
unsolicited or in response to a request) is an initial decision made by
a plan on whether to pay for services already furnished, we do not
believe there is similar concern for plans reopening these types of
decisions since, as a practical matter, the plan would already have
access to medical records for the entire hospital stay and would be
less prone to reopen the retrospective decision later. We, therefore,
do not
[[Page 15865]]
believe it necessary to add a reference to retrospective review
decisions to the rules in Sec. 422.138(c).
After consideration of the comments received, we are finalizing the
amendment to Sec. 422.616(a) to state that the reopening provisions
are subject to the rules at Sec. 422.138(c) and finalizing the
addition of new paragraph (e) to Sec. 422.616, placing a limitation on
reopening determinations related to favorable inpatient hospital
admissions without modification. In finalizing new paragraph (e) to
Sec. 422.616, we are omitting the unitalicized heading that was
included in the proposed rule. We are also finalizing the technical
amendment to the parenthetical text in paragraph (c) of Sec. 422.138
to add a cross reference to the rules at Sec. 422.616 with a minor
modification to fix an editorial error that was inadvertently made in
the proposed regulation text revision (specifically, reinstating ``or''
between ``prior authorization'' and ``pre-service determination''.
Lastly, in providing feedback to our proposals, commenters also
raised concerns or provided recommendations related to the following:
A commenter urged CMS create a provider-specific
electronic form for reporting suspected MA violations to CMS.
A commenter recommended that we extend the timeframe for
filing an appeal to 120 days to be consistent with Traditional
Medicare.
A commenter stated the main problem that remains to be
addressed is that there is no avenue for enrollees to appeal their
inpatient denials via subpart M that does not require some action from
the MA organization. They suggested enrollees or their advocates be
able to file an appeal directly to the IRE.
A commenter strongly urged CMS to prohibit MA
organizations from applying arbitrary, short prior-authorization
periods that lead to time-consuming reauthorizations, which often
disrupt care, and recommended clarity and consistency on the course of
treatment.
A commenter requested that CMS ensure that providers are
only required to submit new information, if applicable.
A commenter recommended CMS clarify content requirements
for adverse organization determinations continue to apply to partially
adverse organization determinations.
We appreciate the feedback provided by commenters. We note, though,
that the items outlined previously were outside the scope of the
rulemaking.
B. Clarifying the Definition of ``County'' (Sec. 422.116)
Network adequacy of MA organizations is assessed by CMS at the
county level, including county-equivalents, across all geographic areas
in the United States and its territories. CMS uses the county level for
purposes of determining the number and type of providers and
facilities, based on time and distance, with which an MA organization
must contract to ensure there is adequate access to Parts A and B
services for beneficiaries. The minimum number of providers and
facilities, provider specialty type, and time and distance requirements
are codified at Sec. 422.116(d) and (e). CMS's longstanding policy,
interpretation, and application of existing network adequacy
regulations uses the term ``county'' to mean the areas designated by
the Census Bureau as the primary political and administrative division
of States. The Census Bureau also considers certain geographic areas as
county-equivalents. County-equivalents include, but are not limited to,
boroughs, certain designated cities, parishes, municipalities and the
District of Columbia. CMS uses the Census Bureau's designation of
county and county-equivalent in establishing network adequacy standards
to ensure consistency in the application of CMS's network adequacy
requirements across the country.
For purposes of determining network adequacy, CMS proposed to
codify its longstanding policy of treating county equivalents the same
as counties for network adequacy determination purposes by defining
``county'' in Sec. 422.116. In Sec. 422.116, we proposed to create a
new paragraph (a)(1) and redesignate the current paragraphs (a)(1)
through (4) as paragraphs (a)(2) through (5). We also proposed to
define ``county'' in new paragraph (a)(1) as the primary political and
administrative division of most States and includes functionally
equivalent divisions called ``county equivalents'' as recognized by the
United States Census Bureau (for economic census purposes).
In Sec. 422.2, CMS defines service area to include a geographic
area that for local MA plans is a county or multiple counties. We
proposed to modify the definition to align with our proposal to include
a definition of county in Sec. 422.116 that includes ``county-
equivalents'' as recognized by the United States Census Bureau for
economic census purposes. To ensure consistency in the use of the term
``county'' across service area and network adequacy requirements and to
codify our longstanding policy of treating county-equivalents the same
as counties for these network adequacy evaluation purposes, we proposed
to amend the definition of service area in Sec. 422.2 to refer to ``a
geographic area that for local MA plans is one or more counties, as
defined in Sec. 422.116(a)(1)''.
These proposals were discussed in sections III.E. and III.N.1 of
the proposed rule (89 FR 99384 and 89 FR 99424, respectively) and are
being reorganized and finalized, in section III.B. of this final rule.
Comment: Several commenters supported CMS's proposal to modify the
definition of service area in Sec. 422.2, to align with our proposal
to include a definition of county in Sec. 422.116 that includes
``county-equivalent'' for network adequacy purposes. Commenters noted
that these changes would promote consistency, provide clarity regarding
the definition of service area, improve access to care, and ensure that
information regarding plan networks is accurate for enrollees making
decisions about their coverage.
A commenter, who supported CMS's proposals, requested clarification
on how CMS intends to address flexibility in meeting network adequacy
standards within the updated service area definition, particularly for
plans operating in rural and underserved areas.
Another commenter requested that CMS provide timely updated
guidance regarding these changes and allow organizations time to ensure
that they can close any network adequacy gaps that would result in
areas such as a ``county-equivalent'' Planning Region, which may not
fully overlap with a previously mapped county.
Response: We thank the commenters for their support of our
proposals. We note that CMS currently uses counties and county-
equivalents to establish network adequacy standards and to apply the
network adequacy requirements. The changes herein serve to clarify, in
our regulations, that CMS uses the Census Bureau's designation of
county and county-equivalent in establishing network adequacy
standards. Therefore, we agree with commenters that this clarification
would promote consistency. It does not impose any new requirements and
therefore should not require additional guidance. Under the current
rules, and the changes we are finalizing, organizations will continue
to be able to use the exception request process outlined at Sec.
422.116(f) in any service area, including in rural and underserved
counties and county-equivalents, where they are unable to satisfy CMS
network
[[Page 15866]]
adequacy requirements. We agree that these proposals will allow us to
continue to ensure consistency in CMS's application of network adequacy
standards throughout MA organizations' existing and future service
areas.
Comment: Some commenters opposed these proposals. These commenters
noted that they did not agree that CMS should treat a county equivalent
the same as a county for network adequacy purposes because it would
increase the number of geographic areas throughout the country that
would be subject to network standards and that it could possibly
trigger the need for additional exception requests to be submitted as
part of network adequacy reviews.
Response: We reiterate that the proposed policy was a codification
of CMS's longstanding policy to use the term ``county'' to mean the
areas designated by the Census Bureau (that is, the primary political
and administrative division of States, including county-equivalents
which include, but are not limited to, boroughs, certain designated
cities, parishes, municipalities and the District of Columbia), in
establishing network adequacy standards. Therefore, the codification of
CMS's established policy of treating a county-equivalent the same as a
county for network adequacy purposes, by defining ``county'' in Sec.
422.116, will not result in additional burden for organizations,
additional standards for network adequacy determination purposes, or
additional exception request submission requirements.
After reviewing and considering the public comments received on
these proposals, CMS is finalizing its proposals to modify the
definition of service area in Sec. 422.2, and to add a definition of
county in Sec. 422.116 that includes county-equivalent for network
adequacy purposes. The finalization of our proposals clarifies our
longstanding policy and interpretation of the term ``county'' for
network adequacy determination purposes.
C. Non-Allowable Supplemental Benefits for the Chronically Ill (SSBCI)
(Sec. 422.102)
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. The April 23, 2024 final rule titled ``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)'' (the ``April 2024 final rule'') (89 FR 30448) finalized
requirements at Sec. 422.102(f)(3) 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 an SSBCI has a reasonable expectation of improving or
maintaining the health or overall function of a chronically ill
enrollee. In the April 2024 final rule, we also codified at Sec.
422.102(f)(5) that 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.
In addition, in the April 2024 final rule (89 FR 30448), we modified
and strengthened the requirements in Sec. 422.2267(e)(34) for the
SSBCI disclaimer that MA organizations that offer SSBCI must use
whenever SSBCI are mentioned. Specifically, we required 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. We
also finalized 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 required that MA organizations include the SSBCI disclaimer
in all marketing and communications materials that mention SSBCI. These
requirements further 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.
Section 1852(a)(3)(A) of the Act provides CMS the authority to
approve supplemental benefits. Supplemental benefits must meet the
regulatory and statutory requirements for approval, including that the
benefits may not be approved if the agency finds that including such
supplemental benefits would substantially discourage enrollment by
Medicare+Choice (now Medicare Advantage) eligible individuals with the
organization. Further, per section 1854(a)(5)(C) of the Act, CMS is not
obligated to accept any or every bid submitted by an MA organization.
Based on our experience reviewing, approving, and denying bid proposals
throughout the years, we relied upon these authorities to propose in
regulation a non-exhaustive list of non-primarily health related items
or services that do not meet the standard of having a reasonable
expectation of improving or maintaining the health or overall function
of the enrollee standard as described in section 1852(a)(3)(D)(ii)(I)
of the Act and at CMS regulations at Sec. 422.102(f)(1)(ii). We
believe that codifying a non-exhaustive list of examples of items or
services that do not meet these standards will provide transparency and
greater certainty for MA organizations and enrollees about the rules
that govern these benefits.
As discussed in the proposed rule we proposed to codify a non-
exhaustive list of nonprimarily health related items or services that
do not have a reasonable expectation of improving or maintaining the
health of a chronically ill enrollee and therefore cannot be offered as
SSBCI.
Those items include--
Procedures that are solely cosmetic in nature
and do not extend upon Traditional Medicare coverage (for example,
cosmetic surgery such as facelifts or cosmetic treatment for facial
lines, atrophy of collagen and fat, and bone loss due to aging);
Alcohol, tobacco, and cannabis products;
Funeral planning and expenses;
Life insurance;
Hospital indemnity insurance; and
Broad membership-type programs inclusive of
multiple unrelated services and discounts.
These items and services cannot be offered as SSBCI for the
following reasons:
Regarding cosmetic services, CMS explained in previous guidance
(see Health Plan Management System (HPMS) memorandum ``Final Contract
Year (CY) 2025 Standards for Part C Benefits, Bid Review and
Evaluation,'' dated May 6, 2024, pp. 30-31) that coverage for
procedures that are cosmetic in nature are not permitted to be offered
as SSBCI because these benefits do not meet the statutory requirement
of a ``reasonable expectation of improving or maintaining the health or
overall function of the enrollee.'' Some plans have proposed to offer
cosmetic services for aesthetic purposes only, such as botulinum toxin
injections for lines and wrinkles, in their bids. CMS has previously
disapproved these proposals during its bid review because purely
cosmetic procedures are not health related and
[[Page 15867]]
thus cannot be permitted as a supplemental benefit.
As explained in more detail in the proposed rule at 89 FR 99391,
some cosmetic procedures may be acceptable to be offered as an SSBCI
benefit if used to treat medical conditions that affect health or
overall function and would not be considered purely cosmetic in nature.
For example, the use of botulinum toxin injections is acceptable when
treating medical conditions such as an overactive bladder, headache
prevention in adults with chronic migraine, and increased muscle
stiffness in adults with limb spasticity.
In the 2019 HPMS memo titled ``Implementing Supplemental Benefits
for Chronically Ill Enrollees,'' CMS stated that MA organizations may
offer food and produce to assist chronically ill enrollees in meeting
nutritional needs assuming all requirements for SSBCI under Sec.
422.102(f) are met, and that such items may include items such as (but
not limited to) produce, frozen foods, and canned goods. CMS noted that
tobacco and alcohol are expressly prohibited however, as neither are
considered food or nutritional. In addition, CMS has received inquiries
from MA organizations about whether they are permitted to offer
cannabis-based products as a supplemental benefit. In response to these
inquiries, CMS has stated that medical marijuana or derivatives, such
as cannabis oil, cannot be covered by MA organizations as they are
illegal substances under Federal law.
CMS also stated that while MA organizations may provide services to
assist in the establishment of decision-making authority for health
care needs (for example, power of attorney for health care) and/or may
provide education such as financial literacy classes, technology
education, and language classes, assuming all requirements for SSBCI
under Sec. 422.102(f) are met, coverage of funeral expenses is not
permitted. Funeral services are provided after the death of the
beneficiary and, as such, cannot be tied to improving or maintaining
that individual's health or overall function. Similarly, life insurance
would not be permissible as SSBCI.
CMS also does not consider hospital indemnity insurance to meet the
definition of a supplemental benefit. MA organizations offering
supplemental benefits must incur a non-zero direct medical cost, except
that in the case of an SSBCI that is not primarily health related the
MA organization may instead incur a non-zero, direct non-administrative
cost (Sec. 422.100(c)(2)(ii)(B)). Reductions in cost sharing fit into
the definition of a supplemental benefit as they are increases in the
MA organization's share of the overall payment for the covered health
care item or service. However, payment for hospital indemnity insurance
premiums would not fit this definition because an MA organization
paying for separate, third-party insurance for the enrollee does not
incur a direct cost on behalf of the enrollee. Rather, it shifts
payment for medical costs to another payer. See also Contract Year 2026
proposed rule at 89 FR 99392 for further discussion.
Finally, CMS has received and declined proposals from MA
organizations to offer broad membership programs, inclusive of multiple
unrelated services and discounts, such as Amazon Prime, Costco, and
others, as SSBCI. A generic membership is not permissible as SSBCI
because it is not limited to items or services that have a reasonable
expectation of improving or maintaining the health or overall function
of the enrollee. That is not to say that an MA organization cannot
contract with any of these retailers to offer covered benefits in some
capacity (for example, benefits administered via a restricted debit
card). However, a generic membership that would include items or
services that do not have a reasonable expectation of improving or
maintaining the health or overall function of the enrollee and no
mechanism to ensure that enrollees receive only covered benefits is not
compliant with CMS rules regarding supplemental benefits and thus not
allowable as SSBCI. Additionally, we note the statutory prohibition
against MA organizations offering cash or monetary rebates (section
1851(h)(4)(A) of the Act).
CMS proposed to codify the examples discussed here as items and
services that cannot be offered as SSBCI at Sec. 422.102(f)(1)(iii)
and solicited comment on all aspects of this proposal. CMS also
solicited comment on other items and services not listed here that
would be appropriate to include in the list of items that may not be
offered as SSBCI and stated that we may consider finalizing revisions
to the proposed policy in response to comments received.
Finally, we reiterate that this is a non-exhaustive list of
benefits and services that may not be offered as an SSBCI. All benefits
must be proposed in a plan's annual bid and are subject to review by
CMS. Further, all SSBCI must meet the requirements under Sec.
422.102(f), including the requirement of a written bibliography of
relevant acceptable evidence that demonstrates the impact of a service
on the health or overall function of its recipient (Sec.
422.102(f)(3)), and the requirement that enrollees must meet all the
eligibility requirements under Sec. 422.102(f) to receive an SSBCI
service or benefit.
This final rule will codify and clarify existing guidance and
practices, including the practice of providing technical assistance
during bid review and is not expected to have additional impact above
current operating expenses for MA organizations. This final rule will
not impose any new collection of information requirements.
CMS thanks commenters for their input to help inform our final rule
on items that are not allowable as SSBCI. CMS received the following
comments on this proposal, and our responses follow.
Comment: Commenters were largely supportive of CMS codifying the
proposed list of items that are not allowable as SSBCI. MA plans stated
that knowing what proposed SSBCI benefits CMS will not accept ahead of
time helps streamline the bid submission and review processes.
Response: We agree that codifying this list will be helpful to MA
plans in submitting bids to CMS and serve to improve the efficiency of
the bid submission and review process.
Comment: Some commenters requested that CMS also codify a list of
allowable SSBCI. Some commenters requested that CMS update sub-
regulatory guidance (for example, chapter 4 of the Medicare Managed
Care Manual) to assist plans. These commenters stated that such
guidance would be helpful for plans as they plan and prepare their
annual bids.
Response: We thank commenters for the suggestion and will consider
codifying a non-exhaustive list of allowable SSBCI in regulation in the
future. In the interim, we remind commenters that a discussion of
examples of allowable SSBCI was discussed 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'' (herein after referred to as
the June 2020 final rule) (85 FR 33801).
Comment: Some commenters requested that CMS create a process that
allows plans to solicit feedback from CMS on allowable SSBCI, prior to
bid filing.
Response: CMS will consider this suggestion for the future. CMS
also reminds plans that they may submit questions or solicit feedback
concerning
[[Page 15868]]
specific benefits being considered before the bid deadline.
Comment: A commenter requested that CMS explain what is meant by
``broad membership-type programs inclusive of multiple unrelated
services and discounts'' and to further explain what inclusive services
are non-allowable as SSBCI.
Response: As discussed in the proposed rule, a generic membership
(for example, Amazon Prime, Costco, and others) is not permissible as
SSBCI because it cannot be limited to items or services that have a
reasonable expectation of improving or maintaining the health or
overall function of the enrollee. For example, a Costco membership
could include services such as discounts for non-covered items and cash
bonuses, none of which are acceptable as a supplemental benefit per CMS
rules. Further, plans submit specific, proposed supplemental benefits
in their annual bids for CMS to review and approve each year. A plan
cannot propose to offer supplemental benefits that are generic or non-
specific in nature as part of this submission. A generic membership
could include coverage and discounts for items not specified in the
plan's benefit submission, which is prohibited. These memberships also
may include items that CMS would not consider an approvable benefit or
a benefit that is disallowed (for example, streaming services,
discounted travel bookings, discounts to fast food chains, etc.).
Finally, section 1851(h)(4)(A) of the Act prohibits plans from giving
enrollees cash. Many of these memberships include cash back benefits,
which are strictly prohibited by statute. For these reasons, these
generic memberships cannot be offered as SSBCI.
Comment: A commenter expressed concern that the requirement for
SSBCI to have ``a reasonable expectation of improving or maintaining
the health of a chronically ill enrollee'' is too vague, specifically
citing a lack of clarity on whether items such as food and non-medical
adaptive equipment (for example, grabbers, raised toilet seats, door
levers, motion detecting interior lights for hallways) would be
allowable. The commenter recommended CMS reconsider the language in
this section to add clarity and specificity so that non-medical items
and services that help frail, elderly beneficiaries are not excluded
from coverage.
Response: Section 1852(a)(3)(D) of the Act explicitly requires
SSBCI to have a reasonable expectation of improving or maintaining the
health or overall function of the chronically ill enrollee. We note
that the April 24, 2019, HPMS memo titled ``Implementing Supplemental
Benefits for Chronically Ill Enrollees,'' \54\ and the June 2020 final
rule (85 FR 33801) discuss these items. As mentioned in the proposed
rule and in the discussion above, the 2019 HPMS memo stated that MA
organizations may offer food and produce to assist chronically ill
enrollees in meeting nutritional needs assuming all requirements for
SSBCI under Sec. 422.102(f) are met, and that such items may include
items such as (but not limited to) produce, frozen foods, and canned
goods.
---------------------------------------------------------------------------
\54\ https://www.cms.gov/medicare/health-plans/healthplansgeninfo/downloads/supplemental_benefits_chronically_ill_hpms_042419.pdf.
---------------------------------------------------------------------------
Additionally, also noted in the 2019 HPMS memo, certain home
structural modifications that may assist in the chronically ill
enrollee's overall function, health, or mobility may be covered as
SSBCI if those items and services have a reasonable expectation of
improving or maintaining the health or overall function of the
chronically ill enrollee (such as, widening of hallways or doorways,
permanent mobility ramps, easy use doorknobs and faucets). Regarding
grabbers, raised toilet seats, door levers, and motion detecting
interior lights for hallways, CMS considers these items primarily
health related per CMS requirements at 42 CFR 422.100(c)(2)(ii) and
permissible as a standard supplemental benefit. CMS has approved bid
proposals that include these items in prior years.
Comment: Several commenters requested more clarity on food and
nutrition specifically. A commenter requested that CMS further clarify
how plans may provide food to prevent and manage diet-related diseases.
Other commenters asked CMS to clarify how plans may provide ``Food is
Medicine'' \55\ within the parameters of supplemental benefits
requirements.
---------------------------------------------------------------------------
\55\ https://odphp.health.gov/foodismedicine.
---------------------------------------------------------------------------
Response: We thank commenters for their input. As outlined above
and noted in the proposed rule, CMS has stated in previous guidance
that plans may offer food and produce to assist chronically ill
enrollees in meeting nutritional needs as SSBCI.\56\ A food benefit
helps maintain the health and overall function of a chronically ill
enrollee, and therefore is an appropriate SSBCI, when the food assists
in meeting the nutritional needs of the beneficiary.
---------------------------------------------------------------------------
\56\ See HPMS Memo issues on April 24, 2019, titled
``Implementing Supplemental Benefit for Chronically Ill Enrollee'':
https://www.cms.gov/medicare/health-plans/healthplansgeninfo/downloads/supplemental_benefits_chronically_ill_hpms_042419.pdf.
---------------------------------------------------------------------------
Similarly, CMS would not consider non-healthy food--that is food
that does not assist in meeting the nutritional needs of a chronically
ill enrollee--as an appropriate SSBCI. In response to comments
requesting further clarity on this subject, CMS is finalizing a
revision to the proposal to add ``non-healthy food'' to the non-
exhaustive list of items that are not allowable as SSBCI. CMS is not
providing a list of specific foods that may or may not be considered
``non-healthy food.'' Rather, CMS reiterates its longstanding guidance
regarding food as an allowable SSBCI, specifically, that plans may
offer food and produce to assist chronically ill enrollees in meeting
nutritional needs as SSBCI, assuming all requirements for SSBCI under
Sec. 422.102(f) are met. Plans should apply this standard to determine
what is allowable and design their food benefits to ensure that those
benefits assist in meeting the nutritional needs of a chronically ill
enrollee.
CMS regulations at 42 CFR 422.102(f)(3) require MA plans to
establish a written bibliography of relevant acceptable evidence
concerning the impact that any item or service included as SSBCI in its
bid has on the health or overall function of its recipient. If a plan
were to submit a bid proposal that includes non-healthy food as SSBCI,
CMS may ask the plan to provide a bibliography of evidence for how the
proposed food benefit assists in meeting the nutritional needs of a
chronically ill enrollee. If necessary, in these instances, CMS could
give the plan the opportunity to propose limitations on the proposed
benefit, or otherwise modify their bid proposal. As noted previously,
our 2019 HPMS memo stated that MA organizations may offer food and
produce to assist chronically ill enrollees in meeting nutritional
needs and that plans may include items such as (but not limited to)
produce, frozen foods, and canned goods. In adding ``non-healthy food''
to the list of items that are not allowable as SSBCI, CMS is not
departing from that 2019 guidance. Non-healthy food does not have a
reasonable expectation of improving or maintaining the health or
overall function of an enrollees, and therefore, may not be offered as
an SSBCI.
Based on the comments received, we are finalizing the provisions at
Sec. 422.102(f)(1)(iii) as proposed, with one modification to add
``non-healthy food'' as an example of an item that is not allowable as
SSBCI at Sec. 422.102(f)(1)(iii)(I).
[[Page 15869]]
D. Risk Adjustment Data Updates
1. Update the Definition of Hierarchical Condition Categories (HCC)
(Sec. 422.2)
The current regulation at 42 CFR 422.2 defines Hierarchical
Condition Categories (HCC) as ``disease groupings consisting of disease
codes (currently ICD-9-CM codes) that predict average healthcare
spending. HCCs represent the disease component of the enrollee risk
score that are applied to MA payments.'' HCCs are used in risk
adjustment model calibrations, in risk score calculations to determine
individual risk scores, and in Sec. 422.311 as part of describing risk
adjustment data validation audit reports and the voluntary dispute
resolution process available for MA organizations to dispute errors
identified during those audits. The current definition at Sec. 422.2
references the International Classification of Diseases, Ninth
Revision, Clinical Modification (ICD-9-CM), which was the standard
medical data code set HHS adopted for health conditions from October
16, 2002, to September 30, 2015 (45 CFR 162.1002(a)(1) and 45 CFR
162.1002(b)(1)). For the period starting on October 1, 2015, HHS
adopted an updated version of the ICD, ICD-10-CM, as the standard
medical data code set for health conditions (45 CFR 162.1002(c)(2)).
Valid ICD diagnosis codes--referred to as disease codes in the current
HCC definition--are only those from the ICD version that is in place
during a respective year. For example, for dates of service starting on
October 1, 2015, only valid ICD-10-CM codes would have been included in
HCCs, since ICD-9-CM codes were no longer in use.
CMS proposed to remove the reference to a specific version of the
ICD from the definition of HCC in Sec. 422.2, while maintaining a
reference to the ICD in general to keep the definition in Sec. 422.2
current as newer versions of the ICD become available and are adopted
by the Secretary and updates are made to the HCCs in model calibrations
to reflect newer versions of the ICD. The ICD is updated as advances
are made in healthcare, and as new editions are issued, the code set
standard adopted by HHS may change to use the most current edition. See
section 1173(c) of the Act for the Secretary's authority to adopt code
sets, as well as 45 CFR part 162 (specifically, Sec. Sec. 162.1000
through 162.1011) for the diagnosis code sets adopted for transactions
under the Health Insurance Portability and Accountability Act of 1996
(HIPAA).\57\ We also proposed to substitute the terms ``disease codes''
with ``diagnosis codes'' and ``disease groupings'' with ``diagnosis
groupings'' to be consistent with ICD terminology.
---------------------------------------------------------------------------
\57\ Public Law 104-191, 110 Stat. 1936.
---------------------------------------------------------------------------
The update CMS proposed is a technical change to the longstanding
definition of HCC at Sec. 422.2. As stated in the proposed rule,
removing the reference to a specific version of the ICD from the HCC
definition does not change the meaning of HCC or how it is used in
Sec. 422.311, which has been defined and used in MA regulations since
2010 (75 FR 19803) as part of describing risk adjustment data
validation audit reports and the voluntary dispute resolution process
available for MA organizations to dispute errors identified during
those audits. For this reason, CMS does not expect that the change will
result in additional costs or savings, and we therefore are not scoring
this provision in the Regulatory Impact Analysis section. Further, as
we are not imposing any new reporting requirements, we do not believe
the change will result in additional paperwork burden and have not
incorporated a burden increase in the Collection of Information
section.
We received the following comments on this proposal, and our
responses follow:
Comment: A few commenters expressed support for the proposal to
remove the reference to a specific version of the ICD, while
maintaining a reference to the ICD in general, and for substituting the
terms ``disease codes'' with ``diagnosis codes'' and ``disease
groupings'' with ``diagnosis groupings'' to be consistent with ICD
terminology, in the definition of HCC in Sec. 422.2, with an
additional commenter stating that it did not oppose the proposal.
Response: We thank the commenters for their support and for their
feedback.
Comment: A commenter opposed the proposed change, stating that CMS
has adequate flexibility to address risk adjustment updates through the
established rulemaking process, including changes to the use of HCCs,
diagnosis codes, and related definitions. Further, the commenter is
concerned that removing the reference to a specific version of the ICD
and substituting terms such as ``disease codes'' with ``diagnosis
codes'' could allow CMS to implement future modifications to the risk
adjustment model without undergoing the full rulemaking process. The
commenter further stated that the introduction of broad language and
new definitions could create unnecessary disruption and uncertainty in
the program, and result in variability in interpretation and
implementation, increasing administrative complexity for plans.
Response: Thank you for the comment. Removing the reference to a
specific version of the ICD from the HCC definition in regulation does
not alter the risk adjustment methodology or modify the risk adjustment
models; further, as we stated, it does not change the meaning of the
term HCC or how HCCs are used, therefore we do not believe this
technical update will result in uncertainty in interpretation or
implementation. CMS updates the risk adjustment methodology for payment
in accordance with section 1853(b)(2) of the Act, and Sec. 422.312,
which require that CMS annually provide notice of planned changes in
the Medicare Advantage (MA) capitation rate methodology and risk
adjustment methodology--including the risk and other factors to be used
in adjusting rates under Sec. 422.308 for payments for months in that
year--and provide the public an opportunity to comment on the proposed
changes. As per statute, CMS publishes the Advance Notice of
Methodological Changes for Medicare Advantage (MA) Capitation Rates and
Part C and Part D Payment Policies (the Advance Notice) no fewer than
60 days before the publication of the Announcement of MA Capitation
Rates and Part C and Part D Payment Policies (the Rate Announcement),
where we finalize our policies for the upcoming payment year, providing
a minimum 30-day period for public comment on the changes proposed in
the Advance Notice.
After consideration of the comments received, CMS is finalizing the
change to the HCC definition at Sec. 422.2 as proposed.
2. Clarifying the Obligation of PACE Organizations To Submit Risk
Adjustment Data (Sec. 460.180(b))
Section 1894(d)(1) of the Act provides that CMS shall make payments
to PACE organizations in the same manner as MA organizations. To do so,
PACE organizations must submit data in accordance with the risk
adjustment data requirements for MA organizations at Sec. 422.310.
Codified at 42 CFR 460.200, PACE organizations are required to collect
data, maintain records, and submit reports as required by CMS to
establish payment rates. CMS proposed to codify the longstanding
practice of requiring the collection and mandatory submission of risk
adjustment data by PACE organizations by adding a new paragraph at 42
CFR 460.180(b)(3) that requires the data PACE organizations submit be
in
[[Page 15870]]
accordance with risk adjustment data submission requirements in Sec.
422.310.
As stated in the proposed rule, the new paragraph CMS proposed
adding to Sec. 460.180(b) codifies longstanding practice; it does not
change existing reporting requirements set forth and approved under OMB
0938-1152 (CMS-10340) and OMB 0938-0878 (CMS-10062), nor does it make
any changes to payment for PACE organizations. For this reason, CMS
does not expect that this regulatory change will result in additional
costs or savings.
We received the following comments on this proposal, and our
responses follow:
Comment: A few commenters either expressed general support for or
did not oppose the proposal. A commenter acknowledged that codifying
this existing practice should not create any new requirements or make
changes to payment for PACE programs but asked that CMS maintain
consideration for administrative burden any additional data collection
efforts place on providers.
Response: We appreciate the commenters' support and thank them for
their comments.
After consideration of the comments received, CMS is finalizing the
change to Sec. 460.180(b) as proposed.
3. Clarifying the Obligation of Cost Plans To Submit Risk Adjustment
Data (Sec. 417.486(a))
Currently, we require the submission of risk adjustment data from
organizations that operate Cost plans under section 1876 of the Act in
the same manner as MA organizations. Codified at 42 CFR 417.486(a), the
contract of section 1876 Cost plans must provide that the plan agrees
to submit to CMS: (1) all financial information required under subpart
O of part 417 and for final settlement; and (2) any other information
necessary for the administration or evaluation of the Medicare program.
CMS proposed to amend Sec. 417.486(a) to add a new Sec.
417.486(a)(3) to codify the longstanding practice of requiring the
collection and mandatory submission of risk adjustment data as
specified in 42 CFR 422.310 by 1876 Cost plans. This change to Sec.
417.486(a) codifies longstanding practice; it does not change existing
reporting requirements set forth and approved in OMB 0938-1152 (CMS-
10340), nor does it make any changes to payment for Cost plans. For
this reason, CMS does not expect that this regulatory change will
result in additional costs or savings.
We received one comment on this proposal. The commenter did not
oppose the proposal and did not provide any specific further comment.
We appreciate the comment.
After consideration of this comment, CMS is finalizing the change
to Sec. 417.486(a) as proposed.
E. Medicare Advantage/Part C and Part D Prescription Drug Plan Quality
Rating System (Sec. Sec. 422.166 and 423.186)
1. Introduction
CMS develops and publicly posts a 5-star rating system for Part
C,\58\ more commonly referred to as Medicare Advantage (MA), 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. 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 based on the collection of different types of
quality data under section 1852(e) of the Act to measure quality and
performance of contracts, such as CMS administrative data, surveys of
enrollees, and information provided directly from health and drug
plans. CMS 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/Part C 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 and 16527). As a result, the regulatory change finalized
here will apply to the quality ratings for MA plans and cost plans.
---------------------------------------------------------------------------
\58\ 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 \59\ evolves over time to increase the health and wellbeing of
enrollees. In the Contract Year 2026 proposed rule, we proposed to
update the Breast Cancer Screening (Part C) measure by expanding the
age range to align with updated clinical guidelines. In addition, we
proposed other policies to amend the Part C and Part D Star Ratings but
are not addressing those proposals in this final rule; those other
proposals may be addressed in a future rule.
---------------------------------------------------------------------------
\59\ https://www.cms.gov/medicare/quality/meaningful-measures-initiative/cms-quality-strategy.
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2. 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 Part C and D 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),
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
through16537.) 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. In the Contract
Year 2026 proposed rule, CMS proposed to update the Breast Cancer
Screening (Part C) measure for performance periods beginning on or
after January 1, 2026.
We are committed to continuing to improve the Part C and Part D
Star Ratings system by focusing on improving the health and wellbeing
of enrollees. 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 the National Committee for
Quality Assurance (NCQA) and Pharmacy Quality Alliance (PQA).
[[Page 15871]]
3. Updating Measures
a. Breast Cancer Screening (Part C)
CMS proposed a substantive update to the existing Breast Cancer
Screening measure because the measure steward, NCQA, updated the
measure as a result of changes in the applicable clinical guidance. In
April 2024, the U.S. Preventive Services Task Force (USPSTF) issued
final updated guidance for the age at which breast cancer screenings
should begin.\60\ Subsequently, NCQA announced their intention to
update their breast cancer screening measure for measurement year 2025
to include biennial mammography screening for women aged 40-74 years at
average risk of breast cancer (see https://www.ncqa.org/blog/updates-to-breast-cancer-screening-age-range-for-hedis-my-2025/ 2025/). CMS proposed
to expand the age range for the Breast Cancer Screening measure to
women aged 40-49, for an updated age range of 40-74, for the 2027 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). The legacy measure with
the narrower age range of 50-74 years will remain available and used in
Star Ratings until the updated measure has been on the display page for
two years and has been adopted through rulemaking. For measures such as
this, NCQA requires plans to submit the data as the total rate and
rates for each age stratification so data will be available to
calculate the legacy measure rate until the expanded rate is adopted
through rulemaking for the Star Ratings. We solicited comments on
adding this updated measure to the 2029 Star Ratings program.
---------------------------------------------------------------------------
\60\ https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/breast-cancer-screening#bcei-recommendation-title-area.
---------------------------------------------------------------------------
Comment: There was unanimous support among commenters on this
provision for expanding the age range for the Breast Cancer Screening
measure.
Response: CMS thanks the commenters for their support of our
proposal to expand the age range for this measure beginning with the
2029 Star Ratings.
Comment: A few commenters suggested expanding the measure from
biennial screening to annual and to continue screening until comorbid
conditions limit life expectancy. Another commenter suggested
additional screening methods for those at high risk. A couple of
commenters suggested that this change would disproportionately impact
plans that serve, for example, more disabled and Institutional Special
Needs Plan enrollees.
Response: Medicare enrollees should work with their providers and
plans to determine the frequency of breast cancer screenings and
whether they should continue past age 74 given their individual
circumstances, as we know that early detection provides more treatment
options to support the health and wellbeing of Medicare enrollees. The
Breast Cancer Screening measure excludes Medicare enrollees 66 years of
age and older who are enrolled in an Institutional Special Needs Plan
or living long-term in an institution since these individuals have
difficulty in accessing mammograms, and ultrasounds, as an alternative,
are not currently recommended in the USPSTF guidelines. We have shared
all of these comments with NCQA as they consider making updates to the
measure in the future.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing adding the updated Breast Cancer Screening (Part C) measure
to the 2029 Star Ratings. The updated measure will be on the display
page for the 2027 and 2028 Star Ratings prior to being included in the
2029 Star Ratings.
Table 2 summarizes the updated Breast Cancer Screening measure
addressed in this final rule, beginning with the 2029 Star Ratings. The
measure description listed in this table is a high-level description.
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. The annual Star Ratings are produced in the fall of
the prior year. For example, Stars Ratings for the year 2029 are
produced in the fall of 2028. If a measurement period is listed as
``the calendar year 2 years prior to the Star Ratings year'' and the
Star Ratings year is 2029, the measurement period is referencing the
January 1, 2027 to December 31, 2027 period. As noted earlier in
section III.C.E.2. of this final rule, CMS does not codify a list of
the specific measures for the Part C and Part D Quality Rating System
in regulation text; doing so would be unnecessarily lengthy and
cumbersome due to the relative regularity with which measure
specifications are updated.
Table 2--Summary of Revised Individual Star Rating Measure for Performance Periods Beginning on January 1, 2027
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Statistical method Reporting
Measure Measure description Domain Measure category Data source Measurement period CMIT ID for assigning star requirements
and weight rating (contract type)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Part C Measures
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Breast Cancer Screening......... Percent of female Staying Healthy: Process Measure HEDIS......... The calendar year 2 00093-02-C-PARTC.. Clustering........ MA-PD and MA-only.
plan members aged Screenings, Tests Weight of 1. years prior to the
40-74 who had a and Vaccines. Star Ratings year.
mammogram during
the past 2 years.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 15872]]
IV. Improving Experiences for Dually Eligible Enrollees
A. Member ID Cards, Health Risk Assessments, and Individualized Care
Plans (Sec. Sec. 422.101, 422.2267, 423.2267)
Dually eligible individuals face fragmentation in many parts of the
health care system, including their experiences as enrollees of
Medicare and Medicaid managed care plans. One way in which we seek to
address such fragmentation is through policies that integrate care for
dually eligible individuals. ``Integrated care'' refers to delivery
system and financing approaches that (1) maximize person-centered
coordination of Medicare and Medicaid services; (2) mitigate cost-
shifting incentives between the two programs; and (3) create a seamless
experience for dually eligible individuals.
In recent years, we have advanced integrated care by--
Incorporating features of the Medicare-Medicaid Financial
Alignment Initiative's (FAI) Medicare-Medicaid Plans (MMPs) into dual
eligible special needs plan (D-SNP) requirements, including enrollee
participation in plan governance, screening for social risk factors in
health risk assessments (HRAs) (which applies to all SNPs), integrated
enrollee materials, and mechanisms for joint Federal-State oversight;
Implementing provisions of the Bipartisan Budget Act of
2018 to unify appeals and grievance processes across Medicare and
Medicaid; and
Increasing opportunities for enrollment in D-SNPs with
aligned Medicaid managed care plans operated by the same parent
organization.
However, there remain aspects of care for dually eligible
individuals that can be misaligned, confusing, or duplicative even when
a dually eligible individual is enrolled in Medicare and Medicaid
managed care plans operated by the same parent organization.
We proposed to establish new Federal requirements for D-SNPs that
are applicable integrated plans (AIPs) to: (1) have integrated member
identification (ID) cards that serve as the ID cards for both the
Medicare and Medicaid plans in which an enrollee is enrolled; and (2)
conduct an integrated health risk assessment for Medicare and Medicaid,
rather than separate HRAs for each program. We explained that these
proposals would continue our work to advance integrated care by
applying MMP features into D-SNP requirements. More importantly, these
proposals would improve and simplify experiences for dually eligible
enrollees in AIP D-SNPs. We also proposed to amend the requirements
related to HRAs and individualized care plans (ICPs) for all SNPs (that
is, D-SNPs, chronic condition SNPs, and institutional SNPs). Third, we
proposed to codify timeframes for SNPs to conduct HRAs and develop ICPs
and prioritize the involvement of the enrollee or the enrollee's
representative, as applicable, in the development of the ICPs.
