July 13, 2020

Volume X, Number 195

July 10, 2020

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Top 10 Provisions of CMS Proposed Rule: Medicare Advantage and Part D Programs for CY2021 and CY2022

As promised, here is a summary of some key provisions in CMS’ proposed rule relating to the Medicare Advantage and Part D programs for contract years 2021 and 2022.  CMS is soliciting comments on a number of issues and we urge stakeholders to take the opportunity to submit comments.  The deadline for comments is April 6, 2020.

The proposed rule has several purposes.  First, it implements several statutory requirements including:

  • The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act (the SUPPORT Act), which requires Part D sponsors to notify CMS of the imposition of a payment suspension on pharmacies that is based on a credible allegation of fraud, impose such payment suspensions consistent with the manner in which CMS implements payment suspensions in fee-for-service Medicare, and report such information using a secure website portal. The SUPPORT Act also requires Part D sponsors to implement drug management programs, which had previously been voluntary under the Comprehensive Addiction and Recovery Act of 2016 (CARA).

  • The 21st Century Cures Act, which allows Medicare beneficiaries with end stage renal disease (ESRD) to enroll in Medicare Advantage plans effective for contract years on or after January 1, 2021.

  • The Bipartisan Budget Act of 2018 (BBA), which expanded the care management requirements for special needs plans (SNPs).

Second, the proposed rule codifies a significant amount of CMS subregulatory guidance, which the agency has issued through the annual call letter, the Medicare Managed Care Manual, and agency guidance memoranda.  CMS notes that it is codifying its subregulatory guidance in the interest of transparency.  But one has to wonder if CMS is feeling vulnerable in light of the Supreme Court’s decision in Azar v. Allina Health Servs., 139 S. Ct. 1804 (2019), which struck down certain CMS subregulatory guidance due to the agency’s failure to comply with the statutory notice and comment period requirements of 42 U.S.C. § 1395hhh(a)(2).

Third, the proposed rule includes several new requirements for Medicare Advantage organizations and Part D sponsors and amends existing regulations.  Here is my top 10 list of key provisions of the proposed rule:

  • Network adequacy. The proposed rule would reduce from 90% to 85% the required percentage of beneficiaries who must reside within the maximum time and distance standards in micro, rural or CEAC counties.  CMS would give a 10% credit when the Medicare Advantage plan includes telehealth providers that provide additional telehealth benefits for Dermatology, Psychiatry, Cardiology, Otolaryngology, and Neurology.  CMS would give another 10% credit for the affected provider type where a state has certificate of need or “other state imposed anti-competitive restrictions” that impact a plan’s ability to meet network adequacy requirements.  CMS solicits comments on the appropriateness of the provider specialty types eligible for the telehealth credit, and specifically wants to comments on whether nephrology for home dialysis should be on the list.  Recognizing that meeting network adequacy for outpatient dialysis is a change for some plans, CMS wants comments on whether to:

▸ Delete outpatient dialysis from the list of facility types for which MA plans need to meet time and distance standards;

▸ Give credit for the use of home dialysis; or

▸ Customize the network adequacy standards for outpatient dialysis.

  • Second Specialty Tier.  The proposed rule would allow Part D plans to maintain up to two specialty tiers and set a maximum allowable cost sharing of 25/33 percent for a single specialty tier, or, in the case of a plan with two specialty tiers, the higher cost-sharing specialty tier. Part D sponsors could set the cost sharing for the preferred specialty tier at any amount lower than that of the higher cost-sharing, specialty tier.  In addition, sponsors could design exception processes to make specialty tier drugs ineligible for a tiering exception to non-specialty tiers.  Sponsors would be required to permit tiering exceptions between two specialty tiers.  Comments are requested on topics including:

▸ Benefits or drawbacks of maintaining the current policy that would permit Part D sponsors to exempt drugs on a specialty tier from the tiering exceptions process altogether.

▸ Whether to set a numeric or other differential in cost sharing between a specialty tier and any preferred specialty tier.

