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On November 6, 2023, the Centers for Medicare and Medicaid Services (“CMS”) released the contract year 2025 proposed rule for Medicare Advantage (“MA”) organizations and Part D sponsors (the “Proposed Rule”). The Proposed Rule covers an array of regulatory topics including the Star Ratings program, marketing and communications, agent and broker compensation, health equity, dual eligible special needs plans (“D-SNPs”), utilization management, network adequacy, and access to biosimilars.

Below is a summary of some of the Proposed Rule’s key changes.

Improving Access to Behavioral Health Care Providers

The Proposed Rule would expand MA network adequacy requirements to encompass outpatient behavioral health in order to improve access to behavioral health care providers. As part of its Behavioral Health Strategy, CMS aims to improve access and quality of mental health care and services, such as substance use disorder prevention and treatment services. As such, CMS proposes adding a facility-specialty type called “Outpatient Behavioral Health” to (1) the list of facility-specialty types that are evaluated for network adequacy standards and (2) to the published time and distance standards.

MA organizations must make benefits available and accessible in their service areas, including ensuring a sufficient network of providers to meet their enrollees’ needs. Consequently, MA organizations are subject to network adequacy requirements with number, time, and distance standards for certain provider-specialty types and facility-specialty types.

The “Outpatient Behavioral Health” facility-specialty type can include Marriage and Family Therapists (“MFTs”), Mental Health Counselors (“MHCs”), Community Mental Health Centers (“CMHCs”), Opioid Treatment Programs (“OTPs”), and certain other practitioners who regularly furnish behavioral health counseling or therapy services. The inclusion of MFTs and MHCs was spurred by the Consolidated Appropriations Act, 2023, which authorized payment for services furnished by these providers. CMS notes “Outpatient Behavioral Health” would be added as a facility-specialty type, rather than a provider-specialty type, because the providers listed above furnish behavioral health services in outpatient behavioral health settings and for consistency with the categorization of other therapy types (such as physical therapy) as facility-specialty types.

Additionally, CMS proposes adding “Outpatient Behavioral Health” to the list of specialty types that are eligible to receive a ten percent (10%) point credit towards the percentage of beneficiaries that reside within published time and distance standards for certain providers when the plan includes one or more telehealth providers of that specialty type that provide additional telehealth benefits in its contracted network.[1]

Special Supplemental Benefits for the Chronically Ill (SSBCI)

The Balanced Budget Act of 2018 introduced new authorities concerning supplemental benefits that may be offered to chronically ill enrollees in MA plans. A chronically ill enrollee is defined as an MA member with one or more complex chronic conditions, who is at risk for hospitalization or other adverse health outcomes, and who requires intensive care coordination. In the Proposed Rule, CMS seeks to ensure that MA plans offer appropriate special supplemental benefits for the chronically ill (“SSBCI”) to improve or maintain the health or overall function of those enrollees while also guarding against the use of MA rebate dollars for SSBCI that are not supported by evidence. 

CMS proposes additional requirements designed to help ensure that SSBCIs offered are in fact backed by evidence. Specifically, CMS proposes that MA organizations demonstrate through 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, and must, by the date on which they submit their bids to CMS, establish a bibliography of this evidence. The bibliography must be made available to CMS upon request. 

“Relevant acceptable evidence” would include large, randomized controlled trials or prospective cohort studies or all-or-none studies with clear results, published in a peer-reviewed journal, and specifically designed to investigate whether the item or service impacts the health or overall function of a population, or large systematic reviews or meta-analyses summarizing the literature of the same. In the alternative, “relevant acceptable evidence” could include case studies, federal policies or reports, internal analyses or investigations. This proposal would shift the burden from CMS to the MA organization to demonstrate compliance with this standard. In this same vein, CMS proposes to codify its authority to (1) review and deny approval of an MA organization’s bid if the MA organization has failed to demonstrate, via relevant acceptable evidence, that its proposed SSBCI has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill enrollee; and (2) review SSBCI offerings annually for compliance purposes. 

CMS also seeks to provide clarification on MA plan enrollee eligibility determinations in proposing that an MA organization be required to follow its written policies based on objective criteria for determining an enrollee’s eligibility for an SSBCI. Moreover, CMS is proposing to require that the MA organization documents its denials of SSBCI rather than its approvals to ensure that the SSBCI is being implemented in an evidence-based, non-discriminatory, and fair manner. 