Comment: Several commenters offered overall support for our
collective package of proposals to improve experiences for dually
eligible enrollees. These commenters emphasized that the proposals
would remove barriers to fully integrated care and promote greater
integration for dually eligible individuals, improve health outcomes,
and reduce burden on enrollees and administrative costs.
Response: We welcome the commenters' support for our proposals.
These proposals will help to continue our work to further integrate
elements of the Medicare and Medicaid programs to improve experiences
for dually eligible individuals.
Comment: A few commenters expressed concern about CMS requiring
additional changes for SNPs in addition to other recent requirements
and at the same time MMPs transition to D-SNPs. These comments included
a request that CMS not make major changes that would cause States to
reopen procurements supporting integrated D-SNPs.
Response: We thank the commenters for sharing these perspectives.
We note that the proposed requirements are already being implemented by
MMPs, and--based on our work with the States--we expect the vast
majority of MMPs to transition to a D-SNP under the same parent
organization as the MMP. Thus, we expect these parent organizations to
have experience implementing these requirements, which aim to simplify
processes and reduce burden for enrollees and plans. We believe the
procurement comment is referring to State procurements of Medicaid
managed care plans that are affiliated with integrated D-SNPs. We do
not believe our proposals at Sec. 422.101(f)(1)(i) through (x) would
affect these State procurements. As stated in response to other
comments in this section, the proposed timeframes for HRAs and ICPs
serve as maximum timeframes. Nonetheless, we will remain mindful of the
overall State and Federal contexts as we implement this final rule and
consider future rulemaking.
1. Integrating Member ID Cards for Dually Eligible Enrollees in Certain
Integrated D-SNPs
Sections 422.2267(e)(30) and 423.2267(e)(32) require MA and Part D
plans, including D-SNPs, to provide member ID cards to enrollees.
Medicaid managed care plans, which include managed care organizations
(MCOs), prepaid inpatient health plans (PIHPs), and prepaid ambulatory
health plans (PAHPs) also send member ID cards to enrollees which they
use to access the items and services provided under that plan.
However, when a dually eligible individual is enrolled in both a
Medicare Advantage (MA) plan and a Medicaid managed care plan, the
plans usually issue the enrollee separate member ID cards--one for
their MA plan and one for their Medicaid managed care plan--to access
services for each program. This is administratively confusing, as
providers may not always know which insurance to charge for which
services, and confusing for enrollees, who may not always be aware of
when to present which card.\61\ Through studies and conversations with
dually eligible enrollees, we have learned that individuals dually
eligible for Medicare and Medicaid view having one insurance card
instead of two as a benefit of integrated care.\62\ As such, we
proposed to continue our effort to integrate materials for dually
eligible enrollees by requiring that certain D-SNPs provide one
integrated member ID card to serve as the ID card for both the Medicare
and Medicaid plans in which the enrollee is enrolled.
---------------------------------------------------------------------------
\61\ CMS commissioned studies on experiences and terms
pertaining to integrated care and solicited feedback from States and
plans on integrated member ID cards.
\62\ Rachelle Brill, Listening to Dually Eligible Individuals:
Person-Centered Enrollment Strategies for Integrated Care. Center
for Consumer Engagement in Health Innovation, June 2021. Online at
https://communitycatalyst.org/wp-content/uploads/2023/06/Person-Centered-Enrollment-Strategies-for-Integrated-Care.pdf.
---------------------------------------------------------------------------
In the past several years, we have partnered with States to make
integrated materials more broadly available, with the goal of
streamlining the managed care enrollee experience and reducing burden
and confusion for dually eligible individuals. As of January 2025,
approximately 992,000 dual eligible individuals were enrolled in
integrated care plans that used integrated materials. That includes all
MMPs in the FAI, which use integrated Medicare and Medicaid materials
including the member ID card, annual notice of change, evidence of
coverage (Member
[[Page 15873]]
Handbook), Formulary (List of Covered Drugs), Summary of Benefits, and
Provider and Pharmacy Directory.
In the final rule titled ``Medicare Program; Contract Year 2023
Policy and Technical Changes to the Medicare Advantage and Medicare
Prescription Drug Benefit Programs; Policy and Regulatory Revisions in
Response to the COVID-19 Public Health Emergency; Additional Policy and
Regulatory Revisions in Response to the COVID-19 Public Health
Emergency'' which appeared in the May 9, 2022, Federal Register
(hereinafter referred to as the May 2022 final rule), we finalized a
pathway at Sec. 422.107(e) by which States can require D-SNPs with
exclusively aligned enrollment (EAE) to use integrated Medicare and
Medicaid materials including the Summary of Benefits, Formulary, and
combined Provider and Pharmacy Directory--essential information for
dually eligible enrollees to be able to understand and utilize their
managed care benefits. Eleven States currently require D-SNPs that are
AIPs, as defined at Sec. 422.561, to use at least some integrated
materials for CY 2025, as shown in table 3.
Table 3--States Requiring Various Integrated Materials Among AIPs
----------------------------------------------------------------------------------------------------------------
Provider and Formulary (list Evidence of
Material Summary of pharmacy of covered Annual notice of coverage (member
benefits directory drugs) change handbook)
----------------------------------------------------------------------------------------------------------------
State(s)............ CA, DC, ID, MA, CA, HI, ID, MA, CA, HI, ID, MA, CA, DC, MN, NJ, CA, DC, MN, NJ,
MN, NJ, NY, TN, MN, NJ, VA, WI. MN, NJ, VA, WI. TN. TN.
VA, WI.
----------------------------------------------------------------------------------------------------------------
In addition, in some cases, dually eligible enrollees in D-SNPs and
an affiliated Medicaid managed care plan with EAE receive a single ID
card that serves as the ID card for both health plans. According to
State Medicaid agency contracts (SMACs) for contract year 2025, 13
States (Arizona, California, Florida, Hawaii, Idaho, Massachusetts,
Minnesota, New Jersey, New Mexico, Oregon, Tennessee, Virginia, and
Wisconsin) require D-SNPs to use a single integrated member ID card for
both Medicare and Medicaid benefits.
In the proposed rule (89 FR 99486), we posited that establishing a
Federal requirement for integrated member ID cards for AIP D-SNPs would
improve experiences for dually eligible individuals (in such plans not
already deploying an integrated ID card) and build on our past work to
integrate Medicare and Medicaid. Therefore, under our authority to
interpret, implement and carry out the Part C and D programs under
sections 1851(h), 1852(c), 1860D-1(b)(1)(B)(vi), 1860D-4(a), and 1860D-
4(l) of the Act, we proposed to add a requirement at Sec. Sec.
422.2267(e)(30) and 423.2267(e)(32) that AIPs provide enrollees one
integrated member ID card that serves as the ID card for both the
Medicare and Medicaid plans in which they are enrolled.
We did not propose substantive changes to the Medicare or Medicaid
requirements for the content of the ID cards. Therefore, the integrated
ID cards would need to comply with the applicable Medicare requirements
at Sec. Sec. 422.2267(e)(30) and 423.2267(e)(32) and as further
described in the Medicare Communications and Marketing Guidelines and,
when applicable, the Medicaid requirements at Sec. 438.3(s)(7),
finalized in the final rule titled ``Medicaid Program;
Misclassification of Drugs, Program Administration and Program
Integrity Updates Under the Medicaid Drug Rebate Program,'' which
appeared in the September 26, 2024, Federal Register (hereinafter
referred to as the September 2024 Medicaid final rule).
Medicaid managed care plans are not required by Federal regulations
to issue enrollee identification cards; however, it is a standard
business practice for plans to routinely issue such cards for pharmacy
benefits for Medicaid enrollees. The September 2024 Medicaid final rule
requires, in accordance with 42 CFR 438.3(s)(7), Medicaid managed care
plans that provide coverage for covered outpatient drugs and choose to
issue enrollee identification cards to assign and exclusively use
unique Medicaid-specific Bank Identification Number (BIN) and Processor
Control Number (PCN) combination, and group number identifiers for
these cards. This requirement will be implemented the first rating
period for contracts with managed care plans beginning on or after 1
year following November 19, 2024. A more in-depth discussion of how the
requirements at Sec. 438.3(s)(7) will affect integrated member ID
cards can be found at 89 FR 99486.
Our proposal would not add new requirements in the 13 States that
currently require integrated member ID cards in their SMACs. Similarly,
we expect--independent of this proposal--several additional States will
require integrated member ID cards when MMPs transition to D-SNPs in
2026 (because these States already require integrated member ID cards
for the MMPs). This proposal would require current AIPs in three
additional States and Territories (District of Columbia, New York, and
Puerto Rico) to implement integrated member ID cards. It would also
apply to any new AIPs. However, we do not believe that the proposed
requirement to integrate member ID cards would create additional burden
in these States and Territories as the issuance of member ID cards is a
normal and customary practice throughout the insurance industry. Since
we will be working with several States to update an array of integrated
materials as we transition MMPs to become integrated D-SNPs in 2026,
and to give AIPs time needed to implement such updates as appropriate
during the annual material creation cycle, we proposed to require the
use of the integrated member ID card for enrollments effective January
1, 2027. Thus, our proposed updates to marketing and communication
provisions at Sec. Sec. 422.2267(e)(30) and 423.2267(e)(32) would be
applicable for all contract year 2027 marketing and communications
beginning October 1, 2026.
We continue to believe requiring that AIPs use integrated member ID
cards is an important step to further integration and make enrollees'
experience with Medicaid and Medicare less confusing, less burdensome,
and more accessible. To our knowledge, our proposal represented the
first time we proposed a Federal requirement for any integrated
materials for any type of D-SNP. We chose to focus on ID cards because
having one ID card is important to dually eligible individuals \63\
and--relative to integrating other materials--is operationally
manageable for integrated plans and requires the least of State
Medicaid agencies. We solicited comment on this proposal and feedback
[[Page 15874]]
on successes, challenges, and other experiences to date with integrated
member ID cards.
---------------------------------------------------------------------------
\63\ Rachelle Brill, Listening to Dually Eligible Individuals:
Person-Centered Enrollment Strategies for Integrated Care. Center
for Consumer Engagement in Health Innovation, June 2021. Online at
https://communitycatalyst.org/wp-content/uploads/2023/06/Person-Centered-Enrollment-Strategies-for-Integrated-Care.pdf.
---------------------------------------------------------------------------
We invited comment on whether the final rule should provide that
any requirement for integrated ID cards should apply to AIPs and all
HIDE SNPs, including those that do not also qualify as AIPs. However,
in the proposed rule, we chose to limit our proposal to AIPs because we
assumed that integrated member ID cards would be more complex to
administer in situations where some D-SNP enrollees have aligned
enrollment, but others are enrolled in a Medicaid plan operated by a
different organization or a Medicaid fee-for-service program. In
contrast to an AIP, where all of the D-SNP's enrollees would receive
the integrated ID card, a non-AIP would need a reliable and timely
mechanism for differentiating among enrollees within the plan to
determine which ID card to send. We are unaware of any D-SNPs or other
MA plans that currently deploy the types of integrated ID cards
envisioned in our proposal for plans that do not have exclusively
aligned enrollment. We solicited comment on the accuracy of these
assumptions and, as noted previously, whether in the final rule to
apply the proposed requirement to AIPs and all HIDE SNPs. We also
welcomed comments on different situations in which commenters believe
that integrated member ID cards could be helpful to include in
potential future rulemaking.
Finally, we welcomed comment on other considerations for future
rulemaking on ID cards, including ways to prevent stigma and ensure
their security and utility for dually eligible enrollees.
In the proposed rule at 89 FR 99508, we discussed our burden
estimate for this proposal. 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 our responses follow:
Comment: Commenters overwhelmingly supported our proposal to
require integrated member ID cards for dually eligible enrollees in AIP
D-SNPs. Commenters noted that an integrated member ID card would remove
barriers to fully integrated care and eliminate confusing and
duplicative aspects of D-SNPs. A few commenters expressed appreciation
for our extended effective date of January 1, 2027.
Response: We thank the commenters for their support.
Comment: A few commenters issued conditional support for our
proposal for an integrated member ID card. One commenter was concerned
that one ID card could lead to confusion among enrollees. Another
commenter expressed their concern that a single ID card would cause
beneficiaries to believe that they may not switch their D-SNP plan
without also having to change their Medicaid plan, and vice-versa. The
commenter further discussed their concern that a single ID card for
dually eligible enrollees may limit an enrollee's perception of their
ability to switch plans.
Response: We thank the commenters for their concern. As we
discussed in the proposed rule beginning at 89 FR 99485, we have
learned through studies and conversations with dually eligible
enrollees that they view having one insurance card instead of two as a
benefit of integrated care. In 2025, 13 States are already requiring D-
SNPs to use integrated member ID cards for both Medicare and Medicaid
benefits. Based on these experiences, we believe that the benefits of
an integrated member ID card outweigh any potential for confusion.
Further, as we discuss in more detail later in this section, we believe
that our plan to provide technical assistance, as well as existing
feedback mechanisms for enrollees to discuss their experiences with a
plan, including with member ID cards, will allow us to quickly respond
to any points of confusion that occur as a result of integrating member
ID cards.
We also note that--in addition to numerous other potentially
applicable enrollment periods at Sec. Sec. 422.62 and 423.38--all
dually eligible and other Part D low-income subsidy enrolled
individuals may elect to use a once-per-month special enrollment period
(SEP) under Sec. 423.38(c)(4) to enroll in fee-for-service Medicare
and a standalone prescription drug plan. Dually eligible individuals
may also use the integrated care SEP described in Sec. 423.38(c)(35),
which allows full-benefit dually eligible individuals to enroll once
per month in a FIDE, HIDE, or AIP when the enrollment is used to align
enrollment with the integrated D-SNP and Medicaid managed care
organization. Information about enrollment periods is distributed
annually through the Medicare & You handbook and the Evidence of
Coverage (also known as Member Handbook) provided through plans, and
available by calling 1-800-MEDICARE. We believe that these SEPs reduce
the type of ``lock-in'' scenario for which the commenter expressed
concern. An integrated member ID card also does not limit an enrollee's
ability to change Medicaid managed care plans as allowable in 42 CFR
part 438.
Comment: Several commenters requested specific information be
included on an integrated member ID card. A few commenters suggested
that we require an enrollee's Qualified Medicare Beneficiary (QMB)
status be printed on the card to prevent improper billing, or other
language to denote to what extent the individual is exempt from cost
sharing. Other commenters requested that the specific benefit design or
plan type be included so that providers are aware of care coordination
requirements or limitations of an enrollee's coverage. A commenter
requested that we require a date of issue for the integrated ID card to
help with timeline issues as people churn on and off Medicaid.
Response: We thank the commenters for their input to include
specific information to help enrollees, advocates, and practitioners
better identify the type of plan or type of enrollment an enrollee may
have. We note that in this rulemaking, we did not propose substantive
changes to the Medicare or Medicaid requirements for the content of the
ID cards. However, based on our work with States that currently require
integrated member ID cards, States may require that plans using
integrated member ID cards add language to indicate that providers may
not bill the enrollee.\64\ We will take the other suggestions for
specific benefit design or plan type into consideration for future
rulemaking.
---------------------------------------------------------------------------
\64\ See, for example, CY 2025 California AIP D-SNP model
materials. Link available here: https://www.cms.gov/medicare/medicaid-coordination/about/dsnps.
---------------------------------------------------------------------------
Comment: Several commenters requested that we provide a model
material or standard framework for an integrated member ID card that
would clearly and realistically include the necessary information,
while accounting for available space. Some commenters note that since
there currently is not a requirement for an integrated member ID card,
individual States are approaching integrated member ID cards in their
own ways, and that a variety of approaches could complicate the design.
Commenters assert that a model material for an integrated member ID
card would reduce administrative burden and prevent fragmentation.
Response: We thank the commenters for their thoughts on this issue
and agree that a model material could help alleviate administrative
burden and prevent fragmentation. We are working with interested States
on developing and implementing such a model material.
[[Page 15875]]
Comment: Several commenters requested that, if we finalize our
proposal, we also provide clear guidance, technical assistance, and
training to plans and States to facilitate successful implementation.
Response: We appreciate these comments. As we discuss later in this
final rule, in the past several years, we have partnered with States to
make integrated materials more broadly available, with the goal of
streamlining the managed care enrollee experience and reducing burden
and confusion for dually eligible individuals. We plan to continue to
provide technical assistance and guidance to States, as well as partner
with States to provide technical assistance and guidance to plans to
facilitate successful implementation.
Comment: A few commenters offered suggestions for implementation
and design of an integrated member ID card, including seeking provider
and enrollee feedback on card design, and careful consideration to
accessibility factors, such as too much information or multiple
addresses.
Response: We thank the commenters for their responses and
appreciate the care toward the design, efficacy, and accessibility of
the design. We note there are regulatory requirements addressing the
required information displayed on member ID cards at Sec. Sec.
422.2267(e)(30), 423.2267(e)(32), and 423.120(c). These regulations
state that the member ID card must include the plan's website address,
customer service number, and contract/PBP number. If a plan is a PPO,
the card must also include the phrase ``Medicare limiting charges
apply.'' The card must also include the Medicare prescription drug
benefit program mark, Part D BIN or RxBIN and Part D processor control
number (RxPCN) as well as an Rx identification number (RxID).
In the proposed rule at 89 FR 99486, we discussed that Sec.
438.3(s)(7) requires States that contract with MCOs, PIHPs, or PAHPs
that provide coverage of Medicaid outpatient drugs to require those
managed care plans to assign and exclusively use unique Medicaid-
specific Bank Identification Number (BIN) and Processor Control Number
(PCN) combination, and group number identifiers for all Medicaid
managed care enrollee identification cards for pharmacy benefits that
are utilized by plans to make the Medicaid drug program run more
efficiently and improve the level of pharmacy services provided to
Medicaid enrollees. We discussed the fact that Medicaid managed care
plans are not Federally required to issue member ID cards but it is a
standard business practice for managed care plans to routinely issue ID
cards for pharmacy benefits for Medicaid enrollees. To the extent AIPs
cover outpatient drugs for which Medicaid (not Medicare) would be the
primary payer, Sec. 438.3(s)(7) would still apply to the AIP and the
required information would need to be included on the member ID card.
As we noted in the proposed rule at 89 FR 99486, we did not propose
substantive changes to the Medicare or Medicaid requirements for the
content of the ID cards. Therefore, the integrated ID cards would need
to comply with the applicable Medicare requirements at Sec. Sec.
422.111(i), 422.2267(e)(30), 423.2267(e)(32), and 423.120(c), and any
applicable Medicaid requirements including, as discussed previously,
Sec. 438.3(s)(7). We are working with interested States in developing
model ID cards and will work to create a streamlined and readable
document while ensuring that the needed content to access services is
included on the card.
Comment: Several commenters requested that we monitor for any
issues that may arise if this provision is implemented. Commenters
suggested that we monitor for the impact of the integrated member ID
card on care coordination, enrollee satisfaction, and overall health
outcomes. Commenters also suggested we engage stakeholders and solicit
direct feedback from dually eligible individuals. A few commenters also
suggested that we monitor for issues surrounding staggered enrollment,
or for any issues that may arise for individuals who may be
disenrolled, then reenrolled. Commenters expressed concern that
beneficiaries in this situation may get lost in the system and not
receive care while waiting for a member ID card.
Response: We thank the commenters for their suggestions. We plan to
monitor implementation, including for issues surrounding staggered
enrollment, in partnership with the States. We also encourage D-SNPs to
consult with their enrollee advisory committees on challenges with ID
cards.
Comment: Many commenters supported our proposal that the integrated
member ID card policy be applicable to all AIPs and agreed with our
reasoning that production of member ID cards is operationally feasible
for AIPs but far less so for non-AIPs. In response to our solicitation
of comments about whether or not we should extend the requirements to
all HIDE SNPs, including those that do not qualify as AIPs, many
commenters expressed opposition to such an expansion, citing potential
confusion for non-integrated plan enrollees and operational
difficulties for plans when enrollees are not receiving both Medicare
and Medicaid from the same organization. A few commenters expressed
support for an expansion to all HIDE SNPs; one noted their support was
due to their belief that the structure of HIDE SNPs suggests that even
a non-AIP HIDE SNP likely has the operational capacity to send an
integrated member ID card only to aligned enrollees. Another commenter
supportive of this position encouraged us to work toward expanding this
policy to all HIDE SNPs and eventually all D-SNPs in the future by
building a data sharing mechanism across Medicaid managed care, MA, and
the Medicaid fee-for-service program to facilitate timely sharing of
relevant data across plans. Another commenter further noted that though
expanding this requirement to non-AIP HIDE SNPs may present some
challenges for the health plans, this is a rare opportunity to provide
a tangible benefit to dually eligible enrollees who have repeatedly
requested one integrated member ID card.
Response: We thank commenters for their input. Based on the
operational challenges we cited in the proposed rule (89 FR 99487), we
are not planning to require integrated member ID cards beyond AIPs.
However, we appreciate the comments discussing how this provision could
be applied to non-AIP HIDE SNPs or other plans.
Comment: A few commenters recommended that we allow flexibility in
implementing integrated member ID cards. A commenter requested that we
take into consideration the burden that this requirement may impose on
plans as they prepare to launch in 2026. The commenter also requested
that we not make major changes that would require plans to reopen
Medicaid competitive bidding processes. Another commenter asked CMS to
take into consideration that States may have their own requirements.
Another commenter suggested that there may be unique situations that
may require an extension of the timeline.
Response: We thank the commenters for their input. As proposed, the
requirement for AIPs to deploy integrated member ID cards would first
apply for contract year 2027 (for which marketing and communications
begins in October 2026). We proposed this timeline since we will be
working with several States to update an array of integrated materials
as we transition MMPs to become integrated D-SNPs in 2026, and to give
AIPs time needed to implement such updates as appropriate during the
annual material creation
[[Page 15876]]
cycle. However, we note that several States already require the use of
an integrated member ID card through their State Medicaid agency
contract, and other States may choose to do so for contract year 2026.
As in the past, we plan to continue working closely with States on all
integrated materials, including member ID cards, and will utilize that
process to address unique situations that may arise based on State-
specific policies. Lastly, as we discussed in the proposed rule at 89
FR 99486, we do not believe that this proposed requirement to integrate
member ID cards would create additional burden in any States and
Territories as the issuance of member ID cards is a normal and
customary practice throughout the insurance industry.
Comment: A commenter suggested that, to help enrollees make
educated decisions, CMS should require additional integrated materials
such as materials explaining coverage, provider availability, and/or
appeals.
Response: We thank the commenter for their suggestion. As discussed
in the proposed rule, beginning at 89 FR 99485, in the past several
years, we have partnered with States to make integrated materials more
broadly available, with the goal of streamlining the managed care
enrollee experience and reducing burden and confusion for dually
eligible individuals. In the proposed rule, we discussed previous
rulemaking (the May 2022 final rule), where we finalized a pathway at
Sec. 422.107(e) by which States can require D-SNPs with exclusively
aligned enrollment (EAE) to use integrated Medicare and Medicaid
materials including the Summary of Benefits, Formulary, and combined
Provider and Pharmacy Directory-- essential information for dually
eligible enrollees to be able to understand and utilize their managed
care benefits. In 2025, eleven States require D-SNPs that are AIPs to
use at least some integrated materials. The State templates are
publicly available at https://www.cms.gov/medicare/medicaid-coordination/about/dsnps. In addition, AIPs must use an integrated
coverage decision letter as a result of an adverse integrated
organization determination under Sec. 422.631. The template is also
available on the CMS website mentioned previously.
After considering the comments and for the reasons described in the
proposed rule, and our responses to comments, we are finalizing without
modification our proposal to require integrated member ID cards for AIP
D-SNPs.
2. Integrating Health Risk Assessments for Dually Eligible Enrollees in
Certain Integrated D-SNPs
Medicare requirements at Sec. 422.101(f)(1) require D-SNPs to
conduct a comprehensive HRA for each enrollee, both at the time of
enrollment and annually thereafter. Separately, Medicaid managed care
regulations at Sec. 438.208(b)(3) require Medicaid managed care plans
to make a best effort to conduct an initial screening of enrollee needs
within 90 days of a new enrollee's effective enrollment date, and
States may require additional assessments such as long-term services
and supports (LTSS) and home and community-based services eligibility
screenings.
In the FAI, MMP enrollees complete a single integrated HRA,
encompassing both Medicare and Medicaid requirements. In contrast,
dually eligible individuals enrolled in both a D-SNP and a Medicaid
managed care plan may end up completing multiple assessments during the
year, some of which may be duplicative, as managed care plans aim to
meet all applicable enrollee assessment requirements across both
programs, and to gather information about enrollee needs and
preferences and create individualized care plans. Completing two
separate, but potentially overlapping, assessments creates unnecessary
burden for enrollees, who may have to answer the same detailed personal
questions more than once.
In the final rule titled ``Medicare and Medicaid Programs; Contract
Year 2022 Policy and Technical Changes to the Medicare Advantage
Program, Medicare Prescription Drug Benefit Program, Medicaid Program,
Medicare Cost Plan Program, and Programs of All-Inclusive Care for the
Elderly,'' which appeared in the January 19, 2021, Federal Register
(hereinafter referred to as the January 2021 final rule), we clarified
that D-SNPs receiving capitation for Medicaid services may combine
their Medicare-required HRA with a State Medicaid-required assessment
to reduce burden for enrollees, as long as the assessment meets all
applicable requirements (86 FR 5879). We also noted that, to the extent
there is overlap and the HRA required by Sec. 422.101(f)(1)(i) can be
aligned with other assessments conducted by a SNP, the model of care
(MOC) should describe that alignment, consistent with the standards in
MOC 2, Element B in Chapter 5, section 20.2.2 of the Medicare Managed
Care Manual. We explained that the factors outlined in the MOC
guidelines allow SNPs the flexibility to align the HRA required by
Sec. 422.101(f)(1)(i) with other assessment tools. In addition, the
contract year (CY) 2025 Medicare Part C Reporting Requirements, which
describe MA plan reporting on HRA completion, allow D-SNPs to count a
Medicaid HRA that is performed within 90 days before or after the
effective date of Medicare enrollment as meeting the Part C obligation
to perform an HRA, so long as the requirements in Sec. 422.102(f)
regarding the HRA are met.\65\ As outlined in both the January 2021
rule and the most recent Part C Reporting Requirements, we have allowed
a certain degree of flexibility for SNPs to streamline their Medicare
and Medicaid assessments. However, we have not previously required that
D-SNPs integrate Medicare and Medicaid enrollee HRAs into a single HRA
for dually eligible individuals.
---------------------------------------------------------------------------
\65\ 2025 Part C Reporting Technical Specifications: https://www.cms.gov/files/document/cy-2025-part-c-technical-specifications.pdf.
---------------------------------------------------------------------------
Some States have implemented their own requirements, through SMACs,
to reduce burden and duplication. Other States, while not explicitly
requiring integrated HRAs, have implemented requirements to improve
integration and coordination across Medicare and Medicaid HRAs and
services. We have also heard from a few D-SNP parent organizations that
are actively working to reduce duplication between their Medicare and
Medicaid HRAs. Discussion of these States' requirements can be found at
89 FR 99487.
Under our authority at section 1856(b) of the Act to establish
standards for MA plans by regulation, we proposed to adopt specific
standards to implement the requirement at section 1859(f)(5)(A)(ii)(I)
of the Act that all MA SNPs conduct an initial assessment and an annual
reassessment of the individual's physical, psychosocial, and functional
needs. We proposed to add a new paragraph at Sec. 422.101(f)(1)(v)
that would require D-SNPs that are AIPs (as defined in Sec. 422.561)
to conduct a comprehensive HRA that meets all requirements at Sec.
422.101(f)(1)(i) through (v) as well as any applicable Medicaid
requirements, including those at Sec. 438.208, such that enrollees in
the AIP complete a single integrated HRA for Medicare and Medicaid. We
posited in the proposed rule that our proposal would meaningfully
reduce assessment burden for dually eligible individuals and improve
their experience as managed care enrollees (where States aren't already
requiring something similar). It may also improve integration of care
within D-SNP AIPs and their
[[Page 15877]]
affiliated Medicaid managed care plans by collecting all enrollee
assessment information in one place, potentially facilitating better
care coordination across Medicare and Medicaid services. The proposal
would also continue our efforts to incorporate MMP features into D-SNP
requirements. Finally, we believe the proposal for a new Federal
requirement would not create a significant burden for health plans
because similar State requirements to integrate Medicare and Medicaid
HRAs are already in place in some States, and at least a few health
plans have taken on these efforts themselves.
We proposed only to require D-SNPs that are AIPs to meet this new
requirement based on our belief that it is most feasible for D-SNPs
whose enrollees are exclusively aligned with an affiliated Medicaid MCO
to implement a fully integrated HRA. Because all FIDE SNPs are AIPs
beginning in 2025, the proposal encompasses all FIDE SNPs. Numerous
HIDE SNPs and some coordination-only D-SNPs with exclusively aligned
enrollment are also AIPs. We considered whether we should apply this
proposed new requirement to all HIDE SNPs or all D-SNPs, even those
without exclusively aligned enrollment. However, in a scenario where
some D-SNP enrollees receive their Medicaid benefits from a different
organization or through the Medicaid fee-for-service program, it could
be challenging for the D-SNP to assess aligned enrollees with an
integrated HRA and to assess non-aligned enrollees with a different,
Medicare-only assessment. We welcomed comment on whether this
requirement should be applied to all HIDE SNPs or suggestions as to
whether application to a different subset of D-SNPs should be proposed
in future rulemaking.
The proposal would not change any specific Medicare or Medicaid
requirements for the timing of or elements included in an HRA (although
we are finalizing a separate proposal to address an issue related to
the timing of required HRAs in this final rule). Nor would the proposal
preclude deployment of assessments that are modular (such as a base
level assessment that meets all Medicare and Medicaid requirements with
optional additional sections that are specific to people for substance
use or other factors) or include additional elements for people with
special needs. For example, some States may require more expansive
assessment questions to develop a service plan for 1915(c) waiver
services, or plans may conduct additional assessment for people who
screen positive for substance use disorder or other conditions. The
proposal would not require that all enrollees complete such an
assessment, nor would it preclude plans from conducting such additional
assessments separately from the HRA. Rather, our proposal simply would
require that the base HRA and screening apply across both programs,
such that enrollees are not asked to complete independent HRAs for
Medicare and Medicaid. We welcomed comment on potential challenges that
health plans and other stakeholders foresee, or have already
experienced, in implementing HRAs that integrate LTSS assessments. We
also welcomed comment on any potential conflicts with State Medicaid
assessment requirements our proposal may create.
In addition to separate Medicare and Medicaid managed care
assessment requirements, different Medicare and Medicaid enrollment
timeframes and effective dates can be a barrier to D-SNP AIPs
administering a single, integrated HRA. In the final rule titled
``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,'' which appeared in the April 23, 2024 Federal Register
(hereinafter referred to as the April 2024 final rule), we noted at 89
FR 30704 that Medicare and Medicaid managed care enrollment start and
end dates can be misaligned. Sections 1851(f)(2) and 1860D-
1(b)(1)(B)(iv) of the Act, and regulations codified at Sec. Sec.
422.68 and 423.40 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 believe it would still be feasible to assess an enrollee using an
integrated HRA in situations where some States have cut-off dates after
which enrollment in a Medicaid managed care plan is not effectuated
until the first day of the next month after the following month, given
that the enrollee's Medicaid eligibility would already be verified. We
solicited comment about whether this would present operational
challenges to implementing an integrated HRA for AIP D-SNP enrollees.
We posited in the proposed rule (89 FR 99488) that our proposal
would reduce confusion, assessment burden, and fragmentation for dually
eligible individuals enrolled in AIP D-SNPs and potentially lead to
more effective coordination of care. We also believe our proposal would
not be overly burdensome for AIP D-SNPs to implement, given there are
existing requirements in eight States \66\ either to use a single,
integrated HRA or take action to reduce duplication in HRAs. In the
proposed rule at 89 FR 99509, we discussed our burden estimate for this
proposal. 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 our
responses are as follows:
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\66\ Based on CMS review of 2024 SMACs.
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Comment: Commenters overwhelmingly supported our proposal to
require an integrated HRA for D-SNPs that are AIPs. Commenters noted
that such a requirement would reduce burden on enrollees and plans, and
such a requirement furthers CMS's goal of creating a more integrated
care delivery system for dually eligible individuals.
Response: We thank commenters for their support.
Comment: A few commenters suggested that we allow flexibility for
States with regard to the implementation of an integrated HRA, as
States may have their own requirements or existing Medicaid assessments
that cannot be integrated into a single HRA.
Response: We thank the commenters for their thoughts on this
matter. As we noted in the proposed rule at 89 FR 99487, some States
have implemented their own integrated HRA requirements to reduce burden
and duplication. Other States, while not explicitly requiring
integrated HRAs, have implemented requirements to improve integration
and coordination across Medicare and Medicaid HRAs and services. In the
proposed rule at 89 FR 99488, we proposed to require all D-SNPs that
are AIPs to conduct a comprehensive HRA that meets all requirements at
Sec. 422.101(f)(1)(i) through (v) as well as any applicable Medicaid
requirements, including those at Sec. 438.208, such that enrollees in
the AIP complete a single integrated HRA for Medicare and Medicaid.
This proposal would not
[[Page 15878]]
preclude deployment of assessments that are modular (such as a base
level assessment that meets all Medicare and Medicaid requirements with
optional additional sections that are specific to people for substance
use or other factors) or include additional elements for people with
special needs. For example, some States may require more expansive
assessment questions to develop a service plan for 1915(c) waiver
services, or plans may conduct additional assessment(s) for people who
screen positive for substance use disorder or other conditions. Our
proposal would not require that all enrollees complete any assessment,
nor would it preclude plans from conducting such additional assessments
separately from the HRA. Rather, our proposal would simply require that
the base HRA and screening applies across both programs, such that
enrollees are not asked to complete independent HRAs for Medicare and
Medicaid. We believe that this proposal gives States the flexibility
that the commenters are requesting.
Comment: Several commenters requested that, if this proposal is
finalized, we issue specific technical assistance, such as which
Medicaid assessments would be integrated with the D-SNP HRA, including
in instances where States require multiple Medicaid MCO assessments,
and how plans should proceed when there are Medicaid assessments that
cannot be integrated due to misaligned timeframes and purposes.
Further, a commenter suggested that we encourage States to align HRA
requirements to Medicare requirements, ensuring that model of care
domains are met.
Response: We thank the commenters and appreciate the request for
more information. We note that, as discussed in our proposed rule at 89
FR 99488 and discussed earlier, this proposal would not change any
specific Medicare or Medicaid requirements for the timing of or
elements included in an HRA. This proposal does not preclude deployment
of assessments that are modular or include additional elements for
people with special needs. Our proposal would not preclude plans from
conducting such additional assessments separately from the HRA. Our
proposal simply requires that the base HRA and screening applies across
both programs, such that enrollees are not asked to complete
independent HRAs for Medicare and Medicaid. As is current practice, we
plan to provide technical assistance to States and plans as needed.
Lastly, we acknowledge that beyond the proposal specific to HRAs, model
of care requirements at Sec. 422.101(f) remain unchanged.
Comment: Many commenters requested general technical assistance or
model materials to help plans facilitate implementation of an
integrated HRA. Some commenters suggested that training should include
strategies for maintaining patient confidentiality, and approaches to
engaging enrollees in the HRA process. Commenters also requested
clarification as to what specifically will be required within the
integrated HRA. A commenter recommended that CMS create a core HRA with
specific standardized elements across all States. The commenter stated
that standardized requirements across States would greatly enhance
Medicare-Medicaid integration efforts and build the ability to create
benchmarks, assess performance, and capture best practices. Commenters
further noted that in the absence of a common HRA, integrated HRAs
could look different in every State.
Response: We thank commenters for their many suggestions and
requests for technical guidance. Integrated HRAs may reflect State-
specific requirements, leading to variation across States. However, our
experience with States and HRAs leads us to believe that, in many
cases, the MA organizations can meet both State and Federal
requirements while using many standardized elements across States.
As discussed in the proposed rule at 89 FR 99488, this proposal
would not change any specific Medicare or Medicaid requirements for the
timing of or elements included in an HRA. We note that our proposal
simply requires that the base HRA and screening applies across both
programs, such that enrollees are not asked to complete independent
HRAs for Medicare and Medicaid.
Creating or requiring a nationally standardized HRA (or
standardized elements to include in an HRA) is beyond the scope of this
rulemaking, but we will consider it for potential future rulemaking.
Comment: Several commenters expressed their support for our
proposed requirement that plans combine only the initial base level
assessment, allowing plans to provide follow-up assessments beyond
Medicare requirements at another time.
Response: We appreciate the support for our proposal.
Comment: A few commenters suggested that CMS consider how to
incentivize enrollees to more actively participate in their care and
complete HRAs, as the commenters' expressed enrollees are becoming more
reluctant to respond to outreach, which, they note, can affect HRA
completion.
Response: We thank the commenters for raising this issue. We hope
that using an integrated HRA (in contrast to entirely separate HRAs for
Medicare and Medicaid) will reduce duplication and assessment burden
for enrollees and, therefore, improve engagement. We note that plans
can also use reward and incentive programs, as defined at Sec.
422.134, to incentivize enrollee engagement with regard to HRAs.
Comment: Several commenters recommended that we hold plans
accountable for compliance with our proposed requirements through
audits or other oversight activities, and specifically monitor for
their impact on care coordination, enrollee satisfaction, and overall
health outcomes. Commenters further recommended that CMS engage
stakeholders to better understand their experiences with integrated
HRAs.
Response: We thank the commenters for their thoughts and
suggestions. We plan to monitor implementation, in partnership with
States. We encourage D-SNPs to consult with their enrollee advisory
committees on use of or challenges with HRAs. Further, as described in
Sec. 422.101(f)(1), we have the ability to review HRA assessment tools
during oversight activities to ensure that the results from the initial
assessment and annual reassessment conducted for each individual
enrolled in the D-SNP are addressed in the individuals' individualized
care plan.
Comment: A few commenters offered suggestions for items to include
in the HRA. A commenter suggested that we add a question on caregiver
status, and another commenter suggested we include patient-centered
metrics to account for the unique challenges faced by dually eligible
enrollees, such as higher rates of chronic conditions.
Response: We thank the commenters. While these comments are out of
scope--we noted at 89 FR 99488 that our proposal would not change any
specific Medicare or Medicaid requirements for the timing of or
elements included in an HRA--we encourage plans to consider these
comments in developing their HRAs.
Comment: Several commenters expressed concern about the length of
the HRAs. Commenters note that very long HRAs discourage participation
and can be taxing for enrollees to complete leading to poor enrollee
experience. Some commenters' concerns are largely related to the
complexity and length of time an integrated HRA might take, depending
on the number of
[[Page 15879]]
requirements a State imposes for the Medicaid HRA.
