On April 5, 2023, the Centers for Medicare & Medicaid Services (CMS) released its Medicare Program; Contract Year 2024 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly (CMS-4201-F)  with a fact sheet and press release. The final rule contains policies for Medicare Advantage (MA) and Medicare Part D plans in contract year (CY) 2024. The final rule is informed by public feedback received to an August 2022 request for information on MA.[1]

The policies finalized in this new rule include:

• Revisions to the regulatory definition of gross covered prescription drug costs (GCPDC),
• Making permanent the limited income newly eligible transition (LI NET) program and expansion of the Part D low-income subsidies,
• Changes to MA utilization management policies to improve patient access,
• Added protections for enrollees from misleading marketing for MA and Part D plans,
• Creation of new policies to promote health equity and access under the MA program,
• Changes to the MA Star Ratings program to improve health equity, and
• New policies to improve behavioral health access.

In this final rule, CMS does not address all proposals from the December 2022 proposed rule[2] and plans to address remaining proposals in subsequent rulemaking. Provisions adopted in the subsequent, second final rule would be applicable to coverage beginning no earlier than January 1, 2025. Specifically, CMS does not address its previously outlined proposals regarding new Part D plan formulary flexibility regarding immediate formulary substitutions for certain biological products and authorized generics and the addition of new requirements for Part D Medication Therapy Management (MTM) programs to improve patient access.

The provisions in the final rule are applicable to coverage beginning January 1, 2024, except as otherwise noted.

CMS REVISES REGULATORY DEFINITION OF GROSS COVERED PRESCRIPTION DRUG COSTS USED IN DETERMINING PART D REINSURANCE PAYMENTS

CMS finalized its proposal to revise the regulatory definition of gross covered prescription drug costs (GCPDC) at § 423.308 to remove the two references to ‘‘actually paid’’ to clarify that GCPDC are not net of all direct and indirect renumeration (DIR) and to more closely mirror statutory language. GCPDC is used in the determination of Part D reinsurance payments. Reinsurance acts as a form of risk adjustment by providing greater federal subsidies for the highest cost enrollees.

The revised text would now read: “GCPDC are “those costs incurred under a Part D plan, excluding administrative costs, but including dispensing fees, during the coverage year.” Consistent with section 1960D-15(b)(2), the reinsurance payment amount will continue to be calculated based on drug costs net of DIR. CMS’ existing operational guidance instructs plans to report costs without first netting out DIR applied after the point of sale so the guidance will not need to be adjusted with this change. This revision is applicable June 5, 2023.

Several commenters supported CMS’ efforts to better align the GCPDC definition with statutory language. However, several commenters stated CMS did not complete an adequate regulatory impact analysis by not accounting for the policy implications of this proposed change on the IRA. CMS disagreed and indicated that currently this definition only applies in the context of determining reinsurance payments under the Part D program.

IMPLEMENTING PROVISIONS OF RECENT LEGISLATION, CMS FINALIZES CHANGES TO SOLIDIFY LIMITED INCOME NEWLY ELIGIBLE TRANSITION PROGRAM AND EXPAND PART D LOW-INCOME SUBSIDIES

In this rule, CMS implements several provisions from the Inflation Reduction Act (IRA) of 2022 and the Consolidated Appropriations Act, 2021 (CAA) impacting the Limited Income Newly Eligible Transition (LI NET) Program and Part D low-income subsidies (LIS).

Since 2010, CMS has operated the LI NET demonstration program which provides Part D coverage for eligible low-income beneficiaries who do not yet have prescription drug coverage. Specifically, LI NET program provides transitional, point-of-sale coverage for low-income beneficiaries who demonstrate an immediate need for prescriptions, but who have not yet enrolled in a Part D plan, or whose enrollment is not yet effective. The LI NET program also provides retroactive and/or temporary prospective coverage for beneficiaries determined to be eligible for the Part D low-income subsidy (LIS) by the Social Security Administration (SSA) or a State. In this final rule, CMS makes the LI NET program a permanent part of Medicare Part D, as required by CAA. CMS estimates the cost to the Medicare Trust fund as $95 million over 10 years with an additional 10-year paperwork burden of $4.3 million.

