CMS Proposes Policy Changes and Updates for Medicare Advantage and the Prescription Drug Benefit Program for Contract Year 2019 (CMS-4182-P)

November 20, 2017

CMS, Medicare Advantage

CMS Proposes Policy Changes and Updates for Medicare Advantage and the Prescription Drug Benefit Program for Contract Year 2019 (CMS-4182-P)

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On November 16, 2017, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule with comment period that proposes to update Medicare Advantage (MA) and the prescription drug benefit program (Part D) by promoting innovation and empowering MA and Part D sponsors with new tools to improve quality of care and provide more plan choices for MA and Part D enrollees. In addition to creating opportunities for innovation and additional plan choices in MA and Part D, the proposed changes would result in an estimated $195 million in savings a year for the Medicare program over 5 years (2019 through 2023) – some of which would be passed onto beneficiaries in the form of lower premiums or additional benefits.

CMS is committed to supporting flexibility and efficiency throughout the MA and Part D programs. The MA and Part D programs have been successful in allowing for innovative approaches for providing Medicare and Part D benefits to millions of Americans. In Spring 2017, CMS released a Request for Information that solicited ideas to transform Medicare Advantage and the prescription drug benefit so that Medicare beneficiaries have robust options in their health care coverage. CMS received numerous ideas in response to the Request for Information on how to improve Medicare Advantage and the prescription drug benefit from beneficiaries, Medicare Advantage and Part D sponsors, advocacy groups, and other stakeholders. The policies in the proposed rule are responsive to this feedback.

This fact sheet discusses the major provisions of the proposed rule. The proposed rule (CMS-4182-P) can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection.

Patients over Paperwork Initiative

CMS recently launched the Patients Over Paperwork Initiative, a cross-cutting, collaborative process that evaluates and streamlines regulations with the goal of reducing unnecessary burden, increasing efficiencies, and improving the beneficiary experience. The proposed rule furthers this initiative and would empower patients and doctors in making decisions about patient healthcare. Specifically, the proposed rule would reduce unnecessary regulatory burdens by:

  • Allowing plans to send more materials electronically to Medicare beneficiaries;
  • Eliminating requirements that plans submit, in addition to their bids, similar and overlapping accounting information;
  • Streamlining government review and approval of materials plans use to communicate with beneficiaries; and
  • Eliminating burdensome enrollment requirements for providers that bring value to Medicare Advantage beneficiaries. 

Proposed Policy Changes to Medicare Advantage and the Prescription Drug Benefit Program

Ensure Additional Transparency for Star Ratings
CMS annually calculates and publishes Star Ratings for participating Part C and Part D plans. Beneficiaries rely on the Star Ratings to help inform plan choice, and CMS uses the ratings to calculate Quality Bonus Payments for plans. CMS historically announces changes to the Star Rating framework, measures, and methodology through the Call Letter. 

In the proposed rule, CMS is proposing to codify key aspects of the Part C and D Star Ratings methodology, including the principles for adding, updating, and retiring measures, and the methodology for calculating and weighting measures. CMS is also proposing:

  • New rules related to how contract consolidations affect stars to more accurately reflect performance of the surviving and consumed contracts, and
  • New methods for applying scaled reductions when CMS determines that the data for the appeals measures is not complete to allow for smaller reductions for less serious data issues. These changes will support CMS’ efforts to improve the quality of care for Medicare beneficiaries. 

Artificial Limits on Medicare Advantage Plan Variety 
Current regulations place artificial limits (called “meaningful difference” requirements) on the variety of plans an MA organizationcan offer in the same county.

CMS is proposing to eliminate the requirement that MA plans offered by the same organization in the same county comply with artificial limits. CMS is concerned the current requirement may result in organizations reducing the value of certain benefit offerings in order to make their benefit packages comply with these artificial limits. This may include instances where differences in benefit packages exist but are not incorporated in the agency’s evaluation (e.g., unique benefit packages based on enrollee health conditions). CMS expects that eliminating the artificial limits will improve the plan options available for beneficiaries. New flexibilities in benefit design and more sophisticated approaches to consumer engagement and decision-making should help beneficiaries, caregivers, and family members make more informed plan choices. We welcome comment on this proposal.