Response: We thank the commenters for their concern over the length
of an integrated HRA. This proposal simply requires that the base HRA
and screening applies across both programs, such that enrollees are not
asked to complete independent HRAs for Medicare and Medicaid. This
proposal would not preclude deployment of assessments that are modular
(such as a base level assessment that meets all Medicare and Medicaid
requirements with optional additional sections that are specific to
people for substance use or other factors) or include additional
elements for people with special needs. Further, our proposal would not
require that all enrollees complete any assessment, nor would it
preclude plans from conducting such additional assessments separately
from the HRA. We believe that an integrated HRA would meaningfully
reduce assessment burden for dually eligible individuals and improve
their experience as managed care enrollees (where States are not
already requiring something similar).
Our proposal stated the integrated HRA proposed at Sec.
422.101(f)(1)(v) would require D-SNPs that are AIPs to meet applicable
Medicare and Medicaid requirements, including those at Sec. 438.208,
such that enrollees in the AIP complete a single integrated HRA for
Medicare and Medicaid. In this final rule, we are clarifying that the
integrated HRA would need to satisfy the requirements at Sec.
438.208(b)(3) but would not necessarily encompass the other
requirements at Sec. 438.208. We believe the more specific citation is
more appropriate since Sec. 438.208(b)(3) is the provision that
requires that the Medicaid MCOs, PIHPs, or PAHPs make a best effort to
conduct an initial screening of each enrollee's needs within 90 days of
the effective date of enrollment for all new enrollees.
Comment: Many commenters supported our proposal that integrated
HRAs be applicable to AIPs and agreed with our reasoning that it would
be more feasible for D-SNPs whose enrollees are exclusively aligned
with an affiliated Medicaid MCO to implement a fully integrated HRA. We
received many comments expressing opposition to expanding this
requirement to all HIDE SNPs, citing the administrative burden and
complexity, resource constraint, and confusion that would result, as
well as the complexity of aligning timing for State Medicaid agency
contracts and MOC submissions. Some commenters supported an expansion
to all HIDE SNPs and encouraged us to build a data sharing mechanism
across Medicaid managed care, MA, and Medicaid fee-for-service programs
for organizations to facilitate timely sharing of relevant data across
plans.
Response: We appreciate the commenters' input on our proposal and
comment solicitation. Based on the challenges described in the proposed
rule at 89 FR 99488, we are not finalizing application of a requirement
for an integrated HRA beyond what we proposed.
Comment: Several commenters suggested that we align Medicare and
Medicaid HRA timelines to avoid beneficiary confusion and disruption.
Response: We thank commenters for their input. In the next section
on Promoting Person-centeredness in SNP ICPs and Timeliness of HRAs and
ICPs, we note that SNPs could conduct the comprehensive initial HRA
within 90 days (before or after) of the effective date of enrollment
for all new enrollees. But we also note that States could set more
stringent timeframe requirements through their State Medicaid agency
contracts for D-SNPs to conduct initial HRAs. The language we are
finalizing at Sec. 422.101(f)(1)(i) would establish a maximum
timeframe, not a minimum.
Comment: A few commenters discussed potential misalignment between
Medicare and Medicaid enrollment timelines and recommended that we
finalize this proposal in a way that aligns Medicaid and Medicare
enrollment timelines for dual eligible individuals and promotes
consistency across States and the Federal Government.
Response: We appreciate the comments. We understand the operational
considerations of potentially misaligned enrollment timelines for
Medicare and Medicaid, but such a change would be out of scope for this
final rule. Under our proposal on Promoting Person-centeredness in SNP
ICPs and Timeliness of HRAs and ICPs, SNPs would need to conduct an HRA
within 90 days (before or after) the enrollment effective date. As we
discussed in the proposed rule at 89 FR 99488, we believe it would
still be feasible to assess an enrollee using an integrated HRA in this
scenario, given that the enrollee's Medicaid eligibility would already
be verified through their enrollment in the D-SNP.
Comment: A handful of commenters suggested that we defer
implementation of an integrated HRA to allow States and plans
sufficient time to work through administrative complexities and train
staff before implementation. Commenters also suggested that we be aware
of the imposition that any major changes could have on States and plans
and argued that sufficient time and coordination will be needed to
develop streamlined and integrated HRAs that have the appropriate level
of standardization to assess core clinical and social needs, while also
maintaining the brevity and simplicity required to encourage member
completion. A commenter suggested a new implementation date of January
1, 2027.
Response: We appreciate the comments. We are delaying the
implementation date of this provision to January 1, 2027, to align with
the implementation timeline of the provisions for integrated member ID
cards and to allow States and plans more time to implement appropriate
instrument redesigns and staff training. We note that since HRAs may be
conducted within 90 days before or after the effective date of
enrollment, this provision will be applicable beginning October 1,
2026.
After considering the comments and for the reasons described in the
proposed rule, and our responses to comments, we are finalizing our
proposal to require integrated HRAs for AIP D-SNPs with two
modifications: (1) we are delaying the implementation date of this
provision to January 1, 2027, with an applicability date of October 1,
2026 and (2) at Sec. 422.101(f)(1)(v), for greater specificity, we are
replacing the reference to Sec. 438.208 with reference to Sec.
438.208(b)(3).
3. Promoting Person-Centeredness in SNP ICPs and Timeliness of HRAs and
ICPs
a. Medicare Context
Section 1859(f)(5)(A) of the Act requires SNPs to conduct an
initial assessment and an annual reassessment of each enrollee's
physical, psychosocial, and functional needs and ensure that the
results are addressed in each enrollee's ICP. We codified this
requirement at Sec. 422.101(f)(1)(i), using the term ``health risk
assessment,'' as a required component of the SNP MOC. Specifically,
Sec. 422.101(f)(1)(i) requires that MA organizations offering SNPs
conduct a comprehensive initial HRA of the individual's physical,
psychosocial, and functional needs as well as annual HRA, using a
comprehensive risk assessment tool that CMS may review during oversight
activities, and ensure that the results from the initial assessment and
annual reassessment conducted for each individual enrolled in the plan
are addressed in the individuals' ICP.
[[Page 15880]]
In addition, Sec. 422.112(b)(4)(i) requires that MA organizations
offering coordinated care plans make a ``best effort'' attempt to
conduct an initial assessment of each enrollee's health care needs,
including following up on unsuccessful attempts to contact an enrollee,
within 90 days of the effective date of enrollment. In the CY 2024
Medicare Part C Reporting Requirements, as further defined by the
Medicare Part C Technical Specifications Document Contract Year
2025,\67\ CMS specifies that SNPs report to CMS the number of initial
HRAs completed within 90 days of (before or after) the effective date
of enrollment and annual HRAs performed within 365 days of the last
HRA. As described in the Medicare Part C Technical Specification
Document Contract Year 2025, SNPs may report an enrollee as unable to
be reached if: the enrollee did not respond to at least three ``non-
automated'' phone calls and a follow-up letter from the SNP where all
the efforts were to solicit participation in the HRA, none of the
efforts to solicit participation were automated calls (``robo'' or
``blast'' calls), and documentation of the enrollee's refusal and/or
the SNP's inability to reach the enrollee is available at any time to
CMS. The technical specifications include additional details regarding
how to interpret the CY 2025 Medicare Part C Reporting Requirements.
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\67\ https://www.cms.gov/medicare/enrollment-renewal/health-plans/part-c.
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In addition, Sec. 422.101(f)(1)(ii) requires SNPs to develop and
implement a comprehensive ICP through an interdisciplinary team in
consultation with the beneficiary, as feasible, identifying goals and
objectives including measurable outcomes as well as specific services
and benefits to be provided. There are no timeframe requirements for
developing ICPs in Sec. 422.101(f).
b. Medicaid Context
Many D-SNPs have affiliated Medicaid managed care plans that
deliver Medicaid services to D-SNP enrollees through their parent
organization or another entity that is owned and controlled by the D-
SNP's parent organization. For Medicaid managed care, Sec.
438.208(b)(3) requires that MCOs, PIHPs, or PAHPs make a best effort to
conduct an initial screening of each enrollee's needs, within 90 days
of the effective date of enrollment for all new enrollees, including
subsequent attempts if the initial attempt to contact the enrollee is
unsuccessful.
For individuals enrolled in certain Medicaid home and community-
based services (HCBS) programs, there are requirements for a person-
centered care planning process. For section 1915(c) Medicaid HCBS
waiver programs, these requirements are set forth at Sec.
441.301(c)(1) through (3); for section 1915(k) Medicaid HCBS State plan
amendments, these requirements are set forth at Sec. 441.540; and for
section 1915(i) Medicaid State plan HCBS benefits, these requirements
are set forth at Sec. 441.725. We refer readers to these regulations
for more details.
Generally, these regulations require the State administering these
Medicaid HCBS programs to ensure an individualized person-centered
services plan, meeting certain minimum requirements, is developed for
each individual beneficiary enrolled in a Medicaid HCBS program. A more
in-depth discussion of the Medicaid HCBS care planning requirements can
be found at 89 FR 99489.
c. Medicare-Medicaid Plan (MMP) Context
Like Medicaid managed care plans, MMPs are subject to more
requirements than SNPs on person-centeredness and timeliness of HRAs
and ICPs. The MMP care coordination requirements for HRAs and ICPs for
the FAI are included in the three-way contracts between CMS, State
Medicaid agencies, and MMPs. In several States, the three-way contracts
apply requirements on the person-centeredness of ICPs beyond what is
required for SNPs and specific requirements for the timing of HRAs and
ICPs. Most States participating in the FAI (Illinois, Massachusetts,
Michigan, Ohio, South Carolina, and Texas) require MMPs to develop HRAs
and ICPs within 90 days or less of enrollment and include enrollees in
the development of the ICPs.
4. Opportunities for Improvement
Over the years, we have identified opportunities to improve person-
centeredness in care planning and the need to codify the timeline for
development of HRAs and ICPs. For example, we have learned of instances
in which SNPs did not complete initial or annual HRAs timely, or it
took several months to develop an ICP for enrollees after an HRA. In
addition, we have reviewed ICPs that were only loosely related to the
needs and preferences of enrollees or did not contain measurable
outcomes. We have identified some similarities in our review of MMP
care plans, such as care plans that do not include goals that are
meaningful to enrollees. We proposed regulatory updates to address
these opportunities for improvement, better align requirements across
Medicare and Medicaid, and build on our experiences in other programs
and demonstrations.
We proposed amendments to Sec. 422.101(f)(1) to codify timeliness
standards, improve the organization of the various HRA and ICP
requirements, and strengthen these requirements. First, in Sec.
422.101(f)(1)(i), we proposed to specify that SNPs conduct the
comprehensive initial HRA within 90 days (before or after) of the
effective date of enrollment for all new enrollees. This would better
align with the Medicaid requirement at Sec. 438.208(b)(3) and, for
Medicare, conform to Sec. 422.112(b)(4)(i) and the standard currently
described for reporting HRA completion in the Part C Reporting
Requirements. We also noted that, as described in the Medicare Part C
Technical Specifications, when a person enrolls, disenrolls, and re-
enrolls into any SNP under the same contract number, the previous HRA
is still considered valid and can continue to be used as long as it is
not more than 365 days old. CMS will continue to provide guidance on
these types of issues through the Medicare Part C Technical
Specifications.
Second, we proposed to move the requirement for a comprehensive
annual HRA from Sec. 422.101(f)(1)(i) to Sec. 422.101(f)(1)(ii) based
on the updates and to improve the flow of the rule.
Third, we proposed to relocate the requirement for SNPs to use a
comprehensive risk assessment tool that CMS may review during oversight
activities that assesses the enrollee's physical, psychosocial, and
functional needs and includes one or more questions from a list of
screening instruments specified by CMS in subregulatory guidance, from
Sec. 422.101(f)(1)(i) to Sec. 422.101(f)(1)(iii). This is a technical
change to improve the organization of the rule. (This organizational
change notwithstanding, we are planning to reassess these screening
requirements in response to Executive Order 14192, ``Unleashing
Prosperity Through Deregulation.'')
Fourth, we proposed a new Sec. 422.101(f)(1)(iv)(A) through (C) to
establish specific requirements for all SNPs related to outreach to
enrollees regarding completion of the HRA. Consistent with the Medicare
Part C Technical Specifications, we proposed to require that the SNP
must make at least three non-automated phone call attempts, unless an
enrollee agrees or declines to participate in the HRA before three
attempts are made. We proposed to newly require that these
[[Page 15881]]
attempts be made on different days at different times of day. Also
consistent with the Medicare Part C Technical Specifications, we
proposed to require that, if the enrollee has not responded to these
attempts, the SNP send a follow-up letter to conduct the initial or
annual risk assessments. We also proposed that, for any enrollees who
are unable to be reached or decline to participate in the HRA, the SNP
must document the attempts to contact the enrollee and, if applicable,
the enrollee's choice not to participate.
Fifth, in Sec. 422.101(f)(1)(v), as discussed in the proposed rule
at 89 FR 99490 and in section IV.A.2. of this final rule, we proposed
to require D-SNPs that are AIPs conduct a comprehensive HRA that meets
all requirements at Sec. 422.101(f)(1)(i) through (iv) as well as any
applicable Medicaid requirements, including those at Sec. 438.208,
such that enrollees complete a single integrated assessment for
Medicare and Medicaid.
Sixth, we proposed to relocate the requirement to ensure that the
results from the comprehensive initial and annual HRA conducted for
each individual enrolled in the plan are addressed in the enrollee's
ICP to Sec. 422.101(f)(1)(vi).
Seventh, we proposed to add a new Sec. 422.101(f)(1)(vii) that
would require that SNPs within 30 days of conducting a comprehensive
initial HRA or 30 days after the effective date of enrollment,
whichever is later, develop and implement a comprehensive ICP that--
Is person-centered and based on the enrollee's
preferences, including for delivery of services and benefits, and needs
identified in the HRA;
Is developed through an interdisciplinary care team with
the active participation of the enrollee (or the enrollee's
representative, as applicable), as feasible;
Identifies person-centered goals and objectives (as
prioritized by the enrollee), including measurable outcomes as well as
specific services and benefits to be provided; and
Is updated as warranted by changes in the health status or
care transitions of enrollees.
While section 1859(f)(5)(A) of the Act uses the term individual
throughout, we have used the term enrollee to make it clear that the
proposed requirements are for individuals who are enrolled in the SNP,
consistent with how we have generally used the term enrollee in other
recent rulemaking. For a more detailed discussion of the comprehensive
ICP, please refer to 89 FR 99490.
Finally, we proposed to add Sec. 422.101(f)(1)(viii) to require
that, for any enrollees who are unable to be reached or decline to
participate in the development or updates to the comprehensive ICP, the
SNP must document the attempts to contact the enrollee or the
enrollee's refusal to participate. While our goal is for SNPs to
develop person-centered ICPs, if a SNP is unable to reach an enrollee
(after the SNP has fulfilled its obligations as previously described to
contact the enrollee for the HRA) or an enrollee declines to
participate, then at a minimum the SNP should base the ICP on enrollee
encounter data or other available data. We strongly encourage SNPs to
continue to try to reach the enrollee even after satisfying the
proposed regulatory requirement. We noted at 89 FR 99490 that Resources
for Integrated Care (RIC) has developed a brief on Locating and
Engaging Members: Key Considerations for Plans Serving Members Dually
Eligible for Medicare and Medicaid, which SNPs may find helpful in
bolstering their efforts to engage enrollees.\68\
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\68\ https://www.cms.gov/files/document/ricresource-locatingandengagingmembers-brief.pdf.
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In addition, as a result of these updates, we proposed to
redesignate Sec. 422.101(f)(1)(iii) as Sec. 422.101(f)(1)(ix) and
redesignate Sec. 422.101(f)(1)(iv) as Sec. 422.101(f)(1)(x) and
change the term ``individual's'' to ``enrollee's''.
We posited in the proposed rule (89 FR 99491) that, collectively,
our proposals would promote more timely and person-centered HRAs and
ICPs for SNP enrollees. Our proposals at Sec. 422.101(f)(1)(i) through
(iv), (vi), and (viii) through (x), would codify elements of the CY
2024 Part C Reporting Requirements and Technical Specifications and
restructure the current section for better flow. Our proposal at Sec.
422.101(f)(1)(vii) would require that SNPs create and implement the ICP
within 30 days of conducting an initial HRA or 30 days after the
effective date of enrollment, whichever is later, although many SNPs
already complete ICPs within such timeframes. We believe that the
benefit gained by the ability for enrollees to quickly have an ICP in
place which will assist with coordinating their care in a person-
centered manner outweighs the associated burden. We solicited comment
on several considerations, including whether to instead adopt
alternative timelines for development and implementation of the ICP,
whether to allow additional time for the development of the ICP, such
as within 60 or 90 days of completion of the HRA, and whether the ICP
should not be required when the enrollee is unable to be reached or
declines to participate. Some States participating in the FAI--
including Illinois, Michigan, South Carolina, and Texas--do not require
the ICP in these circumstances. We also solicited comment on our
consideration of whether text messaging could be useful for contacting
enrollees to conduct HRAs in addition to phone calls and how follow-up
to conduct the HRA would occur following the contact by text messages.
Finally, for Sec. 422.101(f)(1)(vii) where we use the term
``person-centered,'' we solicited comment on whether to cross-reference
the elements of the person-centered planning process at Sec.
441.540(a) as written, a subset of those elements, or a different
definition.
In the proposed rule at 89 FR 99508 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 our responses are as follows:
Comment: Numerous commenters supported our proposals at Sec.
422.101(f)(1)(i) through (x). Many commenters suggested that increased
enrollee involvement in the development of the ICP as proposed would
help to better ensure integrated care. Some commenters noted that
engaging the enrollee and their representative is essential for
developing more effective care plans, better reflecting the
individual's unique circumstances and making it easier for providers to
identify the type of care needed. A commenter stated that such
requirements would provide enrollees a meaningful opportunity to offer
input to improve the care they receive. Other commenters highlighted
that consistent deadlines ensure that assessments and care plans are
developed promptly, supporting a positive enrollee experience and
relationship with a new health plan, and enabling early identification
of health risks and barriers and faster implementation of
interventions. A commenter applauded CMS for describing the person-
centered ICP process, including goals not specific to medical
diagnoses, noting that individualized, person-centered care
coordination is the crux of integrated care that allows individuals to
access appropriate, effective care in a way that works for their lives.
The commenter noted that dually eligible enrollees experience confusion
and conflicting information when attempting to navigate both Medicare
and Medicaid
[[Page 15882]]
benefits and suggested that regulatory requirements on person-centered
care, coupled with robust oversight to ensure their implementation, is
critical to addressing these challenges. Another commenter noted that
the HRA and ICP proposals are especially important for behavioral
health treatment, believing that involvement of enrollees and their
representatives will help create better care plans and lead to improved
medication adherence. Another commenter indicated that generic ICPs
that are not tailored to the individual hold little value for enrollees
or the plan, while identifying and working towards meaningful life
goals is critical to supporting the intended person-centered planning.
A few commenters pointed out the value of updating ICPs after a change
in health status or care transition to ensure ICPs are relevant and
useful for individuals and their care teams. In addition, several
commenters stated that these efforts would carry over best practices
from the Medicare-Medicaid Plans (MMPs), which commenters described as
a preeminent model for integrated care.
Response: We appreciate the support for our proposals to codify
timeframes for SNPs to conduct HRAs and develop ICPs, prioritize the
involvement of the enrollee or the enrollee's representative, as
applicable, in the development of ICPs, and add MOCs to the topics SNPs
discuss during their D-SNP EACs. Our proposals would promote more
timely and person-centered HRAs and ICPs for SNP enrollees and build on
the experience of MMPs. We believe these proposals will provide needed
improvements, prompting SNPs to complete HRAs and ICPs timely and
develop ICPs that are person-centered and based the enrollee's
preferences, including for delivery of services and benefits, and needs
identified in the HRA.
Comment: Numerous commenters supported our proposed requirement
that SNPs conduct the comprehensive initial HRA within 90 days (before
or after) of the effective date of enrollment for all new enrollees.
Commenters noted that requiring completion of an HRA within 90 days of
the effective date of enrollment would ensure timely identification of
enrollee needs and consistency with MMP requirements, Medicare Part C
Reporting Requirements, and Medicaid timeframes. A few commenters
stated that they did not oppose establishing a 90-day standard given
this timeline aligns with Medicaid screening requirements and with
current Part C Reporting Requirements that have generally allowed D-
SNPs to count Medicaid screenings performed during this timeline as
meeting Medicare HRA requirements.
While supportive of CMS establishing a standard timeframe for
completion of HRAs, a few commenters, including the Medicaid and CHIP
Payment and Access Commission (MACPAC), suggested that CMS consider
coordinating the proposed timeframe with State Medicaid requirements or
requested clarification on how the proposed timeframe would interact
with timeliness standards specified in SMACs. MACPAC recommended that
CMS consider adding language that directs D-SNPs to defer to State
requirements, as described in the SMAC, for these activities. MACPAC
acknowledged that several States, such as Minnesota, recognize the need
for more timely completion of the HRA and require a shorter timeline
through the SMAC. MACPAC cited recent work on optimizing SMACs, which
found States with mature integrated D-SNPs typically set requirements
in their SMACs around HRA completion and including specific Medicaid
services in the ICP. Another commenter indicated that States already
require timely HRA completion within 60 days.
Response: We welcome these comments. Our proposal to require SNPs
to conduct comprehensive initial HRAs within 90 days (before or after)
the effective date of enrollment for all new enrollees would better
align with the Medicaid requirement at Sec. 438.208(b)(3) and, for
Medicare, conform to Sec. 422.112(b)(4)(i) and the standard currently
described for reporting HRA completion in the Part C Reporting
Requirements. We appreciate the request to clarify how the proposed
timeframe for SNPs to conduct HRAs would interact with SMAC
requirements. Our proposal would establish a maximum amount of time for
SNPs to conduct HRAs but does not preclude a State from requiring a
shorter timeframe for D-SNPs via the SMAC. We agree with the commenters
that some States have already established shorter timeframes for D-SNPs
to conduct HRAs. For CY 2025, these include Idaho, Massachusetts, and
Minnesota. Also for CY 2025, other States, such as Oregon, Virginia,
and Washington, set shorter timeframes for D-SNPs to conduct HRAs when
enrollees are referred from a Medicaid managed care plan. Under our
proposal, such States would be able to continue requiring (via the
SMAC) initial HRAs be conducted in less than 90 days. This is also
consistent with the Part C Technical Specifications Document Contract
Year 2025, which specifies that SNPs report to CMS the number of
initial HRAs completed within 90 days of (before or after) the
effective date of enrollment. We do not believe modification to our
proposed timeframe for initial HRAs is necessary.
Comment: A few commenters supported our proposal to establish a
standard timeframe for conducting HRAs but recommended that CMS modify
or clarify the proposal to ensure appropriate consideration for D-SNP-
only contracts. Some of these commenters noted that when a State
requires MA organizations to create D-SNP-only contracts with a new H
contract number, the legacy plan's HRA should still be valid for the
prior year; otherwise, this presents issue for States moving to D-SNP-
only contracts and the enrollees served by these plans. These
commenters requested that CMS consider replacing ``under the same
contract number'' with ``under the same parent entity'' to address this
issue. A few of these commenters recommended that CMS treat HRAs for
enrollees transitioned into D-SNP-only contracts as valid the same way
it treats HRAs conducted within the past year when a person enrolls,
disenrolls, and re-enrolls into any SNP under the same contract number.
Response: We thank the commenters for their perspectives. As
described in the Medicare Part C Technical Specifications, when a
person enrolls, disenrolls, and re-enrolls into any SNP under the same
contract number, the previous HRA is still considered valid and can
continue to be used as long as it is not more than 365 days old. Per
the Part C Technical Specifications, enrollees who received an initial
HRA and remain continuously enrolled under a MA organization that was
part of a consolidation or merger within the same MA organization or
parent organization will not need to participate in a second initial
HRA. This guidance also applies to enrollees who were crosswalked from
a non-renewing D-SNP PBP under a broader MA contract to a D-SNP-only
contract per Sec. 422.107(e). We will continue to provide guidance on
these types of issues through the Medicare Part C Technical
Specifications.
Comment: A commenter suggested that CMS continue to allow SNPs to
conduct HRAs before the effective date of enrollment, contingent on
State regulations.
Response: We appreciate the opportunity for clarification. Under
our proposal, SNPs could conduct the comprehensive initial HRA within
90 days (before or after) of the effective date of enrollment for all
new enrollees. As discussed earlier in this section,
[[Page 15883]]
under language proposed at Sec. 422.101(f)(1)(i), States could use
their State Medicaid agency contracts under Sec. 422.107 to set more
stringent timeframe requirements for D-SNPs to conduct initial HRAs.
The proposed language at Sec. 422.101(f)(1)(i) would establish a
maximum timeframe, not a minimum.
Comment: Numerous commenters, including MACPAC, supported our
proposal at Sec. 422.101(f)(1)(iv)(C) that SNPs document their
attempts to contact enrollees who cannot be reached to conduct HRAs or
develop ICPs, or who decline to participate. MACPAC viewed this effort
as increasing transparency, which would assist CMS and States in
conducting oversight of D-SNPs. A number of these commenters requested
that SNPs be allowed flexibility to determine which methods of outreach
work for their enrollees, as well as the timing of the outreach. Some
of these commenters cited that engaging enrollees to actively
participate in care management is a challenge, and digital literacy and
adoption of digital technologies as a primary communications method
continues to increase with the SNP population. Several of these
commenters recommended that CMS expand the allowable outreach methods
beyond non-automated phone calls to include electronic methods, such as
text messaging, email, or electronic medical record messages. A
commenter emphasized that text messaging has been shown to be an
effective mode of communication, particularly among Medicaid enrollees
and dually eligible individuals, and suggested that it may be a
successful outreach method for the completion of HRAs. Other commenters
recommended that CMS not require a specific method through which the
enrollee outreach attempts are made. Another commenter requested that
CMS specify through guidance whether the required letter can be
combined with outreach that the plan currently does, such as sending a
printed HRA form with a reminder mailing.
Another commenter asked whether sending a letter to an enrollee on
the same day as a phone call attempt would meet the proposed
requirement to conduct at least three non-automated attempts on
different days, at different times of day.
Response: Consistent with the Medicare Part C Technical
Specifications, we proposed to require that the SNP make at least three
non-automated phone call attempts, unless an enrollee agrees or
declines to participate in the HRA before three attempts are made. We
proposed to newly require that these attempts be made on different days
at different times of day. Also consistent with the Medicare Part C
Technical Specifications, we proposed to require that, if the enrollee
has not responded to these attempts, the SNP sends a follow-up letter
to conduct the initial or annual risk assessments. We also proposed
that, for any enrollees who are unable to be reached or decline to
participate in the HRA, the SNP must document the attempts to contact
the enrollee and, if applicable, the enrollee's choice not to
participate. We appreciate the commenters' responses to our comment
solicitation on whether text messaging could be useful for contacting
enrollees to conduct HRAs in addition to phone calls. We note that the
existing requirement to contact enrollees using non-automated phone
calls only pertains to HRA outreach for Medicare Part C Reporting
Requirement purposes. CMS does not otherwise prohibit use of
alternative outreach for contacting enrollees to conduct HRAs and
assumes SNPs use alternative modes of communication already. We
acknowledge that use of electronic methods, such as text messaging,
emails, and electronic medical records messaging, are widespread
alternative uses of communication that could be useful in engaging
enrollees to conduct HRAs. We are finalizing modifications to our
proposed language at Sec. 422.101(f)(1)(iv)(A) to replace ``at least
three non-automated phone call attempts'' with ``at least three
attempts to reach the enrollee (not including any automated phone
calls).'' This change will allow SNPs to conduct at least three
outreach attempts using any form other than automated calls, including
but not limited to non-automated phone calls or written notifications,
and it will allow SNPs flexibility in engaging enrollees in scheduling
and conducting HRAs while prohibiting the opportunity to comply simply
through automated calls. Also, we clarify that sending an enrollee a
letter on the same day a SNP conducts another outreach attempt would be
permissible under the requirement for conducting outreach attempts on
different days at different times of day to schedule the initial or
annual HRA. We will update the CY 2026 Part C Technical Specifications.
Comment: While numerous commenters supported establishing a
standard timeframe for developing ICPs, many of these commenters
requested more time to develop the comprehensive ICPs relative to our
proposed requirement at Sec. 422.101(f)(1)(vii) that SNPs develop and
implement a comprehensive ICP within 30 days of conducting a
comprehensive initial HRA or 30 days after the effective date of
enrollment, whichever is later. We noted that many SNPs already
complete ICPs within such timeframes. We solicited comment on several
considerations, including whether to instead adopt alternative
timelines for development and implementation of the ICP, such as within
60 or 90 days of completion of the HRA.
A few commenters requested that we extend the ICP development
timeframe to within 45 days of HRA completion, and a few additional
commenters suggested ICPs be developed within 60 or 90 days of HRA
completion. A number of commenters suggested that ICPs be developed
within 90 days of HRA completion. Commenters expressed similar
rationales for needing the additional time. These included needing more
time to reach and engage the enrollees; develop tailored, quality,
comprehensive ICPs that meet enrollees' needs and preferences; provide
time to coordinate and communicate with health care providers and
specialists; allow care managers the ability to prioritize the creation
and updating of care plans for enrollees at highest risk; and
coordinate with Medicaid enrollment and eligibility dates. A commenter
noted the additional time could be helpful in developing ICPs in rural
areas with limited service availability. In support of a 90-day
requirement, a commenter noted that 90 days is even more important for
enrollees who do not respond to first, second, or third outreach
attempts and to address various social risk factors of dually eligible
enrollees, such as housing insecurity or lack of access to
transportation, that create barriers to communication and access to
care. Another commenter appreciated the existing practice of MMPs in
several States requiring that HRAs and ICPs be conducted within 90 days
of enrollment. In support of a 60-day requirement, another commenter
noted that the amount of time it currently takes to complete ICPs
differs by market with current completion rates ranging from within 45
days to within 60 days of completing an HRA.
Several commenters opined on the second part of the proposed ICP
timeframe of ``or 30 days after the effective date of enrollment,
whichever is later''. A few of these commenters emphasized that 30 days
from the enrollment date, SNPs are still in the process of contacting
enrollees to set up the HRA. A commenter noted that creating an ICP 30
days post enrollment
[[Page 15884]]
and then reaching out to create an HRA could trigger the need to create
an additional ICP. Another commenter mentioned that an enrollee may
experience a transition of care after enrollment or completion of an
HRA, which may require additional time beyond 30 days to reach the
enrollee and create a comprehensive ICP. A few commenters explained
that at 30 days post enrollment, SNPs are not likely to have any claims
data yet on which to base the ICP in lieu of the HRA. Another commenter
stated that requiring real-time involvement of an enrollee in drafting
an ICP can lead to delays in care and recommended that CMS allow the
care team to draft the ICP based on the enrollee's health care goals
and preferences, review the ICP with the enrollee, and then adjust the
ICP based on the enrollee's feedback.
MACPAC supported codifying existing timelines for ICPs, including
expectations around person-centeredness. Also, MACPAC cautioned that
elongated timeframes can pose a risk for individuals in urgent need of
LTSS--including home- and community-based services, behavioral health
services, or other supports to delay or prevent institutionalization--
who may need to seek institutional care if their home- and community-
based needs are not addressed promptly. Another commenter emphasized
that some States may wish to set shorter timelines for the completion
of ICPs and recommended that CMS add language specifying that the
Federal timeframe may be superseded by State requirements included in
SMACs. Another commenter requested clarification on how the proposed
timeliness standards for HRAs would interact with the timeliness
standards that Medicaid agencies currently specify in their contracts
with plans.
In addition, a commenter inquired about what CMS meant by
``implementation'' of the ICP, noting there are timing aspects to
implementation of ICPs that are outside the control of a SNP (for
example, obtaining provider signatures, performing home modifications)
that may take longer than the timelines outlined in the proposed rule.
The commenter explained further that if CMS intended implementation of
the ICP to mean development of a care plan--understood to be the
complete creation of the care plan that is acknowledged by the enrollee
but not yet fully executed--then the timeline CMS proposed at Sec.
422.101(f)(1)(vii) is reasonable.
Response: We thank commenters for sharing their perspectives on our
proposal on the timeliness of ICPs.
We proposed that SNPs develop a comprehensive ICP within 30 days of
conducting an initial HRA or 30 days after the effective date of
enrollment, whichever is later. We clarify that we deliberately used
the word ``develop'' rather than ``implement'' in our proposed language
at Sec. 422.101(f)(1)(vii) because we do not expect SNPs to have fully
implemented an ICP within the timeframes proposed. ICPs generally
include multiple goals and objectives, including measurable outcomes,
and describe the specific services and benefits to be provided, as
proposed at Sec. 422.101(f)(1)(vii)(C). It often takes time to achieve
goals and objectives.
We also clarify that in several States, the MMP three-way contracts
include person-centered requirements for ICPs beyond what is required
for SNPs and specific requirements for the timing of HRAs and ICPs.
Most States participating in the FAI (Illinois, Massachusetts,
Michigan, Ohio, South Carolina, and Texas) require MMPs to develop both
HRAs and ICPs within 90 days or less of enrollment and include
enrollees in the development of the ICPs. Under our proposal, SNPs
would need to conduct an HRA within 90 days (before or after) of the
enrollment effective date and have another 30 days (up to a total of
120 days after enrollment) to develop the ICPs.
Dually eligible individuals have a higher prevalence of many health
conditions than their Medicare-only and Medicaid-only peers and are
more likely than non-dually eligible Medicare beneficiaries to report
being in poor health.\69\ A comprehensive ICP, developed with the
enrollee, is an important tool for helping SNP enrollees manage that
complexity. We are persuaded by the comments articulating the need--in
certain circumstances--for additional time to reach and engage an
enrollee and their representative, if applicable, understand enrollee
needs and preferences and any barriers, and coordinate and communicate
with providers to develop a comprehensive ICP that truly coordinates
care. We also appreciate concerns about ICP development potentially
delaying access to care for enrollees in urgent need of services, such
as LTSS.
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Weighing these considerations, we are finalizing modifications to
our proposed language at Sec. 422.101(f)(1)(vii) to require SNPs to
develop a comprehensive ICP within 90 days of conducting a
comprehensive initial HRA or 90 days after the effective date of
enrollment, whichever is later. We emphasize that 90 days is a
regulatory maximum, not a goal or best practice. SNPs should not use
the ICP process as a reason to delay provision of urgently needed
services. We expect the vast majority of ICPs to be developed much
sooner than the maximum allowable timeframe since in many cases using
the maximum allowable time after an enrollee's effective date to
complete and HRA and ICP would not yield the best outcome for
enrollees. SNPs may also choose to develop the HRA and ICP during the
same encounter, consistent with the experience of many MMPs. Yet we
recognize that some enrollees are more difficult to reach or take more
time to develop a relationship with a care coordinator before being
ready to engage in an HRA or ICP. We do not want SNPs to sacrifice an
enrollee's active involvement in the care planning process because of a
shorter compliance timeframe. We will monitor HRA and ICP completion
and consider whether changes are necessary through future rulemaking.
Based on review of CY 2025 SMACs, there are at least two States
(Idaho and Minnesota) that have used their SMAC to set specific
requirements for D-SNPs on the timing of ICP development. Like HRAs,
the Federal standard establishes a maximum timeframe for developing the
ICP. The language we are finalizing at Sec. 422.101(f)(1)(vii) will
require SNPs to develop a comprehensive ICP within 90 days of
conducting a comprehensive initial HRA or 90 days after the effective
date of enrollment, whichever is later. Nothing in our proposal, or the
rule we are finalizing, precludes States from setting more restrictive
requirements for D-SNPs as terms in their SMACs.
Comment: A few commenters expressed explicit support for our
proposed criteria for comprehensive ICPs at Sec. 422.101(f)(1)(vii)(A)
through (D). These commenters encouraged CMS to ensure the enrollee and
their representative, if applicable, lead the person-centered planning
process, receive a timely copy of their ICP, have meaningful
opportunities to amend it, receive plain language information about
available care coordination, and have access to care coordination that
effectively resolves any access issues. A commenter requested that CMS
confirm that the ICP needs to be reviewed, and updated if necessary,
when the interdisciplinary care team (ICT) becomes aware of changes in
an enrollee's health status.
[[Page 15885]]
Response: We appreciate these comments and agree the proposals at
Sec. 422.101(f)(1)(vii)(A) through (D) promote active participation of
enrollees (or the enrollee's representative, as applicable) in care
planning, yielding a care plan based on enrollee's preferences,
including for delivery of services and benefits, and their needs
identified in the HRA. As proposed, the ICP would identify person-
centered goals and objectives, as prioritized by the enrollee, and be
updated, as warranted by changes in health status or care transitions.
We expect the development of the ICP through the ICT will include plain
language information about available care coordination and care
coordinators/care managers will assist each enrollee in accessing
services included in their ICP. We also confirm, per language we are
finalizing at Sec. 422.101(f)(1)(vii)(D), that SNPs will be required
to update an ICP as warranted by changes in the health status or care
transitions of enrollees.
Comment: A number of commenters expressed support for care
coordination and care planning activities.
A commenter recommended that CMS ensure enrollees know who their
care coordinator/care manager is and how they can file a grievance
related to care coordination and require core competencies responsive
to the needs of dually eligible individuals (for example, knowledge of
community integration, person-centered planning, culturally competent
and trauma informed care delivery practices, Medicaid home- and
community-based services and Medicare home health benefits, health-
related social needs, dignity of risk, and health equity). This
commenter further recommended that an enrollee's care team be notified
when they are admitted to a hospital or skilled nursing facility, and
SNPs should be monitored for how well they implement notification
requirements when an at-risk enrollee experiences a care transition.
A few commenters explained that while ICPs are intended to empower
enrollees to have control over their health care, they may not address
the full range of Medicare and Medicaid benefits. To make the ICP a
meaningful tool, these commenters recommended that ICPs should be
integrated and address all benefits for which an enrollee is eligible.
Response: We appreciate these comments. We consider sharing contact
information for care coordinators/care managers with enrollees and
establishing core competencies for care coordinators/care managers as
best practices for care coordination. Some States, such as
Massachusetts, New Jersey, and Virginia, include language in their CY
2025 SMACs requiring D-SNPs to provide enrollees with updated contract
information for their care managers. We also expect ICTs to be notified
of any enrollee hospital or skilled nursing facility admissions. We
believe such notifications are common practice and many D-SNPs report
hospital and SNF admissions to State Medicaid agencies or their
designees per Sec. 422.107(d)(1). Some States, such as Pennsylvania,
include language in their SMACs, for D-SNPs to require contracted
hospitals, nursing facilities, and skilled nursing facilities notify
the D-SNP, including the D-SNP service coordinator, within 24 hours of
any enrollee visits, admissions, and discharges. The service
coordinator must follow-up to address care needs. Also, CMS audits of
SNPs include review of enrollee care transitions.