The Proposed Rule sets out new policies to promote transparency and protect beneficiaries, by updating SSBCI marketing requirements to prevent misleading marketing related to these benefits to make certain that SSBCIs are only available to enrollees who meet specific eligibility criteria. In doing so, CMS proposes to modify and strengthen the current SSBCI disclaimer requirements MA organizations must use whenever SSBCI are mentioned by requiring that the SSBCI disclaimer: (1) list the relevant chronic condition(s) the enrollee must have to be eligible for the SSBCI offered by the MA organization; (2) convey that, even if the enrollee has a listed chronic condition, the enrollee may not receive the benefit because other coverage criteria also apply; (3) be in specific font and reading pace parameters on various advertising platforms; and, (4) appear in all marketing and communications materials that mention SSBCI. 

Mid-Year Enrollee Notification of Available Supplemental Benefits

MA organizations are permitted to offer mandatory supplemental benefits, optional supplemental benefits, and special supplemental benefits for the chronically ill. Although the number of supplemental benefit offerings has risen significantly in recent years, including in 2023, where $61 billion was directed towards supplemental benefits in MA, CMS has received reports that MA organizations have observed low utilization of these benefits by their enrollees.

Currently, there is no specific requirement for MA organizations to conduct outreach to enrollees to encourage utilization of supplemental benefits, beyond general care coordination requirements. CMS has expressed concern that some MA organizations are primarily using supplemental benefits as marketing tools to steer enrollment towards their plans but are not taking steps to ensure that enrollees are using their benefits or tracking if the supplemental benefits are improving health, or quality of care outcomes, or addressing social determinants of health.

Accordingly, CMS proposed that beginning January 1, 2026, MA organizations mail a personalized mid-year notice annually, but not sooner than June 30 and not later than July 31 of the plan year to each enrollee with information pertaining to each supplemental benefit available during that plan year that the enrollee has not accessed during the first six months of the year. In addition, the notification would include the scope of the benefit, cost-sharing, instructions on how to access the benefit, any network application information for each available benefit, and a customer service number to call if additional help is needed. 

CMS believes this proposed change would help beneficiaries be aware of their plan benefits and facilitate better decision-making and consumer choice in the MA marketplace.

Enhance Guardrails for Agent and Broker Compensation

Over the last few years, CMS has issued new regulations and subregulatory guidance intended to address abusive marketing practices by third party marketing organizations (“TPMOs”) that sell MA and Part D plans. Please refer to our January 5, 2023, November 4, 2022 and May 16, 2022 blog posts for more information. None of these changes addressed how MA organizations and Part D sponsors compensate agents, brokers and other TPMOs. Under current regulations, plans may pay initial and renewal commissions up to the fair market value (“FMV”) amounts annually established by CMS. In addition, plans may make administrative payments to TPMOs for services other than the enrollment of beneficiaries (e.g., training, customer service, agent recruitment, operational overhead, or assistance with completion of health risk assessments) provided that such payments do not exceed the value of those services in the marketplace. Finally, plans may reimburse TPMOs for expenses incurred in marketing activities.

In the Proposed Rule, CMS seeks to generally prohibit contract terms between MA organizations, Part D sponsors and TPMOs that may interfere with the agent’s or broker’s ability to objectively recommend the plan that is best tailored to the beneficiary’s needs. CMS proposes to set a single compensation rate for all plans, discontinue the allowance of separate administrative payments, and revise the scope of items and services included within agent and broker compensation. Thus, beginning in 2025, the FMV would be increased to account for administrative payments included under the compensation rate, beginning at $31 and updated annually. For subsequent years, FMV would be calculated by adding the current year FMV and the product of the current year FMV and MA growth percentage for aged and disabled beneficiaries, which is published for each year in the annual rate announcement.

Annual Health Equity Analysis of Utilization Management Policies and Procedures

After receiving input from Medicare beneficiaries, patient groups, consumer advocates, and providers that the use of prior authorization (“PA”) as a utilization management (“UM”) practice in MA can create a barrier for patients who need to access medically necessary care, CMS is proposing to change the composition and responsibilities of the UM committee. The UM committee was established in April 2023 in the 2024 Medicare Advantage and Part D Final Rule (CMS-4201-F). If finalized, the changes would go into effect on January 1, 2025, and include:

  1. The addition of at least one member with expertise in health equity to the UM committee; and
  2. The establishment of an annual health equity analysis on the use of PA.

