On April 4, 2024, the Centers for Medicare & Medicaid Services (CMS) released its 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) (CMS-4201-F3 and CMS-4205-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) 2025.

The policies finalized in this new rule include:

• New MA and Part D plan agent and broker compensation policies to guard against anti-competitive and anti-consumer steering,
• Limits to distribution of beneficiary data by Third-Party Marketing Organizations (TPMOs),
• Improvements in MA plan enrollee access to behavioral health care providers,
• Requirement of MA plan mid-year enrollee notifications for available supplemental benefits,
• New standards for MA special supplemental benefits for the chronically ill (SSBCI),
• Requirement that MA plans conduct plan-level annual health equity analysis of utilization management (UM) policies and procedures,
• Improvements in MA beneficiary access to fast-track appeals currently available to traditional Medicare beneficiaries,
• Changes to the current quarterly special enrollment period (SEP) and creation of a new integrated care SEP to increase the number of dually eligible MA plan enrollees who are in plans that also cover Medicaid,
• Addition of limits for out-of-network cost-sharing in Dual Eligible Special Needs Plan (D-SNP) preferred provider organizations (PPOs) for specific services beginning in 2026,
• Lowering the threshold for identifying D-SNP look-alikes for 2025 and 2026,
• Standardization of the MA plan Risk Adjustment Data Validation (RADV) appeals process,
• Increased Part D plan formulary flexibility regarding substitutions of biosimilar biological products for their reference products, and
• Changes Medicare Part D Medication Therapy Management (MTM) Program eligibility criteria to expand access to services.

CMS FINALIZES GUARDRAILS FOR AGENTS AND BROKERS TO PREVENT PATIENT STEERING

Due to concerns with the currently highly consolidated MA marketplace and the impact of current compensation for broker and agents on beneficiary plan choice, CMS finalizes policies to:

• Redefine and revise the scope of “compensation” to set a clear, fixed amount for all agents and brokers paid regardless of the plan the beneficiary enrolls in. CMS also finalized a $100 increase to the fair market value (FMV) compensation rate for agents and brokers, rather than $31 as initially proposed,
• Generally prohibit contract terms between MA organizations and third-party marketing organizations, agents, or brokers that may interfere with an agent’s or broker’s objectivity, and
• Eliminate the regulatory framework that currently permits separate administrative payments to brokers and agents.

These policies are designed to ensure a robust and competitive MA marketplace with meaningful benefits, aligned with President Biden’s Competition Council and Executive Order signed in July 2021. CMS expects this provision to have no costs as CMS is transferring funds that MA plans already pay directly to marketing agencies.

DISTRIBUTION OF PERSONAL BENEFICIARY DATA BY THIRD-PARTY MARKETING ORGANIZATIONS TO BE LIMITED

Given concerns regarding TPMOs selling and reselling personal beneficiary data and associated use of aggressive marketing tactics by Medicare Advantage and Part D plans, CMS will require that personal beneficiary data collected by a TPMO for marketing or enrolling the individual into a Medicare Advantage or Part D plan may only be shared with another TPMO when prior express written consent is given by the individual. The TPMO must obtain this written consent through a transparent, and prominently placed, disclosure from the individual to share the information and be contacted for marketing or enrollment purposes.

CMS IMPLEMENTS CHANGES TO ENHANCE ACCESS TO BEHAVIORAL HEALTH CARE IN MEDICARE ADVANTAGE PLANS

In alignment with its Behavior Health Strategy Goals,[1] CMS finalizes updates to network adequacy standards to enhance access to behavioral health care for Medicare Advantage (MA) plan members. The Consolidated Appropriations Act, 2023 (CAA, 2023) introduced a new Medicare benefit category for services by marriage and family therapists (MFTs) and mental health counselors (MHCs), Opioid Treatment Program (OTP) providers, and CMS implemented requirements for MHCs to enroll in Medicare effective January 1, 2024.