Our proposed language at Sec. 422.101(f)(1)(vii)(A) would require
an ICP to be based on the enrollee's preferences, including for
delivery of services and benefits, and their needs identified in the
HRA. For D-SNPs, this includes describing coordination with Medicaid
for any needed services at a minimum and for integrated D-SNPs
providing Medicare and Medicaid services and benefits. We remind D-SNPs
of the requirements at Sec. 422.562(a)(5) that D-SNPs must offer to
assist their enrollees in obtaining Medicaid covered services and
resolving grievances, including requesting authorization of Medicaid
services, as applicable, and navigating Medicaid appeals and grievances
in connection with the enrollee's own Medicaid coverage, regardless of
whether such coverage is in a Medicaid fee-for-service program or a
Medicaid managed care plan. We also emphasize that all MA plans,
including SNPs, provide the Evidence of Coverage to enrollees each
year. Chapter 9 of the Evidence of Coverage outlines steps for how
enrollees can file appeals and grievances.
Comment: A commenter recognized the person-centered care plans
being appropriate for certain populations (enrollees in D-SNPs or with
well-controlled chronic conditions, for example) but suggested a
medical focused care plan is often more appropriate for I-SNP and C-SNP
enrollees. The commenter advised that education on medications,
treatment adherence, and the importance of provider appointments are
vital parts of managing chronic conditions and should be part of the
care plan, when applicable.
Response: We thank the commenter for sharing this perspective. As
stated in the proposed rule at 89 FR 99490, we intend for ICPs to
engage and motivate enrollees by including goals that are meaningful to
each enrollee. These may include goals that are not specific to a
medical diagnosis, such as attending a child's graduation, pursuing
higher education, or being able to attend religious services each week.
The ICP should also outline steps for managing conditions, such as
diabetes or high blood pressure, that may have been identified in the
HRA and impact the enrollee's ability to meet their goals. The steps
should also take account of the enrollee's preferences for delivery of
any needed services or benefits. For example, an enrollee may have a
goal of attending a child's graduation, but weight and mobility
limitations are current barriers identified in the HRA. The care plan
would include specific steps to help the enrollee lose weight and
improve mobility, which would support the enrollee's efforts to attend
the graduation. This personalized approach balances a medical focus
with other goals that are meaningful to enrollees.
Comment: A few commenters shared their perspectives on whether ICPs
should be required when the enrollee cannot be reached or declines to
participate. Some of these commenters suggested that removing the ICP
requirement when enrollees cannot be reached would remove the
administrative burden and potential enrollee dissatisfaction caused by
repeated attempts to reach these enrollees and allow plans to repurpose
that time to managing care for enrollees who are willing to
participate. Noting that SNPs continue to struggle with enrollees who
are unable to reach or decline to participate in the HRA and ICP
processes, another commenter indicated that there should not be a
Federal requirement for ICPs in these cases but suggested that CMS
consider allowing a separate timeframe for conducting these HRAs and
ICPs for enrollees who eventually agree to participate. The commenter
explained that a SNP could start a new clock for HRA completion and ICP
development (which would override the effective date of enrollment)
based on the date the enrollee expresses willingness to engage. To
allow sufficient time for the enrollees to meaningfully participate in
care planning, the commenter suggested that SNPs conduct an HRA within
90 days of the date an enrollee is willing to engage and develop an ICP
within 60 days of conducting the HRA.
[[Page 15886]]
Another commenter noted that it works with States to encourage
enrollee participation in HRAs and ICPs at the time of Medicaid
enrollment and annually thereafter. This commenter surmised that
primary care providers and care managers may have best practices to
engage enrollees in HRAs and ICPs and recommended that CMS maintain a
repository that shares this information.
Response: We appreciate these comments regarding our proposed
language at Sec. 422.101(f)(1)(viii), which would require SNPs to
document the attempts to contact enrollees who they are unable to reach
or refuse to participate. As we stated in the proposed rule (89 FR
99491), our goal is for SNPs to develop person-centered ICPs. But, if a
SNP is unable to reach an enrollee (after the SNP has fulfilled its
obligations as previously described to contact the enrollee for the
HRA) or an enrollee declines to participate, then at a minimum the SNP
should base the ICP on enrollee encounter data or other available data.
We strongly encourage SNPs to continue to try to reach the enrollee
even after satisfying the regulatory requirement but recognize the need
to take a balanced approach to outreach to minimize enrollee abrasion.
We thank the commenter for the suggested alternative for enrollees
who are hard to reach but ultimately agree to participate in HRA and
ICP processes. We will take this suggestion as well as the
recommendation to maintain a repository of best practices for engaging
enrollees under consideration for future rulemaking.
Comment: A few commenters recommended that CMS modify the Star
Ratings measure SNP Care Management to account for refusals and
documented inability to reach enrollees.
Response: We thank the commenters for their input, but we do not
believe the suggested change is needed. As articulated in the CY 2025
Part C Reporting Requirements, the SNP Care Management reporting
section already includes elements to capture counts of enrollees that
refused and enrollees that the SNP was unable to reach. However, as
noted in the CY 2025 Medicare Part C and D Star Ratings Technical
Notes, those elements are not included in the calculation of the SNP
Care Management measure for Star Ratings purposes. This is so that MA
organizations are incentivized to reach and engage enrollees for
purposes of completing an HRA.
Comment: A commenter proposed that CMS allow SNPs to apply risk
stratification methods for developing and updating ICPs and to focus
higher touch ICP development efforts on higher-needs enrollees. The
commenter explains that for enrollees at lower risk strata and/or with
few needs or care plan changes, detailed engagement with their SNP plan
to co-develop an ICP and to identify and track person-centered goals is
a higher level of service than most enrollees require or want.
Alternatively, the commenter suggests SNPs focus lower risk enrollees
on ensuring engagement with a primary care provider and health
screenings.
Response: We thank the commenter for sharing this perspective.
Enrollment of dually eligible individuals is predominant in D-SNPs, I-
SNPs, and some C-SNPs, and these individuals are navigating the
complexity of Medicare and Medicaid programs. Dually eligible
individuals have a higher prevalence of many health conditions than
their Medicare-only and Medicaid-only peers and are more likely than
non-dually eligible Medicare beneficiaries to report being in poor
health.\70\ A comprehensive ICP, developed with the enrollee, is an
important tool for helping SNP enrollees manage that complexity
regardless of risk strata. We also note that some States include more
frequent requirements for care plan updates based on risk
stratification levels. Nothing in our proposal would preclude SNPs from
more frequent updates to the ICP or higher-touch approaches based on
risk stratification.
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\70\ https://www.medpac.gov/wp-content/uploads/2024/01/Jan24_MedPAC_MACPAC_DualsDataBook-508_SEC.pdf.
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Comment: A commenter recommended inclusion of family caregivers in
conducting HRAs and developing ICPs and using caregiver assessments as
ways to improve the success of the ICP for the enrollee. The commenter
suggested that including caregivers in these discussions would help
them understand the enrollee's care needs, effectively provide care,
and highlight any necessary training. The commenter further explained
that employing a caregiver assessment, such as the Caregiver
Profiles(copyright)17 developed by The Rosalynn Carter Institute for
Caregivers and Duke University, would inform the potential success of
the care plan and whether it would place undue burden on the caregiver.
The commenter emphasized the need for providers to understand social
determinants of health factors that could impede successful outcomes
coding to document SDOH data. Finally, the commenter advocated that MA
organizations publicly provide information on available caregiver
programs and supports.
Response: We welcome these comments and agree caregiver
participation in HRA and ICP discussions can be valuable. Our proposed
requirements at Sec. 422.101(f)(1)(i) through (x) would promote
development of a comprehensive ICP that is person-centered, based on
the enrollee's preferences, and developed through an ICT with the
active participation of the enrollee (or the enrollee's representative,
as applicable). Nothing in our proposed requirements would preclude a
caregiver from participating in the HRA or ICP processes if such
participation is consistent with the enrollee's preferences.
Comment: A commenter noted that several SNPs are participating in
an effort by the National Committee for Quality Assurance (NCQA) to
develop and test person-centered outcome measures, which will not be
ready for several years. The commenter suggested that more work be done
before implementing requirements around person-centered care planning.
Response: We appreciate the commenter's perspective. We look
forward to learning from these efforts as they progress but are not
compelled to delay the requirements proposed at Sec.
422.101(f)(1)(vii) through (viii). We will monitor the requirements
finalized at Sec. 422.101(f)(1)(vii) through (viii) and consider that
experience as well as other information gained through efforts such as
those described by the commenter in making any refinements in future
rulemaking.
Comment: A commenter explained that it would be of great value to
have States adopt the Federal model of care requirements since they are
standardized and well-established in the field, D-SNPs already follow
these requirements, and NCQA (under contract with CMS) already reviews
them through a comprehensive MOC that is subject to CMS and oversight.
As States consider how to modify their HRA, social risk screening, ICP,
or ICT requirements to align with Federal MOC guidelines, the commenter
suggested that CMS provide deemed status on a temporary basis for D-
SNPs that meet all State care management requirements as a substitute
for Federal MOC requirements. The commenter acknowledged that some
States may already have State-specific requirements outlined in their
SMACs, which do not align with Federal Medicare requirements, and these
States may need some time to modify their requirements or may not be
able to adopt the Federal standards due to State legislative language
or policy governing
[[Page 15887]]
Medicaid. If CMS did not favor such deemed status, the commenter urged
CMS to work with States to create a comprehensive crosswalk document
showing each State's requirements and policy around HRA, social risk
screening, care planning, care management, care teams, and oversight
activities by State. Such a crosswalk would provide awareness of
similarities and differences across care coordination elements.
Response: We appreciate these comments and will take them into
consideration for future rulemaking. Based on our experience reviewing
SMACs, we are not aware of any State-specific care coordination
requirements that conflict with Federal MOC requirements. We reiterate
that our proposals do not circumvent States' ability to establish--in
their SMACs--requirements that are more restrictive than the Federal
requirements we are finalizing here. Nor do our proposals affect the
MOC review and approval processes.
Comment: A commenter advised that better care coordination between
Medicare and Medicaid plans, such as through ICPs and improved
communication, is needed for enrollees whose plans are aligned
regardless of whether the D-SNPs are AIPs. This commenter gave the
example of Pennsylvania having 52,000 dually eligible individuals
enrolled in Medicaid plans aligned with D-SNPs, but none of the D-SNPs
are AIPs. The commenter noted that while the State encourages
individuals to enroll in Medicaid plans aligned with D-SNPs, aligned
enrollees see little difference in access to and coordination of
services compared to unaligned enrollees, citing problems related to
poor coordination and communication related to motorized wheelchair
repairs. The commenter also highlighted that D-SNPs should better
educate their Medicare provider networks about coverage differences
between Medicare and Medicaid. The commenter explained that this could
help avoid instances where Medicare providers fail to submit a prior
authorization request to the Medicaid managed care plan (on behalf of
an enrollee) because they believe Medicaid can only cover services and
benefits secondary to Medicare rather than Medicaid providing primary
coverage in certain situations.
Response: We appreciate the commenter sharing this detailed
perspective. The requirements we proposed at Sec. 422.101(f)(1)(vii)
would apply to all SNPs, including AIP and non-AIP D-SNPs, and, for D-
SNPs, this includes describing coordination with Medicaid for any
needed services at a minimum and for integrated D-SNPs providing
Medicare and Medicaid services and benefits. We also remind D-SNPs of
the requirements at Sec. 422.562(a)(5) that D-SNPs must offer to
assist their enrollees in obtaining Medicaid covered services and
resolving grievances, including requesting authorization of Medicaid
services, as applicable, and navigating Medicaid appeals and grievances
in connection with the enrollee's own Medicaid coverage, regardless of
whether such coverage is in a Medicaid fee-for-service program or a
Medicaid managed care plan. If the enrollee accepts the offer of
assistance, the plan must provide the assistance. At Sec.
422.562(a)(5)(i), we outline examples of the assistance D-SNPs can
provide, which include explaining to an enrollee how to make a request
for a Medicaid service authorization, how to file an appeal, and
assisting the enrollee in contacting the enrollee's specific Medicaid
fee-for-service program or Medicaid managed care plan, regardless of
whether the Medicaid managed care plan is affiliated with the
enrollee's D-SNP. Also, we agree with the commenter that it is
worthwhile for D-SNPs to educate their providers about Medicaid
coverage.
Comment: Several commenters expressed concern that SNPs, including
AIP D-SNPs, may not be providing individualized planning and care
delivery, in part due to lack of oversight. Another commenter stated
that process requirements, like those related to conducting HRA and
ICPs, are not sufficient to drive improvement in care outcomes for
these enrollees and urged CMS to collect and publicly report data on
how many individuals participate in assessments and care plans. These
commenters also recommended that CMS conduct random audits to verify if
ICPs reflect an individual's care objectives rather than standardized
template language; analysis and action based on grievances specific to
the person-centered planning processes; structured opportunities for
enrollees to provide feedback on their person-centered planning
experiences, including their ability to actively lead the drafting
process, make changes to their care plans, and have care plans reflect
their needs and goals; publication of outcomes from audits, enrollee
feedback, and quality measures; and corrective action plans for SNPs
that do not meet requirements. With additional requirements and
oversight, these commenters indicated dually eligible individuals could
have better access to quality care that meets their needs.
Response: We thank the commenters for their input and agree that
process requirements, alone, do not guarantee good outcomes and
experiences for enrollees. Currently, CMS audits HRA and ICP completion
as well as care transitions. We expect these audits to continue and
will update the CMS audit protocols, as necessary, for the requirements
finalized in this section. We will also continue to monitor enrollee
satisfaction and SNP reporting on HRA completion and consider other
opportunities to improve enrollee outcomes and experiences.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the provisions as proposed at Sec. 422.101(f)(1)(i) through
(x), but with the following modifications: We are modifying the
language at Sec. 422.101(f)(1)(iv)(A) to read ``Make at least three
attempts to reach the enrollee (not including any automated phone
calls), unless an enrollee agrees or declines to participate in the HRA
before three attempts are made, on different days at different times of
day to reach the enrollee to schedule the comprehensive initial or
annual HRA.'' We are also modifying the introductory language at Sec.
422.101(f)(1)(vii) to read: ``Within 90 days of conducting a
comprehensive initial HRA or 90 days after the effective date of
enrollment, whichever is later, develop a comprehensive individualized
plan of care that meets all of the following:''
5. Comment Solicitation--Making State Medicaid Agency Contracts Public
Section 164 of the Medicare Improvements for Patients and Providers
Act of 2008 (MIPPA) (Pub. L. 110-275) amended section 1859(f) of the
Act to require that a D-SNP contract with the State Medicaid agency in
each State in which the D-SNP operates. We refer to such contracts as
State Medicaid agency contracts, or SMACs. As we have emphasized in
rulemaking over the last several years, SMACs are important vehicles
for integrating the delivery of Medicare and Medicaid services and
improving experiences for dually eligible individuals. In many States,
the provisions in the SMAC are of significant public policy interest,
affecting the ways that many people experience the Medicare and
Medicaid programs.
Some States, including Indiana, New Jersey, and Washington, have
posted SMACs and any SMAC amendments--usually as a single model
agreement,
[[Page 15888]]
rather than the individual signed copies with each D-SNP--on their
websites. We encourage all States to post the content of the SMACs
online. However, we have never done so on a CMS website.
We posited in the proposed rule (89 FR 99492) that posting SMACs
would improve public transparency on the important requirements
included in these agreements. This, in turn, would promote
accountability in implementing the terms of the SMAC and make it easier
for States, advocates, researchers, and others to identify promising
practices or opportunities for improvement across States. However,
while we review all SMACs for compliance with the requirements of Sec.
422.107, CMS is not a signatory to the SMACs. And we have never
systematically analyzed the extent to which SMACs may include
confidential commercial or financial information that should not be
shared publicly.
We solicited comments on whether and how CMS should post SMACs
online. 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 received overwhelming support for making the
substantive content of SMACs publicly available. We intend to begin
working through the operational process to make that possible. We will
weigh all concerns, comments, and suggestions throughout. In the
meantime, we continue to encourage States to post the content of their
SMACs.
B. Clarifying Highly Integrated Dual Eligible Special Needs Plan
Definition Relative to Oregon's Coordinated Care Organization Structure
(Sec. 422.2)
The definition of HIDE SNPs is codified at Sec. 422.2. According
to this definition, a HIDE SNP, in addition to meeting other
requirements, is a D-SNP offered by an MA organization that provides
coverage of Medicaid benefits under a capitated contract between the
State Medicaid agency and the MA organization itself, the MA
organization's parent organization, or another entity that is owned and
controlled by its parent organization. CMS defined this term 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,'' which appeared in the April 16, 2019, Federal Register
(hereinafter referred to as the April 2019 final rule) (84 FR 15705),
and further refined it in the final rule titled ``Medicare Program;
Contract Year 2023 Policy and Technical Changes to the Medicare
Advantage and Medicare Prescription Drug Benefit Programs; Policy and
Regulatory Revisions in Response to the COVID-19 Public Health
Emergency; Additional Policy and Regulatory Revisions in Response to
the COVID-19 Public Health Emergency,'' which appeared in the May 9,
2022, Federal Register (hereinafter referred to as the May 2022 final
rule) (87 FR 27755).
The May 2022 final rule revised the HIDE SNP definition to outline
more clearly the services HIDE SNPs must cover in their contracts with
State Medicaid agencies to include LTSS or behavioral health services
to the extent Medicaid coverage of those benefits is available to
individuals eligible to enroll in a HIDE SNP, and required the
capitated contract with the State Medicaid agency to cover the entire
service area of the D-SNP beginning in 2025. The revisions facilitate
HIDE SNP enrollees having access to both Medicare and Medicaid benefits
from a single parent organization.
However, the definition of HIDE SNP at Sec. 422.2 does not
explicitly account for certain ownership arrangements of Medicaid
managed care organizations that operate Medicaid health plans
affiliated with D-SNPs that we believe should meet the definition of
and be treated as a HIDE SNP. In Oregon, the State Medicaid managed
care program utilizes community-governed organizations called
coordinated care organizations (CCOs) to provide comprehensive Medicaid
benefits, including physical, behavioral, and dental services.\71\
These nonprofit community-governed organizations are locally based
(rather than national organizations), and may be single corporate
structures or networks of providers with contractual relationships, per
Oregon law.\72\
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\71\ https://www.oregon.gov/oha/HPA/Pages/CCOs-Oregon.aspx.
\72\ https://oregon.public.law/statutes/ors_414.572.
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In the Portland metro area that includes Clackamas, Multnomah, and
Washington counties, one of the CCOs delivering Medicaid benefits to
eligible residents is Health Share, a nonprofit public benefit
corporation with 11 founding members that include providers, health
systems, and county governments. A subset of these founding members
includes organizations with which Health Share contracts to provide
covered Medicaid physical, behavioral, and dental health services to
beneficiaries assigned to them on a fully capitated basis through
agreements called Integrated Delivery System (IDS) Participation
Contracts. These founding members with IDS Participation Contracts
administer Medicaid benefits on Health Share's behalf and assume full
risk for their assigned beneficiaries' services.
Three of these Health Share founding members are organizations that
also operate a D-SNP with a service area that includes the three-county
Portland metro area. Dually eligible individuals in that three-county
service area who are enrolled in one of these D-SNPs can therefore
receive their Medicaid benefits from the same organization from which
they receive their Medicare benefits, through the organization's IDS
Participation Contract with Health Share to provide Medicaid benefits.
Oregon estimates that between 80 and 91 percent of the Health Share
enrollees who receive Medicare benefits through a D-SNP are assigned to
the same organization for their Medicaid benefits, depending on which
of the three organizations in which they are enrolled. We believe this
arrangement is functionally similar to and should be treated as meeting
the HIDE SNP definition because dually eligible individuals are
receiving their Medicare and Medicaid benefits from the same
organization or the parent organization of the entities that operate
the D-SNP and the Medicaid managed care plan. While that organization
does not directly hold a contract with the State Medicaid agency for
Medicaid managed care services, it is responsible for the full
obligations of the CCO contract with the State Medicaid agency through
its IDS Participation Contract with Health Share. Furthermore, the
current HIDE SNP definition requires the capitated contract to be
between the State Medicaid agency and either the MA organization
itself, the MA organization's parent organization, or another entity
that is owned and controlled by its parent organization. While the
founding members of Health Share do not meet the CMS definition of a
parent organization,\73\ founding members appoint representatives to
Health Share's board of directors, vote on key leadership decisions,
serve on standing committees of the board (including committees that
oversee Health Share's contractual obligations), and financially
support Health Share. We believe this is functionally an entity that is
owned and controlled by the MA
[[Page 15889]]
organization's parent organization as included in paragraph (1)(ii) of
the HIDE SNP definition. For these reasons, we categorized these D-SNPs
in the three-county Portland area as HIDE SNPs for CY 2025 as part of
our review of Oregon's SMAC agreements with D-SNPs operating in the
State. Nonetheless, given the foregoing ambiguity about the
applicability of the existing HIDE SNP definition, we proposed to
modify the HIDE definition at Sec. 422.2 to make clear that it applies
to this type of arrangement, whether in Oregon or elsewhere.
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\73\ CMS considers a parent organization to be the legal entity
that owns a controlling interest in a contracting organization.
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Under our authority at section 1859(f)(8)(D) of the Act to require
that all D-SNPs meet certain minimum criteria for Medicare and Medicaid
integration, and under section 1856(b) to establish requirements by
regulation, we proposed to amend the definition of a HIDE SNP at Sec.
422.2 to make minor edits to paragraph (1) and add a new paragraph
(1)(iii) to the definition to explicitly describe a scenario in which
there is a capitated contract between the State Medicaid agency and a
local nonprofit public benefit corporation of which the MA organization
is a founding member. The proposed change would clarify that D-SNPs
with this ownership arrangement meet the HIDE SNP definition. (We did
not propose any changes to paragraph (2) or (3) of the HIDE SNP
definition.)
In developing this proposal, we considered other scenarios that
have arisen related to the HIDE SNP definition as described at 89 FR
99493. In the proposed rule, we invited comments on our proposed
clarifications to the HIDE SNP definition, including our use of the
term ``founding member'' and whether the language we proposed was
sufficiently narrow such that it does not unintentionally encompass
additional delegation situations that are contrary to our goals of
increasing the level of integration between D-SNPs and affiliated
Medicaid managed care plans and facilitating D-SNP enrollees having
access to Medicare and Medicaid benefits provided by the same parent
organization. Additionally, we welcomed comment on whether there are
existing scenarios like Health Share we may want to consider as we
revise the HIDE SNP definition.
We do not believe that this provision adds any additional burden to
the three D-SNPs in Oregon with affiliated Medicaid CCOs, which we have
already classified as HIDE SNPs in recent years. We do not believe that
any additional work from the three D-SNPs would amount to burden above
and beyond what is routine, and as such, this work has already been
accounted for in other burden estimates under OMB control number 0938-
1410 (CMS-10796).
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 our
responses follow:
Comment: All of the commenters who commented on this topic
supported our proposal to amend the definition of a HIDE SNP at Sec.
422.2 to make minor edits to paragraph (1) and add a new paragraph
(1)(iii) to the definition to explicitly describe a scenario in which
there is a capitated contract between the State Medicaid agency and a
local nonprofit public benefit corporation of which the MA organization
is a founding member.
Response: We thank the commenters for their support.
Comment: A few commenters noted that this proposal, while
highlighting Oregon's CCO structure, could allow States to pursue
alternative structures for Medicaid managed care and could apply to
other States that adopt a similar model.
Response: We thank the commenters for their interest in the
application of this proposal to States outside of Oregon. We remind
commenters that, as described at 89 FR 99493, we proposed a very narrow
change to the HIDE definition at Sec. 422.2, even though it is not
regulatorily limited to Oregon.
Comment: A few commenters requested clarification as to how this
proposed amendment to Sec. 422.2 would affect policy at Sec.
422.514(h), which, beginning in 2027, limits enrollment in certain D-
SNPs to those individuals who are also enrolled in an affiliated
Medicaid managed care organization (MCO), and limits the number of D-
SNP plan benefit packages an MA organization, its parent organization,
or entity that shares a parent organization with the MA organization,
can offer in the same service area as an affiliated Medicaid MCO.
Response: We thank the commenters for the questions. The
regulations at Sec. 422.514(h)(1) are applicable where the MA
organization offers a D-SNP and the MA organization, its parent
organization, or any entity that shares a parent organization with the
MA organization also holds the Medicaid MCO contract with the State. In
the scenario described by commenters, as we understand it, neither the
MA organization offering the D-SNP, its parent organization, nor any
entity that shares a parent organization with the MA organization holds
the Medicaid MCO contract with the State. As such, the MA organization
offering the D-SNP does not meet the condition set forth at Sec.
422.514(h), and therefore the other requirement and limitations in
Sec. 422.514(h) would not apply. We will work with individual States
and plans to assess specific situations and consider clarifications in
sub-regulatory guidance or future rulemaking as necessary to clarify
this and similar scenarios.
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. 422.2, as proposed.
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: full integration standard for coverage and care for
dually eligible individuals, C-SNPs with cost-sharing designed to
attract dually eligible individuals, and concerns regarding a provision
that CMS finalized in the April 2025 final rule at Sec. 422.514(h).
The following are our responses to these comments:
Comment: A commenter recommended that CMS establish a full
integration standard for coverage and care for dually eligible
individuals. This would include one benefit package with medical,
behavioral health, dental, LTSS, fully aligned benefits and financing,
and a single, streamlined set of quality and performance measures.
Another commenter described that providers experience difficulty
knowing when a secondary claim is paid appropriately or when to appeal
for payment, especially for individuals enrolled in HIDE SNPs, FIDE
SNPs, and AIPs. The commenter recommended that CMS require these plans
to internally crossover or adjudicate claims without a provider having
to submit a secondary claim. A commenter explained that many dually
eligible individuals with mental health and substance use disorders
inadvertently lose access to the Mental Health Parity and Addiction
Equity Act of 2008 (Parity Act) protections associated with their
Medicaid benefits when they enroll in D-SNPs that are not subject to
the Parity Act. The commenter urged CMS to work with Congress to
require D-SNPs be subject to the Parity Act.
Response: We appreciate these comments, but they are out of scope
for this rulemaking. We will consider them for future rulemaking.
Comment: A commenter recommended that CMS leverage and facilitate
access to PACE, which it described as a key part of any CMS
[[Page 15890]]
solution to achieve meaningful Medicare and Medicaid integration for
dually eligible individuals. The commenter also advocated that CMS
support enrollment in PACE at any point during the month and ensure
that enrollment systems are designed to expedite enrollment in PACE for
individuals who choose this option.
Response: We thank the commenter and agree that PACE is another
option for dually eligible enrollees to receive integrated care. While
this comment is out of scope for the current rulemaking, we will take
it under consideration for future rulemaking.
Comment: A few commenters expressed concern about the increase in
the number of C-SNPs with cost-sharing designed to attract dually
eligible individuals and noted that C-SNPs are excluded from the D-SNP
look-alike requirements at Sec. 422.514(d). These commenters
emphasized that the increase and presence of these C-SNPs may erode the
effectiveness of CMS and State Medicare-Medicaid integration efforts
and recommend that CMS assess this issue and apply the D-SNP look-alike
threshold requirements to C-SNPs.
Response: We appreciate these comments. They are out of scope for
the current rulemaking, but we will consider for future rulemaking.
Comment: A commenter indicated mandating MA organizations to hold
Medicaid contracts for non-senior populations dilutes senior-focused
expertise and limits choice. The commenter recommended that Federal
policies prioritize integration programs that preserve a senior-first
focus without requiring non-senior services.
Response: We appreciate the commenter's perspective. We note that
States have broad flexibility to establish parameters for their D-SNPs
through State Medicaid agency contract authority under MIPPA, including
enrollee eligibility.
Comment: A commenter described a recent survey of State Health
Insurance Assistance Program (SHIP) counselors, which found that many
individuals are unaware of D-SNPs or the benefits they provide, States
and plans do not provide education to potentially eligible individuals,
and SHIP counselors have difficulty obtaining information from States
and plans regarding individual eligibility for AIP D-SNPs.
Response: We appreciate this comment and will consider ways to
better empower and inform SHIP counselors about D-SNPs, eligibility for
D-SNPs and the benefits they provide. We do have a resource available
on the Special Enrollment Periods (SEPs) for dually eligible and low-
income subsidy eligible individuals available at https://www.cms.gov/files/document/duals-lissepsjobaid01012025.pdf. We designed the
resource to provide an overview of the SEPs and help anyone who assists
dually eligible and LIS-only eligible individuals with their Medicare
coverage choices-including SHIP counselors.
Comment: A few commenters expressed concerns regarding a provision
that CMS finalized in the April 2025 final rule at Sec. 422.514(h). A
commenter suggested that CMS amend Sec. 422.514(h) to allow MA
organizations to offer multiple D-SNPs if they are fully integrated and
have exclusively aligned enrollment. Another commenter supported CMS's
overall goals of increased integration and alignment for D-SNPs but
expressed concerns about the complexity of determining eligibility for
D-SNPs under Sec. 422.514(h), State burden, and State autonomy in
crafting programs for their dually eligible individuals. The commenter
also raised the potential misalignment in timing between State Medicaid
competitive bid cycles and Medicare Advantage timelines for bids,
networks, and service area expansions or reductions that might result
in D-SNPs disenrolling individuals to Medicare FFS when an affiliated
Medicaid contract expires. The commenter further suggested that the
exception provided at Sec. 422.514(h)(3)(i)--which allows for parent
organizations to provide multiple D-SNPs in the same service area for
full-benefit dually eligible when the State Medicaid agency's contract
differentiates enrollment into D-SNPs by age group, eligibility or
benefit design--will result in a confusing collection of plans that
require navigation and support from agents, SHIP counselors, and
others.
Response: We appreciate comments on Sec. 422.514(h), but
adjustments to Sec. 422.514(h) are outside the scope of this
rulemaking. We are continuing to provide technical assistance to States
and MA organizations on Sec. 422.514(h). For example, CMS developed a
frequently asked questions (FAQ) document to help MA organizations,
States, and other interested parties prepare for the implementation of
Sec. 422.514(h). The FAQs are located on our website at https://www.cms.gov/medicare/medicaid-coordination/about/dsnps under the 2025
Integrated D-SNPs section. We look forward to working with States and
MA organizations on successfully implementation.
V. Technical Changes
A. Technical Change to the Specific Rights to Which a PACE Participant
Is Entitled (Sec. 460.112)
In the Medicare Program: Changes to the Medicare Advantage and
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) (hereinafter referred to as the
April 2024 final rule), we finalized changes to the regulations
impacting the specific rights to which a participant is entitled (89 FR
30756). Specifically, we added a new paragraph (a) which was entitled
``right to treatment,'' and redesignated existing Sec. 460.112(a)
through (c) as Sec. 460.112(b) through (d). In the new paragraph (a),
we finalized that each participant has the right to appropriate and
timely treatment for their health conditions.
On May 6, 2024, we issued the Nondiscrimination in Health Programs
and Activities final rule (hereinafter referred to as the
Nondiscrimination 2024 final rule) (89 FR 37522), with the intention of
adding language to the respect and nondiscrimination paragraph (which
had been redesignated from Sec. 460.112(a) to Sec. 460.112(b) in the
April 2024 final rule). Because the respect and nondiscrimination
paragraph had only been redesignated a few weeks prior to the issuance
of the Nondiscrimination 2024 final rule, the updated language was
added in error to the newly added paragraph (a) instead of the
redesignated paragraph (b); thereby replacing the right to treatment
language provision added to paragraph (a) through the April 2024 final
rule. As a result of this error, the current regulation text has two
identically titled paragraphs (Sec. 460.112(a) and (b)). To avoid any
further confusion and for the reasons explained in the April 2024 final
rule (89 FR 30756), we proposed to make a technical change to reinstate
the language that each participant has the right to appropriate and
timely treatment for their health conditions in Sec. 460.112(b)
instead of in Sec. 460.112(a).
We also finalized two paragraphs under Sec. 460.112(a) in the
April 2024 final rule. Paragraph (a)(1) related to 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. Paragraph (a)(2) related to the
participants' rights to access emergency
[[Page 15891]]
health care services when and where the need arises without prior
authorization by the PACE interdisciplinary team. Since the two
paragraphs under Sec. 460.112(a), paragraphs (a)(1) and (2), more
appropriately align with the requirement in the ``right to treatment''
paragraph, we proposed to redesignate Sec. 460.112(a)(1) and (2) as
Sec. 460.112(b)(1) and (2). The paragraphs under Sec. 460.112(b) more
appropriately align with the ``respect and nondiscrimination''
paragraph. Therefore, we proposed to redesignate the paragraphs under
Sec. 460.112(b)(1) through (8) as Sec. 460.112(a)(1) through (8).
Finally, we note that two courts, in Tennessee v. Becerra, No.
1:24-cv-161-LG-BWR (S.D. Miss.), and Texas v. Becerra, 6:24-cv-211-JDK
(E.D. Tex.), have issued orders that, in relevant part, stay nationwide
the effective date of, respectively, Sec. 460.112 to the extent it
``extend[s] discrimination on the basis of sex to include
discrimination on the basis of gender identity'' and Sec. 460.112(a).
Nothing in this technical change is intended to affect the scope of
those orders or CMS's compliance with those orders as long as they
remain in effect.
This provision is technical and is therefore not expected to have
economic impact beyond current operating expenses.
We solicited comments on these proposals. A summary of the comments
received, and our responses follow.
Comment: A commenter supported our technical change and requested
that we expeditiously issue an updated PACE Participant Rights template
to reflect the correction. Another commenter expressed agreement with
the purpose of the change, but noted their concern about the impact on
PACE organizations that would need to update materials. The commenter
requested that CMS adopt a regular schedule for implementing technical
and other necessary updates and suggested that schedule could be every
four years to minimize the impact to PACE organizations' administrative
processes.
Response: We thank the commenter for their support, and we are
finalizing this technical change as proposed. While we understand the
commenter's concern regarding the impact of regulatory changes on PACE
organizations, it is important that CMS move quickly to address and
correct errors in regulatory text to minimize any potentially negative
impact to beneficiaries. The PACE Participant Rights template was
updated in June 2024 to incorporate regulatory requirements from the
April 2024 final rule and this technical change would not impact the
template.
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 technical change to Sec. 460.112 as proposed.
B. Technical Change to PACE Contracted Services (Sec. 460.70(e)(2))
In the April 2024 final rule, we finalized changes to the PACE
service delivery requirements at Sec. 460.98. Specifically, we removed
paragraph (b)(4), added a new paragraph at Sec. 460.98(c), and
redesignated paragraphs (b)(5) and (c) through (e) as paragraphs (b)(4)
and (d) through (f), respectively (89 FR 30845). As part of these
changes, the paragraph titled ``Minimum services furnished at each PACE
center'' was redesignated from Sec. 460.98(c) to Sec. 460.98(d).
However, the April 2024 final rule did not include a correction to the
cross-reference at Sec. 460.70(e)(2) to reflect the redesignation of
``Minimum services furnished at each PACE center'' requirements from
Sec. 460.98(c) to Sec. 460.98(d).
Therefore, we proposed a technical change at Sec. 460.70(e)(2) to
update the cross-reference from Sec. 460.98(c) to Sec. 460.98(d),
which would affirm the connection between Sec. 460.70(e)(2) and the
``Minimum services furnished at each PACE center'' requirements at the
redesignated Sec. 460.98(d).
This technical change would not impose any new requirements or
burden on PACE organizations. Additionally, we expect no cost impact to
the Medicare Trust Funds.
We solicited comment on the proposed technical change. A summary of
the comment received, and our response, follows.
Comment: A commenter expressed support for our proposal to amend
the cross-reference at Sec. 460.70(e)(2) from Sec. 460.98(c) to Sec.
460.98(d) as a clarifying change.
Response: We thank the commenter for their support. We agree that
this technical change provides clarification to the requirement at
Sec. 460.70(e)(2).
After consideration of the public comment we received, we are
finalizing the technical change at Sec. 460.70(e)(2) as proposed.
VI. 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 the proposed rule (89 FR 99340), we solicited public comment on
each of these issues for the following sections of the rule that
contained information collection requirements. Such comments were
received for the provisions proposed under Medicare Prescription
Payment Plan Pharmacy POS Notification Process and Clarifying MA
Organization Determinations to Enhance Enrollee Protections in
Inpatient Settings. A summary of the comments and our response follows
under section VI.B.5. and 7. of this final rule, respectively.
This final rule is only finalizing some of the proposed provisions.
The remaining provisions may be finalized in subsequent rulemaking, as
appropriate. See table 4 for a list of those provisions.
[[Page 15892]]
Table 4--PRA-Related Provisions of Proposed Rule That a Decision To Be Finalized Is Deferred for Subsequent
Rulemaking
----------------------------------------------------------------------------------------------------------------
ICR No. Provision description Regulatory citation
----------------------------------------------------------------------------------------------------------------
8............................. Part D Medication Therapy Management (MTM) Program 423.153(d).
Eligibility Criteria.
10............................ Ensuring Equitable Access to Behavioral Health 417.454 and 422.100.
Benefits Through Section 1876 Cost Plan and MA Cost
Sharing Limits.
12............................ Format Medicare Advantage (MA) Organizations' 422.111 and 422.2265.
Provider Directories for Medicare Plan Finder.
13............................ Promoting Informed Choice--Enhancing Review of 422.2260 and 423.2260.
Marketing & Communications.
III.U......................... Enhancing Rules on Internal Coverage Criteria....... 422.101.
----------------------------------------------------------------------------------------------------------------
A. Wage Data
1. Private Sector
To derive average (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/2023/may/oes_nat.htm), which, at the time of
publication of this final rule, provides May 2023 wages. In this
regard, table 5 presents BLS's mean hourly wage, our estimated cost of
fringe benefits and other indirect costs (calculated at 100 percent of
salary), and our adjusted hourly wage.
Table 5--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Fringe benefits
Occupation Mean hourly and other Adjusted
Occupational title code wage ($/hr) indirect costs hourly wage
($/hr) ($/hr)
----------------------------------------------------------------------------------------------------------------
Business Operations Specialists (All Others)... 13-1199 42.85 42.85 85.70
Computer Programmer............................ 15-1251 51.80 51.80 103.60
Computer Systems Analyst....................... 1-1211 53.27 53.27 106.54
Database Administrators........................ 15-1242 50.39 50.39 100.78
Medical and Health Service Managers............ 11-9111 64.64 64.64 129.28
Software Developer............................. 15-1252 66.40 66.40 132.80
Software Quality Assurance Analysts and Testers 15-1253 52.15 52.15 104.30
Web Developer.................................. 15-1254 45.95 45.95 91.90
----------------------------------------------------------------------------------------------------------------
Adjusting our employee hourly wage estimates by a factor of 100
percent is a rough adjustment that is being used since 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.
2. Beneficiaries
We believe that the cost for beneficiaries undertaking
administrative and other tasks on their own time is a post-tax wage of
$24.73/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 $1,192, divided by 40 hours to calculate an hourly
pre-tax wage rate of $29.80/hr.\74\ 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 $24.73/
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.
---------------------------------------------------------------------------
\74\ ``Usual Weekly Earnings of Wage and Salary Worders, Fourth
Quarter 2024,'' Bureau of Labor Statistics, January 22, 2025,
accessed on February 20, 2025 <https://www.bls.gov/news.release/pdf/wkyeng.pdf>.
---------------------------------------------------------------------------
For valuing time spent outside of work, there is logic to this
approach but also to using a fully loaded wage. In the past we have
used BLS occupational code 00-0000, the average of all occupational
codes, which currently is $31.48/hr. Thus, we proposed a range for
enrollees of $24.73/hr to $31.48/hr. Nevertheless, the upper limit is
based on an average over all occupations while the lower limit reflects
a detailed analysis by the Assistant Secretary for Planning and
Evaluation (ASPE) targeted at enrollees, many of whom are over 65 and
unemployed; consequently, in our estimates we will use the lower limit
as we consider it more accurate.