The analysis would specifically examine the impact of PAs at the plan level on enrollees who receive the low-income subsidy, who are dually eligible for Medicare and Medicaid, or who have a disability and compare that impact with the impact of PAs on those who are not in those categories. And, in order to do so, the following metrics would be included in the analysis and aggregated for all items and services: the percentage of standard PA requests that were approved; the percentage of standard PA requests that were denied; the percentage of standard PA requests that were approved after appeal; the percentage of PA requests for which the timeframe for review was extended, and the request was approved; the percentage of expedited PA requests that were approved; the percentage of expedited PA requests that were denied; average and median time that elapsed between the submission of a request and a determination by the MA plan, for standard PA; and the average and median time that elapsed between the submission of a request and a decision by the MA plan for expedited PA. Upon completion of the analysis, the health equity member of the UM committee must approve the final report of the analysis prior to the analysis being posted on the plan’s publicly available website.

This proposal follows research showing that the use of PAs may disproportionately impact individuals who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality. The proposal also follows research that dual eligibility for Medicare and Medicaid is one of the most influential predictors of poor health outcomes and that disability is also an important risk factor linked to health outcomes. The proposal is purposefully consistent with the first pillar of the current CMS Strategic Plan, which is to advance health equity by addressing the health disparities that underlie the health system in the United States.

CMS seeks comment on whether additional populations should be considered in the health equity analysis, which populations should be considered in the health equity analysis, if health equity expertise should be more precisely defined, and how health equity expertise should be defined. The Proposed Rule defines health equity expertise as “educational degrees or credentials with an emphasis on health equity, experience conducting studies identifying disparities amongst different population groups, experience leading organization-wide policies, programs, or services to achieve health equity, or experience leading advocacy efforts to achieve health equity.” CMS additionally seeks comment on whether any specific items or services, or groups of items or services should be disaggregated in the annual health equity analysis for future proposal development.

Amendments to Part C and Part D Reporting Requirements

CMS would solidify its authority to collect information from MA organizations and Part D sponsors. CMS proposes to amend 42 C.F.R. §§ 422.516(a)(2) and 423.514(a)(2) so that the reporting requirements imposed upon MA organizations and Part D Plan sponsors include procedures relating to coverage, utilization (in the aggregate and at the beneficiary level), and the actions required of beneficiaries to obtain covered services or items. Further, the revised regulations would clarify that the MA reporting requirements do not inherently exclude statistics from being reported under § 422.516(a). CMS emphases that this is in line with the Biden-Harris Administration’s effort to enhance transparency and data in Part C and Part D plans.

Enhance Enrollees’ Right to Appeal an MA Organization’s Decision to Terminate Coverage for Non-Hospital Provider Services

The Proposed Rule takes several key steps to align certain appeal rights afforded to MA enrollees with those available to traditional Medicare enrollees. Specifically, MA enrollees enjoy an appeal right which is normally triggered when the MA organization delivers a Notice of Medicare Non-Coverage (“NOMNC”) relating to certain non-hospital provider services, including services in a home health agency, skilled nursing facility, or a comprehensive outpatient rehabilitation facility.[2] A NOMNC ordinarily outlines the appeal process as well as a deadline by which an enrollee should submit his/her appeal.[3]

Significantly, both traditional Medicare and MA enrollees have the right to a fast-track appeal by an Independent Review Entity (“IRE”).[4] The Quality Improvement Organization (“QIO”) ordinarily fills the role of an IRE, but where an enrollee fails to submit an appeal by the deadline set forth in the NOMNC, MA enrollees forfeit their right to a fast-track appeal with the QIO but may appeal to the MA organization itself, whereas traditional Medicare enrollees retain the right to submit an untimely appeal to the QIO.[5]

The Proposed Rule would better align those QIO access rights by allowing MA enrollees access to the fast-track appeal process provided through the QIO even where the appeal is untimely. Not only would MA enrollees have access to the fast-track, but the QIO would also assume responsibility for the review of those appeals by replacing the MA organization’s current review role.

Separately, the Proposed Rule would eliminate the automatic forfeiture of an MA enrollee’s right to appeal a termination of non-hospital provider services which is ordinarily triggered where the enrollee leaves a facility or otherwise ends the services at issue prior to the appeal deadline set forth in the NOMNC.[6] Historically, traditional Medicare enrollees have retained the right to appeal to the QIO regardless of whether the services ended prior to a deadline set forth in an NOMNC.