To ensure MA plan members have access to these providers, CMS establishes a new facility-specialty category, “Outpatient Behavioral Health,” encompassing various behavioral health providers. To ensure the quality of care and to prevent the formation of “ghost networks,” specific criteria are set for including nurse practitioners (NPs), physician assistants (PAs), and Clinical Nurse Specialists (CNSs) in the network adequacy standard for this category. Medicare Advantage plans must verify providers’ service provision to at least 20 patients within 12 months using reliable data sources such as claims records or electronic health records. CMS also extends a 10% credit toward meeting time and distance standards for networks including Outpatient Behavioral Health facilities. MA plans are required to include one or more telehealth providers in this specialty to provide additional benefits.

TO ENSURE BENEFICIARY AWARENESS OF SUPPLEMENTAL BENEFITS, CMS WILL REQUIRE PLANS TO ISSUE ENROLLEES A MID-YEAR NOTIFICATION OF UNUSED BENEFITS

Nearly all MA plans offer supplemental benefits, with over 99 percent of plans offering at least one supplemental benefit in 2022. The most frequently offered supplemental benefits in 2022 were vision, hearing, fitness, and dental. Supplemental benefits may also address social determinants of health needs such as food insecurity or inadequate transportation access. Despite widespread offering, plans have reported enrollee utilization of many supplemental benefits is low, and it is unclear to CMS whether plans actively encourage beneficiaries to utilize these benefits.

To ensure beneficiaries are aware of these benefits and that supplemental benefits are not primarily used as a marketing tactic, CMS finalizes its proposal to require plans issue a “Mid-Year Enrollee Notification of Unused Supplemental Benefits.” This notification will be issued annually no sooner than June 30 and not later than July 31 each year, personalized to each enrollee, and include a list of any supplemental benefits not accessed during the first half of the year. The notification will also provide information on the scope of the benefit, cost-sharing, directions for accessing the benefit, and any network application information.

These policies are designed to facilitate better-decision-making and consumer choice, aligned with President Biden’s Competition Council and Executive Order signed in July 2021.

CMS estimates that these provisions will ultimately result in savings to the Medicare Trust Fund but cannot currently quantify the impact as it is new and CMS lacks data. The provision has an administrative cost of $23.7 million.

CMS FINALIZES PROPOSALS FOR NEW STANDARDS FOR SUPPLEMENTAL BENEFITS FOR THE CHRONICALLY ILL

Special supplemental benefits for the chronically ill (SSBCI) are benefits for eligible chronically ill enrollees, where MA plans have the flexibility to design and implement benefits to address an enrollee’s specific conditions and needs. An item or service covered as an SSCBI must have a reasonable expectation of maintaining or improving the beneficiary’s health or overall function. The number of plans offering these benefits has significantly increased. As such, CMS is finalizing policies to update its processes for reviewing and approving SSCBI and ensuring compliance with statutory requirements.

SSBCI items and services must meet the legal threshold of having a reasonable expectation of improving the health or overall function of chronically ill enrollees. To increase efficiency in establishing whether the “reasonable expectation” standard has been met for an SSCBCI, CMS is shifting responsibility from itself to plans to make this determination.

CMS finalizes its proposal that plans including SSBCI in their bids must, among other requirements, establish and maintain bibliographies of relevant research studies or data to demonstrate an SSBCI meets the requirements.“Relevant acceptable evidence” to be used in bibliographies largely mirrors CMS’s standards for sufficiently high-quality clinical literature in the context of an MAO establishing internal clinical criteria for certain Medicare basic benefits, as discussed in the April 2023 MA PD final rule. Plans must also document denials of SSBCI eligibility rather than approvals.

CMS also finalizes a number of changes to prevent misleading marketing of SSBCI benefits, including expanding the SSBCI disclaimer to clarify what must occur for a beneficiary to be eligible for the SSCBI and requiring MAOs to clarify in disclaimers that enrollees may not be eligible for SSCBCI due to the statutory definition of “chronically ill enrollee” even if an enrollee has a specific chronic condition. In the final rule, CMS also makes clarifications regarding various SSBCI disclaimer scenarios and outlines the requirements associated with each case.