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 Medicare Prescription Payment Plan Calculation of the
Maximum Monthly Cap on Cost-Sharing Payments (Sec. 423.137(c))
The following finalized changes will be submitted to OMB for
approval under control number 0938-1475 (CMS-10882) using the standard
non-rule PRA process which includes the publication of 60- and 30-day
Federal Register notices. The initial 60-day notice will publish
sometime after the publication date of this final rule. This rule
finalizes proposals to implement the requirements in section 1860D-
2(b)(2)(E)(iv) of the Act related to the calculation of the monthly
caps on out-of-pocket (OOP) cost sharing payments. The burden related
to these new requirements for Part D sponsors reflects the time and
effort needed to correctly calculate the monthly caps based on the
statutory formulas, determine the amount to be billed, and send monthly
bills to program participants. The average number of Part D contracts
per year is 840 (based on 2021, 2022, and
[[Page 15893]]
2023 data). This average number of Part D contracts per year excludes
contracts with Program of All-Inclusive Care for the Elderly (PACE)
organizations that exclusively charge $0 cost sharing, which we do not
expect to offer enrollees the option to pay their OOP costs through
monthly payments over the course of the plan year or otherwise comply
with the Medicare Prescription Payment Plan requirements set forth in
this final rule and at Sec. 423.137.
As outlined in the proposed rule the burden associated with
sponsors sending monthly bills to program participants is a function of
the number of enrollees likely to enroll in the program. CMS conducted
internal analyses of CY 2021 Prescription Drug Event (PDE) data to
identify the number of enrollees likely to be identified as likely to
benefit from the program and estimates that between 435,000 and
3,200,000 individuals will elect to participate in the Medicare
Prescription Payment Plan. Because of the prior to plan year and during
the plan year targeted outreach required for individuals identified as
likely to benefit, we assume that the majority of enrollees who
participate will pick up a high-cost prescription early in the year,
for which they will be billed over all 12 months of the plan year.
Assuming 3,200,000 enrollees participate, and they all incur drug
costs in January for which they are billed over the course of 12
months, the projected number of bills sent per year is 38,400,000
(3,200,000 * 12). Billing statements may be provided via mail or
electronically; consistent with existing estimates for other required
Part D materials, we estimate that approximately one-third or
12,800,000 (\1/3\ * 38,400,000) will be sent electronically since we
estimate that one third of enrollees will opt to receive billing
statements electronically. We estimate that the remaining two-thirds of
enrollees or 25,600,000 (\2/3\ * 38,400,000) will receive hard copy
billing statements.
We assume the following costs include paper, toner, envelopes, and
postage (envelope weight is normally considered negligible when citing
these rates and is not included) for hard-copy mailings:
Paper: $3.50 for a ream of 500 sheets. The cost for one
page is $0.007 ($3.50/500 sheets).
Toner: $70 for 10,000 pages. The toner cost per page is
$0.007 ($70/10,000 pages).
Envelope: Bulk envelope costs are $440 for 10,000
envelopes or $0.044 per envelope.
Postage: The cost of first-class metered mail is $0.73 per
letter up to 1 ounce. We estimate that a sheet of paper weighs 0.16
ounces, and do not anticipate additional postage for mailings in excess
of 1 ounce.
We estimate the aggregate cost per mailed billing statement is
$0.802 ([$0.007 for paper * 2 pages] + [$0.007 for toner * 2 pages] +
$0.73 for postage + $0.044 per envelope). We assume a maximum of 2
double-sided pages (generally, weighing less than 1 ounce) will be
needed for a billing statement, based on the required content for
billing statements. Because preparing and generating a hard-copy
billing statement is automated once the systems have been developed, we
do not estimate any labor costs. Therefore, we estimate a total annual
mailing cost by sponsors to enrollees of $20,531,200 (25,600,000
mailings * $0.802/mailing).
We also estimate annual burden associated with maintenance of
associated systems. On average, we expect that for each Part D
contract, a two-person team consisting of one database administrator at
$100.78/hr and one computer systems analyst at $106.54/hr will each
spend 50 hours per year performing system maintenance. In aggregate, we
estimated an annual burden of 84,000 hours (840 Part D contracts * 100
hr/contract) at a cost of $8,707,440 (840 contracts x [($100.78/hr x 50
hr) + ($106.54/hr x 50 hr)]).
Therefore, the total burden for all Part D contracts associated
with the aforementioned provisions is 84,000 hours at an ongoing annual
cost of $29,238,640 (see table 6).
When compared to our proposed rule, this is a decrease of 388,095
hours (from 472,095 hr to 84,000 hr) and $38,977,908 (from $68,216,548
to $29,238,640) despite an increase in the number of Part D contracts
that we expect to comply with the requirements in the rule (an increase
of 33 from 807 to 840 contracts) due to the inadvertent inclusion of
previously incurred one-time burden.
Table 6--Burden for Calculation Provisions
----------------------------------------------------------------------------------------------------------------
Total cost
Requirement Total time Total cost (subsequent Labor (L) vs
(hr) (year 1) years) non-labor (NL)
----------------------------------------------------------------------------------------------------------------
Mailing Billing Statements...................... 0 20,531,200 20,531,200 NL
System Maintenance.............................. 84,000 8,707,440 8,707,440 L
---------------------------------------------------------------
Total....................................... 84,000 29,238,640 29,238,640 n/a
----------------------------------------------------------------------------------------------------------------
While we received no comments on our proposed changes, CMS notes
that the requirements and burden (89 FR 99495 and 99497) are active and
were approved by OMB under CMS's program instruction authority for the
first year of the program. Although we had accounted for such
requirements/burden in our proposed rule (391,395 hours at a cost of
$39,319,986), we are not carrying them over into this final rule's COI
section because they are one-time payment system development burden
previously incurred in 2025.
2. ICRs Regarding Medicare Prescription Payment Plan Eligibility and
Election Requirements (Sec. 423.137(d))
Except where noted, the following finalized changes will be
submitted to OMB for review and approval under control number 0938-1475
(CMS-10882) using the standard non-rule PRA process which includes the
publication of 60- and 30-day Federal Register notices. While the use
of the standard non-rule PRA update process was not indicated in the
proposed rule, we are correcting that inadvertent omission in this
final rule. The initial 60-day notice will publish sometime after the
publication date of this final rule.
This rule's finalized amendments to Sec. 423.137(d) requires that
Part D sponsors offer the Medicare Prescription Payment Program to all
Part D enrollees and set forth requirements for how Part D sponsors
must process program election requests.
The finalized amendments to Sec. 423.137(d) also requires Part D
sponsors to send a notice alerting the Part D enrollee that their
participation in the Medicare Prescription Payment Plan will continue
into the next year
[[Page 15894]]
unless they indicate that they choose to opt out.
We estimate a one-time burden for Part D sponsors to develop a
standard auto-renewal notice alerting the Part D enrollee that their
participation in the Medicare Prescription Payment Plan will continue
into the next year unless they indicate that they choose to opt out. On
average, we expect that for each Part D contract, a team of one medical
and health services manager will spend 2 hours at $129.28/hr and one
business operations specialist will spend 10 hours at $85.70/hr to
implement the requirements. In aggregate, we estimate a one-time burden
of 10,080 hours (12 hr/contract * 840 Part D contracts) at a cost of
$937,070 (840 contracts x [($129.28/hr x 2 hr) + ($85.70/hr x 10 hr)]).
We estimate annual burden for Part D sponsors to provide these
auto-renewal notices to all enrollees participating in the Medicare
Prescription Payment Plan at the end of the plan year. Assuming
3,200,000 individuals participating in the Medicare Prescription
Payment Plan, we estimate a total of 3,200,000 auto-renewal notices
sent each year. We assume that one-third or 1,065,600 enrollees
(3,200,000 * \1/3\) will receive this notice electronically and the
remaining two-thirds or 2,133,333 enrollees (3,200,000 * \2/3\) will
receive hard copy notices.
We estimate the aggregate cost per mailed auto-renewal notice to be
$0.802 ([$0.007 for paper * 2 pages] + [$0.007 for toner * 2 pages] +
$0.73 for postage + $0.044/envelope). We assume a maximum of 2 double-
sided pages (generally, weighing less than 1 ounce) will be needed for
this notice. Because preparing and generating hard copy notices is
automated once the systems have been developed, we do not estimate any
labor costs. Therefore, we estimate total annual mailing costs to
sponsors of $1,710,933 (2,133,333 hard copy notices * $0.802/notice).
To estimate the information collection burden for beneficiaries, we
estimate that approximately 160,000 enrollees will voluntarily
terminate their participation in the program in CY2026. We estimate
that 99,200 will opt out of the program electronically, and the
remaining 60,800 will opt out via telephone. We also estimate that it
would take approximately 5 minutes (0.083 hr) to voluntarily terminate
(by phone or electronically) participation in the Medicare Prescription
Payment Plan. We estimate an annual recurring burden of 13,280 hours
(160,000 enrollees * 0.083 hr) at a cost of $328,414 ($24.73/hr *
13,280 hr) for beneficiaries who choose to opt out of the program to
complete a voluntary termination request.
The total burden for all Part D contracts associated with the
aforementioned requirements (developing standard auto-renewal notice
and mailing standard auto-renewal notice) is 10,080 hours with a one-
time first year cost of $2,648,003 and a cost of $1,710,933 in
subsequent years. When compared to our proposed rule, this is an
decrease of 114,198 hours (from 124,278 hr to 10,080 hr) and
$11,896,918 (from $14,544,921 to $2,648,003) despite an increase in the
number of Part D contracts that we expect to comply with the
requirements in the rule (an increase of 33 from 807 to 840 contracts)
due to the inadvertent inclusion of burden associated with developing
and mailing a standard request for additional information and the
inadvertent inclusion of previously incurred one-time burden (see table
7).
The total burden for Part D beneficiaries with the aforementioned
requirements is 13,280 hours with an ongoing annual cost of $328,414
(see table 7). When compared to our proposed rule, this is a decrease
of 80,000 hours (from 93,280 hr to 13,280 hr) and $1,603,415 (from
$1,931,829 to $328,414) due to the inadvertent inclusion of burden
associated with completing incomplete election requests and the
inadvertent use of $20.71/hr instead of $24.73/hr to calculate
beneficiary cost.
Table 7--Burden for Election Requirements
----------------------------------------------------------------------------------------------------------------
Total cost
Requirement Total time Total cost (subsequent Labor (L) vs
(hr) (year 1) years) non-labor (NL)
----------------------------------------------------------------------------------------------------------------
Part D Contracts
----------------------------------------------------------------------------------------------------------------
Develop Standard Auto-Renewal Notice............ 10,080 937,070 0 L
Mail Standard Auto-Renewal Notice............... 0 1,710,933 1,710,933 NL
---------------------------------------------------------------
Subtotal: Part D Contracts.................. 10,080 2,648,003 1,710,933 N/A
----------------------------------------------------------------------------------------------------------------
Part D Beneficiaries
----------------------------------------------------------------------------------------------------------------
Complete Program Opt-Out Process................ 13,280 328,414 328,414 L
---------------------------------------------------------------
Subtotal: Part D Beneficiaries.............. 13,280 328,414 328,414 N/A
---------------------------------------------------------------
Total................................... 23,360 2,976,417 2,039,347 N/A
----------------------------------------------------------------------------------------------------------------
While we did not receive comments on our proposed changes, CMS
notes that the proposed requirements and burden related to systems
programming (89 FR 99497 and 99498) are active and were approved by OMB
(CMS-10882, OMB 0938-1475) under CMS's program instruction authority
for the first year of the program. Although we had accounted for such
requirements/burden in our proposed rule (104,910 hours at a cost of
$10,862,381), we are not carrying it over into this final rule's COI
section because it represents one-time burden previously incurred in
2025. The burden associated with developing the standard auto-renewal
notices (one-time), mailing the standard auto-renewal notices (annual),
and the beneficiary opt-out process (annual) is new burden for 2026 and
subsequent years and will be submitted to OMB for approval as indicated
previously.
3. ICRs Regarding Medicare Prescription Payment Plan Part D Enrollee
Targeted Outreach (Sec. 423.137(e))
The following finalized changes will be submitted to OMB for
approval under control number 0938-1475 (CMS-10882) using the standard
non-rule PRA process which includes the publication
[[Page 15895]]
of 60- and 30-day Federal Register notices. The initial 60-day notice
will publish sometime after the publication date of this final rule.
This rule finalizes proposals to require Part D sponsors to
undertake targeted outreach to enrollees who are likely to benefit from
making an election into the Medicare Prescription Payment Plan,
including notifying a pharmacy when a Part D enrollee incurs OOP costs
with respect to covered Part D drugs that make it likely the enrollee
may benefit from participating in the program, and directly outreaching
to enrollees likely to benefit prior to the plan year and on an ongoing
basis during the plan year.
We estimate annual burden for Part D sponsors to review annual
updates to the ``likely to benefit'' identification criteria and update
their systems accordingly. On average, we expect that for each Part D
contract, one business operations specialist will spend 2 hours at
$85.70/hr to review annual updates and make corresponding systems
changes. In aggregate, we estimate an annual burden of 1,680 hours (840
Part D contracts * 2 hr/contract) at a cost of $143,976 (1,680 hr *
$85.70/hr).
We are also including annual burden associated with the cost of
providing the ``Medicare Prescription Payment Plan Likely to Benefit
Notice,'' as well as the program's election request form, notice of
election approval, notice of failure to pay, notice of involuntary
termination, and notice of voluntary termination to enrollees. As of
January 2023, there were 50,657,397 Part D enrollees. We estimate that
approximately 3,200,000 enrollees will elect to participate in the
Medicare Prescription Payment Plan program. This estimate is predicated
on internal CMS data analysis regarding the number of enrollees who may
be identified as likely to benefit from participating in the program,
new enrollees to the Part D plan, and enrollees that elect to
participate in the program. Our analysis also takes into account the
number of enrollees who may receive one or more notices from their Part
D plan regarding the program.
To estimate the cost associated with providing beneficiaries and
prospective beneficiaries model notices regarding the Medicare
Prescription Payment Plan program, we note that all Part D plans and MA
organizations must provide education and outreach materials to
enrollees likely to benefit, to new enrollees to the Part D plan, and
to enrollees participating in the Medicare Prescription Payment Plan
program.
We estimate that plans will furnish a total of 16,080,000 notices
regarding the program. This estimate includes both electronic and hard-
copy mailings. Because electronic preparation and delivery is
automated, we do not estimate any burden for the preparation and
delivery of the electronic model notices. Instead, these costs are
included in our systems programing estimate discussed previously.
We estimate that a total of 10,725,360 hard-copy Medicare
Prescription Payment Plan notices will be mailed annually (see table
8). This total does not include the auto-renewal notice addressed in
ICR 2. A description of each model notice and a detailed breakdown of
our estimation for each is also provided under control number 0938-1475
(CMS-10882).
Table 8--Burden for Mailing Notices
----------------------------------------------------------------------------------------------------------------
Total cost
Requirement Total time Total mailings Total cost (subsequent Labor (L) vs
(hr) (year 1) years) non-labor (NL)
----------------------------------------------------------------------------------------------------------------
Likely to Benefit Notice........ 0 2,134,400 1,711,789 1,711,789 NL
Election Request Form........... 0 5,709,520 4,579,035 4,579,035 NL
Notice of Election Approval..... 0 2,134,400 1,711,789 1,711,789 NL
Notice of Failure to Pay........ 0 426,880 342,358 342,358 NL
Notice of Involuntary 0 213,440 171,179 171,179 NL
Termination....................
Notice of Voluntary Termination. 0 106,720 85,589 85,376 NL
-------------------------------------------------------------------------------
Total....................... 0 10,725,360 8,601,739 8,601,739 N/A
----------------------------------------------------------------------------------------------------------------
We assume the following costs include paper, toner, envelopes, and
postage (envelope weight is normally considered negligible when citing
these rates and is not included) for hard-copy mailings:
Paper: $3.50 for a ream of 500 sheets. The cost
for one page is $0.007 ($3.50/500 sheets).
Toner: $70 for 10,000 pages. The toner cost per
page is $0.007 ($70/10,000 pages).
Envelope: Bulk envelope costs are $440 for
10,000 envelopes or $0.044 per envelope.
Postage: The cost of first-class metered mail is
$0.73 per letter up to 1 ounce. We estimate that a sheet of paper
weighs 0.16 ounces, and do not anticipate additional postage for
mailings in excess of 1 ounce.
We estimate the aggregate cost per mailing is $0.802 ([$0.007 for
paper x 2 pages] + [$0.007 for toner x 2 pages] + $0.044 per envelope +
$0.73 for postage). We assume 3 pages on average will be needed for
each model notice, based on the content included in the model notices.
The notices are assumed to be printed double sided to save on printing
costs, yielding 2 pages of double-sided print, generally weighing less
than 1 ounce. Because preparing and generating a hard-copy model is
automated once the template is loaded, we do not estimate any labor
costs. Thus, we estimate a total annual mailing cost to sponsors of
$8,601,739 (10,725,360 model notices x $0.802). The total burden for
all Part D contracts associated with the aforementioned requirements is
1,680 hours at an ongoing annual cost of $8,745,715 (see 9). When
compared to our proposed rule, this is a decrease of 48,254 hours (from
50,034 hr to 1,680 hr) and an increase of $13,110,088 (from $5,148,176
to $18,258,264) despite an increase in the number of Part D contracts
that we expect to comply with the requirements in the rule (an increase
of 33 from 807 to 840 contracts) and the inadvertent exclusion of
burden associated with mailing notices due to the inadvertent inclusion
of previously incurred one-time burden. The proposed rule did not
include the burden associated with the cost of programming model
notices into existing systems and providing model notices to enrollees
because the burden is active and unchanged by the proposed rule and
this final rule.
[[Page 15896]]
Table 9--Burden for Part D Enrollee Targeted Outreach
----------------------------------------------------------------------------------------------------------------
Total cost
Requirement Total time Total cost (subsequent Labor (L) vs
(hr) (year 1) years) non-labor (NL)
----------------------------------------------------------------------------------------------------------------
Review/Update................................... 1,680 143,976 143,976 L
Mailing Notices................................. 0 8,601,739 8,601,739 NL
---------------------------------------------------------------
Total....................................... 1,680 8,745,715 8,745,715 n/a
----------------------------------------------------------------------------------------------------------------
While we received no comments on this proposal, CMS notes that the
burden activities outlined (50,034 hours at a cost of $5,148,176) in
the proposed rule (89 FR 99340) were approved by OMB (CMS-10882, OMB
0938-1475) under CMS's program instruction authority for the first year
of the program. Although we had accounted for the requirements/burden
related to systems development in our proposed rule, we are not
carrying it over into this final rule's COI section because it
represents one-time burden previously incurred in 2025. The burden
associated with the cost of providing Medicare Prescription Payment
Plan model notices to enrollees is accounted for under control number
0938-1475 (CMS-10882) as an annual burden.
4. ICRs Regarding Medicare Prescription Payment Plan Termination of
Election, Reinstatement, and Preclusion (Sec. 423.137(f))
This rule finalizes our proposal to require Part D sponsors to have
a process to allow a participant who has opted into the Medicare
Prescription Payment Plan to opt out during the plan year. Part D
sponsors are also required to terminate an individual's Medicare
Prescription Payment Plan participation if that individual fails to pay
their monthly billed amount. CMS received no comments on our proposal.
The proposed requirements and burden (51,648 hours at a cost of
$5,362,515) (89 FR 99340) were implemented in 2025 under CMS's program
instruction authority for the first year of the program. Although we
had accounted for the requirements/burden related to systems
development in our proposed rule, we are not carrying it over into this
final rule's COI because it represents one-time burden previously
incurred in 2025.
5. ICRs Regarding Medicare Prescription Payment Plan Pharmacy POS
Notification Process (Sec. 423.137(i))
This rule finalizes our proposal to require Part D sponsors to
ensure that a pharmacy, after receiving such a notification from the
Part D sponsor, informs the Part D enrollee that they are likely to
benefit from the Medicare Prescription Payment Plan. The provision also
outlines the required claims processing methodology for applicable
Medicare Prescription Payment Plan transactions.
The system development burden activities outlined (1,467,940 hours
at a cost of $164,923,059) in the proposed rule (89 FR 99340) were
implemented in 2025 under CMS's program instruction authority for the
first year of the program. Although we had accounted for these
requirements/burden in our proposed rule, we are not carrying it over
into this final rule's COI because it represents one-time burden
previously incurred in 2025.
As indicated previously, PRA-related public comments were received
and are summarized along with our responses.
Comment: A commenter stated that the ICRs Regarding Medicare
Prescription Payment Plan Pharmacy POS Notification Process (Sec.
423.137(i)) should also include the time that pharmacies have invested
in educating and training their employees, additional transaction fees
that pharmacies will incur due to having to reverse, resubmit, and send
secondary claims to effectuate Medicare Prescription Payment Plan
processing, and the cost of paper to print the ``Medicare Prescription
Payment Plan Likely to Benefit Notice.''
Response: CMS appreciates the commenter's feedback. As noted, the
requirements and burden were approved by OMB under CMS's program
instruction authority for the first year of the program and will be
submitted to OMB for review and approval under control number 0938-1475
(CMS-10882) using the standard non-rule PRA process.
6. ICRs Regarding Medicare Prescription Payment Plan Pharmacy Claims
Processing (Sec. 423.137(j))
The electronic claims processing methodology outlined in our
proposed rule is utilized today by Part D sponsors and pharmacies and
therefore the addition of the BIN/PCN that is unique to the Medicare
Prescription Payment Plan does not require new or revised burden.
CMS is finalizing as proposed the requirement that Part D sponsors
report their program-specific PCN starting with ``MPPP'' to CMS. We
estimate that this will require 1 hour at $85.70/hr for a business
operations specialist to report their identifier to CMS. In aggregate,
we estimate an annual ongoing burden of 840 hours (840 Part D contracts
* 1 hr/response) at a cost of $71,988 (840 Part D contracts * $85.70/
hr). When compared to our proposed rule, this is an increase of $2,828
(from $69,160 to $71,988) due to an increase in the number of Part D
contracts that we expect to comply with the requirements in the rule
(an increase of 33 from 807 to 840 contracts).
7. ICRs Regarding Medicare Transaction Facilitator for 2026 and 2027
Under Sections 11001 and 11002 of the Inflation Reduction Act (IRA)
The following changes will be submitted to OMB for review and
approval under control number 0938-TBD (CMS-10912) using the standard
non-rule PRA process which includes the publication of 60-day and 30-
day Federal Register notices. The initial 60-day notice was published
on October 28, 2024, and the initial 60-day comment period closed on
December 27, 2024. The tentative date for the publication of the 30-day
notice will be on or around April 1, 2025, making the tentative closing
date for the comment period on or around May 1, 2025.
Under the authority in sections 11001 and 11002 of the Inflation
Reduction Act of 2022 (Pub. L. 117-169), CMS is implementing the
Medicare Drug Price Negotiation Program (``the Negotiation Program''),
codified in sections 1191 through 1198 of the Social Security Act
(``the Act''). The Act establishes the Negotiation Program to negotiate
a maximum fair price (``MFP''), defined at section 1191(c)(3) of the
Act, for certain high expenditure, single source drugs covered under
Medicare Part B and Part D (``selected drugs''). In accordance with
section 1193(a) of the Act, any Primary Manufacturer of a selected drug
that continues to participate in the Negotiation Program and reaches
agreement upon an MFP must provide
[[Page 15897]]
access to the MFP to MFP-eligible individuals, defined in section
1191(c)(2)(A) of the Act, and to pharmacies, mail order services, other
dispensing entities, providers and suppliers with respect to such MFP-
eligible individuals who are dispensed that selected drug during a
price applicability period.
The purpose of the information collection request (CMS-10912, OMB
0938 NEW) is for CMS to collect information from manufacturers of drugs
covered under Part D selected for negotiation under the Inflation
Reduction Act for the initial price applicability years 2026 and 2027
and the dispensing entities that dispense the selected drugs to MFP-
eligible individuals. To facilitate the effectuation of the MFP, CMS
will engage a Medicare Transaction Facilitator (MTF). The ICR includes
the following forms:
Drug Price Negotiation Program MTF DM Dispensing Entity and
Third-Party Support Entity Enrollment Form (Appendix A)
Drug Price Negotiation Program MTF DM Primary Manufacturer
Maximum Fair Price (MFP) Effectuation Plan Form (Appendix B)
Drug Price Negotiation Program MTF DM Primary Manufacturer
Payment Elements Form (Appendix C)
Drug Price Negotiation Program Complaint and Dispute Intake
Form (Appendix D)
By virtue of this rulemaking, Part D sponsors will require
dispensing entities in their network to complete Appendix A. CMS
expects approximately up to 95,000 pharmacies, including both chain and
non-chain pharmacies to enroll in the MTF DM; this assumption
represents CMS' maximum expectation for participation. CMS expects
chain pharmacies to enroll individual stores through a central office.
There are an estimated 760 chain pharmacies representing approximately
39,000 stores. In the burden estimate, CMS uses 760 chain pharmacy
respondents. An estimated 56,000 non-chain pharmacies will individually
enroll in the MTF DM. CMS believes collection of these data will be a
one-time cost for each submitting dispensing entity enrolling in the
MTF and that a significant majority of pharmacies will enroll before
January 1, 2026. The MTF will not charge dispensing entities any fees
to use the system.
CMS expects 56,000 non-chain pharmacies to individually enroll in
the MTF DM. For a non-chain pharmacy completing the one-time enrollment
form for initial price applicability year 2026, we estimate it will
take a financial manager (2 hours at $173.08/hour, a business
operations specialist (2 hours at $89.88/hour), a pharmacist (2 hours
at $129.62/hour), and lawyer (2 hours at $140.16/hour). In this regard,
we estimate each respondent would spend 8 hours at a total cost of
$1,065.48 ($346.16 + $179.76 + $259.24 + $280.32). In aggregate, we
estimate the total annual burden hours across all 56,000 non-chain
dispensing entities would be approximately 448,000 hours (8 hours x
56,000 respondents), with a total cost of $59,666,880.00 ($1,065.48 x
56,0000 respondents).
For a chain pharmacy, we expect the chain home office to enroll
once on behalf of the associated store locations. For the chain office
to complete the one-time enrollment form (for initial price
applicability year 2026), we estimate it will take a financial manager
(4 hours at $173.08/hour), a business operations specialist (4 hours at
$89.88/hour), a pharmacist (4 hours at $129.62/hour), and a lawyer (4
hours at $140.16/hour). In this regard, we estimate each respondent
would spend a burden of 16 hours at a total cost of $2,130.96 ($692.32
+ $359.52 + $519.48 + $560.64). In aggregate, we estimate the total
annual burden hours across all 760 respondents representing 39,000
pharmacies would be approximately 12,160 hours (16 hours x 760
respondents), with a total cost of $1,619,529.60 ($2,130.96 x 760
respondents).
8. ICRs Regarding Clarifying MA Organization Determinations To Enhance
Enrollee Protections in Inpatient Settings (Sec. Sec. 422.138,
422.562, 422.566, 422.568, and 422.616)
The following changes will be submitted to OMB for reinstatement
under control number 0938-0753 (CMS-R-267). While the control number
has expired, we are setting out this rule's collection of information
requirements/burden to score the impact of such changes. We intend to
use the standard PRA process (which includes the publication of 60- and
30-day non-rule Federal Register notices) to reinstate the control
number with change. The initial 60-day notice will publish sometime
after the publication of this final rule.
The revision to clarify the definition of ``organization
determinations'' is intended to enhance enrollee protections in
inpatient settings. This will be accomplished by clarifying in this
final rule that an MA organization's refusal, pre- or post-service or
in connection with a decision made concurrently with an enrollee's
receipt of services, to provide or pay for services, in whole or in
part, including the type or level of services, that the enrollee
believes should be furnished or arranged for by the MA organization is
an organization determination subject to the requirements under 42 CFR
part 422, subpart M, including, but not limited to, adjudication
timeframes and the form and content of decision notifications. We are
also finalizing a corresponding change at Sec. 422.138(c), to include
concurrent reviews as a type of determination subject to the rules at
Sec. 422.138(c). Per Sec. 422.138(c), if the MA organization approved
the furnishing of a covered item or service through a prior
authorization or pre-service determination of coverage or payment, or,
as finalized in this rule, a concurrent determination made during the
enrollee's receipt of inpatient or outpatient services, it may not deny
coverage later on the basis of lack of medical necessity and may not
reopen such a decision for any reason except for good cause (as
provided at Sec. 405.986) or if there is reliable evidence of fraud or
similar fault per the reopening provisions at Sec. 422.616.
As discussed in section III.A. of this final rule, we are
finalizing our proposals with the following modifications:
At Sec. 422.562(c)(2), we are revising the language to
state that if a contract provider's request for payment has been
adjudicated and the enrollee is determined to have no further liability
to pay for the services furnished by the MA organization, the claim
payment determination is not subject to the appeal process in this
subpart.
At Sec. 422.616(e), we are omitting the unitalicized
heading that was included in the proposed rule.
At Sec. 422.138(c), we are making a minor modification to
fix an editorial error that was inadvertently made in the proposed
regulation text revision at 89 FR 99560 (specifically, reinstating
``or'' between ``prior authorization'' and ``pre-service
determination'').
When making an organization determination, the plan must issue a
coverage determination notice. The clarification to the definition of
an organization determination means that when an MA organization
downgrades an enrollee from receiving inpatient to outpatient services
or when an MA organization denies payment for services after such
services were rendered but before a request for payment is submitted,
the MA organization will be required to provide proper notice of the
decision to the enrollee. The revision we are finalizing strengthens
requirements related to
[[Page 15898]]
notifying providers. The existing notice requirements for standard
organization determinations at Sec. 422.568 specify that MA
organizations must provide the enrollee with notice of its decisions.
Under existing rules, MA organizations are required to use CMS-10003
(OMB control number: 0938-0829, titled ``Notice of Denial of Medical
Coverage (or Payment) (NDMCP)'') to notify enrollees of adverse
decisions. (The NDMCP is not being modified at this time.)
In this final rule, we are amending requirements related to notice
of a standard organization determination at Sec. 422.568(b)(1) for MA
organizations to notify an enrollee's physician or provider, as
appropriate, as well as the enrollee. We continue to believe
strengthening notice requirements will not have a measurable impact on
the practices of MA organizations. The final rule codifies longstanding
requirements and guidance that we believed the majority of plans
already implement based on the few complaints we receive on this issue
from providers and enrollees. In addition, we also understand that due
to the contractual relationship MA organizations have with their
providers, most contracted providers should already receive notice of
relevant organization determinations, including those that the provider
submitted on behalf of the enrollee. The burden for issuing notices is
captured under control number 0938-0753 (CMS-R-267) which, as noted
earlier, will be submitted to OMB for reinstatement.
In terms of our clarification of the definition of an organization
determination, we acknowledged that some plans were complying with the
existing regulations in a manner that is consistent with this
clarification, but we do not have the data on the number of plans that
are not complying. In this final rule we continue to estimate that
annually 60,000 inpatient admissions are downgraded to an outpatient
level of care at the time the enrollee is receiving hospital services.
We estimated that of those 60,000 cases, approximately 10 percent
of those cases were being handled appropriately (that is, plans are
complying with the existing regulations). We do not have definitive
data sources that indicate the number of plans that may not be in
compliance and, therefore, invited stakeholder comment on our
assumptions.
Due to lack of data on the number of plans that may not be in
compliance under the current rules, we cannot precisely quantify all
burden that may result from finalizing this provision. However, we can
quantify some and perform qualitative estimates for: (1) additional
notices to enrollees and providers not currently receiving them, and
(2) an increase in the number of appeals received.
a. Additional Notices
We continue to anticipate there will be an increase in the number
of notices to providers and enrollees regarding downgrading inpatient
stays to observation status. Because the issuance of these notices is
typically automated, there could be a one-time first year cost to
update systems in addition to a potential annual mailing cost. We
estimated that, per plan, it may take a programmer 4 to 8 hours to
update systems. In aggregate we estimate a one-time, first year burden
of 5,816 hours (8 hr/plan * 727 plans) at a cost of $602,538 (5,816 hr
* $103.60/hr).
By examining risk-adjustment data for MA plan use of Condition Code
44, the code used in Traditional Medicare for a downgrade of an
inpatient stay to observation, we estimate there are 60,000 downgrades
annually. We continue to believe that MA plans are using Condition Code
44 to indicate downgrades, and that most downgrades are being captured.
Since the information in the notice is confidential, they must be
mailed via first class at a rate of $0.802/notice. We assume the
following costs include paper, toner, and postage (envelope weight is
normally considered negligible when citing these rates and is not
included), and envelope (supplies) for hard-copy mailings:
Paper: $3.50 for a ream of 500 sheets. The cost for one
page is $0.007 ($3.50/500 sheets).
Toner: $70 for 10,000 pages. The toner cost per page is
$0.007 ($70/10,000 pages).
Postage: The cost of first-class metered mail is $0.73 per
letter up to 1 ounce. We estimate that a sheet of paper weighs 0.16
ounces, and do not anticipate additional postage for mailings in excess
of 1 ounce.
Envelope: Bulk envelope costs are $440 for 10,000
envelopes or $0.044 per envelope.
We estimate the cost per mailed notice is $0.802 ([$0.007 for paper
* 2 pages] + [$0.007 for toner * 2 pages] + $0.73 for postage + $0.044
per envelope).
In addition, we believe there will be a new burden for
approximately 90 percent of plans. This assumption is based on
complaints, correspondence with plans, and other anecdotal evidence,
but we acknowledged that it is speculative since we do not collect
related data. Based on our assumptions, the cost of mailing notices
would be a non-labor cost of $43,308 annually (60,000 downgrades * 90
percent that are not currently complying * $0.802/notice). Besides the
other assumptions detailed previously, this estimate is an over-
estimate since some enrollees will receive their NDMCP (CMS-10003) in
the hospital and hence incur no mailing costs.
b. Increased Appeals
While we expect an increase in the number of organization
determinations reported, as well as the number of appeals received, we
did not have data to confirm this assumption. Appeals data available to
CMS is not currently broken out by the type of service; therefore, we
did not know how many MA organizations fail to provide proper
notification and how many inpatient approvals being downgraded to
outpatient are appealed. There is no applicable appeals data at the
Independent Review Entity (IRE) level. We were unable to estimate: (1)
how many cases of the overall universe of 60,000 will now receive
notices; (2) how many appeals would arise; (3) how many are overturned;
and (4) how many will go to the IRE. Thus, we could not quantify this,
but we could qualitatively identify this as a cost.
We also noted that amending the reopening rules at Sec. 422.616
would not add to existing plan processes or requirements, so we
believed any overall burden associated with processing a reopening of
an organization determination related to inpatient hospital admissions
will remain unchanged or will possibly be reduced (given that we
proposed to eliminate the discretion of an MA organization to reopen an
approved authorization for an inpatient hospital admission based on new
and material evidence), including a concurrent review decision per the
change to Sec. 422.138(c). The decision to reopen an organization
determination is at the discretion of an MA organization. Curtailing an
MA organization's authority to reopen and modify an approved
authorization for an inpatient hospital admission on the basis of good
cause for new and material evidence does not impose any new burden in
the decision-making process related to prior authorization and
concurrent review for inpatient hospital admissions. Consequently, we
continue to believe this provision will not have added impact on
enrollees, MA organizations, or the Medicare Trust Funds.
Likewise, we noted our clarification to Sec. 422.562(c)(2) would
not add to
[[Page 15899]]
existing plan processes or requirements., We continue to believe the
overall estimated burden on MA organizations associated with processing
organization determinations and appeals will be unchanged and this
provision will not have added impact and will not adversely impact
enrollees or MA organizations. Further, we continue to believe that
most MA organizations are already properly excluding provider payment
appeals from the subpart M administrative appeals process when a
dispute no longer involves enrollee financial liability for furnished
services. Similarly, we did not believe the proposed changes would have
any impact to the Medicare Trust Funds.
c. Public Comments
As indicated previously, we received PRA-related public comments,
the summation of the comments and our responses follow.
Comment: A commenter disagreed with our assumption that our changes
would result in an increase in the number of notices that MA
organizations would need to deliver to providers. They believed that we
were broadening the scope of those allowed to file appeals on behalf of
beneficiaries and noted that this was not necessary since this has been
a long-standing flexibility. They also believed that any increase in
costs related to delivery of notices would be negated by the reduction
in the number of ``unwarranted denials'' and that CMS should execute
corrective action to eliminate inappropriate denials.
Response: We appreciate the commenter's feedback. As the commenter
did not provide further context or detail on how our estimates should
be adjusted, we have no basis to revise our estimates. Upon further
consideration and review of our estimates we are finalizing our
assumption and estimates as proposed.
Comment: A few commenters encouraged CMS to carefully evaluate the
increased complexity, risk of member and provider confusion, and
significant resource investments, including increases in clinical and
administrative staffing to manage the additional workload thoroughly
before finalizing the proposal to ensure the policy achieves its
intended goals. A commenter also suggested that CMS reflect these
additional significant costs in its cost projections.
Response: We appreciate the commenters' suggestions. We
acknowledged in the proposed rule (89 FR 99463) that MA organizations
are already making decisions on the appropriateness of inpatient
hospital services before and during the course of treatment. While some
MA organizations consider concurrent review decisions as organization
determinations, others utilize internal dispute resolution processes.
Notably, in both cases, the MA organizations are already expending
resources on evaluating the medically necessity for the services being
requested or rendered, providing notice to the providers, and
permitting appeals (albeit through the MA organization's internal
processes). Our change merely clarifies that these decisions, which are
already being widely made, must adhere to the existing requirements for
organization determinations. Therefore, we disagree with the commenter
that our estimate failed to fully evaluate for costs to MA
organizations related to staffing and workload increases.
Upon further consideration and review of our estimates, we believe
the assumption that 10 percent of these cases are being handled
appropriately is fair and we intend to leave this estimate as is.
Further, we also noted in the proposed rule (89 FR 99507) that our
estimated burden related to increased notices was an overestimate and
we continue to believe this is an accurate statement. We have adjusted
our estimates related to notices to include paper and toner.
9. ICRs Regarding Clarifying the Obligation of PACE Organizations To
Submit Risk Adjustment Data Sec. 460.180(b)
The following requirements and burden are active and approved by
OMB under control number 0938-1152 (CMS-10340) and 0938-0878 (CMS-
10662).
Medicare requirements at Sec. 460.180(b) clarify the obligation of
PACE organizations to submit risk adjustment data to CMS. Section
1894(d)(1) of the Act provides that CMS makes payments to PACE
organizations in the same manner as MA organizations. To do so, PACE
organizations must submit data in accordance with the risk adjustment
data requirements for MA organizations at Sec. 422.310. Codified at
Sec. 460.200, PACE organizations are required to collect data,
maintain records, and submit reports as required by CMS to establish
payment rates. CMS finalized the longstanding practice of requiring the
collection and mandatory submission of risk adjustment data by PACE
organizations by adding a new paragraph (b)(3) to Sec. 460.180 that
requires the data PACE organizations submit be in accordance with risk
adjustment data submission requirements in Sec. 422.310. As stated in
the proposed rule (89 FR 99395), this change does not set forth any new
reporting requirements or changes to reporting requirements to PACE
organizations. As such, we do not anticipate any additional costs
associated with continued submission of data under this longstanding
practice. We are providing cost estimates had these organizations not
been submitting data under the longstanding requirements noted
previously.