Regarding low-income subsidies, CMS expands eligibility under the low-income subsidy (LIS) program per requirements under the IRA. Part D LIS helps people with Medicare who meet certain statutory income and resource criteria pay for prescription drugs and lowers the costs of prescription drug coverage. Individuals who qualify for the full LIS receive assistance to pay their full premiums and deductibles (in certain Part D plans) and have reduced cost sharing. Individuals who qualify for the partial LIS pay reduced premiums (on a sliding scale based on their income) and also have reduced deductibles and cost sharing. Under the IRA provision and this rule’s changes, individuals with incomes up to 150 percent of the federal poverty level (FPL) and who meet statutory resource requirements will qualify for the full low-income subsidy beginning on or after January 1, 2024. This change will provide the full subsidy to those who currently qualify for the partial subsidy, improving affordability of prescription drug coverage for certain people with Medicare. CMS estimates that the proposal will increase Medicare spending by $2.3 billion over 10 years.

CMS ESTABLISHES POLICIES ADDRESSING UTILIZATION MANAGEMENT AIMED AT CONSISTENT, TIMELY ACCESS TO CARE

Citing feedback regarding MA organizations’ use of utilization management tools, including prior authorization and its effect on beneficiary access to care, CMS establishes several policies to ensure beneficiaries have consistent, timely access to medically necessary care.

The majority of MA plans are coordinated care plans, which utilize a network of providers under contract with an MA organization to deliver the benefit package approved by CMS. These plans often use utilization management tools, such as prior authorization, to manage cost, service utilization, and quality.

CMS has received feedback from stakeholders noting that utilization management tools can prevent patients from accessing medical necessary care. Additionally, an April 2022 Office of Inspector General (OIG) report, “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care,” found that some prior authorization requests were inappropriately denied by plans. OIG recommended that CMS: 1) issue new guidance on the appropriate use of MA organization clinical criteria in medical necessity, 2) update its audit protocols for issues related to MA organization use of clinical criteria, and 3) direct MA organizations to address vulnerabilities that can lead to prior authorization denials as a result of manual review and system errors.

CMS finalizes the following policies:

1. For prior authorization policies for coordinated care plans, plans may only use prior authorization to confirm the presence of diagnoses or other clinical criteria and/or to ensure that an item or service is medically necessary.
2. CMS will require MA plans to comply with national coverage determinations (NCD), local coverage determinations (LCD), and general coverage and benefit conditions included in Traditional Medicare laws. This includes criteria for determining whether an item or service is a benefit available under Traditional Medicare. CMS is not revising existing step therapy policies for Part B drugs.
3. CMS will allow plans to develop internal coverage criteria to make medical necessity determinations when there are no applicable coverage criteria in Medicare statute, NCDs or LCDs. Plans would be required to make factors considered in internal coverage criteria publicly available and use current evidence in widely used treatment guidelines or clinical literature when developing criteria. When additional, unspecified criteria are needed to interpret or supplement general provisions, the MA organization must demonstrate that the additional criteria provide clinical benefits that are highly likely to outweigh any clinical harms, including from delayed or decreased access to items or services.
4. When an approval is granted through prior authorization processes, CMS will require that it must be valid for as long as medically necessary to avoid disruptions in care in accordance with applicable coverage criteria, the patient’s medical history, and the treating provider’s recommendation, and that plans provide a minimum 90-day transition period when an enrollee who is currently undergoing an active course of treatment switches to a new MA plan, switches from Traditional Medicare to an MA plan, or is new to Medicare.
5. CMS will require all MA plans to establish a Utilization Management Committee to review policies on an annual basis and ensure consistency with Traditional Medicare’s NCDs, LCDs, and guidelines. The agency also outlines policies regarding the composition of a Utilization Management Committee, including requirements that the committee be led by the Medical Director, the majority of members are practicing physicians, at least one practicing physician is independent and free of conflict relative to the MA organization and MA plan, at least one practicing physician is an expert regarding care of elderly or disabled individuals, and members represent various clinical specialties.

Additionally, following OIG’s recommendation that CMS direct MA organizations to address vulnerabilities that can lead to prior authorization denials as a result of manual review and system errors, in the proposed rule, CMS solicited comments on how MA administrative and management arrangements may be adjusted to address prior authorization denial errors. The final rule noted that commenters supported the involvement of the Utilization Management Committee in developing mechanisms to address system vulnerabilities. However, as CMS did not propose any policies regarding this, the agency indicated it would not finalize anything in this area and would consider the comments in future rulemaking.