▸ Suggestions on requiring a minimum difference between the cost-sharing levels of the two specialty tiers that can provide maximum flexibility and anticipate varied approaches.

▸ Whether permitting a coinsurance higher than 25/33 percent would be discriminatory.

  • Elimination of D-SNP Look-Alike Plans. CMS proposes to not contract with or renew the contract of Medicare Advantage plans that are not dual-SNPs (D-SNPs) and have an enrollment of beneficiaries who are dually eligible for Medicare-Medicaid in excess of 80 percent. CMS proposes an exception for plans that have been active for less than one year and their January 1, 2021 enrollment is 200 or less.  The contracting prohibition would be limited to those states where there is a D-SNP or other plan, such as a Medicare-Medicaid Plan, that is authorized by CMS to exclusively enroll dual eligibles.  This would impact all but eight states. A D-SNP look-like plan that also offered a D-SNP could transition its eligible look-alike plan enrollees to the D-SNP.  These enrollment transitions would be effective January 1, 2021.  Contract terminations of impacted plans would be effective no earlier than December 31, 2021.

  • Beneficiary Real Time Benefit Tool. No later than January 1, 2022, Part D sponsors would be required to implement a beneficiary RTBT that allows enrollees to view accurate, timely, and clinically appropriate patient-specific real-time formulary and benefit information on: enrollee cost-sharing information; clinically appropriate formulary alternatives; and formulary status of each drug presented including any utilization management requirements applicable to each alternative drug. Sponsors may provide rewards and incentives to enrollees who use the beneficiary RTBT.  Requirements for the rewards and incentives include that they (1) be of nominal value, (2) offered for no more than one login per month, (3) designed so all enrollees are eligible and are not discriminatory, and (4) earned solely for logging onto the beneficiary RTBT and no other purpose.  In what will likely be another shock to the industry, CMS solicits comments on whether to implement the beneficiary RTBT for January 1, 2021 when plans must implement the provider RTBT, rather than January 1, 2022.

  • Changes for All SNPs. CMS is implementing the following BBA care management requirements for all SNPs – not just C-SNPs:

▸ Enrollees’ interdisciplinary care teams must include 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.

▸ MAO must provide an annual face-to-face visit, that is in-person or by remote technology, to occur starting within the first 12 months of enrollment. This could be satisfied by a visit to or by a member of an individual’s interdisciplinary team or the plan’s case management and coordination staff that perform clinical functions, such as direct beneficiary care.

▸ Results of initial assessment and annual reassessment must be addressed in the enrollee’s individualized care plan

▸ Evaluation and approval of model of care (MOC) must take into account whether the plan fulfilled the previous MOC’s goals.  This would mean that SNPs would provide NCQA with relevant information on the MOC’s goals and appropriate data pertaining to the fulfillment of the previous MOC’s goals.  If previous MOC’s goals were not fulfilled, the plan would be required to indicate in the MOC submission how it will achieve or revise the goals for the plan’s next MOC.

  • Reinsurance. CMS has renewed its concern about arrangements where entities that are not the contracted Medicare Advantage organization are at full financial risk for costs under the contract.  CMS had previously proposed limitations on permissible reinsurance arrangements, but did not finalize them.  CMS is at it again in the proposed rule.  Medicare Advantage organizations would be permitted to obtain reinsurance (or other arrangements) for the cost of providing basic benefits under the following options:

▸ The aggregate value of such coverage must exceed $10,000 during a contract year, i.e., no first dollar coverage; or

▸ The Medicare Advantage organization could purchase first dollar pro rata coverage provided that the value of the insured risk is actuarially equivalent to costs that exceed $10,000 per member per year. The price of such first dollar coverage could not exceed the cost of coverage under the first option.

The above limitations would not apply to risk-sharing and cost allocations among wholly-owned subsidiaries and would not apply to arrangements that cover the cost of supplemental benefits. Risk-sharing arrangements with providers and other arrangements permitted by law are not affected by the proposed rule.