Flexibility in the Medicare Advantage Uniformity Requirements
CMS has included a preamble discussion regarding changes to our interpretation of requirements around the uniformity of Part C benefits offered to MA enrollees. These changes give MA organizations new tools to improve care and outcomes for the most vulnerable enrollees by allowing MA organizations the ability to reduce cost sharing for certain covered benefits, offer specific tailored supplemental benefits, and offer different deductibles for beneficiaries that meet specific medical criteria. We are announcing this important new benefit design an option for all MA plans. Furthermore, after review of our existing authority, MA plans can vary supplemental benefits, in addition to premium and cost sharing, by each segment of an MA plan. MA plans will be able to exercise the uniformity flexibility described above within each segment of an MA plan. These flexibilities are available to plans beginning in CY 2019. The upcoming call letter will address the operational details of this policy. 

Allowing Electronic Delivery of Certain Beneficiary Documents
We are proposing to separate the delivery date of the Annual Notice of Change (ANOC) from the Evidence of Coverage (EOC) so Medicare beneficiaries receive the ANOC first as a stand-alone document. This would allow beneficiaries to better focus on the most important information, such as the upcoming changes to their current plan. In addition, we are proposing to provide CMS with the ability to permit MA and Part D sponsors to provide certain materials, such as the EOC, electronically. When doing so, plans would be required to provide beneficiaries with easy access to hardcopy materials, if they prefer.

Updates to the Definition of Marketing
Currently, a variety of materials that are not intended to steer a beneficiary into a particular plan fall under the regulatory definition of marketing and related requirements. Because of this, a statutory requirement that these materials be subject to CMS review applies.

CMS proposes to lessen the burden of marketing submission and review by focusing the definition of marketing on materials that are most likely to lead to an enrollment decision. To account for those materials that fall outside of the proposed new marketing definition, we are proposing to create more appropriate requirements and oversight for a new category of materials and activities called “communications.” In tandem, this would allow CMS to better focus our oversight efforts.

 Implementation of the Comprehensive Addiction and Recovery Act of 2016 (CARA)
CMS is proposing to implement new CARA requirements so as to provide an important additional tool to combat the growing opioid epidemic that is devastating families and communities across the nation. CARA requires CMS to establish through regulation a framework that allows Part D sponsors to voluntarily implement a drug management program that limits “at risk” beneficiaries’ access to controlled substances that CMS determines are “frequently abused drugs” beginning with the 2019 plan year. CMS proposes to designate opioids (with limited exceptions) as frequently abused drugs; tie the definition of at-risk beneficiaries to the criteria used to identify potential opioid overutilizers under CMS’ existing Part D Opioid Drug Utilization Review (DUR) Policy and Overutilization Monitoring System (OMS); and allow a plan to limit an at-risk beneficiary’s access to opioids to a selected prescriber(s) and/or network pharmacy(ies), which would be an extension of CMS’ DUR policy and OMS. CMS also proposes to exempt beneficiaries who have cancer or are in hospice or long-term care from the drug management program. CMS also proposes to limit the availability of the special enrollment period (SEP) for dually- or other low income subsidy (LIS)-eligible beneficiaries who are identified as at-risk or potentially at-risk for prescription drug abuse under such a drug management program. At-risk determinations and any associated limitations on access to frequently abused drugs would be subject to the existing beneficiary appeals process. 

Maximum Out-of-Pocket and Cost Sharing Limits
CMS proposes to revise the regulations controlling MOOP limits, so CMS might change its existing methodology of using the 85th and 95th percentiles of projected beneficiary out-of-pocket Medicare FFS spending in the future. Under these proposals, CMS would have authority to change and implement additional levels of MOOP limits, as well as provide flexibility to encourage plan offerings with lower MOOP limits. In addition, CMS would be able to issue and update guidance regarding discriminatory cost-sharing.

Default Enrollment
CMS is proposing to codify the current optional enrollment mechanism that allows MA organizations to provide seamless continuation of coverage by way of enrollment in an MA plan for newly MA-eligible individuals who are currently enrolled in other health plans offered by the MA organization (such as commercial or Medicaid plans) at the time of the individuals’ initial eligibility for Medicare with significant limitations. In addition to other limits, CMS’ proposal would limit default enrollments of this type to individuals remaining in a Medicaid managed care plan offered by the same parent organization offering the MA plan. CMS seeks comment on whether to allow such enrollments in other circumstances beyond Medicare managed care.