Additional Changes to an Approved Formulary—Substituting Biosimilar Biological Products

The Proposed Rule builds on section III.Q, “Changes to an Approved Formulary” of CMS’ December 2022 proposed rule, and introduces modifications that permit more flexibility for beneficiaries in the cost and accessibility of drug products available under their Part D plans. With CMS’ proposed changes, Part D plans would be able to expedite the process of substituting lower cost biosimilar biological products for their reference products providing enrollees with greater accessibility to biosimilar biological and generic drugs which are often less expensive while being equally effective as their reference product counterpoint. In the Proposed Rule, CMS builds on its proposals in the December 2022 proposed rule and expands the category of “interchangeable biological products” to include a broader category of “biosimilar biological products” for reference products and treat such substitutions of drug products as “maintenance changes.” Functionally, this means that any such substitutions to reference products will apply to all enrollees following a 30-day notice period making substitutions more affordable and accessible to patients.

Currently, if a Part D sponsor seeks to make a formulary change that replaces a reference product with a biosimilar biological product other than an interchangeable biological product, the sponsor must first obtain explicit approval from CMS and must provide 30 days advance notice to affected enrollees prior to removing or otherwise changing the tiered cost-sharing status of a Part D drug absent certain considerations that qualifies the formulary change for an immediate substitution. Further, even if the replacement is approved by CMS, enrollee access is still restricted as the Part D sponsor can only apply the approved change to enrollees who begin their treatment after the effective date of change, effectively preventing enrollees already on the reference product from changing to the replacement biosimilar biological product through the remainder of the plan year, absent an approved exception.

Under the Proposed Rule, Part D Sponsors would be able to make formulary changes substituting biosimilar biological products without prior approval from CMS. As a result, the substitution of biosimilar biological products, the broader category of substitute products which still includes interchangeable biological products, for the reference product would be a “maintenance change.” Of note is that while CMS encourages Part D sponsors to provide “biosimilar products” in their formulary, CMS is not proposing to permit Part D sponsors to immediately substitute all “biosimilar products” as not all biosimilar biological products have met the requirements to support the immediate interchangeability. However, as all FDA-licensed biosimilar biological products must be very similar to and would have no clinically meaningful difference from the reference product with respect to safety and efficacy, CMS is comfortable with proposing this formulary change. CMS further emphasizes that based on FDA’s stringent approval standards and strict regulation of the manufacturing standards applicable to both biosimilar biological products and reference products, healthcare providers and patients can also take comfort in knowing that the safety and efficacy of all biosimilar biological products are consistent with existing reference products.

Further, by categorizing this formulary change as a “maintenance change,” the substitution of a biosimilar biological product (1) would not require prior CMS approval and (2) would be applicable to all enrollees including those already using the reference product prior to the effective date of change. Of note is that the 30-day notice period to enrollees before the change is effectuated is still in place, and is now applicable to both maintenance and non-maintenance changes, but even with this notice period, enrollees will generally be able to access the equally effective, but potentially more affordable, substitute options sooner.

With these formulary changes, CMS furthers the dual aim of promoting utilization of more biosimilar biological products while still providing enrollees with sufficient advance notice of such changes.

Increasing the Percentage of Dually Eligible Managed Care Enrollees Who Receive Medicare and Medicaid Services from the Same Organization

Dually eligible individuals who rely on both Medicare and Medicaid may experience fragmented care and poor health outcomes when the delivery of health services and administration of benefits are not aligned. Improved care coordination has been a priority at both the state and federal level for the past decade, with some integrated care models already implemented and in use; yet the number of beneficiaries enrolled in integrated care remains relatively low. Moreover, according to CMS, the current enrollment and eligibility policies have led to a proliferation of poorly-integrated D-SNPs, leaving dually eligible individuals susceptible to aggressive marketing tactics from agents and brokers throughout the year.

To address these concerns, CMS proposes to:

  • Replace the current quarterly special enrollment period (“SEP”) with a continuous, one-time-per month SEP for dually eligible individuals and others enrolled in the Part D low-income subsidy (“LIS”) program to elect a standalone prescription drug plan (PDP);
  • Create a new integrated care SEP to allow dually eligible individuals to elect an integrated D-SNP on a monthly basis;
  • Limit enrollment in certain D-SNPs to those individuals who are 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.

According to CMS, these changes would increase the percentage of dually eligible enrollees who are in plans that are also contracted to cover Medicaid benefits, thereby expanding access to integrated materials, unified appeal processes across Medicare and Medicaid, and continued Medicare services during an appeal. Furthermore, these policies advance the goals of President Biden’s Competition Council and Executive Order signed in July 2021 by empowering beneficiary choice and enhancing access to a robust set of Medicare coverage options for low-income beneficiaries.