These policies are designed to facilitate better-decision-making and consumer choice, aligned with President Biden’s Competition Council and Executive Order signed in July 2021.

CMS does not expect these policies will have an economic impact on the Medicare Trust fund.

MA PLANS WILL BE REQUIRED TO ANNUALLY ANALYZE UTILIZATION MANAGEMENT POLICIES WITH A HEALTH EQUITY LENS THOUGH DRUGS ARE EXCLUDED

Noting that prior authorization (PA) policies and procedures may have a disproportionate impact on underserved populations and that these policies may delay or prevent access to certain services, CMS finalizes proposed policies that would require MA plans to analyze utilization management (UM) policies and procedures with a health equity lens. CMS specifically finalizes its proposed three updates to Utilization Management committee composition and responsibilities requiring:

1. A member of the UM committee to have health equity expertise. Health equity expertise may include educational degrees or credentials that emphasize health equity, experience conducting studies that identify disparities, experience leading organization-wide efforts to achieve health equity or experience leading advocacy efforts to achieve health equity.
2. The UM committee to conduct an annual health equity analysis of the plan’s PA policies and procedures. CMS finalizes its proposal that the health equity analysis examine the impact of PA policies on beneficiaries with at least one of the following social risk-factors: 1) receipt of the Part D LIS or being dually eligible for Medicare and Medicaid, or 2) having disability. The analysis will compare the impact of PA practices on beneficiaries with social risk factors (SRFs) versus beneficiaries without the SRFs and will be conducted at the plan level. CMS has outlined eight metrics that plans would be required to use in the proposed analysis, including the percentage of prior authorization requests that were approved or denied. Each metric will be reported in the aggregate.[2]
3. MAOs to make the results of health equity analyses public on their website by July 1, 2025. CMS finalizes its proposal that the member of the UM committee with health equity expertise would approve the final report before it is publicly posted. CMS notes that making results of health equity analyses publicly available will assist researchers and other third-parties in developing tools and conducting studies to further inform the public.

CMS sought comments on the proposal and also sought comments on several areas related to the topic, including:

• What additional populations CMS should consider including in its health equity analysis;
• If there should be a definition for “expertise in health equity;” and
• If there are specific items or services or groups of items or services that CMS should consider disaggregating in the analysis to consider in future rulemaking.

CMS received numerous comments in response to the proposal, with nearly all commenters supporting the addition of a member to the utilization management committee with expertise in health equity. Some commenters suggested CMS add additional specificity regarding the definition of expertise in health equity, but CMS declined to do so at this time. In response to the proposal to require plans to require the UM committee to conduct a health equity analysis, commenters were generally supported. Additionally, CMS does not plan to add additional metrics to its analysis at this time.

Commenters suggested several other populations CMS should consider including in the analysis, including individuals with certain chronic diseases, individuals with a rare disease, members of racial and ethnic communities, and members of the LGBTQ+ community. In terms of disaggregating data, CMS plans to require some level of disaggregation in the coming years and suggests there is significant value in establishing baseline data.

Notably, CMS finalized additional language to exclude drugs from the scope of the new reporting and health equity analysis metrics, aligned with performance metrics for reporting under §422.122(c), as adopted in the 2024 Interoperability Final Rule. CMS also believes that excluding drugs will reduce concerns about burden. As such, Medicare Part B and Part D drugs will not be included in the analysis.

CMS does not expect these policies will have an economic impact on the Medicare Trust fund.

FAST-TRACK APPEALS RIGHTS EXPANDED FOR MA BENEFICIARIES

Beneficiaries enrolled in Traditional Medicare and MA plans have the right to a fast-track appeal by an Independent Review Entity (IRE) when their covered skilled nursing facility (SNF), home health, or comprehensive outpatient rehabilitation facility (CORF) services are being terminated.