Generally, CMS considers these changes as not having an economic impact on the Medicare Trust fund and being qualitatively beneficial for enrollees.

CMS FINALIZES POLICIES TO PROTECT MA AND PART D ENROLLEES FROM MISLEADING MARKETING

CMS finalized several policies to protect MA and Part D enrollees and people shopping for Medicare coverage from confusing and misleading marketing, while ensuring information needs are met. CMS finalized 21 of the 22 provisions proposed, with four proposals having modifications.

Key policies include the following:

• Limitations on the use of the Medicare name, logo, and Medicare card in advertisements.
• Policies limiting when agent sales can occur, including the following:
  • Prohibiting the collection of Scope of Appointment Cards at Education Events
  • Ban on sales presentations immediately after educational events;
  • Requiring 48 hours between a Scope of Appointment and an agent meeting with a beneficiary; and
  • Additional prohibitions on certain types of marketing.
• Policies addressing the types of information agents must provide to beneficiaries, including requiring agents to:
  • Inform beneficiaries of the government sources which they can receive complete Medicare information from;
  • Use a standardized list of questions that address beneficiary health needs, existing providers, and prescriptions; before enrolling a beneficiary into a plan; and
  • Provide the pre-enrollment checklist to prospective enrollees.

CMS estimates the one-time costs of these marketing changes to be $172,593.

The rule also strengthens translation requirements for enrollee marketing and communications materials. CMS finalized its proposal to require MA organizations, cost plans, and Part D sponsors to establish a process to provide materials to enrollees on a standing basis in any non-English language that is the primary language of at least 5 percent of individuals in the service area The estimated cost of this policy is $10.4 million. The Agency also estimates it would cost $2.1 million for fully integrated dual eligible special needs plans (FIDE SNPs), highly integrated dual eligible special needs plans (HIDE SNPs), and applicable integrated plans (AIPs) to translate one set of materials into one additional language.

CMS USES MA’S STAR RATINGS TO IMPROVE HEALTH EQUITY

CMS develops and publicly posts a 5-Star Rating system for Medicare Advantage (MA)/Part C and Part D plans based on the requirement to distribute comparative information. To incentivize Parts C and D plans to focus on improving care for enrollees with social risk factors (e.g., dual eligibility, low-income subsidies, and disability), CMS finalized a health equity index (HEI) reward for the 2027 Star Ratings. The HEI index will use measure data from the 2024 and 2025 measurement years.

To support the current CMS Quality Strategy and align with other CMS quality programs,

CMS finalizes its proposal to reduce the weight of patient experience/complaints and access measures by 50 percent (from four to two). CMS finalized the removal, addition, and updates of some of the measures, but did not move forward with all proposals.

Measures Removed

• Part C Diabetes Care – Kidney Disease Monitoring measure

CMS proposed to remove the stand-alone Medication Reconciliation Post-discharge measure but did not finalize its removal.

 Measures Added

• Part C Kidney Health Evaluation for Patients with Diabetes measure

CMS proposed the addition of the following measures but did not finalize their addition:

• Updated Colorectal Cancer Screening and Care for Older Adults – Functional Status Assessment measure
• Part D Concurrent Use of Opioids and Benzodiazepines, Polypharmacy Use of Multiple Anticholinergic Medications in Older Adults measure
• Polypharmacy Use of Multiple Central Nervous System Active Medications in Older Adults measure

 Measures Updated

• Part D Medication Adherence for Diabetes Medications, Medication Adherence for Hypertension (RAS Antagonists) measure
• Medication Adherence for Cholesterol (Statins) measure

CMS finalized its proposal to eliminate the 60 percent rule that is part of the adjustment for extreme and uncontrollable circumstances (also referred to as the disaster adjustment, and its proposal to add an additional rule for the sub-regulatory removal of Star Ratings. Additionally, CMS proposed the following policies but did not finalize them: the removal of guardrails—bi-directional caps that restrict upward and downward movement of a measure’s cut points compared to the prior year—when establishing measure-specific-thresholds for non-Consumer Assessment of Healthcare Providers and Systems (CAHPS) measures and the adjustment of the Improvement Measure hold harmless policy.

CMS intends to address the proposals that were not finalized for Star Ratings in future rulemaking. With these changes, CMS aims to improve quality and health equity in MA and Part D. CMS indicates that the anticipated net impact of all finalized Star Rating provisions will be $6.41 billion over ten years.