In recent years, the Biden Administration, through CMS, has sought to streamline the delivery of services between Medicare and Medicaid by ramping up D-SNP program requirements in order to promote equity in coverage and provide much-needed support to the dual-eligible population navigating these complex medical assistance programs. However, the MA marketplace contains a certain category of plans, colloquially called “D-SNP look-alike” plans,[7] which are designed specifically to attract dual-eligible beneficiaries, but provide a lower level of protection to enrollees, as these general enrollment plans are not subject to CMS’ D-SNP regulations. Specifically, D-SNP look-alike plans are not required to comply with the D-SNP model of care or Medicare-Medicaid coordination requirements, essentially defeating the purpose of CMS’ integration efforts for the dual-eligible population. Accordingly, CMS has taken measures to curb enrollment in D-SNP look-alike plans. For example, in 2021, CMS implemented an initiative to transition enrollees from D-SNP look-alike plans to other MA plans, including traditional D-SNP plans.[8] Specifically, under existing regulations, CMS does not contract with and will not renew the contract of a D-SNP look-alike in which dually eligible enrollees account for eight percent (80%) or more of total enrollment. The Proposed Rule would lower the D-SNP look-alike threshold from eighty percent (80%) to seventy percent (70%) in 2025 and to sixty percent (60%) in 2026. According to CMS, the proposal “would help to address the continued proliferation of MA plans that are serving high percentages of dually eligible individuals without meeting the requirements to be a D-SNP.”[9]

Additionally, the Proposed Rule purports to beef up cost-sharing protections for individuals enrolled in traditional D-SNP plans. The Proposed Rule would limit out-of-network cost sharing for D-SNP preferred provider organizations (“PPOs”) for specific services with the goal of reducing cost-shifting to Medicaid, increasing payments to safety net providers, expanding access to providers at large, and protecting enrollees from unaffordable cost of care.[10]

Standardize the Medicare Advantage (MA) Risk Adjustment Data Validation Appeals Process

Following the much-anticipated release of the Medicare Advantage risk adjustment data validation (“RADV”) audit final rule, CMS proposes changes to the RADV audit appeal regulations to “address gaps and operational constraints” and to “standardize and simplify the RADV appeals process for CMS and MA organizations”. Specifically, the Proposed Rule would require MA organizations to exhaust all three levels of appeal (i.e., reconsideration, hearing officer, and CMS Administrator) for medical record review determinations before beginning the payment error calculation appeals process. This would ensure adjudication of medical record review determinations are final before a recalculation of the payment error is completed and subject to appeal. CMS believes this clarification is necessary because RADV payment error calculations are directly based upon the outcomes of medical record review determinations.

Among other RADV appeal changes, CMS would require that an MA organization’s request for medical record review determination reconsideration must specify any and all audited HCCs from an audit report that the MA organization wishes to dispute. The intent of this revision is to permit an MA organization to submit only one medical record review determination reconsideration request per audited contract, which includes all disputed audited HCCs, given that the results of all audited HCCs for a given audited contract are communicated as part of a single audit report.

Appeals of Quality Bonus Payment Determinations

Existing regulations provide MA organizations with a two-level administrative process for the appeal of CMS quality bonus payment determinations: reconsideration and informal hearing. CMS proposes to provide the CMS Administrator the opportunity to review and modify the hearing officer’s decision within 10 business days of its issuance. If the Administrator does not review and issue a decision within 10 business days, the hearing officer’s decision is final and binding. If the Administrator reviews and modifies the hearing officer’s decision, a new decision will be issued as directed by the Administrator.

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Comments are due by January 5, 2024


[1] See 42 C.F.R. § 422.116(d)(5).

[2] 42 C.F.R. § 422.626.

[3] 42 C.F.R. § 422.624.

[4] 42 C.F.R. § 422.626; 42 C.F.R.§ 405.1200, et seq.

[5] 42 C.F.R. § 422.626; 42 C.F.R.§ 405.1202, et seq.

[6] 42 C.F.R. § 422.626(a)(3).

[7] CMS identifies D-SNP look-alike plans as those general enrollment plans who membership consists of more than eighty percent (80%) dual eligible beneficiaries. See Dual Eligible Special Needs Plan (D-SNP) “Look-Alike” Transitions for Contract Year (CY) 2021, Ctrs. for Medicare & Medicaid Servs. (June 8, 2020).

[8] See Dual Eligible Special Needs Plan “Look-Alike” Transitions for Contract Year 2022, Ctrs. for Medicare & Medicaid Servs. (May 18, 2021).

[9] See Fact Sheet on Proposed Rule, Ctrs. for Medicare & Medicaid Servs. (Nov. 6, 2023).

[10] See id.