The estimated total burden for all PACE organizations associated
with the current submission of encounter data is 156,510 hours
(4,700,000 x 0.03 hr) with a yearly recurring cost of $8,695,000
(4,700,000 x $1.85). The number of active PACE contracts for CY 2025 is
approximately 189. For 2023 dates of service, PACE organizations
submitted approximately 4,700,000 risk adjustment encounter data
records. The estimated annual electronic processing cost per encounter
data record is $1.85 according to the 2022 Council for Affordable
Quality Healthcare (CAQH) and the estimated time required to process an
electronic record based on the CAQH Index Report is 2 minutes.
The estimated total burden for all PACE organizations associated
with the current submission of encounter data through RAPS is 333,000
hours (10,000,000 x 0.03 hr) with a yearly recurring cost of
$18,500,000 (10,000,000 x $1.85). For 2023 dates of service, PACE
organizations submitted approximately 10,000,000 diagnosis codes
through RAPS. The estimated annual electronic processing cost per
encounter data record is $1.85 according to the 2022 Council for
Affordable Quality Healthcare (CAQH) and the estimated time required to
process an electronic record based on the CAQH Index Report is 2
minutes.
The aforementioned reporting requirements would total a yearly
recurring estimated burden of 489,510 hours (156,510 hr + 333,000 hr)
and yearly recurring cost of $27,195,000 ($8,695,000 + $18,500,000) for
organizations that are not currently submitting in accordance with
longstanding practice. As indicated, the requirements and burden are
active and approved by OMB. This final rule does not set out any new or
revised requirements or burden.
10. ICRs Regarding Clarifying the Obligation of Cost Plans To Submit
Risk Adjustment Data (Sec. 460.180(b))
The following requirements and burden are active and approved by
OMB under control number 0938-1152 (CMS-10340).
[[Page 15900]]
Medicare requirements at Sec. 460.180(b) clarify the obligation of
Cost plans to submit risk adjustment data to CMS. CMS will finalize
Sec. 417.486(a) by adding a new paragraph (Sec. 417.486(a)(3)) to
codify the longstanding practice of requiring the collection and
mandatory submission of risk adjustment data as specified in Sec.
422.310 by Cost plans. As stated in the proposed rule (89 FR 99395),
this change to Sec. 417.486(a) codifies longstanding practice and does
not set forth any new reporting requirements to changes to reporting
requirements to Cost plans. As such, we do not anticipate any
additional costs associated with continued submission of data under
this longstanding practice. We provide cost estimates had these
organizations not been submitting data under the longstanding
requirements noted previously.
Currently, CMS requires the submission of risk adjustment data from
organizations that operate Cost plans under section 1876 of the Act in
the same manner as MA organizations. Codified at Sec. 417.486(a), the
contract of section 1876 Cost plans must provide that the plan agrees
to submit to CMS: (1) all financial information required under subpart
O of part 417 and for final settlement; and (2) any other information
necessary for the administration or evaluation of the Medicare program.
The estimated total burden for all Cost plans associated with the
current submission of encounter data is 186,480 hours (5,800,000 x 0.03
hr) with a yearly recurring cost of $10,360,000 (5,800,000 x $1.85).
The number of active Cost plan contracts for CY 2025 is approximately
11. For 2023 dates of service, Cost plans submitted approximately
5,800,000 risk adjustment encounter data records. The estimated annual
electronic processing cost per encounter data record is $1.85 according
to the 2022 Council for Affordable Quality Healthcare (CAQH) and the
estimated time required to process an electronic record based on the
CAQH Index Report is 2 minutes.
This final rule does not set out and new or revised requirements or
burden.
11. ICRs Regarding Promoting Person-Centeredness in SNP ICPs and
Timeliness of HRAs and ICPs (Sec. 422.101(f))
In section IV.A.4. of this final rule, we discuss our amendments to
Sec. 422.101(f)(1) to codify timeliness standards, improve the
organization of the various HRA and ICP requirements, and strengthen
these requirements. The amendments will require that--
SNPs conduct the comprehensive initial HRA within 90 days
(before or after) of the effective date of enrollment for all new
enrollees. This would better align with the Medicaid requirement at
Sec. 438.208(b)(3) and codify the standard currently described for
reporting HRA completion in the Part C reporting requirements.
Consistent with the Medicare Part C Technical
Specifications, SNPs make at least three attempts to reach the enrollee
(not including any automated phone calls), unless an enrollee agrees or
declines to participate in the HRA before three attempts are made, on
different days at different times of day. We are also finalizing that
for any enrollees that are unable to be reached or decline to
participate in the HRA, the SNP must document the attempts to contact
the enrollee or the enrollee's choice not to participate. These updates
would better conform to the standard currently described for reporting
HRA completion in the Part C reporting requirements. We will update the
CY 2026 Part C Technical Specifications consistent with these changes.
Within 90 days of conducting a comprehensive initial HRA
or 90 days after the effective date of enrollment, whichever is later,
SNPs to develop and implement a comprehensive ICP that--
++ Is person-centered and based on the enrollee's preferences,
including for delivery of services and benefits, and needs identified
in the HRA;
++ Is developed through an interdisciplinary care team with the
active participation of the enrollee (or the enrollee's representative,
as applicable) as feasible;
++ Identifies person-centered goals and objectives (as prioritized
by the enrollee), including measurable outcomes as well as specific
services and benefits to be provided; and
++ Is updated as warranted by changes in the health status or care
transitions of enrollees.
Since SNPs are already required to conduct HRAs and ICPs, we did
not anticipate that the changes to Sec. 422.101(f) would impose any
new burden on MA organizations offering SNPs. However, we would need to
revise language on allowable methods of plan outreach to enrollees for
conducting HRAs in the Part C Technical Specifications, which is part
of the Part C Reporting Requirements submitted annually and currently
approved by OMB under control number 0938-0154 (CMS-10261). We received
no comments on these assumptions.
We received non-PRA related comments on the proposals, which we
summarize and respond to in section IV.A.4. of this final rule. As
indicated, we are finalizing the provisions as proposed at Sec.
422.101(f)(1)(i) through (x), but with the following modifications: We
are modifying the language at Sec. 422.101(f)(1)(iv)(A) to read ``Make
at least three attempts to reach the enrollee (not including any
automated phone calls), unless an enrollee agrees or declines to
participate in the HRA before three attempts are made, on different
days at different times of day to reach the enrollee to schedule the
comprehensive initial or annual HRA.'' We are also modifying the
introductory language at Sec. 422.101(f)(1)(vii) to specify that
within 90 days of conducting a comprehensive initial HRA or 90 days
after the effective date of enrollment, whichever is later, develop a
comprehensive individualized plan of care that meets all of the
following.
12. ICRs Regarding Integrating Member ID Cards for Dually Eligible
Enrollees in Certain Integrated D-SNPs (Sec. Sec. 422.2267(e)(30) and
423.2267(e)(32))
Consistent with our Contract Year 2023 final rule (87 FR 27860) and
our Contract Year 2026 proposed rule (89 FR 99486), we noted that the
Member Identification Card burden is exempt from the requirements of
the PRA since the issuance of such cards is a normal and customary
practice throughout the insurance industry, citing the fact that health
plans, whether commercial, through Medicare or Medicaid, or Original
Fee-for-Service issue cards that inform providers of the enrollee's
insurance. The MA requirements were previously described in the May
2022 final rule, and we are simply combining these requirements with
Medicaid requirements for one ID card. Sections 422.2267(e)(30) and
423.2267(e)(32) require D-SNPs to provide member ID cards to enrollees.
Medicaid managed care plans also send member ID cards to enrollees.
However, when a dually eligible individual is enrolled in both an MA
plan and a Medicaid managed care plan, the plans currently may issue
the enrollee separate member ID cards--one for their MA plan and one
for their Medicaid managed care plan--to access services for each
program. The change we are finalizing requires that applicable
integrated plans (AIPs), as defined in Sec. 422.561, provide one
integrated member ID card to serve as the ID card for both the Medicare
and Medicaid plans in which the enrollee is enrolled. Given that
issuance of member ID cards is a usual and customary practice
throughout the insurance industry and most States with AIPs currently
require integrated member ID cards in their SMACs, we do not
[[Page 15901]]
estimate any PRA-related burden for the requirement.
We did not receive any comments on these burden assumptions.
We received non-PRA related comments on our proposal, which we
summarize and respond to in section IV.A.1. of this final rule. As
indicated, we are finalizing without modification our proposal to
require integrated member ID cards for AIP D-SNPs.
13. ICRs Regarding Integrating Health Risk Assessments for Dually
Eligible Enrollees in Certain Integrated D-SNPs (Sec.
422.101(f)(1)(v))
The following changes will be submitted to OMB for approval under
control number 0938-1446 (CMS-10825).
Medicare requirements at Sec. 422.101(f)(1) require D-SNPs to
conduct a comprehensive HRA for each enrollee, both at the time of
enrollment and annually thereafter. Separately, Medicaid managed care
regulations at Sec. 438.208(b)(3) require Medicaid managed care plans
to make a best effort to conduct an initial screening of enrollee needs
within 90 days of their effective enrollment date, and State
requirements may include additional assessments such as long-term
services and supports (LTSS) and home and community-based services
eligibility screenings. While some States have implemented their own
requirements, through SMACs, to reduce burden and duplication, not all
States have done so. In this rule, we are finalizing a requirement that
D-SNPs that are AIPs conduct a comprehensive HRA that meets all
Medicare and Medicaid requirements, rather than two separate HRAs,
beginning no later than contract year 2027, which is one year later
than we proposed.
AIPs in seven States (DC, FL, ID, NJ, PR, VA, and WI) that do not
currently combine their HRAs will be required to adhere to this new
provision. We believe that a business operation specialist associated
with each contract that has an AIP in these seven states would spend an
average of 2 hours at $85.70/hr to determine whether the HRA tool
currently in use meets State requirements and make any necessary system
updates in preparation for implementation in plan year 2027. With 26
unique contracts in the seven States that would be required to meet
this provision, we estimate that half of the contracts or 13 contracts
(26 contracts * \1/2\) will only need to make minor administrative
changes to comply with this provision. This would be a one-time burden
of 26 hours (13 contracts* 2 hr) at a cost of $2,228 (26 hr * $85.70/
hr) (see table 10). We estimate that the other half of the contracts
(13 contracts) would require more extensive updating and merging of two
separate HRAs (at 40 hr/response) to comply with this provision. We
estimate such MA organizations would need to merge two separate HRAs
and implement systems updates to operationalize the integrated HRA. We
estimate that these activities would take 40 hours per contract. This
would be a one-time burden of 520 hours (13 contracts * 40 hr) at a
cost of $44,564 (520 hr * $85.70/hr).
After initial implementation, the requirement would reduce burden
for AIPs in the seven states listed earlier with HRAs that are not
already integrated, as plans would be conducting one integrated HRA
instead of two. As discussed in the prior paragraph, we estimate that
half of the contracts that would be affected by this rule currently
administer some form of a consolidated HRA. Conversely, we estimate
that the other half of the contracts are currently conducting two HRAs.
Based on this assumption, we are estimating that half of the contracts
that would be required to adhere to this provision will see a reduction
of burden by half. We expect some long-term burden reduction from the
13 contracts that currently administer two HRAs for their enrollees but
would only administer one HRA under this final rule.
We did not receive any comments on these burden assumptions and are
finalizing our estimates as proposed.
We received non-PRA related comments on our proposal, which we
summarize and respond to in section IV.A.2. of this final rule. As
indicated, we are finalizing our proposal to require integrated HRAs
for AIP D-SNPs with two modifications: (1) we are delaying the
implementation date of this provision from the proposed timeframe of
January 1, 2026 to January 1, 2027 with an applicability date of
October 1, 2026; and (2) at Sec. 422.101(f)(1)(v), we are changing the
specificity of the Medicaid requirements cited to clarify that the
integrated HRA would necessarily satisfy the requirements at Sec.
438.208(b)(3) but would not necessarily encompass the other
requirements at Sec. 438.208.
C. Summary of Information Collection Requirements and Associated Burden
Table 10--Summary of Annual Information Collection Requirements and Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
Time per Total Total cost,
Regulatory section in title Brief OMB control No. Respondents Total response time Labor cost Total cost, subsequent
42 of the CFR description (CMS ID No.) responses (hr) (hr) ($/hr) 1st yr ($) years ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
423.137(c)................... Medicare 0938-1475 25,600,000 N/A N/A N/A N/A....... 20,531,200 20,531,200
Prescription CMS-10882 Beneficiaries.
Payment Plan
Calculation of
the Maximum
Monthly Cap on
Cost-Sharing
Payments:
Calculations:
Mailing bills.
423.137(c)................... Medicare 0938-1475 840 Part D 840 100 84,000 Varies.... 8,707,440 8,707,440
Prescription CMS-10882 Contracts.
Payment Plan
Calculation of
the Maximum
Monthly Cap on
Cost-Sharing
Payments:
Calculations:
Maintenance.
423.137(d)................... Medicare 0938-1475 840 Part D 840 12 10,080 Varies.... 937,070 ...........
Prescription CMS-10882 Contracts.
Payment Plan:
Eligibility and
Election
Requirements:
Auto renewal
notice
development.
423.137(d)................... Medicare 0938-1475 840 Part D 2,133,333 N/A N/A N/A....... 1,710,933 1,710,933
Prescription CMS-10882 Contracts.
Payment Plan:
Eligibility and
Election
Requirements:
Auto renewal
mailings.
[[Page 15902]]
423.137(d)................... Medicare 0938-1475 160,000 160,000 0 13,280 25........ 328,414 328,414
Prescription CMS-10882 Beneficiaries.
Payment Plan:
Eligibility and
Election
Requirements:
Beneficiary:
Opt out.
423.137(e)................... Medicare 0938-1475 840 Part D 840 2 1,680 86........ 143,976 143,976
Prescription CMS-10882 Contracts.
Payment Plan
Part D Enrollee
Targeted
Outreach:
System Updates.
423.137(e)................... Medicare 0938-1475 840 Part D N/A N/A N/A N/A....... 8,601,739 8,601,739
Prescription CMS-10882 Contracts.
Payment Plan
Part D Enrollee
Targeted
Outreach:
Mailings.
423.137(j)................... Medicare 0938-1475 840 Part D 840 1 840 Varies.... 71,988 71,988
Prescription CMS-10882 Contracts.
Payment Plan
Pharmacy Claims
Processing.
423.505(q)................... Medicare OMB 0938 NEW 56,000 Non- 56,000 8 448,000 Varies.... 59,666,880
Transaction CMS-10912 Chain
Facilitator: Pharmacies.
Independent
Pharmacies.
423.505(q)................... Medicare OMB 0938 NEW 760 Chain 760 16 12,160 Varies.... 1,619,530
Transaction CMS-10912 Pharmacies.
Facilitator:
Chain
Pharmacies.
422.138, 422.562, 422.566, Enhance enrollee 0938-0753 727 MA 727 8 5,816 104....... 605,538
422.568, 422.572, 422.616, protections in CMS-R-267 Contracts.
and 422.631. inpatient
settings--syste
m update.
--------------------------------------------------------------------------------------------------------------------------------------------------------
VII. 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) and Medicare Prescription Drug
Benefit (Part D) programs, and Programs of All-Inclusive Care for the
Elderly (PACE). It is necessary to codify our implementation of
policies laid out in acts of Congress and to improve access and
transparency for beneficiaries enrolled in MA and Part D plans. The
rule includes provisions implementing requirements or improving
processes initiated by the Inflation Reduction Act of 2022 (IRA). The
IRA directed CMS to implement the Medicare Prescription Payment Plan
program as well as the IRA's insulin and vaccine cost-sharing
requirements through the end of calendar year 2025 through program
instruction or other forms of program guidance. For 2026 and subsequent
years, CMS must codify the policies implementing these aspects of the
IRA through rulemaking. Similarly, CMS must also enact regulations
related to manufacturer effectuation of the ``maximum fair prices''
negotiated under the Medicare Drug Price Negotiation Program
established by the IRA to the extent that such regulations involve
exercising authorities under the Act that are not subject to the IRA's
program instruction requirement. For that purpose, this rule will
finalize provisions to shorten the PDE submission window for selected
drugs and to require plan sponsors to require their network pharmacies
to be enrolled in the Medicare Transaction Facilitator Data Module.
Other major provisions of this rule will clarify or enhance plan
requirements pertaining to supplemental benefits for the chronically
ill, approved inpatient admissions decisions, and risk adjustment.
B. Overall Impact Analysis
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 13132, ``Federalism''; Executive Order 14192,
``Unleashing Prosperity Through Deregulation''; the Regulatory
Flexibility Act (RFA) (Pub. L. 96-354); section 1102(b) of the Act;
section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L.
104-4); 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). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an any regulatory action that is likely to result in a rule
that may: (1) have an annual effect on the economy of $100 million or
more, or adversely affect in a material way a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, or Tribal governments or communities; (2)
create a serious inconsistency or otherwise interfere with an action
taken or planned by another agency; (3) materially alter the budgetary
impacts of entitlement grants, user fees, or loan programs or the
rights and obligations of recipients thereof; or (4) raise novel legal
or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in E.O. 12866.
A regulatory impact analysis (RIA) must be prepared for a
regulatory action that is significant under section 3(f)(1) of E.O.
12866. Based on our estimates, the Office of Information and Regulatory
Affairs (OIRA) has determined this rulemaking is significant under
section 3(f)(1) of E.O. 12866. Pursuant to Subtitle E of the Small
Business Regulatory Enforcement Fairness Act of 1996 (also known as the
Congressional Review Act), OIRA has determined that this rule meets the
criteria set forth in 5 U.S.C. 804(2).
C. Detailed Economic Analysis
Many provisions of this final rule have negligible impact either
because they are technical provision or clarifications. Throughout the
preamble we have noted when we estimated that provisions have no
impact.
[[Page 15903]]
Additionally, this Regulatory Impact Analysis discusses several
provisions with either zero impact or impact that cannot be quantified.
The remaining provisions' effects are estimated in section VI. of this
final rule and in this RIA. Where appropriate, when a group of
provisions have both paperwork and non-paperwork impact, this RIA
cross-references impacts from section VI. of this final rule in order
to arrive at the total impact. Table 11 provides a summary of the
estimated transfers and costs associated with the various provisions in
this final rule over a 10-year period. Further detail is provided later
in this RIA.
Table 11--Summary of the Transfers and Costs of the Final Rule by Provision and Year
[In $ millions]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Category of provisions Year(s)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TRANSFERS......................................................... 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2025-2034
Cost Sharing for Insulin Products: Federal Spending........... ......... $110 $120 $120 $130 $140 $110 $110 $120 $120 $1,080
Cost Sharing for Insulin Products: Premium Offsets............ ......... ......... ......... ......... ......... ......... $30 $30 $30 $40 $130
COSTS *........................................................... 2026 2026 2027 2028 2029 2030 2031 2032 2033 2034 2026-2035
Medicare Prescription Payment Plan Provisions (ICR)........... [dagger] $40.9 $40 $40 $40 $40 $40 $40 $40 $40 $631.4
$270.4
Medicare Transaction Facilitator.............................. ......... $61.3 ......... ......... ......... ......... ......... ......... ......... ......... $61.3
Risk Adjustment Provisions (ICR).............................. 0 $37.6 $37.6 $37.6 $37.6 ......... $37.6 $37.6 $37.6 $37.6 $338
Other Provisions **........................................... ......... $0.6 $0.1 0 0 0 0 0 0 0 $1
-----------------------------------------------------------------------------------------------------------------------------
Total Costs............................................... $270.4.4 $140.5 $77.7 $77.7 $77.7 $77.7 $77.7 $77.7 $77.7 $77.7 $1,032.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
[dagger] The Medicare Prescription Payment Plan impacts for 2025 originate from ICRs authorized through program instruction authority granted by the IRA.
* Figures in the Costs section of table 11 have been rounded to the nearest tenth of one million. For that reason, numbers in the 2025-2034 column may not equal the sum of columns 2025 through
2034.
** The Other Provisions row includes estimated first-year and annually recurring impacts for the Information Collection Requirements of the following provisions: Clarifying MA Organization
Determinations to Enhance Enrollee Protections in Inpatient Settings ($648,846 for the first year and $43,308 per year thereafter), and Integrating Health Risk Assessments for Dually
Eligible Enrollees in Certain Integrated D-SNPs ($46,792), costs for which will only be incurred in 2027.
1. Effects of Coverage of Adult Vaccines Recommended by the Advisory
Committee on Immunization Practices Under Medicare Part D (Sec. Sec.
423.100 and 423.120)
This provision implements section 11401 of the IRA which amends
section 1860D-2 of the Act to require that, effective for plan years
beginning on or after January 1, 2023, the Medicare Part D deductible
shall not apply to, and there is no cost sharing for, an adult vaccine
recommended by the Advisory Committee on Immunization Practices (ACIP)
covered under Part D.
The cost-sharing limits for ACIP-recommended adult vaccines
outlined in this final rule have been in place since CMS implemented
the limits in 2023 through program instruction authority. We annually
review cost sharing in plan benefit package submissions and expect our
codification of these requirements to have minimal impact on Part D
sponsors and beneficiaries. All Part D enrollees have had zero cost
sharing for ACIP-recommended adult vaccines since 2023.
Shortly after the IRA was enacted, the Congressional Budget Office
(CBO) scored the $0 cost-sharing requirement for ACIP-recommended adult
vaccines as a Federal cost of $4.4 billion from FY 2022 to FY 2031 and,
therefore, the estimates are not a result of this rule.\75\
---------------------------------------------------------------------------
\75\ https://www.cbo.gov/system/files/2022-09/PL117-169_9-7-22.pdf.
---------------------------------------------------------------------------
2. Effects of Cost Sharing for Covered Insulin Products Under Medicare
Part D (Sec. Sec. 423.100 and 423.120)
This provision implements section 11406 of the IRA, which amends
section 1860D-2 of the Act to require that, effective for plan years
beginning on or after January 1, 2023, the Medicare Part D deductible
shall not apply to covered insulin products, and the Part D cost-
sharing amount for a 1-month supply of each covered insulin product
must not exceed the statutorily defined ``applicable copayment amount''
for all enrollees. The applicable copayment amount for 2023, 2024, and
2025 was $35. For 2026 and each subsequent year, in accordance with the
statute, we are finalizing that, with respect to a covered insulin
product covered under a PDP or an MA-PD plan prior to an enrollee
reaching the annual out-of-pocket threshold, the ``covered insulin
product applicable cost-sharing amount'' is the lesser of--
$35;
An amount equal to 25 percent of the maximum fair price
established for the covered insulin product in accordance with Part E
of title XI of the Act; or
An amount equal to 25 percent of the negotiated price, as
defined in Sec. 423.100, of the covered insulin product under the PDP
or MA-PD plan.
The requirement to provide enrollees with an applicable cost-
sharing amount equal to the lesser of $35, 25 percent of the MFP, or 25
percent of the negotiated price, has not yet been implemented. As
described in Part E of title XI of the Act, the Secretary must
establish a Medicare Drug Price Negotiation Program and negotiate MFPs
for selected drugs that will go into effect beginning in initial price
applicability year 2026. The selected drug list for initial price
applicability year 2026 includes a selected drug that will be subject
to the cost-sharing requirements outlined in this final rule.\76\ The
selected drug list under the Medicare Drug Price Negotiation Program in
future years may also include additional insulin products. As defined
in Sec. 423.100, the negotiated price is the price for a
[[Page 15904]]
covered Part D drug that the Part D sponsor (or other intermediary
contracting organization) and the network dispensing pharmacy or other
network dispensing provider have negotiated as the lowest possible
reimbursement such network entity will receive, in total, for a
particular drug. A negotiated price must meet all of the following: (1)
includes all price concessions from network pharmacies or other network
providers; (2) includes any dispensing fees; and (3) excludes
additional contingent amounts, such as incentive fees, if these amounts
increase prices. Finally, a negotiated price is reduced by non-pharmacy
price concessions and other direct or indirect remuneration that the
Part D sponsor passes through to Part D enrollees at the point of sale.
---------------------------------------------------------------------------
\76\ https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation.
---------------------------------------------------------------------------
Beginning in 2026, the applicable cost-sharing amount for a 1-month
supply of a covered insulin product will depend on which of the
following is the lowest amount: $35, an amount equal to 25 percent of
the insulin product's MFP (if the insulin product is a selected drug),
or an amount equal to 25 percent of the negotiated price of the insulin
product. If 25 percent of the MFP or 25 percent of the negotiated price
is not less than $35, the impact on Part D sponsors will be minimal as
this $35 applicable copayment amount has been in place since 2023.
However, if either 25 percent of the MFP or 25 percent of the
negotiated price is less than $35, the impact on Part D sponsors will
depend on: (1) the magnitude of difference between 25 percent of the
MFP or 25 percent of the negotiated price and $35; and (2) the number
of beneficiaries affected. In other words, the greater the difference
in 25 percent of the MFP or 25 percent of the negotiated price and $35,
the greater the impact on Part D sponsors.
We estimated the impact of the change in Part D insulin coverage
for years 2026 through 2034 using a claim-level simulation model under
the defined standard benefit before and after the application of the
change. As the beneficiary cost sharing is reduced, the net effect is
an increase in benefit costs. Additionally, because of the premium
stabilization provisions of the IRA, beneficiary premiums are not
impacted until 2031. In 2031 and subsequent years, we expect
beneficiaries will see small increase in premiums to account for the
richer benefit structure. Overall, we expect Federal costs to increase
by approximately $1.1 billion from 2026 to 2034.
Table 12--Financial Impact of Cost-Sharing for Covered Insulin Products Under Medicare Part D
----------------------------------------------------------------------------------------------------------------
CY incurred: in millions 2026 2027 2028 2029 2030 2031 2032 2033 2034
----------------------------------------------------------------------------------------------------------------
Net Medicare................... $110 $120 $120 $130 $140 $110 $110 $120 $120
Premium Offset................. 0 0 0 0 0 30 30 30 40
Gross Impact................... 110 120 120 130 140 140 140 150 160
----------------------------------------------------------------------------------------------------------------
3. Effects of Medicare Transaction Facilitator Requirements for Network
Pharmacy Agreements
The codification of the ``Medicare Transaction Facilitator
Requirements for Network Pharmacy Agreements'' provision applies to
Part D sponsors. It requires Part D sponsors to include a provision in
their network agreements with contracting pharmacies that requires such
pharmacies, mail order services, and dispensing entities be enrolled in
the Medicare Transaction Facilitator (MTF) Data Module. Therefore, the
entities directly affected by the codification of the ``Medicare
Transaction Facilitator Requirements for Network Pharmacy Agreements''
provision are Part D sponsors. Hence, CMS notes that this provision in
the final rule will have a negligible direct economic impact on -Part D
sponsors (associated with adding language to their network agreements)
and will not have a direct significant economic impact on a substantial
number of small entities. CMS recognizes that dispensing entities
(including those that are ``small entities'' under the meaning of the
RFA) are indirectly involved in the downstream impacts of this
provision as they fulfill the requirements of their network
agreement(s) with Part D sponsors and will enroll in the MTF Data
Module. This one-time enrollment activity among dispensing entities is
expected to have a nominal economic cost per entity associated with
completing a brief web-based enrollment form, which CMS has described
in the Medicare Transaction Facilitator Information Collection Request
(CMS-10912, OMB 0938-NEW).
CMS expects that enrollment in the MTF Data Module by dispensing
entities will be necessary and beneficial to such dispensing entities
as they dispense prescription drugs with negotiated maximum fair prices
(MFPs) under the Part D program. As discussed in the preamble of this
final rule, the MTF is designed to provide an efficient, timely, and
unified data exchange and payment flow where none currently exists
between Primary Manufacturers and dispensing entities. Further, by
enrolling in the MTF Data Module, dispensing entities can self-identify
whether they are a dispensing entity that anticipates having material
cashflow concerns at the start of a price applicability period with
respect to selected drugs as a result of potential delays created by
reliance on retrospective MFP refund payments within the 14-day prompt
MFP payment window. CMS will provide information about dispensing
entities' self-identification in the MTF Data Module to Primary
Manufacturers to assist in development of Primary Manufacturers'
mitigation approach for dispensing entity material cashflow concerns as
part of their MFP Effectuation Plans, consistent with section
1193(a)(5) of the Act and as mentioned in the preamble of this final
rule. CMS recognizes that some commenters requested that--separate from
the requirement on Part D sponsors at issue in this rulemaking--CMS
revisit the design of the MTF and establish an alternative approach to
processing MFP refund payments (for example, a pre-funded model). As
mentioned in our response in this rule, CMS appreciates this feedback
but considers such comments out of scope as those comments are beyond
the intent of the provision being codified in this rule. CMS reiterates
that it is aware of such concerns regarding the Negotiation Program and
addressed similar comments in the ``Medicare Drug Price Negotiation
Program: Final Guidance, Implementation of Sections 1191-1198 of the
Social Security Act for Initial Price Applicability Year 2027 and
Manufacturer Effectuation of the Maximum Fair Price in 2026 and 2027''
(final guidance).
[[Page 15905]]
4. Clarifying MA Organization Determinations To Enhance Enrollee
Protections in Inpatient Settings (Sec. Sec. 422.138, 422.562,
422.566, 422.568, and 422.616)
We proposed modifications to existing regulations at 42 CFR part
422, subpart M, to clarify and strengthen existing rules related to
organization determinations. The intent of this provision is to clarify
the definition of an organization determination to enhance enrollee
protection in inpatient settings. We wanted to ensure enrollees and
providers acting on their behalf receive notice of an inpatient/
outpatient downgrade and are aware of their appeal rights. The intent
of this provision was also to increase awareness when inpatient stays
are downgraded with the expectation that there would be more appeals
and some overturns. Thus, qualitatively, we expected this proposal to
generate increased costs to the MA organizations and ultimately to the
Medicare Trust Funds since inpatient stays are generally more expensive
than services billed in an outpatient setting.
In section VI.B.8. of this rule, we estimated that there are
annually 60,000 downgrades of inpatient to observation. Although we
could estimate 60,000 affected enrollees, we did not have any way to
estimate the following: (1) what percent of the enrollees are already
receiving required written notification and what percent of them will
receive a notice due to change in the provision; (2) of those receiving
the notice, what percent will appeal; (3) of those appealing the
downgrade, what percent will be overturned by the plan; (4) of those
appeals upheld by the plan, what percent will be overturned by the
Independent Review Entity (IRE) (given that 100 percent of upheld plan
decisions are forwarded to IRE). If this data was available, we could
obtain average costs of inpatient stays and observation days and
estimate the cost to the trust fund. In the absence of this data, we
estimated this as a non-quantified cost to the plans that is passed on
to the Trust Fund. We received no comments on our assumption and are
therefore finalizing without modification.
D. Alternatives Considered
In this section, CMS includes discussions of alternatives
considered. Several provisions of this 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.
1. Proposal for Medicare Prescription Payment Plan (Sec. 423.137(d),
(e), (f), (i), and (j))
a. Auto Renewal
In the proposed rule, CMS considered how to address year-over-year
program participation because the IRA limited CMS's program instruction
authority to a single year of the program (that is, CY 2025). We
proposed an automatic election renewal process that requires a Part D
sponsor to automatically renew a Part D enrollee's participation in the
Medicare Prescription Payment Plan, provided the participant remains in
the same Plan Benefit Package (PBP) in the upcoming year, unless the
program participant indicates otherwise. This option would minimize
burden for Part D enrollees, who would not need to complete additional
paperwork to remain in the program, and Part D sponsors, which would
not be required to process new election forms for active program
participants or conduct ``likely to benefit'' analyses for the upcoming
plan year for those participants. Alternatively, we considered
requiring Part D enrollees to re-elect into the program each plan year,
which would allow Part D enrollees to actively choose to participate in
the program each year but would place additional burden on both
enrollees and Part D sponsors. While some commenters opposed the
automatic renewal requirement and asked that it be optional for plans
in the early years of the program, many commenters expressed support
for the proposed automatic election renewal process because of the
reduced burden on beneficiaries. For the reasons set forth in the
proposed rule and our responses to the related comments summarized in
section II.C.2. of this final rule, we are finalizing the automatic
renewal process at Sec. 423.137(d)(9).
b. Point-of-Sale Enrollment
Timely effectuation of election requests is important to prevent
dispensing delays and potential prescription abandonment. For enrollees
who trigger the likely to benefit threshold with a new high-cost
prescription and receive the ``Medicare Prescription Payment Plan
Likely to Benefit Notice'' informing them about the Medicare
Prescription Payment Plan at the point of sale, a real-time or point of
sale election mechanism could allow them to pay $0 at the point of sale
and still leave the pharmacy with their medication. We considered the
three options for point-of-sale enrollment: permit point of sale
enrollment by establishing a new value in an existing NCPDP data field
for the Medicare Prescription Payment Plan, permit real-time enrollment
by telephone or mobile or web-based application, and require Part D
sponsors to process election requests within 24 hours.
CMS proposed to codify the 24-hour timeframe for election requests
made during the plan year, as required in 2025, and requested comment
on real-time election. We believe that the 24-hour timeframe, paired
with the required process to retroactively apply the program to those
meeting criteria for a retroactive election, reduces the likelihood of
dispensing delays and prescription abandonment while avoiding the
operational burden that would be required for Part D sponsors, PBMs,
and pharmacies to develop and implement mechanisms to support real-time
or POS election. While many commenters expressed support for real-time
election due to the reduced burden on enrollees, many commenters
opposed requirements for real-time election and expressed concern about
the technological and operational challenges for plans and pharmacies.
For the reasons set forth in the proposed rule and our responses to the
related comments summarized in section II.C.2. of this final rule, we
are finalizing the 24-hour timeframe for election requests made during
the plan year as proposed.
c. Pharmacy Processes
Section 1860D-2(b)(2)(E)(v)(III)(ff) of the Act states that an
individual's participation in the Medicare Prescription Payment Plan
does not affect the amount paid (or the timing of such payments) to
pharmacies. Accordingly, we proposed that the Part D sponsor must pay
the pharmacy for the final amount the individual would have otherwise
paid at the POS. Because an individual's OOP costs are net of any
contributions made by supplemental payers to Part D to which the
individual may be entitled and that reduce the OOP amount due, this
requires the Medicare Prescription Payment Plan to be integrated into
current coordination of benefits (COB) transactions for program
participants.
We proposed to require pharmacies and Part D sponsors to utilize an
additional BIN/PCN that is unique to the Medicare Prescription Payment
Plan to facilitate electronic processing of supplemental COB
transactions for program participants.
We also considered the use of a pre-funded card, which would keep
the
[[Page 15906]]
pharmacy whole and could allow for COB with other payers supplemental
to Part D. However, this approach does not provide the same level of
Part D sponsor oversight, there are other concerns surrounding
timeliness of issuing payment cards and participants needing to present
a physical card at the POS, and not all organizations have the
financial capabilities established to enable a prefunded payment card
system. Moreover, interested parties have also expressed a desire to
have a single, uniform method of adjudicating and managing the patient
liability for the Medicare Prescription Payment Plan at the POS; we
determined the use of unique BIN/PCNs for the final transaction to the
Medicare Prescription Payment Plan best accomplishes that objective.
CMS received a comment in response to the proposed rule recommending
that CMS instead require a pre-funded card system for processing
Medicare Prescription Payment Plan claims. For the reasons set forth in
the proposed rule, we are finalizing the requirement that pharmacies
and Part D sponsors utilize an additional BIN/PCN that is unique to the
Medicare Prescription Payment Plan as proposed.
E. Regulatory Review Costs
If regulations impose administrative costs on reviewers, such as
the time needed to read and interpret the proposed rule, then we should
estimate the cost associated with regulatory review. We received
approximately 2,000 comments specific to the provisions in this final
rule, and we estimate that a similar number will review this rule upon
publication in the Federal Register.
Using the BLS wage information for medical and health service
managers (code 11-9111), we estimate that the cost of reviewing this
final rule is $106.42 per hour, including fringe benefits, overhead,
and other indirect costs (https://www.bls.gov/oes/current/oes_nat.htm).
Assuming an average reading speed, we estimate that it will take
approximately 10 hours for each person to review this final rule. For
each entity that reviews the rule, the estimated cost is therefore
$1,064 (10 hours x $106.42). Therefore, we estimated that the maximum
total cost of reviewing the final rule is $ 2.1 million ($1,064 x 2,000
reviewers). However, we expected that many reviewers, for example
pharmaceutical companies and PBMs, will not review the entire rule but
review just the sections that are relevant to them. We expected that on
average (with fluctuations) 10 percent of the proposed rule will be
reviewed by an individual reviewer; we therefore estimated the total
cost of reviewing to be $ 0.2 million.
We noted that this analysis assumes one reader per contract. Some
alternatives included assuming one reader per parent organization.
Using parent organizations instead of contracts would reduce the number
of reviewers. However, we believe it is likely that review will be
performed by contract. The rationale for this is that a parent
organization might have local reviewers assessing potential region-
specific effects from the rule.
F. Accounting Statement and Table
The following table summarizes costs, savings, and transfers by
provision. As required by OMB Circular A-4 (available at https://trumpwhitehouse.archives.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf, in table 13, we have prepared an accounting statement
showing the transfers and costs associated with the provisions of this
rule over a 10-year period or for contract years 2025 through 2034.
Table 13--Accounting Statement-Classifications of Estimated Transfers
and Costs, Contract Years 2025-2034
[Millions]
------------------------------------------------------------------------
Category 3% Discount rate 7% Discount rate
------------------------------------------------------------------------
TRANSFERS:
Annualized monetized Federal $107.4 $105.1
budgetary transfers..........
From Federal Government to MA-PDs
& PDPs:
Annualized monetized budgetary 14.1 15.6
transfers....................
From Beneficiaries to MA-PDs &
PDPs:
COSTS:
Annualized monetized costs.... 106.6 111.2
------------------------------------------------------------------------
G. 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.
We proposed a wide range of policies to codify, modify, and update
current guidance governing MA organization bid requirements. We believe
this final rule will have a direct economic impact on beneficiaries,
health insurance plans, and pharmacies. Based on the size standards set
by the Small Business Administration effective March 17, 2023 (for
details, see the Small Business Administration's website at https://www.sba.gov/document/support-table-size-standards), Direct Health and
Medical Insurance Carriers, classified using the North American
Industry Classification System (NAICS) code 524114, have a $47 million
threshold for ``small size.'' Several Medicare Advantage plans (about
30 to 40 percent) are not-for-profit, automatically classing them as
``small entities'' by the definitions found in the RFA. Pharmacies and
Drug Retailers, classified under NAICS code 456110, have a $37.5
million threshold to qualify as a small business. According to the
United States Census Bureau's survey of retail businesses, firms
classified with this NAICS code had an average revenue of over $27.6
million in 2022; on a per establishment basis, retail pharmacies
averaged nearly $12.4 million in revenue.\77\ We believe most retail
pharmacies qualify as small businesses.