Upon receipt of a Notice of Medicare Non-Coverage (NOMNC) indicating service termination by their MA provider, beneficiaries can request review through Quality Improvement Organizations (QIOs), which serve as IREs. Currently, MA enrollees do not have the same access to QIO review of a fast-track appeal as Traditional Medicare beneficiaries. Thus, if an MA enrollee misses the deadline to appeal as stated on the NOMNC, the appeal is considered untimely, and the enrollee loses their right to a fast-track appeal to the QIO. Further, MA enrollees forfeit their right to appeal to the QIO if they leave a facility or otherwise end services prior to the termination date listed on the NOMNC, even if their appeal requests to the QIO are timely.

This final rule modifies the existing regulations regarding fast-track appeals for enrollees when they submit an untimely appeal request to the QIO, or still wish to appeal after they end services on or before the planned termination date. Specifically, CMS finalizes its proposal to require the QIO, instead of the MA plan, to review untimely fast-track appeals of an MA plan’s decision to terminate services in a home health agency, CORF, or SNF. Additionally, CMS finalizes its proposal to fully eliminate the provision requiring the forfeiture of an enrollee’s right to appeal a service termination decision when they leave the facility. CMS contends these changes will align MA regulations with the parallel reviews available to Medicare beneficiaries and expand the rights of MA beneficiaries to access the fast-track appeals process.

CMS estimates an annual administrative cost of $683,910. The agency notes that MA plans have a reduced cost while QIOs have a corresponding increased cost.

CMS TO INCREASE THE PERCENTAGE OF DUALLY ELIGIBLE BENEFICIARIES RECEIVING INTEGRATED MEDICARE AND MEDICAID SERVICES

Individuals dually eligible for Medicare and Medicaid services face a complex range of enrollment options based on MA plan types, enrollment eligibility, and plan performance, but the enrollee’s Medicaid choice is not considered. Many of the coverage options available to dually eligible individuals—including many D-SNPs—do not meaningfully integrate Medicare and Medicaid.

In response to concerns that current practices have resulted in in a proliferation of D-SNPs and leave dually eligible individuals susceptible to aggressive marketing tactics from agents and brokers throughout the year, CMS finalizes its proposals to:

• Replace the current quarterly SEP with a monthly option for dually eligible individuals and Part D low-income subsidy (LIS) recipients to elect a standalone prescription drug plan (PDP),
• Introduce a monthly integrated care SEP for dually eligible individuals to elect an integrated D-SNP,
• Limit enrollment in certain D-SNPs to those also enrolled in an affiliated Medicaid managed care organization (MCO), and
• Limit 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.

CMS believes this will increase the percentage of dually eligible MA enrollees who are in plans that also provide coverage for Medicaid benefits. This expansion is expected to enhance access to integrated processes spanning both Medicare and Medicaid, as well as ensure the continuity of Medicare services during an appeal. Consequently, CMS projects savings of $1.3 billion to the Trust Fund for Part D plans and an additional $1 billion to the Trust Fund for Part C plans over a 10-year period.

CMS FINALIZES NEW LIMITS TO OUT-OF-NETWORK COST SHARING FOR D-SNP PPOS

CMS finalizes their proposal that, starting in 2026, MA organizations offering D-SNP PPO plans must cap out-of-network cost sharing for services at the same level as in-network cost sharing for the same services. This would apply only to professional services, as defined at 42 CFR § 422.100(f)(6)(iii), including primary care services, physician specialist services, partial hospitalization, and rehabilitation services.

CMS notes this change is driven by concerns over increasing cost shifting to State Medicaid agencies, concerns over payments for associated providers, and impact on cost sharing for beneficiaries. CMS’s review found that cost sharing for out-of-network services for D-SNP PPOs was often well above cost sharing for the same services in FFS Medicare. As the dually eligible members in such plans are protected from being billed for services covered by Medicare providers, this results in the increased out-of-network cost sharing being passed on to State Medicaid agencies. In addition, if a State’s Medicaid rates are below the rate paid to the provider by the D-SNP, then the provider is not reimbursed for the cost sharing portion. This new policy is meant to address concerns that these high out-of-network cost sharing figures can raise costs for State Medicaid programs that cover cost sharing, lower reimbursement for out-of-network safety net providers in states that don’t cover the cost sharing, and hurt dually eligible beneficiaries who are not Qualified Medicare Beneficiaries (QMBs) and are therefore liable for all out-of-network cost sharing for providers not enrolled in Medicaid.