Passive Enrollment Opportunities to Protect Continuity of Integrated Care for Dually Eligible Beneficiaries 
In an effort to promote integrated care and continuity of care, CMS is proposing a limited expansion of its regulatory authority in circumstances when beneficiary enrollment would be disrupted by changes in health plan participation. The proposal would allow passive enrollment for full-benefit dually eligible beneficiaries from a non-renewing integrated D-SNP to another comparable plan. This process would be conducted in consultation with a state Medicaid agency, and where other conditions are met to ensure continuity and quality of care.

Part D Tiering Exceptions 
CMS is proposing to revise existing policy related to tiering exceptions, including the permissible limitations Part D plan sponsors may apply to tiering exception requests. We are proposing to eliminate the provision allowing plans to exclude a dedicated generic tier from the tiering exceptions process, and establish a framework based on the type of drug (brand, generic, biological product) requested and the cost-sharing of applicable alternative drugs. We are also proposing to clarify appropriate cost-sharing for approved requests when alternatives are on multiple lower tiers, and to codify that authorized generic drugs should be treated as generics for purposes of tiering exceptions.  

Limitation to the Part D Special Enrollment Period for Dual and Other LIS-Eligible Beneficiaries 
To ensure that Part D plan sponsors are better able to administer benefits, including coordination of Medicare and Medicaid benefits, we are proposing to change the Special Election Period (SEP) for dual-eligible and LIS beneficiaries from an open-ended monthly SEP to one that may be used only in the following circumstances (and only if the beneficiary has not been identified as potentially at-risk or at-risk): (1) within a certain period of time after a CMS or State-initiated enrollment; or (2) as a onetime annual opportunity that can be used at any time of the year. The proposed rule would establish a separate SEP that can be used by any dual or other LIS-eligible beneficiary, including those who have been identified as potentially at-risk or at-risk, within a certain period of time after a change to an individual’s LIS or Medicaid status. 

Any Willing Pharmacy Standard Terms and Conditions and Better Define Pharmacy Types
This provision would clarify Part D rules and CMS expectations regarding statutorily required Any Willing Pharmacy provisions, and proposes to add a clarifying definition of mail-order pharmacy and revise the definition of retail pharmacy.

Changes to the Days’ Supply Required by the Part D Transition Process
To reduce waste, we propose to conform the transition supply provided in the long term care setting (currently 90 days) to that provided in the outpatient setting (currently 30 days) so that the transition supply in both settings is the same number of days. We also propose to change the current 30-day transition supply requirement to a one-month supply (i.e., we are proposing to change the transition supply provided in the long term care setting and outpatient setting to a one-month supply).

Expedited Substitutions of Certain Generics and Other Midyear Formulary Changes
The proposed provisions would provide more formulary flexibility by, for instance, permitting Part D sponsors to immediately substitute newly released equivalent generics for brand name drugs at the same or lower cost-sharing, if they meet revised requirements, including generally advising enrollees beforehand that such changes can occur without a specific advance notice and later providing information to affected enrollees about any specific generic substitutions that occur.

Treatment of Follow-On Biological Products as Generics for Low Income Subsidy (LIS) Cost Sharing and Non-LIS Catastrophic Cost Sharing
This provision would further encourage the use of lower-cost alternatives by classifying follow-on biological products as generics for the purposes of cost-sharing for Part D enrollees who do not receive the LIS and are in the catastrophic portion of the benefit, and for LIS Part D enrollees throughout all phases of the benefit.

Part D Artificial Limits
In our effort to balance plan flexibility and innovation, while still providing for meaningful plan choices for beneficiaries, CMS is proposing to eliminate an artificial limit (called the “meaningful difference” requirement) on Enhanced Alternative (EA) benefit designs offered by the same organization in the same region. CMS is not changing this requirement as it applies between Basic and EA prescription drug plan offerings.

Manufacturer Rebates and Pharmacy Price Concessions to Point of Sale 
The proposed rule includes a Request for Information soliciting comment on potential policy approaches for applying some manufacturer rebates and all pharmacy price concessions to the price of a drug at the point of sale. We would use ideas and comments provided in response to the Request for Information to evaluate and consider proposals for rulemaking.