---------------------------------------------------------------------------
\77\ US Census Bureau, ``Retail Trade: Summary Statistics for
the U.S.: 2022,'' All Sectors: Summary Statistics for the U.S.,
States, and Selected Geographies: 2022, EC2200BASIC, <https://data.census.gov/table/ECNBASIC2022.EC2200BASIC?q=456110>, accessed
on February 5, 2025.
---------------------------------------------------------------------------
We are certifying that this rule will not have a significant
economic impact on a substantial number of small entities. The analysis
in this rule provides descriptions of the statutory
[[Page 15907]]
provisions, identifies the final policies, and presents rationales for
our decisions and, where relevant, alternatives that were considered.
The analyses discussed in this section and throughout the preamble of
this final rule constitutes our RFA analysis. The RFA does not define
the terms ``significant economic impact'' or ``substantial number.''
The Small Business Administration (SBA) advises that this absence of
statutory specificity allows what is significant'' or ``substantial''
to vary, depending on the problem that is to be addressed in the
rulemaking, the rule's requirements, and the preliminary assessment of
the rule's impact. Nevertheless, HHS typically considers a
``significant'' impact to be 3 to 5 percent or more of the affected
entities' costs or revenues. To explain our position, we note certain
operational aspects of the Medicare program.
Each year, MA organizations, submit a bid for each plan for
furnishing Parts A and B (and sometimes Part D) benefits and the entire
bid amount is paid by the government through the Medicare Trust Funds
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 a
basic premium, thus this percentage of plans is not ``significant'' as
defined by the RFA and as justified in this section of this rule). Part
D sponsors also submit a bid for each plan, and the payments made to
stand-alone Part D plans (PDPs) are covered by the Supplementary
Medical Insurance Medicare Trust Fund. PACE organizations are paid a
capitation amount that is funded by both the Medicare Trust Funds (the
Hospital Insurance and Supplementary Medical Insurance trust funds) as
well as the State Medicaid programs they contract with.
MA plans can also offer enhanced benefits--that is--benefits not
covered under Traditional Medicare. These enhanced benefits are paid
for through enrollee premiums, rebates or a combination. Under the
statutory payment formula, if the plan bid submitted by an MA
organization for furnishing Part A and B benefits is lower than the
administratively set benchmark, the government pays a portion of the
difference to the plan in the form of a rebate. The rebate must be used
to provide supplemental benefits (that is, benefits not covered under
Traditional Medicare) and/or to 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 sponsors submit bids and plans are paid through a
combination of Medicare funds and beneficiary premiums. In addition,
for enrolled low-income beneficiaries, Part D plans receive special
government payments to cover most of premium and cost sharing amounts
those beneficiaries would otherwise pay.
Thus, the cost of providing services by these insurers is funded by
the government and, in some cases, by enrollee premiums. As a result,
MA plans, Part D plans, Prescription Drug Plans, and PACE organizations
are not expected to incur burden or losses since the private companies'
costs are being supported by the government and enrolled beneficiaries.
This lack of expected burden applies to both large and small health
plans.
Small entities that must comply with MA regulations, such as those
in this final rule, are expected to include the costs of compliance in
their bids, thus avoiding additional burden, since the cost of
complying with any proposed or 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) the benchmark, if the bid amount is
greater than the benchmark.
Theoretically, there is additional burden if plans bid above the
benchmark. However, consistent with the RFA, the number of these plans
is not substantial. Historically, only 2 percent of plans bid above the
benchmark, and they contain roughly 1 percent of all plan enrollees.
Since the HHS criterion 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 the
rule does not have a significant economic impact on a substantial
number of small entities, as required by the RFA. Besides the direct
costs, discussed above, are certain indirect consequences of these
provisions which also create impact. We have already explained that 98
percent of MA plans (including MA-PD 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 MA 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
benefits 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 the 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 the rule, making it effectively impossible to determine whether a
particular policy had a long-term effect on bids, administrative costs,
margins, or supplemental benefits.
As indicated in table 11, the total costs imposed by this rule and
the guidance that it codifies amount to approximately $270.4 million in
2025, $140.5 million in 2026, and $77.7 million in subsequent years.
Most of those costs will be faced by insurers, such as Part D sponsors
and Medicare Advantage Organizations. Provisions implementing the
Medicare Prescription Payment Plan are expected to result in $84.9
million in costs for all affected plans in 2025, $20.1 million for
2026, and an additional $19.2 million incurred every year thereafter.
Of those amounts, $92,162 are expected to be incurred by each Part D
Plan sponsor in 2025 to perform software updates, develop notices, and
perform other duties necessary to operationalize aspects of the
Medicare Prescription Payment Plan, dropping to $21,893 in 2026, and
$20,778 in subsequent years. The remaining costs, amounting to $7.5
million in 2025 and $1.7 million annually thereafter, are primarily the
cost to mail notices and will most affect plans with higher enrollment.
[[Page 15908]]
The provisions we have titled ``Clarifying MA Organization
Determinations to Enhance Enrollee Protections in Inpatient Settings''
are expected to result in additional expenses of $605,538 spread across
all affected plans in the first year (amounting to $833 per plan), with
an additional $43,308 incurred every year to send notices to
beneficiaries, again with costs likely most affecting those plans with
higher enrollments.
The cost of the Risk Adjustment data submission provisions will
result in an annual cost of $37.6 million. Of that, the PACE
organizations will incur $27.2 million a year, likely to be borne more
heavily by those with more enrollees and those that will have a higher
volume of data to submit. Similarly, Cost plans will likely have
increased expenses of $10.4 million annually, likewise falling most
heavily on those plans with higher enrollment.
As noted previously, plans are expected to include the costs of
compliance in their bids. For that reason, we do not believe these
costs result in a significant economic impact on the affected plans.
This rule will also affect pharmacies. As noted earlier in this
section, we believe most of the pharmacies affected by this rule are
small entities, as indicated by Census data on businesses classified
with the appropriate NAICS code (456110). While not all pharmacies are
captured using this code--those pharmacies that are a part of larger
non-pharmacy retailers or other entities are likely included under the
code for those entities--many of the excluded businesses are also
likely to have sources of income that are not impacted by this
regulation and may also have higher revenues than an average pharmacy.
However, even among pharmacies correctly identified by the NAICS code,
there is reason to believe that there is a high degree of variability
in revenue from one pharmacy to another. Independent pharmacies are
believed to be smaller on average than their peers that are part of
large pharmacy chains. Widely available figures published by industry
sources indicate that independent retail pharmacies have averaged gross
revenues between $3.4 and nearly $5 million over the last several
years. Given the high degree of variation in revenue over a relatively
short amount of time, we will make our estimates based on total
revenues of $3.4 million for small pharmacies.
Two provisions of this rule were expected to create burden for
pharmacies. Under program instruction authority, the Medicare
Prescription Payment Plan was expected to impose costs of $164,923,059
for 2025, spread across all participating pharmacies. This would amount
to costs of $2,247 per pharmacy. Of the $59,666,880 of total costs for
2026 faced by independent pharmacies due to the requirements of the
Medicare Transaction Facilitator provision, each pharmacy could be
expected to bear $1,065.48. For both 2025 and 2026, these amounts are
well below the 3 to 5 percent threshold that HHS typically uses when
determining if a rule will have a significant impact. For 2026, the
chain pharmacy home offices are expected to incur a total of $1,619,530
in costs due to Medicare Transaction Facilitator provision, equaling
$2,130.96 per chain.
We requested comment on the assessment of this outcome in
association with this rule.
Comment: A commenter requested a more detailed breakdown of the
costs to be borne by small entities, with an emphasis on pharmacies.
The commenter noted that our previous analysis did not provide adequate
data to determine if the rule would have a ``significant economic
impact'' on pharmacies.
Response: We thank the commenter for reviewing the proposed rule
and providing feedback on the analysis that it contained. We have
included more detail in our analysis to help clarify the costs imposed
on affected entities. Additionally, we would like to highlight some of
the steps taken to reduce burden on pharmacies in particular. Section
VII.D.1 of this rule, discussing alternatives considered for enrollment
into the Medicare Prescription Payment Plan, explains how CMS is opting
to finalize the 24-hour enrollment timeframe with retroactive election
into the program, selecting this method in part because it will reduce
operational burden on pharmacies and other entities. Other sections
such as sections II.E and VII.C.3. of this rule, covering the Medicare
Transaction Facilitator, describe CMS' attention to the requirements of
pharmacy operations in the development of this rule.
As noted, the costs for pharmacies that we have identified in this
RFA fall below HHS' threshold for a significant burden. These costs can
also be found listed in the Summary of Annual Information Collection
Requirements and Burden (table 10) in section VI.C. of this rule.
Several of the other notable costs faced by pharmacies that were
highlighted by the commenter are not the result of this rule and are
considered out of scope.
H. Unfunded Mandates Reform Act (UMRA)
Section 202 of UMRA also requires that agencies assess anticipated
costs and benefits before issuing any rule whose mandates require
spending in any 1 year of $100 million in 1995 dollars, updated
annually for inflation. In 2025, that threshold is approximately $187
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 $187 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.
I. Federalism
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.
J. Executive Order (E.O.) 14192, ``Unleashing Prosperity Through
Deregulation''
E.O. 14192, titled ``Unleashing Prosperity Through Deregulation,''
was issued on January 31, 2025, and requires that ``any new incremental
costs associated with new regulations shall, to the extent permitted by
law, be offset by the elimination of existing costs associated with at
least 10 prior regulations.'' This final rule is considered an E.O.
14192 regulatory action. We estimate that this rule generates $95
million in annualized costs at a 7 percent discount rate, discounted
relative to year 2024, over a perpetual time horizon.
K. Conclusion
This final rule will result in net annualized transfers, from the
Medicare Trust Fund, of between $107.4 and 105.1 million for calendar
years 2025-2034. These transfers are entirely attributable to the
insulin cost-sharing
[[Page 15909]]
requirements of the Inflation Reduction Act. In addition, this final
rule will result in net annualized costs of between $106.6 and $111.2
million for calendar years 2025 to 2034, which are primarily
attributable to provisions for the information collection requirements
of the Medicare Prescription Payment Plan. These provisions implement
requirements created by the Inflation Reduction Act. This final rule is
subject to the Congressional Review Act provisions of the Small
Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et
seq.) and has been transmitted to the Congress and the Comptroller
General for review.
Stephanie Carlton, Acting Administrator of the Centers for Medicare
& Medicaid Services, approved this document on April 2, 2025.
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, 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 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 417.486 is amended by:
0
a. Removing the word ``and'' at the end of paragraph (a)(1);
0
b. Removing the period and adding in its place ``; and'' at the end of
paragraph (a)(2); and
0
c. Adding paragraph (a)(3).
The addition reads as follows:
Sec. 417.486 Disclosure of information and confidentiality.
* * * * *
(a) * * *
(3) Risk adjustment data as specified in Sec. 422.310 of this
chapter for the purposes of determining an individual's health status.
In applying this paragraph (a)(3), references to Medicare Advantage
(MA) organizations in Sec. 422.310 must be read to mean HMOs and CMPs.
* * * * *
PART 422--MEDICARE ADVANTAGE PROGRAM
0
3. The authority for part 422 continues to read as follows:
Authority: 42 U.S.C. 1302, 1306, 1395w-21 through 1395w-28, and
1395hh.
0
4. Section 422.2 is amended by revising the definition of
``Hierarchical condition categories (HCC)'', paragraph (1) of the
definition of ``Highly integrated dual eligible special needs plan'',
and the introductory text of the definition of ``Service area'' to read
as follows:
Sec. 422.2 Definitions.
* * * * *
Hierarchical condition categories (HCC) mean diagnosis groupings
that predict average healthcare spending. HCCs consist of International
Classification of Diseases, Clinical Modification (ICD-CM) diagnosis
codes and represent the disease component of the enrollee risk score
that are applied to MA payments.
Highly integrated dual eligible special needs plan * * *
(1) The capitated contract is between the State Medicaid agency and
one of the following:
(i) The MA organization.
(ii) The MA organization's parent organization, or another entity
that is owned and controlled by its parent organization.
(iii) A local nonprofit public benefit corporation of which the MA
organization, MA organization's parent organization, or another entity
that is owned and controlled by its parent organization is a founding
member where the local nonprofit public benefit corporation is
responsible for the delivery of physical, behavioral, and dental health
services.
* * * * *
Service area means a geographic area that for local MA plans is one
or more counties, as defined in Sec. 422.116, and for MA regional
plans is a region approved by CMS within which an MA-eligible
individual may enroll in a particular MA plan offered by an MA
organization. Facilities in which individuals are incarcerated are not
included in the service area of an MA plan. Each MA plan must be
available to all MA-eligible individuals within the plan's service
area. In deciding whether to approve an MA plan's proposed service
area, CMS considers the following criteria:
* * * * *
0
5. Section 422.101 is amended by revising paragraph (f)(1) to read as
follows:
Sec. 422.101 Requirements relating to basic benefits.
* * * * *
(f) * * *
(1) MA organizations offering special needs plans (SNP) must
implement an evidence-based model of care with appropriate networks of
providers and specialists designed to meet the specialized needs of the
plan's targeted enrollees. The MA organization must, with respect to
each individual enrolled, do all of the following:
(i) Within 90 days (before or after) of the effective date of
enrollment for all new enrollees, conduct a comprehensive initial
health risk assessment (HRA).
(ii) Conduct a comprehensive annual HRA.
(iii) Use a comprehensive risk assessment tool that CMS may review
during oversight activities that meet both of the following:
(A) Assesses the enrollee's physical, psychosocial, and functional
needs.
(B) Includes one or more questions from a list of screening
instruments specified by CMS in subregulatory guidance on each of the
following domains:
(1) Housing stability.
(2) Food security.
(3) Access to transportation.
(iv) Must do all of the following:
(A) Make at least three attempts to reach the enrollee (not
including any automated phone calls), unless an enrollee agrees or
declines to participate in the HRA before three attempts are made, on
different days at different times of day to reach the enrollee to
schedule the comprehensive initial or annual HRA.
[[Page 15910]]
(B) If the enrollee has not responded, send a follow-up letter to
conduct the initial or annual HRA.
(C) For any enrollees who are unable to be reached or decline to
participate in the HRA, document the attempts to contact the enrollee
and, if applicable, the enrollee's choice not to participate.
(v) For D-SNPs that are applicable integrated plans (as defined in
Sec. 422.561), conduct a comprehensive HRA that meets all requirements
at paragraphs (f)(1)(i) through (iv) of this section and Medicaid
requirements at Sec. 438.208(b)(3) of this chapter, such that
enrollees complete a single integrated assessment for Medicare and
Medicaid, beginning no later than contract year 2027.
(vi) Ensure that the results from the comprehensive initial and
annual HRA conducted for each enrollee are addressed in the enrollee's
individualized care plan as required under paragraph (f)(1)(vii) of
this section.
(vii) Within 90 days of conducting a comprehensive initial HRA or
90 days after the effective date of enrollment, whichever is later,
develop a comprehensive individualized plan of care that meets all of
the following:
(A) Is person-centered and based on the enrollee's preferences,
including for delivery of services and benefits, and their needs
identified in the HRA.
(B) Is developed through an interdisciplinary care team with the
active participation of the enrollee (or the enrollee's representative,
as applicable), as feasible.
(C) Identifies person-centered goals and objectives (as prioritized
by the enrollee), including measurable outcomes as well as specific
services and benefits to be provided.
(D) Is updated as warranted by changes in the health status or care
transitions of enrollees.
(viii) For any enrollees who are unable to be reached or decline to
participate in the development or updates to the comprehensive
individualized plan of care, document the attempts to contact the
enrollee or the enrollee's refusal to participate.
(ix) In the management of care, use an interdisciplinary team that
includes a team of providers with demonstrated expertise and training,
and, as applicable, training in a defined role appropriate to their
licensure in treating individuals similar to the targeted population of
the plan.
(x) Provide, on at least an annual basis, beginning within the
first 12 months of enrollment, as feasible and with the enrollee's
consent, for face-to-face encounters for the delivery of health care or
care management or care coordination services and be between each
enrollee and a member of the enrollee's interdisciplinary team or the
plan's case management and coordination staff, or contracted plan
healthcare providers. A face-for-face encounter must be either in
person or through a visual, real-time, interactive telehealth
encounter.
* * * * *
0
6. Section Sec. 422.102 is amended by adding paragraph (f)(1)(iii) to
read as follows:
Sec. 422.102 Supplemental benefits.
* * * * *
(f) * * *
(1) * * *
(iii) Non-allowable SSBCI. Examples of items or services that may
not be offered as SSBCI include all of the following:
(A) Procedures that are solely cosmetic in nature and do not extend
upon Traditional Medicare coverage (for example, cosmetic surgery, such
as facelifts, or cosmetic treatments for facial lines, atrophy of
collagen and fat, and bone loss due to aging).
(B) Hospital indemnity insurance.
(C) Funeral planning and expenses.
(D) Life insurance.
(E) Alcohol.
(F) Tobacco.
(G) Cannabis products.
(H) Broad membership programs inclusive of multiple unrelated
services and discounts.
(I) Non-healthy food.
* * * * *
0
7. Section 422.116 is amended by--
0
a. Redesignating paragraphs (a)(1) through (4) as paragraphs (a)(2)
through (5);
0
b. Adding a new paragraph (a)(1);
0
c. Removing ``(a)(2)'' and adding in its place ``(a)(3)'' in newly
redesignated paragraph (a)(2)(i); and
0
d. Removing ``(a)(4)(i)'' and adding in its place ``(a)(5)(i)'' in
paragraph (b)(2)(xiv)(A).
The addition reads as follows:
Sec. 422.116 Network adequacy.
(a) * * *
(1) Definition of county. County, for purposes of this section, is
defined as the primary political and administrative division of most
States and includes functionally equivalent divisions called ``county
equivalents'' as recognized by the United States Census Bureau (for
economic census purposes).
* * * * *
0
8. Section 422.138 is amended by revising paragraph (c) to read as
follows:
Sec. 422.138 Prior authorization.
* * * * *
(c) Effect of prior authorization, pre-service, or concurrent
approval. If the MA organization approved the furnishing of a covered
item or service through a prior authorization or pre-service
determination of coverage or payment, or a concurrent determination
made during the enrollee's receipt of inpatient or outpatient services,
it may not deny coverage later on the basis of lack of medical
necessity and may not reopen such a decision for any reason except for
good cause (as provided at Sec. 405.986 of this chapter and Sec.
422.616) or if there is reliable evidence of fraud or similar fault per
the reopening provisions at Sec. 422.616. The definitions of the terms
``reliable evidence'' and ``similar fault'' in Sec. 405.902 of this
chapter apply to this paragraph (c).
0
9. Section 422.562 is amended by revising paragraph (c)(2) to read as
follows:
Sec. 422.562 General provisions.
* * * * *
(c) * * *
(2) If a contract provider's request for payment has been
adjudicated and the enrollee is determined to have no further liability
to pay for the services furnished by the MA organization, the claim
payment determination is not subject to the appeal process in this
subpart.
* * * * *
0
10. Section 422.566 is amended by revising paragraph (b)(3) to read as
follows:
Sec. 422.566 Organization determinations.
* * * * *
(b) * * *
(3) The MA organization's refusal, pre- or post-service or in
connection with a decision made concurrently with an enrollee's receipt
of services, to provide or pay for services, in whole or in part,
including the type or level of services, that the enrollee believes
should be furnished or arranged for by the MA organization.
* * * * *
0
11. Section 422.568 is amended by revising paragraphs (b)(1)
introductory text, (d) introductory text, and (f) to read as follows:
Sec. 422.568 Standard timeframes and notice requirements for
organization determinations.
* * * * *
(b) * * *
(1) Requests for service or item. Except as provided in paragraph
(b)(2) of this section, when a party has made
[[Page 15911]]
a request for an item or service, the MA organization must notify the
enrollee (and the physician or provider involved, as appropriate) of
its determination as expeditiously as the enrollee's health condition
requires but no later than either of the following:
* * * * *
(d) Written notice for MA organization denials. The MA organization
must give the enrollee and the physician or provider involved, as
appropriate, a written notice if--
* * * * *
(f) Effect of failure to provide timely notice. If the MA
organization fails to provide the enrollee and the physician or
provider involved, as appropriate, with timely notice of an
organization determination as specified in this section, this failure
itself constitutes an adverse organization determination and may be
appealed.
* * * * *
0
12. Section 422.572 is amended by revising paragraph (f) to read as
follows:
Sec. 422.572 Timeframes and notice requirements for expedited
organization determinations.
* * * * *
(f) Effect of failure to provide a timely notice. If the MA
organization fails to provide the enrollee and the physician or
prescriber involved, as appropriate, with timely notice of an expedited
organization determination as specified in this section, this failure
itself constitutes an adverse organization determination and may be
appealed.
0
13. Section 422.616 is amended by revising paragraph (a) and adding
paragraph (e) to read as follows:
Sec. 422.616 Reopening and revising determinations and decisions.
(a) Subject to paragraph (e) of this section and the rules at Sec.
422.138(c), an organization or reconsidered determination made by an MA
organization, a reconsidered determination made by the independent
entity described in Sec. 422.592, or the decision of an Administrative
Law Judge (ALJ) or attorney adjudicator or the Council that is
otherwise final and binding may be reopened and revised by the entity
that made the determination or decision, under the rules in part 405 of
this chapter.
* * * * *
(e) If the MA organization approved an inpatient hospital admission
under the rules at Sec. 412.3(d)(1) and (3) of this chapter, any
additional clinical information obtained after the initial organization
determination cannot be used as new and material evidence to establish
good cause for reopening the determination.
0
14. Section 422.631 is amended by revising paragraphs (a) and (d)(1)(i)
and (ii) to read as follows:
Sec. 422.631 Integrated organization determinations.
(a) General rule. An applicable integrated plan must adopt and
implement a process for enrollees to request that the plan make an
integrated organization determination. The process for requesting that
the applicable integrated plan make an integrated organization
determination must be the same for all covered benefits. Timeframes and
notice requirements for integrated organization determinations for Part
B drugs are governed by the provisions for Part B drugs in Sec. Sec.
422.568(b)(3), 422.570(d)(2), and 422.572(a)(2).
* * * * *
(d) * * *
(1) * * *
(i) The applicable integrated plan must send an enrollee a written
notice (and notify the physician or provider involved, as appropriate)
of any adverse decision on an integrated organization determination
(including a determination to authorize a service or item in an amount,
duration, or scope that is less than the amount previously requested or
authorized for an ongoing course of treatment) within the timeframes
set forth in this section.
(ii) For an integrated organization determination not reached
within the timeframes specified in this section (which constitutes a
denial and is thus an adverse decision), the applicable integrated plan
must send a notice to the enrollee (and notify the physician or
provider involved, as appropriate) on the date that the timeframes
expire. Such notice must describe all applicable Medicare and Medicaid
appeal rights.
* * * * *
0
15. Section 422.2267 is amended by:
0
a. Removing the word ``and'' at the end of paragraph (e)(30)(vi);
0
b. Removing the period and adding in its place ``; and'' at the end of
paragraph (e)(30)(vii); and
0
c. Adding paragraph (e)(30)(viii).
The addition reads as follows:
Sec. 422.2267 Required materials and content.
* * * * *
(e) * * *
(30) * * *
(viii) For dual eligible special needs plans that are applicable
integrated plans, as defined in Sec. 422.561, must be an integrated
member ID card that serves as the ID card for both the Medicare and
Medicaid plans in which the enrollee is enrolled, beginning no later
than contract year 2027.
* * * * *
0
16. Section 422.2420 is amended by adding paragraph (b)(4)(i)(D) to
read as follows:
Sec. 422.2420 Calculation of medical loss ratio.
* * * * *
(b) * * *
(4) * * *
(i) * * *
(D) Unsettled balances from the Medicare Prescription Payment Plan.
* * * * *
PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT
0
17. The authority for part 423 continues to read as follows:
Authority: 42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152,
and 1395hh.
0
18. Section 423.100 is amended by adding in alphabetical order
definitions for ``ACIP-recommended adult vaccine'', ``Covered insulin
product'', ``Covered insulin product applicable cost-sharing amount'',
and ``Effective date of the ACIP recommendation'' to read as follows:
Sec. 423.100 Definitions.
* * * * *
ACIP-recommended adult vaccine means a covered Part D drug, as
defined in this section, that is a vaccine licensed by the U.S. Food
and Drug Administration (FDA) under section 351 of the Public Health
Service Act for use by adult populations and administered in accordance
with recommendations of the Advisory Committee on Immunization
Practices (ACIP) of the Centers for Disease Control and Prevention
(CDC) as adopted by the CDC Director.
* * * * *
Covered insulin product means, for purposes of Sec. 423.120(h), an
insulin product, including a product that is a combination of more than
one type of insulin or a product that is a combination of both insulin
and a non-insulin drug or biological product, that--
(1) Is a covered Part D drug covered under a PDP or MA-PD plan--
(i) Is licensed under section 351 of the Public Health Service Act;
and
(ii) Is marketed under the license described in paragraph (1)(i) of
this definition.
(2) Is not a compounded drug product that contains insulin (as
described in Sec. 423.120(d)).
[[Page 15912]]
Covered insulin product applicable cost-sharing amount means, with
respect to a covered insulin product, as defined in this section,
covered under a PDP or an MA-PD plan prior to an enrollee reaching the
annual out-of-pocket threshold during plan year 2026 and each
subsequent plan year, the lesser of the following:
(1) $35.
(2) An amount equal to 25 percent of the maximum fair price
established for the covered insulin product in accordance with Part E
of title XI of the Act.
(3) An amount equal to 25 percent of the negotiated price (as
defined in this section) of the covered insulin product under the PDP
or MA-PD plan.
* * * * *
Effective date of the ACIP recommendation means the date specified
on the CDC website noting the date the CDC Director adopted the ACIP
recommendation.
* * * * *
0
19. Section 423.120 is amended by adding paragraphs (g) and (h) to read
as follows:
Sec. 423.120 Access to covered Part D drugs
* * * * *
(g) Coverage of ACIP-recommended adult vaccines. With respect to an
ACIP-recommended adult vaccine, a Part D sponsor must--
(1) Not apply any deductible nor charge any cost sharing; and
(2) Once a new or revised recommendation is posted on the CDC
website, provide coverage consistent with paragraph (g)(1) of this
section for dates of service on or after the effective date of the ACIP
recommendation, as defined at Sec. 423.100.
(3) Apply the requirements in paragraphs (g)(1) and (2) of this
section to ACIP-recommended adult vaccines obtained from either an in-
network or out-of-network pharmacy or provider in accordance with Sec.
423.124(a) and (c).
(h) Cost sharing for covered insulin products. With respect to a
covered insulin product, as defined at Sec. 423.100, covered under a
PDP or an MA-PD plan prior to an enrollee reaching the annual out-of-
pocket threshold, a Part D sponsor must do all of the following:
(1) Not apply a deductible.
(2) Ensure any enrollee cost sharing for each prescription fill up
to a one-month supply does not exceed the covered insulin product
applicable cost-sharing amount defined at Sec. 423.100.
(3) Ensure any enrollee cost sharing for each prescription fill
greater than a 1-month supply does not exceed the cumulative covered
insulin product applicable cost-sharing amount (as defined in Sec.
423.100) that would apply if the same days' supply was dispensed in the
fewest number of 1-month supply increments necessary.
(4) Apply the requirements in paragraphs (h)(1) through (3) of this
section to covered insulin products obtained from either an in-network
or out-of-network pharmacy or provider.
0
20. Section 423.137 is added to subpart C to read as follows:
Sec. 423.137 Medicare Prescription Payment Plan.
(a) General. For plan years beginning on or after January 1, 2026,
or, in the case of a plan operating on a non-calendar year basis, for
the portion of the plan year starting on January 1, 2026, each PDP
sponsor offering a prescription drug plan and each MA organization
offering an MA-PD plan must provide to any enrollee of such plan,
including an enrollee who is a subsidy eligible individual (as defined
at Sec. 423.4), the option to elect with respect to a plan year to pay
$0 cost sharing at the point of sale and pay cost sharing under the
plan in monthly amounts that are capped in accordance with this
section.
(b) Definitions. For the purposes of this section, the following
definitions apply:
(1) OOP costs for the Medicare Prescription Payment Plan means the
out-of-pocket (OOP) cost sharing amount the Part D enrollee is directly
responsible for paying.
(i) For the subsequent month calculation of the Part D cost sharing
incurred by the Part D enrollee, it includes those Part D cost sharing
amounts that the enrollee is responsible for paying after taking into
account amounts paid by third-party payers.
(ii) It does not include the covered plan pay amount or other costs
defined under section 1860D-2(b)(4)(C) of the Act.
(2) Remaining OOP costs owed by the participant means the sum of
out-of-pocket costs for the Medicare Prescription Payment Plan that
have not yet billed to the program participant. For example, if a
Medicare Prescription Payment Plan participant incurs $2,000 in January
2025 and is billed $166.67, the remaining OOP costs for the Medicare
Prescription Payment Plan are $2,000-$166.67 = $1,833.33.
(c) Calculation of the maximum monthly cap on cost-sharing
payments. For each month in the plan year for which an enrollee in a
PDP or an MA-PD plan has made an election to participate in the
Medicare Prescription Payment Plan, the PDP sponsor or MA organization
must determine a maximum monthly cap (as defined in paragraph (c)(1) of
this section) for such enrollee.
(1) Enrollee monthly payments. For each month an enrollee is
participating in the Medicare Prescription Payment Plan, the PDP
sponsor or MA organization shall bill such enrollee an amount (not to
exceed the maximum monthly cap) for the out-of-pocket costs of such
enrollee in such month.
(i) First month maximum monthly cap calculation. For the first
month for which the enrollee has made an election to participate in the
Medicare Prescription Payment Plan, the maximum monthly cap is an
amount determined by calculating the annual out-of-pocket threshold
specified in section 1860D-2(b)(4)(B) of the Act minus the incurred
costs of the enrollee as described in section 1860D-2(b)(4)(C) of the
Act; divided by the number of months remaining in the plan year.
(A) When the out-of-pocket costs incurred in the first month of
program participation are less than the maximum monthly cap defined in
this paragraph (c)(1)(i), the PDP sponsor or MA organization must bill
the participant the lesser of the participant's actual out-of-pocket
costs or the first month's maximum monthly cap.
(B) When an enrollee opts into the Medicare Prescription Payment
Plan prior to the start of the plan year, the calculation described in
this paragraph (c)(1)(i) applies to their first month of active
coverage within the plan year.
(ii) Calculation of maximum monthly cap in subsequent months. For
subsequent months in the plan year, the maximum monthly cap is an
amount determined by calculating the sum of any remaining out-of-pocket
costs owed by the enrollee from a previous month that have not yet been
billed to the enrollee and any additional out-of-pocket costs incurred
by the enrollee; divided by the number of months remaining in the plan
year.
(2) Eligible out-of-pocket costs. The calculations described in
paragraphs (c)(1)(i) and (ii) of this section apply only to covered
Part D drugs, as defined at Sec. 423.100.
(3) Months remaining in the plan year. For the calculations
described in paragraphs (c)(1)(i) and (ii) of this section, the number
of months remaining in the plan year includes the month for which the
cap is being calculated.
(4) Impact on true out-of-pocket cost accumulation. Participation
in the Medicare Prescription Payment Plan must have no impact on true
out-of-pocket cost accumulation. Costs defined
[[Page 15913]]
under section 1860D-2(b)(4)(C) of the Act incurred under the Medicare
Prescription Payment Plan must still be treated as incurred based on
the date each Part D claim is adjudicated.
(5) Prescriptions for an extended day supply. For participants who
fill prescriptions for an extended day supply, their OOP costs for the
Medicare Prescription Payment Plan for those prescriptions must be
attributed to the month the prescription was filled and not be pro-
rated over the months covered by the prescription.
(6) Mid-year plan switching. When an individual opts into the
Medicare Prescription Payment Plan after switching plans midyear, the
new Part D sponsor must calculate the individual's monthly cap for the
first month of participation under the new plan using the formula for
the calculation of the maximum monthly cap in the first month.
(d) Eligibility and election. An individual is eligible for the
Medicare Prescription Payment Plan if they are enrolled in a Part D
plan and have not been precluded from participation due to failure to
pay, as described in paragraphs (f)(2)(ii) and (f)(5) of this section.
LIS-eligible Part D enrollees are eligible to participate in the
program. The requirements described in this paragraph (d) are
applicable beginning October 1, 2025, with respect to eligibility and
election in the Medicare Prescription Payment Plan for 2026.
(1) Election. A Part D sponsor must allow any Part D enrollee,
including those who are LIS-eligible, to opt into the program prior to
the beginning of the plan year or at any point during the plan year. A
Part D enrollee must also be allowed to opt into the program in advance
of a new plan enrollment effective date, including during any of the
following:
(i) The annual coordinated election period for the subsequent plan
year.
(ii) The Part D initial enrollment period.
(iii) Part D special election periods.
(2) Format of election requests. A Part D sponsor must allow any
Part D enrollee or a Part D enrollee's authorized legal representative
acting on behalf of the enrollee to opt into the program using a paper
or electronic election request form or through a telephone call. Part D
sponsors must process any election request regardless of format.
(i) Paper election requests. Paper election requests are considered
received on the date and time:
(A) The Part D sponsor initially stamps a document received by
regular mail (that is, U.S. Postal Service); or
(B) A delivery service that has the ability to track when a
shipment is delivered (for example, U.S. Postal Service, UPS, FedEx, or
DHL) delivers the document.
(ii) Telephonic election requests. Telephonic election requests are
considered received on the date and time that either of the following
occurs:
(A) The verbal request is made by telephone with a customer service
representative.
(B) A message is left on the Part D sponsor's voicemail system if
the Part D sponsor utilizes a voicemail system to accept requests or
supporting statements after normal business hours.
(iii) Electronic election requests. An electronic election request
is considered received on the date and time a request is received
through the Part D sponsor's website. This is true regardless of when a
Part D sponsor ultimately retrieves or downloads the request.
(3) Completion of election request. For an election request to be
considered complete, the Part D sponsor must receive all of the
following:
(i) The name of the Part D enrollee.
(ii) The Medicare ID number of the Part D enrollee.
(iii) The Part D enrollee's or their authorized legal
representative's agreement to the Part D sponsor's terms and conditions
for the program (signature or, in the case of telephonic requests,
verbal attestation).
(4) Processing an election request--(i) Prior to plan year. Part D
sponsors must process election requests received prior to the plan year
within the following timeframes:
(A) Within 10 calendar days of receipt, process a complete election
request as specified in paragraph (d)(3) of this section.
(B) Within 10 calendar days of receipt of an incomplete election
request, contact the Part D enrollee to request the necessary
information to process the request as specified in paragraph (d)(3) of
this section.
(C) If information necessary to consider the request complete, as
required at paragraph (d)(3) of this section, is not received within 21
calendar days of the request for information, the Part D sponsor may
deny the request.
(ii) During a plan year. Part D sponsors must process election
requests received during a plan year within the following timeframes:
(A) Within 24 hours of receipt, process a complete election
request, as specified in paragraph (d)(3) of this section.
(B) Within 24 hours of receipt of an incomplete election request,
contact the Part D enrollee to request the necessary information to
process the request, as required in paragraph (d)(3) of this section.
(C) If information necessary to consider the request complete, as
required at paragraph (d)(3) of this section, is not received within 21
calendar days of the request for information, the Part D sponsor may
deny the request.
(D) In the event a Part D sponsor fails to process the request
within 24 hours due to no fault of the Part D enrollee, the Part D
sponsor must--
(1) Process a retroactive election effective on the date on which
the enrollee should have been admitted into the program; and
(2) Reimburse the enrollee for any cost-sharing paid on or after
that date within 45 calendar days and include those amounts, as
appropriate, in the program calculations.
(5) Inclusion of all covered Part D drugs once in the program. Once
a participant has opted into the program, cost sharing for all covered
Part D drugs must be included in the program.
(6) Retroactive election. (i) A Part D sponsor must have in place a
process to effectuate a retroactive election into the Medicare
Prescription Payment Plan if both of the following conditions are met:
(A) The Part D enrollee believes that any delay in filling the
prescription(s) due to the 24-hour timeframe required to process their
request to opt in may seriously jeopardize their life, health, or
ability to regain maximum function.
(B) The Part D enrollee requests retroactive election within 72
hours of the date and time the claim(s) were adjudicated.
(ii) The Part D sponsor must process the reimbursement for all cost
sharing paid by the enrollee for the prescription and any covered Part
D prescription filled between the date of adjudication of the claim and
the date that the enrollee's election is effectuated within 45 calendar
days of the election date.
(iii) If the Part D sponsor determines that an enrollee failed to
request retroactive election within the required timeframe, it must
promptly notify the individual of its determination and provide
instructions on how the individual may file a grievance, as required
under paragraph (h)(2) of this section.
(7) Retroactive LIS eligibility. A Part D sponsor must develop
standardized procedures for determining and processing reimbursements
for excess Medicare Prescription Payment Plan payments made by program
participants who become LIS eligible and that meet
[[Page 15914]]
requirements specified at Sec. Sec. 423.800(c) and (e) and 423.466(a).
(8) Mid-year plan switching. When a Part D enrollee switches Part D
plans, whether offered by the same or a different Part D sponsor,
during the plan year or is reassigned by CMS, the Part D sponsor of the
new Part D plan is not permitted to automatically sign up the
individual for the Medicare Prescription Payment Plan under the new
plan but must allow the individual to opt into the program. Part D plan
has the definition established at Sec. 423.4.
(i) The Part D sponsor of the prior Part D plan must offer the
participant the option to repay the full outstanding amount in a lump
sum. If the individual chooses to continue paying monthly, the Part D
sponsor must continue to bill the participant monthly based on the
participant's accrued OOP costs for the Medicare Prescription Payment
Plan while in the program under that sponsor's Part D plan. The Part D
sponsor cannot require full immediate repayment.
(ii) Part D enrollees may only be precluded from opting into the
program under a new Part D plan if both of the following conditions are
met:
(A) Both the former and new plans are offered by the same Part D
sponsor.
(B) The enrollee was involuntarily terminated from the program
under the former plan, as described in paragraph (f)(2)(ii) of this
section, for failure to pay and still owes an overdue balance.
(9) Automatic renewal. A Part D sponsor is required to
automatically renew a Part D enrollee's participation in the Medicare
Prescription Payment Plan for subsequent plan years. The Part D sponsor
must notify the enrollee of the renewal and remind enrollees that they
may opt out of the program at any time, in accordance with paragraph
(f)(2)(i) of this section.
(10) Election communications--(i) Election request form. A Part D
sponsor must make available throughout the plan year and during the
Part D plan enrollment periods described at paragraph (d)(4)(i)(A) of
this section an election request form in the formats specified in
paragraph (d)(2) of this section.
(A) Timing. A Part D sponsor must send a paper election request
form within the same timeframe as the membership ID card mailing
specified at Sec. 423.2267(e)(32)(i). The election form may be sent in
the membership ID card mailing itself or in a separate mailing.
(B) Contents. The election request form must include or provide all
of the following:
(1) Fields for all of the following Part D enrollee information:
(i) First and last name.
(ii) Medicare Number.
(iii) Birth date.
(iv) Phone number.
(v) Permanent residence street address, and mailing address, if
different from permanent residence street address.