CMS does not expect this proposal to financially impact the Medicare Trust Fund.

D-SNP LOOK-ALIKE THRESHOLD TO LOWER TO 60 PERCENT OVER TWO-YEAR PERIOD

CMS finalizes their proposal to lower the D-SNP look-alike threshold from 80 percent to 70 percent in plan year 2025 and from 70 percent to 60 percent in plan year 2026. D-SNPs lookalikes are plans that that are not D-SNP plans but that have a very high dually eligible beneficiary population. Because they are not real D-SNPs, these plans are not required to comply with any laws governing D-SNP plans, such as the obligation to coordinate Medicare and Medicaid benefits for enrollees.

The 60 percent threshold was chosen because it is above the share of dually eligible individuals in any MA plan’s service area, meaning that any plan that exceeded this level was likely targeting dually eligible members. Plans that have been active for less than a year or have 200 or fewer enrollees would be exempt from this threshold. January 2024 enrollment data will be used to identify plans that exceed the 70 percent threshold for plan year 2025.

CMS estimates that this proposal would have an average annual impact of less than $1 million.

CMS STANDARDIZES THE MA PLAN RISK ADJUSTMENT DATA VALIDATION APPEALS PROCESS

To ensure that Medicare Advantage Organizations (MAOs) are not up-coding their diagnoses to receive increased payments via risk scoring adjustments, CMS conducts Risk Adjustment Data Validation (RADV) audits of MAO diagnosis data to check that this data matches beneficiaries medical records. Currently, MAOs have 60 days from receiving a RADV audit report to file a written appeal request. MAOs can appeal RADV medical record review determinations and/or the MA RADV payment error calculations. There are three levels to the appeal: reconsideration, hearing, and CMS Administrator review.

Following this final rule, MAOs will have to go through all three levels of appeal for medical record review determinations before appealing payment error calculations, as the payment error calculations are based on the outcomes of the medical record review determinations. If a MAO has no issues with the medical record review determinations, it can exclusively appeal the payment error calculations. Recalculated payment error calculations will not be issued at each level of appeal but rather when the appeal is final. In addition, if the Administrator does not decline or elect to review a decision within 90 days of the MAO or CMS’s timely request for review, the decision made in the hearing officer review (second stage of appeal) will become final.

PART D PLANS TO HAVE INCREASED FORMULARY FLEXIBILITY REGARDING SUBSTITUTIONS OF BIOSIMILAR BIOLOGICAL PRODUCTS FOR THEIR REFERENCE PRODUCTS

Under current policy, Part D plans must obtain explicit approval prior to substituting with biosimilar biological products other than interchangeable biological products. These substitutions apply only to enrollees who begin therapy after the effective date of the change.

In response to feedback on the CY 2024 proposed rule[3], CMS finalizes its proposal to treat formulary substitutions of all biosimilars for their reference products as “maintenance changes,” which are generally expected to pose a minimal risk of disrupting drug therapy or are warranted to address safety concerns or administrative needs. Treating these substitutions as maintenance changes means that any substitutions will apply to all enrollees following 30 days’ notice.

In addition, as proposed in the CY 2024 proposed rule1, CMS finalizes its proposal to permit Part D sponsors to immediately substitute:

(1) A new interchangeable biological product for its reference product,

(2) A new unbranded biological product for its brand name biological product, and

(3) A new authorized generic for its brand name equivalent.

CMS asserts these changes will enhance beneficiary access to treatments that are equally effective yet potentially more affordable. CMS does not expect any cost impact to the Medicare Trust Fund.