  • Medical Loss Ratio. Currently, incurred claims in the MLR numerator include direct claims paid to providers for covered services furnished to all enrollees under an MA contract.  The term “provider” is narrowly defined as an individual or entity that is engaged in the delivery of health care services in a state and is licensed or certified by the state to engage in that activity in the state.  The proposed rule would expand the incurred claims portion of the MLR numerator to include all amounts that an MA organization pays (including under capitation contracts) for covered services.  This change is intended to ensure that Medicare Advantage organizations are able to include amounts paid for supplemental benefits – both primarily health-related and non-primarily health related (see below) – in the MLR numerator.

  • Special Supplemental Benefits for the Chronically Ill (SSBCI). CMS proposes to modify its supplemental benefits definition as it applies to SSBCI. Traditionally, CMS has defined supplemental benefit as benefits that: (1) are primarily health related; (2) require the MA plan to incur a non-zero medical cost; and (3) are not covered under Medicare Parts A, B or D.  The BBA authorized MA plans to (1) provide additional supplemental benefits that have a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee; (2) permit those additional supplemental benefits to be not primarily health related; (3) define “chronically ill enrollee” to limit eligibility for these additional supplemental benefits; and (4) authorize CMS to waive uniformity requirements in connection with these benefits for eligible chronically ill enrollees.  The proposed rule would codify the definition of “supplemental benefit” and, with respect to SSBCI, make clear that they may be not primarily health related.  However, the Medicare Advantage organization would have to incur a non-zero direct medical cost for SSBCI that are not primarily health related.  Such incurred cost should be a non-administrative cost for providing the benefit even if it is not necessarily a cost paid to a medical provider or facility.

  • Maximum Out-of-Pocket (MOOP).  CMS is codifying its existing policies on MOOP.  In addition, CMS proposes three MOOP limits for CY2022:

▸ Mandatory MOOP limit is any dollar limit that is above the intermediate MOOP limit and at or below the mandatory MOOP limit threshold established each year.

▸ Intermediate MOOP limit is any dollar limit that is above the lower MOOP limit and at or below the intermediate MOOP limit threshold established each year.

▸ Lower MOOP limit is any dollar limit that is between $0.00 and up to and including the lower MOOP limit threshold established each year.

Each MOOP limit would be rounded to the nearest whole $50 increment. Where the MOOP limit is projected to be exactly in between two $50 increments, CMS would round to the lower $50 increment.  The proposed rule includes maximum cost-sharing amounts by service category, e.g., professional, inpatient facility, for each MOOP limit.  The proposed rule would also add home health and DME to the list of services for which a plan’s cost sharing could not exceed the required cost-sharing under fee-for-service Medicare.

  • Past Performance Methodology.  The proposed rule would codify CMS’ past performance methodology, which CMS uses to determine whether an applicant’s performance during the 12-month past performance review period warrants denial of the application.  Under the proposed rule, any of the following three factors during the past performance review period could subject an applicant to denial:

▸ Imposition of civil money penalties or intermediate sanctions;

▸ Low Star Ratings scores; or

▸ Failure to maintain a fiscally sound operation.

  • The two-year contracting ban following contract termination is unchanged.  In addition, the prohibition on expansion of new plans is not changed.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume X, Number 44

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About this Author

Christine Clements, Sheppard Mullin Law Firm, Washington DC, Corporate and Health Care Law Attorney
Partner

Christine M. Clements is a partner in the Healthcare Team in the firm's Washington, D.C. office with 25 years of experience on managed care law issues. Ms. Clements focuses her practice on federal healthcare government contract programs, with particular focus on the Medicare Advantage Program, the Medicare Prescription Drug Benefit, the Federal Employees Health Benefits Program, Medicaid managed care, and the Medicare-Medicaid Plans. Ms. Clements advises clients on the issues most important to them, including contract applications and service area expansions, responses...

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