Restoration of the Medicare Advantage Open Enrollment Period
The 21st Century Cures Act eliminates the existing MA disenrollment period (MADP) that currently takes place from January 1st through February 14th of every year and, effective for 2019, replaces it with a new Medicare Advantage open enrollment period (OEP) that will take place from January 1st through March 31st annually. The new OEP allows individuals enrolled in an MA plan to make a one-time election to go to another MA plan or Original Medicare. Individuals using the OEP to make a change may make a coordinating change to add or drop Part D coverage. Codification of Part A and Part B Premium Adjustments as Initial Determinations CMS is proposing to codify the existing policy of treating fee-for-service premium adjustments as initial determinations, which gives them full appeal rights.  

Lengthening Adjudication Timeframes for Part D Payment Redeterminations and Independent Review Entity Reconsiderations
CMS is proposing to lengthen existing timeframes for adjudicating enrollee payment appeal requests at the redetermination and independent review entity (IRE) reconsideration levels from a maximum of 7 calendar days to a maximum of 14 calendar days. This change would reduce burden on plan sponsors and the Part D IRE by providing them additional time to adjudicate payment requests with little adverse impact on beneficiaries, who in payment appeals have already obtained the requested medications. Reducing Burden on Plans by Eliminating MA Plan Notice of Forwarded AppealsCMS also is proposing to remove the current requirement that MA plans send notice to an appellant when his/her appeal case file is forwarded to Medicare’s Part C IRE. Under its contract with CMS, the Part C IRE will continue to notify MA enrollees of forwarded cases. Eliminating this redundant enrollee notice would ease burden on plans without adversely impacting enrollee protections.

Update to the Electronic Transaction Standard used by Part D Plans
CMS is proposing to update the current electronic prescribing standard for the Part D e-Prescribing Program (the National Council for Prescription Drug Programs (NCPDP) SCRIPT Standard). New versions of standards are created when standard setting organizations like the NCPDP review their existing standards, ballot and recommended changes and adopt new versions of existing standards. NCPDP has recommended that CMS adopt the latest version of the NCPDP SCRIPT Standard, Version 2017071. The prior version (NCPDPD Version 10.6) was adopted in November 1, 2013.

Preclusion List Requirements for Prescribers in Part D and Providers and Suppliers in Medicare Advantage, Cost Plans and PACE
CMS proposes eliminating the prescriber and provider enrollment requirement and compiling a “Preclusion List” of individuals and entities that fall within either of the following categories: (a) are currently revoked from Medicare, are under a reenrollment bar, and CMS determines that the underlying conduct that led to the revocation is detrimental to the best interests of the Medicare program; or (b) have engaged in behavior for which CMS could have revoked the individual or entity to the extent applicable if they had been enrolled in Medicare, and CMS determines that the underlying conduct that would have led to the revocation is detrimental to the best interests of the Medicare program. Under this option, CMS would make the Preclusion List available to Part D prescription drug plans and Medicare Advantage plans. Plans would then be required to deny claims from or written by prescribers and providers on the list. 

Removal of Quality Improvement Project
CMS is proposing to remove the Quality Improvement Project (QIP) from the Quality Improvement (QI) requirements. CMS has determined that the QIP is duplicative of activities MA organizations are already doing to meet other plan needs and requirements. The removal of the QIP and the continued implementation of the Chronic Care Improvement Program (CCIP) would allow MA organizations to focus on one project that supports improving the management of chronic conditions, a CMS priority, while reducing the duplication of other QI initiatives.

Reducing Unnecessary Paperwork Burden: Medical Loss Ratio 
For contract year 2014 and subsequent contract years, Medicare Advantage organizations and Part D sponsors are required to report their medical loss ratios (MLRs). The MLR reflects how much of a plan’s total revenue is spent on claims for medical services, medications, and certain other qualifying expenses like quality improvement activities. Plans are subject to financial and other penalties for a failure to meet the statutory requirement that they have an MLR of at least 85 percent.  CMS is proposing to significantly reduce the amount of MLR data that MA organizations and Part D sponsors submit to CMS on an annual basis. Under the proposed rule, MA organizations and Part D sponsors would only report the MLR percentage and amount of any remittance owed to CMS for each contract. CMS is also proposing to revise the MLR calculation to include in the MLR numerator expenditures related to fraud reduction activities (including fraud prevention, fraud detection, and fraud recovery) and Medication Therapy Management (MTM) programs. 

CMS will accept comments on the proposed rule until January 16, 2018. The proposed rule will publish in the November 28, 2017, Federal Register and can be downloaded from the Federal Register at: https://www.federalregister.gov/public-inspection.

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