ELIGIBILITY CRITERIA FOR MEDICARE PART D MEDICARE THERAPY MANAGEMENT PROGRAM CHANGES TO EXPAND ACCESS TO SERVICES

CMS finalizes several new requirements for Part D sponsors related to Medication Therapy Management (MTM) programs. Currently, all Part D sponsors are required to have an MTM program designed to assure, with respect to targeted beneficiaries, that covered Part D drugs are appropriately used to optimize therapeutic outcomes through improved medication use, and to reduce the risk of adverse events, including adverse drug interactions. Part D sponsors are also required to target those Part D enrollees who have multiple chronic diseases, are taking multiple Part D drugs, and are likely to meet a cost threshold for covered Part D drugs established by the Secretary. CMS codified the MTM targeting criteria at § 423.153(d)(2).

However, driven by findings from CMS’s extensive analysis on MTM program eligibility and access, with this final rule,CMS changes the current MTM targeting criteria to expand access to MTM services. Specifically, CMS finalizes the following changes proposed in the Contract Year 2024 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs Proposed Rule (CMS-4201-P):

• Require Part D sponsors to include all core chronic diseases[4] in their targeting criteria, codify the current 9 core chronic diseases in regulation, and add HIV/AIDS for a total of 10 core chronic diseases,
• Require plan sponsors to include all Part D maintenance drugs and expressly state that Part D sponsors retain the flexibility to include all Part D drugs in their targeting criteria (NOTE: sponsors will not be permitted to limit the Part D maintenance drugs included in MTM targeting criteria to specific Part D maintenance drugs or drug classes), and
  1. Require that, for the purpose of identifying Part D maintenance drugs, plans must rely on information in a widely accepted, commercially or publicly available drug information database.
• Revise the methodology for calculating the MTM cost threshold to be commensurate with the average annual cost of eight generic drugs (set at $1,623 for CY 2025).
• Codify longstanding guidance that a beneficiary must be unable to accept the offer to participate in the Comprehensive Medication Reviews (CMR) due to cognitive impairment and clarify that the CMR must include an interactive consultation that is conducted in person or via synchronous telehealth.

CMS indicates these changes would reduce eligibility gaps identified in their analyses so that more Part D enrollees with complex drug regimens at increased risk of medication therapy problems would be eligible for MTM services and so that criteria would better address statutory goals to reduce medication errors and optimize therapeutic outcomes for beneficiaries with multiple chronic conditions and taking multiple Part D drugs, while maintaining a reasonable cost criterion.

CMS is not finalizing its proposal to decrease the maximum number of Part D drugs a sponsor may require from eight to five for Contract Year 2025. Instead, CMS is retaining the maximum number of drugs a plan sponsor may require for targeting beneficiaries taking multiple Part D drugs as eight with plan sponsors having the flexibility to set a lower threshold (a number between two and eight Part D drugs) for targeting beneficiaries taking multiple Part D drugs. CMS indicates it may consider revisiting this in future rulemaking.

CMS estimates that MTM changes would increase the number and percentage of Part D enrollees eligible for MTM services from 3.6 million (7 percent) to 7.1 million (13 percent), resulting in costs of approximately $192.7 million annually for required MTM services. CMS was not able to definitively score this provision largely due to challenges with estimating Part A/B savings.

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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.cms.gov/cms-behavioral-health-strategy

[2] See page 199 of the unpublished final rule for a complete list of metrics.

[3] 87 FR 79452

[4] The 10 core chronic diseases are (1) Alzheimer’s disease; (2) Bone disease-arthritis (including osteoporosis, osteoarthritis, and rheumatoid arthritis); (3) Chronic congestive heart failure (CHF); (4) Diabetes; (5) Dyslipidemia; (6) End-stage renal disease (ESRD); (7) Human immunodeficiency virus/ acquired immunodeficiency syndrome (HIV/AIDS); (8) Hypertension; (9) Mental health (including depression, schizophrenia, bipolar disorder, and other chronic/disabling mental health conditions); and (10) Respiratory disease (including asthma, chronic obstructive pulmonary disease (COPD), and other chronic lung disorders).