REGULATORY UPDATES TO ADVANCE HEALTH EQUITY IN MEDICARE ADVANTAGE PROGRAMS

To promote CMS’ goal to advance health equity across its programs, the final rule outlines several regulatory updates promoting health equity and access for underserved populations enrolled in Medicare Advantage (MA) Programs.

Expanded List of Populations Requiring Specific Consideration

To ensure that services are provided in a culturally competent manner to broader populations, the final rule outlines specific populations that may require additional, specific consideration. The expanded list of populations includes people with disabilities, people with limited English proficiency or reading skills, various religious, cultural, ethnic, and racial groups, diverse sexual orientations and gender identities as well as people who were born intersex, people who live in rural areas and areas with high levels of deprivation, and those adversely impacted by poverty or inequality.

Best Practices for Provider Directories

To improve best practices for provider directories, CMS finalized its proposal to codify requirements to require organizations to include the cultural and linguistic (i.e., American Sign Language, non-English language) capabilities of each provide in their provider directories. CMS also proposed to require organizations to identify providers waived to treat patients with medications for opioid use disorders in their provider directories; however, policies in the Consolidation Appropriations Act of 2023 have made this proposal moot, so CMS did not finalize this proposal.[3]

Addressing Low Digital Health Literacy

To promote telehealth equity, particularly among older adults, CMS finalized its proposal requiring the implementation of procedures to develop and maintain digital health education programs. These programs will assist enrollees with accessing medically necessary covered telehealth benefits.

Utilizing Quality Improvement Programs to Reduce Health Disparities

To further improve health access for underserved populations, CMS finalized its proposal to require that MA organizations incorporate one or more activities supporting the goal of reducing health disparities into their overall Quality Improvement (QI) program. These activities may include hiring bilingual staff, developing linguistically and culturally appropriate materials for distribution to enrollees, community outreach, and other activities.

Commenters were generally supportive of the policies CMS is implementing to advance health equity in MA programs, with particularly strong support for the policy to utilize quality programs to reduce health disparities.

With the exception of the proposal on digital health education which has an unknown economic impact, CMS does not expect any economic impact on the Medicare Trust fund for these policies.

CMS PROMOTES BEHAVIORAL HEALTH ACCESS IN SEVERAL POLICIES

In response to comments from the Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs Proposed Rule[4], CMS finalized several provisions to improve access to behavioral health services for enrollees and expand network adequacy requirements to include additional types of behavioral health specialties. The finalized provisions are:

• Adding Clinical Psychology Licensed Clinical Social Worker and Prescribers of Medication for Opioid Use Disorder as specialty types evaluated as part of the network adequacy reviews; these new specialty types will also be made eligible for the existing 10 percentage point telehealth credit,
• Amending general access to service standards to explicitly include behavioral health services,
• Codifying standards for wait times to apply to both primary care and behavioral health services,
• Clarifying emergency medical services that must not be subject to prior authorization, including behavioral health services to evaluate and stabilize an emergency medical condition,
• Requiring that MA organizations notify enrollees when the enrollee’s behavioral health or primary care provider(s) are dropped midyear from networks, and
• Requiring MA organizations to establish care coordination programs to help advance uniformity between behavioral health and physical health services.

CMS estimates negligible costs for these policies.

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This Applied Policy® Summary was prepared by Stephanie Lomas with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact Stephanie Lomas at slomas@appliedpolicy.com or at 202-558-5272.

[1] https://www.federalregister.gov/documents/2022/08/01/2022-16463/medicare-program-request-for-information-on-medicare

[2] https://www.federalregister.gov/public-inspection/2022-26956/medicare-program-contract-year-2024-policy-and-technical-changes-to-the-medicare-advantage-program

[3] Section 1262 of Division FF of the Consolidated Appropriations Act of 2023 (CAA) (Pub. L. 117-328) amended section 303(g) of the Controlled Substances Act to remove the statutory requirement for providers to obtain a valid waiver from Substance Abuse and Mental Health Services Administration (SAMHSA) and the Drug Enforcement Agency (DEA) to administer, dispense, or prescribe medications for opioid use disorder (MOUD). Since the waiver has been eliminated, now any licensed provider can treat patients with MOUD without a waiver. As providers no longer need a special waiver to prescribe MOUD, it is no longer necessary to identify providers with a waiver.

[4] 87 FR 1842