(vi) Signature field, allowing the enrollee to attest that they
understand that form is a request to participate in the Medicare
Prescription Payment Plan and the Part D sponsor will contact them if
more information is needed to complete the request; their signature
indicates they have read and understood the Part D sponsor's terms and
conditions; and the Part D sponsor will inform the individual when
their participation in the program is active, and, until the individual
receives that notification, they are not a participant in the program.
(2) Instructions for how to submit the form to the Part D sponsor.
(3) Instructions for how the Part D enrollee can contact the Part D
sponsor for questions or assistance.
(C) Additional information. Additional educational information
about the Medicare Prescription Payment Plan must accompany the
election request form when provided in hard copy or on the web. The
additional information requirement may be fulfilled by including with
the election request form the CMS-developed fact sheet about the
program. If the Part D sponsor develops and uses alternative
informational materials in lieu of the CMS-developed fact sheet to
satisfy this paragraph (d)(10)(i)(C), they must ensure that these
alternative materials accurately convey program information and are
compliant with existing Part D requirements specified at subpart V of
this part.
(D) Terms and conditions. A Part D sponsor may include their
program terms and conditions on the election request form or may
include them on a separate attachment.
(ii) Notice of election approval. Upon accepting an election
request, the Part D sponsor must send a notice of election approval.
(A) Timing. (1) For requests received prior to the plan year, the
notice of election approval must be sent within 10 calendar days of
receipt of the election request.
(2) For requests received during the plan year, the notice of
election approval must be sent within 24 hours of receipt of the
election request.
(3) The initial notice must be delivered via telephone, to be
followed by a written notice delivered to the participant within 3
calendar days of delivering the initial telephone notice. If a Part D
plan sponsor is processing an election request over the phone or
electronically and at that same time provides the enrollee with the
effective date of their program effectuation and other notice of
election requirements as outlined at this paragraph (d)(10)(ii), then a
second telephonic notification of election acceptance is not required.
(B) Contents. The notice of election approval must include all of
the following:
(1) The effective date of the individual's participation.
(2) A description of how payments for covered Part D drugs under
the program will work.
(3) An overview of how the monthly bill is calculated.
(4) Information about procedures for involuntary termination due to
failure to pay and how to submit an inquiry or file a grievance.
(5) A statement that leaving the program will not affect the
individual's Part D plan enrollment.
(6) A description of how individuals may still owe a program
balance if they leave the program, and they can choose to pay their
balance all at once or be billed monthly.
(7) An overview of other Medicare programs that can help lower
costs and how to learn more about these programs. These programs
include all of the following:
(i) Extra Help.
(ii) The Medicare Savings Program.
(iii) The State Pharmaceutical Assistance Program.
(iv) A manufacturer's Pharmaceutical Assistance Program.
(C) Additional information. Additional educational information
about the Medicare Prescription Payment Plan must accompany the notice
of election approval. The additional information requirement may be
fulfilled by including with the notice the CMS-developed fact sheet
about the program. If the Part D sponsor develops and uses alternative
informational materials in lieu of the CMS-developed fact sheet to
satisfy this paragraph (d)(10)(ii)(C), they must ensure that these
alternative materials accurately convey program information and are
compliant with existing Part D requirements specified at subpart V of
this part.
(iii) Notification of denial. Upon denial of an election request,
the Part D sponsor must send a notice of denial.
(A) Timing. (1) For requests received prior to the plan year, the
notice of denial must be sent within 10 calendar days of receipt of the
election request.
(2) For requests received during the plan year, the notice of
denial must be
[[Page 15915]]
sent within 24 hours of receipt of the election request.
(3) For incomplete election requests, within 10 calendar days of
the expiration of the timeframe for submission of additional
information.
(B) Contents. The notice of denial must explain the reason for
denial and a description of the grievance process available to the
individual.
(iv) Renewal notice. A Part D sponsor must send a notice alerting
program participants that their participation in the program will
automatically renew for the subsequent plan year.
(A) Timing. The notice must be sent after the end of the annual
coordinated election period, as described at Sec. 422.62(a)(2) of this
chapter, but prior to the end of the plan year.
(B) Contents. The notice must include all of the following:
(1) Notification to the participant that their participation will
automatically renew for the upcoming year.
(2) Reminder that the participant may opt out of the program at any
time, including for the upcoming plan year.
(3) Terms and conditions. A Part D sponsor must include their
program terms and conditions for the upcoming year as part of the
renewal notice or as a separate attachment.
(e) Part D enrollee targeted outreach. A Part D sponsor must
undertake targeted outreach to enrollees who are likely to benefit from
making an election into the Medicare Prescription Payment Plan. The
requirements described in this paragraph (e) are applicable beginning
October 1, 2025, with respect to targeted outreach for the Medicare
Prescription Payment Plan for 2026.
(1) Identification criteria. An enrollee deemed to be ``likely to
benefit'' from the Medicare Prescription Payment Plan is identified by
the Part D sponsor based on the following criteria.
(i) For 2026 and subsequent years, the targeted outreach criteria
are as follows:
(A) A Part D enrollee is likely to benefit from participating in
the program if the enrollee incurs $600 or more in out-of-pocket costs
for a single covered Part D drug.
(B) A Part D enrollee is likely to benefit from participating in
the program if the enrollee incurred $2,000 in out-of-pocket costs for
covered Part D drugs in the first nine months of the year prior to the
upcoming plan year.
(ii) A Part D sponsor may develop supplemental strategies for
identification of additional Part D enrollees likely to benefit. If
supplemental strategies are implemented, then the Part D sponsor must
apply any additional identification criteria to every enrollee of each
plan equally.
(2) Point of sale notification. (i) A Part D sponsor must have a
mechanism to notify a pharmacy when a Part D enrollee incurs out-of-
pocket costs with respect to covered Part D drugs that make it likely
the enrollee may benefit from participating in the program using the
identification criteria set forth in paragraphs (e)(1)(i)(A) and
(e)(1)(ii) of this section.
(ii) A Part D sponsor must ensure that a pharmacy, after receiving
such a notification from the Part D sponsor, informs the Part D
enrollee that it is likely that the Part D enrollee may benefit from
the Medicare Prescription Payment Plan.
(3) Part D sponsor notification. A Part D sponsor must directly
outreach to enrollees identified as likely to benefit from the program
during either of the following timeframes:
(i) Prior to the plan year. Prior to the plan year, a Part D
sponsor must notify current enrollees that they are likely to benefit
from the program during the fourth quarter of the year, and no later
than the end of the annual coordinated election period, as described at
Sec. 422.62(a)(2) of this chapter, using the identification criteria
set forth in paragraphs (e)(1)(i)(B) and (e)(1)(ii) of this section.
(ii) On an ongoing basis during the plan year. Part D sponsors must
put in place reasonable guidelines for ongoing identification and
notification of enrollees that are likely to benefit from the program
on an ongoing basis during the plan year.
(4) Targeted outreach notification requirements. When an enrollee
is identified as likely to benefit from the program, using the
identification criteria set forth in paragraphs (e)(1)(i) and (ii) of
this section or based on Part D sponsor-developed guidelines set forth
at paragraph (e)(3)(ii) of this section, the Part D sponsor must
provide to the enrollee the standardized ``Medicare Prescription
Payment Plan Likely to Benefit Notice'' consistent with the
requirements at Sec. 423.2267(b).
(i) When the enrollee is identified as likely to benefit directly
by the Part D sponsor, either prior to or during the plan year, the
notification may be done via mail or electronically (based on the Part
D enrollee's preferred and authorized communication methods).
(A) The outreach must include a program election request form and
additional information about the Medicare Prescription Payment Plan.
The additional information requirement may be fulfilled by including
with the notice the CMS-developed fact sheet about the program. If the
Part D sponsor develops and uses alternative informational materials in
lieu of the CMS-developed fact sheet to satisfy this paragraph
(e)(4)(i)(A), they must ensure that these alternative materials
accurately convey program information and are compliant with existing
Part D requirements specified at subpart V of this part.
(B) During the plan year, the initial notice may be provided via
telephone, so long as the written ``Medicare Prescription Payment Plan
Likely to Benefit Notice,'' election request form, and additional
information are sent within 3 calendar days of the telephone
notification.
(ii) When the enrollee is identified as likely to benefit during
the plan year at the pharmacy point of sale, the notice must be
provided as described in paragraph (i)(2) of this section.
(5) Targeted outreach exclusions. A Part D sponsor does not have to
notify enrollees that they are likely to benefit from the program under
any of the following circumstances:
(i) For the current year during the final month of the plan year
(December).
(ii) When the enrollee is currently participating in the program,
including--
(A) For the current year; and
(B) For the upcoming year.
(iii) When the enrollee is precluded from opting into the program.
(iv) When the PDP is non-renewing its contract or individual plan
benefit package. This exclusion only applies to the requirements at
paragraph (e)(3)(i) of this section related to prior to plan year
targeted outreach.
(f) Termination of election, reinstatement, and preclusion--(1)
General rule. Except as provided in paragraph (f)(2) of this section, a
Part D sponsor may not do any of the following:
(i) Terminate an individual from the Medicare Prescription Payment
Plan.
(ii) Orally or in writing, or by any action or inaction, request or
encourage an individual to disenroll.
(2) Basis for termination--(i) Voluntary terminations. A Part D
sponsor must have a process to allow participants who have opted into
the Medicare Prescription Payment Plan to opt out during the plan year.
(A) When a participant opts out of the Medicare Prescription
Payment Plan, a Part D sponsor must--
(1) Process the termination with an effective date within 3
calendar days of receipt of the request for termination.
(2) Provide the individual with a notice of termination after the
individual notifies the Part D sponsor
[[Page 15916]]
that they intend to opt out under the Part D sponsor's established
process.
(i) Timing. The Part D sponsor must send the notice of termination
within 10 calendar days of receipt of the request for termination.
(ii) Contents. The notice of voluntary termination must include all
of the following. The date on which the individual's participation in
the program ends. An explanation of why the individual is receiving the
notice. A statement clarifying that the notice only applies to
participation in the Medicare Prescription Payment Plan. A statement
clarifying that the individual will continue to be billed monthly or
can choose to pay the amount owed all at once, and that the individual
will not pay interest or fees on the amount owed. A statement
clarifying that the individual can join the Medicare Prescription
Payment Plan again and instructions for how to do so. An overview of
other Medicare programs that can help lower costs and how to learn more
about these programs, including Extra Help, the Medicare Savings
Program, the State Pharmaceutical Assistance Program, and a
manufacturer's Pharmaceutical Assistance Program.
(3) Offer the participant the option to repay the full outstanding
amount in a lump sum. A Part D sponsor is prohibited from requiring
full immediate repayment from a participant who has been terminated
from the Medicare Prescription Payment Plan.
(4) If the participant opts not to repay the full outstanding
amount in a lump sum, continue to bill amounts owed under the program
in monthly amounts not to exceed the maximum monthly cap according to
the statutory formula for the duration of the plan year after an
individual has been terminated.
(5) Maintain appropriate records of the termination once the
termination is processed.
(B) [Reserved]
(ii) Involuntary termination. If a participant fails to pay their
monthly billed amount under the program, a Part D sponsor is required
to terminate that individual's Medicare Prescription Payment Plan
participation.
(A) A participant will be considered to have failed to pay their
monthly billed amount only after the conclusion of the required grace
period as specified at paragraph (f)(4) of this section.
(B) When a Part D sponsor involuntarily terminates a participant,
the sponsor must do all of the following:
(1) Provide the individual with a notice of termination consistent
with the requirements of paragraphs (f)(2)(ii)(C) and (D) of this
section.
(2) Offer the participant the option to repay the full outstanding
amount in a lump sum. A Part D sponsor is prohibited from requiring
full immediate repayment from a participant who has been terminated
from the Medicare Prescription Payment Plan.
(3) If the participant opts not to repay the full outstanding
amount in a lump sum, continue to bill amounts owed under the program
in monthly amounts not to exceed the maximum monthly cap according to
the statutory formula for the duration of the plan year after an
individual has been terminated.
(C) If a Part D sponsor involuntarily terminates a participant
under this paragraph (f)(2)(ii), the Part D sponsor must send the
individual an initial notice explaining that the individual has failed
to pay the billed amount.
(1) Timing. The notice of failure to pay must be sent within 15
calendar days of the payment due date.
(2) Contents. The notice of failure to pay must include all of the
following:
(i) Pertinent dates, including the date the missed monthly payment
was due, the amount the individual must pay to remain in the program,
and the date by when payment must be received, which is the date of the
end of the grace period.
(ii) A statement clarifying that the notice only applies to
participation in the Medicare Prescription Payment Plan.
(iii) Instructions for how to submit payment.
(iv) Information about procedures for involuntary termination due
to failure to pay, including the date on which the participant would be
removed if payment is not received, and how to submit an inquiry or
file a grievance.
(v) A statement describing how individuals should pay their Part D
plan premium first if they cannot afford both their premium and their
program balance.
(vi) An overview of other Medicare programs that can help lower
costs and how to learn more about these programs, including Extra Help,
the Medicare Savings Program, the State Pharmaceutical Assistance
Program, and a manufacturer's Pharmaceutical Assistance Program.
(D) If the individual has failed to pay the amount due by the end
of the grace period described at paragraph (f)(4) of this section, the
Part D sponsor must send the individual a termination notice explaining
that the individual has been terminated from the Medicare Prescription
Payment Plan.
(1) Timing. The involuntary termination notice must be sent within
3 calendar days following the last day of the end of the grace period.
(2) Contents. The involuntary termination notice must include all
of the following:
(i) Pertinent dates, including the date the individual was
originally notified of the missed monthly payment and the due date for
that payment, as well as the date on which the individual's
participation in the program ends, which should be the same date as the
notice.
(ii) A statement clarifying that the notice only applies to
participation in the Medicare Prescription Payment Plan, and that the
individual's Part D drug coverage will not be impacted.
(iii) Instructions for how to submit payment and the amount owed.
(iv) Instructions for how to submit an inquiry or file a grievance.
(v) A statement clarifying that the individual can join the
Medicare Prescription Payment Plan again if they pay the amount owed.
(vi) An overview of other Medicare programs that can help lower
costs and how to learn more about these programs, including Extra Help,
the Medicare Savings Program, the State Pharmaceutical Assistance
Program, and a manufacturer's Pharmaceutical Assistance Program.
(E) If either notice is returned to the Part D sponsor as
undeliverable, the Part D sponsor must immediately implement its
existing procedure for researching a potential change of address.
(3) Required grace period and reinstatement. When a program
participant fails to pay a program bill, the Part D sponsor must
provide individuals with a grace period of at least two months upon
notifying the individual of the initial missed payment.
(i) The grace period must begin on the first day of the month
following the date on which the initial notice described in this
paragraph (f)(3) is sent.
(ii) A participant must be allowed to pay the overdue balance in
full during the grace period to remain in the program.
(iii) If a participant fails to pay their monthly billed amount
under the program with fewer than two full calendar months remaining in
the calendar year, the grace period must carry over into the next
calendar year.
(A) If the program participant is within their grace period from
the prior year, the Part D sponsor must allow the participant to opt
into the program for the next year.
(B) If that participant fails to pay the amount due from the prior
year during the required grace period, the Part D
[[Page 15917]]
sponsor may terminate the individual's participation in the program in
the new year following the procedures outlined in paragraph (f)(2)(ii)
of this section.
(iv) If an individual who has been terminated from the Medicare
Prescription Payment Plan demonstrates good cause for failure to pay
the program billed amount within the grace period and pays all overdue
amounts billed, a Part D sponsor must reinstate that individual into
the Medicare Prescription Payment Plan.
(A) A Part D sponsor is expected to reinstate an individual into
the program within a reasonable timeframe after the individual has
repaid their past due Medicare Prescription Payment Plan balance in
full.
(B) To demonstrate good cause, the individual must establish by a
credible statement that failure to pay the monthly amount billed within
the 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.
(v) If an individual who has been terminated from the Medicare
Prescription Payment Plan pays all overdue amounts billed in full, a
Part D sponsor may also reinstate that individual, at the sponsor's
discretion and within a reasonable timeframe, even if the individual
does not demonstrate good cause.
(4) Preclusion of election in a subsequent plan year. If an
individual fails to pay the amount billed for a month as required under
the Medicare Prescription Payment Plan, a Part D sponsor may preclude
that individual from opting into the Medicare Prescription Payment Plan
in a subsequent year.
(i) A Part D sponsor may only preclude an individual from opting
into the Medicare Prescription Payment Plan in a subsequent year if the
individual owes an overdue balance to that Part D sponsor.
(ii) If an individual enrolls in a Part D plan offered by a
different Part D sponsor than the Part D sponsor to which the
individual owes an overdue balance, that individual cannot be precluded
from opting into the Medicare Prescription Payment Plan in a subsequent
year by that different Part D sponsor.
(iii) If a Part D enrollee remains in a plan offered by the same
Part D sponsor and continues to owe an overdue balance, preclusion may
extend beyond the immediately subsequent plan year.
(A) If an individual pays off the outstanding balance under the
Medicare Prescription Payment Plan during a subsequent year, the Part D
sponsor must promptly permit them to opt into the Medicare Prescription
Payment Plan after the balance is paid.
(B) [Reserved]
(iv) A Part D sponsor that offers more than one Part D plan may
have different preclusion policies for its different plans. However,
the Part D sponsor must apply its preclusion policy consistently among
all enrollees of the same Part D plan.
(5) Prohibition on Part D enrollment penalties. A Part D plan
sponsor is prohibited from doing any of the following:
(i) Disenrolling a Part D enrollee from a Part D plan for failure
to pay any amount billed under the Medicare Prescription Payment Plan.
(ii) Declining future enrollment into a Part D plan based on an
individual's failure to pay a monthly amount billed under the Medicare
Prescription Payment Plan.
(6) Disenrollment. (i) If a participant in the Medicare
Prescription Payment Plan is disenrolled voluntarily or involuntarily
from their Part D plan under the provisions in Sec. 423.44(b), the
participant is also terminated from the Medicare Prescription Payment
Plan in that plan.
(ii) If the participant enrolls in a different plan, they may opt
into the Medicare Prescription Payment Plan under their new plan.
(7) Billing for amounts owed. Nothing in this section prohibits a
Part D sponsor from billing an individual for an outstanding Medicare
Prescription Payment Plan amount owed.
(g) Participant billing rights--(1) General rule. For each billing
period after an individual has opted into the program and incurred out-
of-pocket costs, a Part D sponsor must calculate a monthly amount that
takes into account the out-of-pocket costs in that month that were
incurred on or after the date on which the individual opted into the
program.
(i) A Part D sponsor must not bill a participant who is in the
program but has not yet incurred any out-of-pocket costs during the
plan year.
(ii) While past due balances from prior monthly bills may also be
included in a billing statement, which could result in the total amount
on the billing statement exceeding the maximum monthly cap, the amount
billed for the month for which the maximum monthly cap is being
calculated cannot be higher than the cap for that month.
(iii) A Part D sponsor must not charge late fees, interest
payments, or other fees, such as for different payment mechanisms.
(A) A Part D sponsor must ensure that--
(1) Any third party it contracts with complies with such
requirements.
(2) Participants do not incur any charges or fees as a result of
overbilling or overpayment errors made by the Part D sponsor.
(B) [Reserved]
(iv) A Part D sponsor must send a bill for the Medicare
Prescription Payment Plan that is separate from the bill for collection
of premiums, if applicable.
(2) Billing period. Each billing period will be a calendar month.
(i) The billing period begins on either of the following:
(A) The effective date of a Part D enrollee's participation in the
Medicare Prescription Payment Plan (for the first month a participant
elects into the program during the plan year).
(B) The first day of the month (for each subsequent month or for
the first month of a participant who elects into the program prior to
the start of the plan year).
(ii) The billing period ends on the last date of that month.
(3) Billing statement. Billing statements must include all of the
following information:
(i) A statement that the bill is for the Medicare Prescription
Payment Plan.
(ii) A brief description of the program.
(iii) A reference to where additional information about the program
can be found.
(iv) The effective date of program participation.
(v) The last payment received, showing the date, amount of the last
payment, and the means of payment made by the participant.
(vi) Any balance carried over from the prior month, including any
missed payments.
(vii) Itemized out-of-pocket costs by prescription for the month
being billed.
(viii) The amount due from the participant for the month being
billed (that is, the amount based on the application of the monthly cap
calculation).
(ix) The remaining total out-of-pocket cost sharing balance.
(x) Information on the next steps if the participant fails to pay
by the stated due date.
(xi) Information on how to voluntarily opt out of the program and
balances due if participation is terminated.
(xii) Information on the dispute processes available if the
individual disputes their bill.
(xiii) LIS program information, including the following:
[[Page 15918]]
(A) General information about how to enroll in the LIS program (as
an additional or alternative avenue for addressing prescription drug
costs).
(B) A statement that LIS enrollment, for those who qualify, is
likely to be more advantageous than participation in the Medicare
Prescription Payment Plan.
(xiv) Plan contact information for participant questions about the
billing statement.
(4) Treatment of unsettled balances. Any unsettled balances with
respect to amounts owed under the program will be treated as plan
losses.
(i) The Secretary is not liable for any such balances outside of
those assumed as losses estimated in a Part D sponsor's plan bid.
(ii) If a Part D sponsor is compensated by or on behalf of the
participant for an unsettled balance or sells an unsettled balance as a
debt, that Part D sponsor cannot treat the amount as a loss and cannot
include it in its bid.
(5) Prioritization of premium payments. If a Part D enrollee has
opted into the program and makes payments directly to the Part D
sponsor, and it is unclear whether a payment should go towards the
participant's outstanding Part D plan premium or Medicare Prescription
Payment Plan balance, then the payment must be applied to the Part D
premium.
(6) Financial reconciliation. A Part D sponsor must have a
financial reconciliation process in place to correct inaccuracies in
billing or payments or both.
(i) Participant payment. (A) A participant may pay more than the
maximum monthly cap, up to the annual out-of-pocket threshold.
(B) The participant cannot pay more than their total OOP costs for
the Medicare Prescription Payment Plan.
(C) If a participant does pay more than their total OOP costs for
the Medicare Prescription Payment Plan, then the Part D sponsor must
reimburse the participant the amount that is paid above the balance
owed.
(ii) Reimbursements for excess participant payments. A Part D
sponsor must develop standardized procedures for determining and
processing reimbursements for excess Medicare Prescription Payment Plan
payments made by program participants.
(iii) Claims adjustments resulting in increased amounts owed. When
Part D claims adjustments result in increased amounts owed by the
participant, and these amounts have not yet been billed to the
participant, they must be included in the revised remaining OOP costs
owed by the participant (as defined at paragraph (b)(1) of this
section) and, thus, in the subsequent month maximum cap for the next
billing period.
(h) Participant disputes--(1) Coverage determination and appeals
procedures. A Part D sponsor must apply the Part D coverage
determination and appeals procedures specified at Sec. 423.566(a) to
any disputes made by program participants concerning the cost sharing
amount of a covered Part D drug.
(2) Grievance procedures. A Part D sponsor must apply the Part D
grievance procedure specified at Sec. 423.562 to any dispute made by a
program participant related to any aspect of the Medicare Prescription
Payment Plan.
(i) Pharmacy point of sale notification process. (1) When a Part D
sponsor is notifying a pharmacy that a Part D enrollee has incurred
out-of-pocket costs with respect to covered Part D drugs that make it
likely the enrollee may benefit from participating in the program, as
required at paragraph (e)(2) of this section, the Part D sponsor must
use standard code values for notifying the pharmacy that an enrollee
has been identified as likely to benefit, as outlined by the National
Council for Prescription Drug Programs.
(2) A Part D sponsor must ensure that the ``Medicare Prescription
Payment Plan Likely to Benefit Notice'' is provided to enrollees
identified as likely to benefit (or the person acting on their behalf)
through the pharmacy point of sale notification process.
(i) In pharmacy settings in which there is direct contact with
enrollees (for example, community pharmacies where enrollees present in
person to pick up prescriptions), the Part D sponsor must ensure that a
hard copy of the ``Medicare Prescription Payment Plan Likely to Benefit
Notice'' is provided to enrollees identified as likely to benefit (or
the person acting on their behalf) at the time the prescription is
picked up.
(ii) For non-retail pharmacy settings without in-person encounters
(such as mail order pharmacies), a Part D sponsor must require the
pharmacy to notify the Part D enrollee via a telephone call or their
preferred contact method.
(iii) For long-term care pharmacy settings, the Part D plan sponsor
should not require that the pharmacy notify the Part D enrollee prior
to dispensing the medication. Instead, the Part D plan sponsor should
require the long-term care pharmacy to provide the notice to the Part D
enrollee (or their authorized representative) at the time of its
typical enrollee cost-sharing billing process.
(iv) If the pharmacy is in contact with a Part D enrollee
identified as likely to benefit and the enrollee declines to complete
the prescription filling process, the Part D sponsor must ensure that
the pharmacy provides the ``Medicare Prescription Payment Plan Likely
to Benefit Notice'' to the Part D enrollee.
(3) A Part D sponsor must ensure that any contract between the Part
D sponsor and a pharmacy (or between a first tier, downstream, or
related entity and a pharmacy on the Part D sponsor's behalf) for
participation in one or more of the Part D sponsor's networks includes
a provision requiring pharmacies to provide this notification to Part D
enrollees.
(j) Pharmacy claims processing--(1) Electronic claims processing
methodology. Part D sponsors must use, and must ensure pharmacies use,
a bank identification number (BIN) or processor control number (PCN)
electronic claims processing methodology for applicable Medicare
Prescription Payment Plan transactions.
(i) Part D sponsors must utilize, and ensure pharmacies utilize, an
additional BIN/PCN that is unique to the Medicare Prescription Payment
Plan to facilitate electronic processing of supplemental coordination
of benefits (COB) transactions for program participants.
(ii) A Part D sponsor must provide the unique Medicare Prescription
Payment Plan BIN/PCN and any other pertinent billing information to the
pharmacy on paid claim responses when the enrollee is also a Medicare
Prescription Payment Plan participant.
(iii) A Part D sponsor must assign a program-specific PCN that
starts with ``MPPP'' and report the new BIN/PCN to CMS.
(iv) The transaction processed through the Medicare Prescription
Payment Plan BIN/PCN will be submitted after processing any applicable
other payer transactions in order to capture the final patient
responsibility amount after all other payers have paid.
(2) Supplemental coverage that increases final patient pay amount.
When a Part D enrollee has supplemental coverage that modifies their
final out-of-pocket responsibility for covered Part D drugs:
(i) When the final patient pay amount returned to the pharmacy by a
supplemental payer for a covered Part D drug is higher than the
original Part D patient pay amount, the Part D sponsor may only include
in the Medicare Prescription Payment Plan the participant's original
Part D cost sharing, as determined by their plan-specific benefit
structure.
(ii) [Reserved]
[[Page 15919]]
(3) Prescription drug event reporting. A Part D sponsor must ensure
that the claims processing methodology described in paragraph (j)(1) of
this section has no impact on prescription drug event (PDE) cost/
payment field reporting, meaning PDE records must reflect participant
and plan liability amounts as if the Medicare Prescription Payment Plan
did not apply.
(4) Real-time benefit tools. A Part D sponsor must ensure that
participation in the Medicare Prescription Payment Plan or the
associated claims processing methodology described in paragraph (j)(1)
of this section or both has no impact on the cost-sharing information
displayed in real-time benefit tools.
(5) Inclusion of retroactive claims. A Part D sponsor is not
required to retroactively include under this program claims submitted
to the Part D sponsor by a Medicare Prescription Payment Plan
participant (whether the request is made via paper form,
telephonically, or electronically) except as provided in paragraph
(d)(6) of this section.
(6) Re-adjudication of prescription drug claims for new program
participants. (i) When a Part D enrollee receives the ``Medicare
Prescription Payment Plan Likely to Benefit Notice'' from the pharmacy,
they may choose to take time to consider opting into the program and
leave the pharmacy without the prescription that triggered the
notification.
(ii) When the Part D enrollee returns to the pharmacy after their
election into the Medicare Prescription Payment Plan has been
effectuated, the plan sponsor must require the pharmacy to reverse and
reprocess the high-cost claim that triggered the likely to benefit
notification.
(A) Should a Part D enrollee have other unpaid claims at the same
pharmacy for covered Part D drugs from prior dates of service, in
addition to the prescription that may have triggered the likely to
benefit notification, they may also request that those claims be
readjudicated.
(B) [Reserved]
(iii) When the Part D claim date of service is the same as the date
of program effectuation), the Part D sponsor is not required to ensure
the pharmacy reverse and resubmit the Part D claim, provided that they
otherwise obtain the necessary Medicare Prescription Payment Plan BIN/
PCN for the program-specific transaction.
(k) Pharmacy payment obligations. A Part D sponsor must ensure that
enrollee participation in the Medicare Prescription Payment Plan does
not affect the amount paid to pharmacies or the timing of such
payments, consistent with Sec. 423.520. A Part D sponsor must not do
either of the following:
(1) Impose any fees or costs related to program implementation on
pharmacies.
(2) Hold pharmacies responsible for any unsettled balances of a
participant or for collecting unpaid balances from the participant on
the Part D sponsor's behalf.
(l) [Reserved]
(m) General Part D sponsor outreach and education requirements. The
requirements described in this paragraph (m) are applicable beginning
October 1, 2025, with respect to general outreach for the Medicare
Prescription Payment Plan for 2026.
(1) Mailing. A Part D sponsor, except a dual eligible special needs
plan (D-SNP), must provide a Medicare Prescription Payment Plan
election request form, described at paragraph (d)(10)(i) of this
section, and additional educational information on the program in a
hard copy mailing.
(i) The mailing must be sent by the later of--
(A) Within 10 calendar days from receipt of CMS confirmation of
enrollment in the Part D plan; or
(B) The last day of the month prior to the plan effective date.
(ii) The election request form and supplemental information may be
sent--
(A) With the membership ID card mailing described at Sec.
423.2267(e)(32); or
(B) In its own envelope.
(iii) The mailing may be sent only to a Part D enrollee who is
receiving a new membership ID card or to all Part D enrollees.
(iv) The additional information requirement may be fulfilled by
including in the mailing the CMS-developed fact sheet about the
program. If the Part D sponsor develops and uses alternative
informational materials in lieu of the CMS-developed fact sheet to
satisfy this paragraph (m)(1)(iv), they must ensure that these
alternative materials accurately convey program information and are
compliant with existing Part D requirements specified at subpart V of
this part.
(2) Websites. In addition to meeting requirements described at
Sec. Sec. 423.128(d)(2) and 423.2265(b), a Part D sponsor is required
to include all of the following on its website:
(i) An election request mechanism, as described at paragraph (d)(2)
of this section.
(ii) An overview of the Medicare Prescription Payment Plan.
(iii) Examples of the program calculation and explanations.
(iv) A description of Part D enrollees who may be likely to benefit
from the program.
(v) The financial implications of participation.
(vi) The implications of not paying monthly bills.
(vii) Instructions for how to opt into and out of the program,
including timing requirements around election effectuation.
(viii) A description of the standards for retroactive election in
cases where an enrollee believes that a delay in filling a prescription
may seriously jeopardize their life, health, or ability to regain
maximum function.
(ix) A description of the dispute and grievance procedure, as
required under Sec. 423.137(h).
(x) Contact information Part D enrollees can use to obtain further
information
(xi) General information about the LIS program, including an
overview of how LIS enrollment, for those who qualify, is likely to be
more advantageous than program participation.
0
21. Section 423.325 is added to read as follows:
Sec. 423.325 PDE submission timeliness requirements.
(a) General PDE submission timeliness requirements. Unless
paragraph (b) of this section applies, a Part D sponsor must submit PDE
records to CMS as follows:
(1) Initial PDE records within 30 calendar days from the date the
Part D sponsor (or its contracted first tier, downstream, or related
entity) receives the claim.
(2) Adjustment or deletion PDE records within 90 calendar days of
the Part D sponsor (or its contracted first tier, downstream, or
related entity) discovering or receiving notification of an issue that
requires a change to the previously submitted PDE record.
(3) Revised PDE records to resolve CMS rejected records within 90
calendar days of the rejection.
(b) Selected Drugs PDE submission timeliness requirement. A Part D
sponsor must submit initial PDE records for selected drugs (as
described at section 1192(c) of the Act) within 7 calendar days from
the date the Part D sponsor (or its contracted first tier, downstream,
or related entity) receives the claim.
0
22. Section 423.505 is amended by adding paragraph (q) to read as
follows.
Sec. 423.505 Contract provisions.
* * * * *
(q) Enrollment in the Medicare Transaction Facilitator Data Module
for
[[Page 15920]]
the Medicare Drug Price Negotiation Program. For contract year 2026 and
all subsequent years, any contract between the sponsor and a pharmacy,
or between a first tier, downstream, or related entity and a pharmacy
on the sponsor's behalf, for participation in one or more of the Part D
sponsor's networks must include a provision requiring the pharmacy to
be enrolled in the Medicare Transaction Facilitator Data Module (MTF
DM) (or any successor to the MTF DM) in a form and manner determined by
CMS. Such provision must also require the pharmacy to maintain and
certify up-to-date, complete, and accurate enrollment information with
the MTF DM, in accordance with applicable terms and conditions of
participation with the MTF DM, including but not limited to contact,
third-party support entity or entities, and banking information, in a
form and manner determined by CMS.
0
23. Section 423.2265 is amended by adding paragraph (b)(16) to read as
follows:
Sec. 423.2265 Websites.
* * * * *
(b) * * *
(16) Information about the Medicare Prescription Payment Plan as
described in Sec. 423.137(m)(2).
* * * * *
0
24. Section 423.2267 is amended by--
0
a. Removing the word ``and'' at the end of paragraph (e)(32)(vi);
0
b. Removing the period and adding in its place ``; and'' at the end of
paragraph (e)(32)(vii); and
0
c. Adding paragraphs (e)(32)(viii) and (e)(45) through (51).
The additions read as follows:
Sec. 423.2267 Required materials and content.
* * * * *
(e) * * *
(32) * * *
(viii) For dual eligible special needs plans that are applicable
integrated plans, as defined in Sec. 422.561 of this chapter, must be
an integrated member ID card that serves as the ID card for both the
Medicare and Medicaid plans in which the enrollee is enrolled,
beginning no later than contract year 2027.
* * * * *
(45) Election request form. This is a model communications material
that Part D sponsors must provide to allow enrollees to request to opt
into the Medicare Prescription Payment Plan, as required under Sec.
423.137(d)(10)(i).
(46) Notice of election approval. This is a model communications
material that Part D sponsors must provide upon accepting a Medicare
Prescription Payment Plan election request, as required under Sec.
423.137(d)(10)(ii).
(47) Medicare Prescription Payment Plan Likely to Benefit Notice.
This is a standardized communications material that Part D sponsors
must provide to enrollees identified as being likely to benefit from
opting into the Medicare Prescription Payment Plan, as required under
Sec. 423.137(e)(4).
(48) Notice of failure to pay. This is a model communications
material that Part D sponsors must provide to Medicare Prescription
Payment Plan participants who fail to pay a program bill, as required
under Sec. 423.137(f)(2)(ii)(C).
(49) Involuntary termination notice. This is a model communications
material that Part D sponsors must provide to Medicare Prescription
Payment Plan participants who are being involuntarily terminated from
the program due to failure to pay, as required under Sec.
423.137(f)(2)(ii)(D).
(50) Voluntary termination notice. This is a model communications
material that Part D sponsors must provide to Medicare Prescription
Payment Plan participants who request to voluntarily leave the program,
as required under Sec. 423.137(f)(2)(i)(A)(2).
(51) Renewal notice. This is a model communications material that
Part D sponsors must send to Medicare Prescription Payment Plan
participants alerting them that their participation in the program will
automatically renew for the subsequent plan year, as required under
Sec. 423.137(d)(10)(iv).
0
25. Section 423.2420 is amended by adding paragraph (b)(4)(i)(D) to
read as follows:
Sec. 423.2420 Calculation of medical loss ratio.
* * * * *
(b) * * *
(4) * * *
(i) * * *
(D) Unsettled balances from the Medicare Prescription Payment Plan.
* * * * *
0
25. Section 423.2536 is amended by--
0
a. Redesignating paragraphs (c) through (k) as paragraphs (d) through
(l);
0
b. Adding a new paragraph (c); and
0
c. Revising newly redesignated paragraphs (i)(1) and (4).
The addition and revisions to read as follows:
Sec. 423.2536 Waiver of Part D program requirements.
* * * * *
(c) Medicare Prescription Payment Plan. Section 423.137.
* * * * *
(i) * * *
(1) Section 423.2265(b)(4), (5), (11), (13), and (16);
* * * * *
(4) Section 423.2267(e)(3) through (5), (9) through (12), (14)
through (17), (25), (29), (33), and (45) through (51); and
* * * * *
PART 460--PROGRAMS OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE)
0
26. The authority for part 460 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395, 1395eee(f), and 1396u-4(f).
Sec. 460.70 [Amended]
0
27. Section 460.70 is amended in paragraph (e)(2) by removing the
reference ``Sec. 460.98(c)'' and adding in its place the reference
``Sec. 460.98(d)''.
0
28. Section 460.112 is amended by--
0
a. Revising paragraphs (a)(1) and (2);
0
b. Adding paragraphs (a)(3) through (8); and
0
c. Revising paragraph (b).
The revisions and additions read as follows:
Sec. 460.112 Specific rights to which a participant is entitled.
(a) * * *
(1) To receive comprehensive health care in a safe and clean
environment and in an accessible manner.
(2) To be treated with dignity and respect, be afforded privacy and
confidentiality in all aspects of care and be provided humane care.
(3) Not to be required to perform services for the PACE
organization.
(4) To have reasonable access to a telephone.
(5) To be free from harm, including physical or mental abuse,
neglect, corporal punishment, involuntary seclusion, excessive
medication, and any physical or chemical restraint imposed for purposes
of discipline or convenience and not required to treat the
participant's medical symptoms.
(6) To be encouraged and assisted to exercise rights as a
participant, including the Medicare and Medicaid appeals processes as
well as civil and other legal rights.
(7) To be encouraged and assisted to recommend changes in policies
and services to PACE staff.
(8) To have all information regarding PACE services and treatment
options explained in a culturally competent manner.
(b) Right to treatment. Each participant has the right to
appropriate and timely treatment for their health conditions, including
the right to both of the following:
[[Page 15921]]
(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.
* * * * *
0
29. Section 460.180 is amended by revising paragraph (b)(3) to read as
follows:
Sec. 460.180 Medicare payment to PACE organizations.
* * * * *
(b) * * *
(3) CMS adjusts the monthly capitation payment amount derived under
paragraph (b)(2) of this section based on a risk adjustment that
reflects the individual's health status. The provisions of Sec.
422.310 of this chapter apply to PACE organizations and risk adjustment
data submitted by PACE organizations to CMS. In applying Sec. 422.310
to PACE organizations and risk adjustment of payments to PACE
organizations, references to MA organizations are read as references to
PACE organizations. CMS ensures that payments take into account the
comparative frailty of PACE enrollees relative to the general Medicare
population.
* * * * *
Robert F. Kennedy Jr.,
Secretary, Department of Health and Human Services.
[FR Doc. 2025-06008 Filed 4-4-25; 4:15 pm]
BILLING CODE 4120-01-P