PARTIAL FINAL RULE: RIN 0938-AT97; Medicare Program; Contract Year 2021 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, and Medicare Cost Plan Program
On May 22, 2020, the Centers for Medicare & Medicaid Services (CMS) released the first in a two-part federal rulemaking series governing the Medicare Advantage Program, Medicare Prescription Drug Benefit Programs, and Medicare Cost Plan Program for contract year 2021.
Two-Part Rulemaking Series
In this unusual rulemaking arrangement, CMS said it took a “measured approach” to review each provision proposed and focused on finalizing in this first final rule those policies most helpful for bidding, those that address the Coronavirus Disease (COVID-19) pandemic and public health emergency, as well as those topics on which issuing a final rule now would advance the MA program.
While it intends to address the remaining proposals from the February 18, 2020, proposed rule (85 Fed. Reg. 9002) not included in this final rule in subsequent rulemaking, including, but not limited to changes to pharmacy tiering and other technical and policy changes to Parts D and C, CMS said it was focusing in this final rule on more immediate regulatory actions. CMS said it plans to make any provisions adopted in the subsequent, second final rule (which it declined to set a publication date for), effective on or before January 1, 2021, applicable no earlier than January 1, 2022.
Consistent with its comments above, CMS prioritized several time-sensitive implementation items from the Bipartisan Budget Act and the 21st Century Cures Act and left other policies for future rulemaking.
Major Policy Codifications
CMS codified Medicare Advantage (MA) proposals that modified Part C and D Star Rating methodologies to make them more accurate and reflective of patient experience and to reduce spending; adjusted Medical Loss Ratio (MLR) methodologies to make them more comprehensive and transparent; generally strengthened network adequacy requirements for most specialty services, including by applying percentage credits to MA plans attempting to meet network adequacy standards and encouraging the use of plan contracts with telehealth providers for a variety of specialty and primary care; provided for the enrollment of individuals with End Stage Renal Disease into MA plans (and made Medicare fee-for-service, not MA plans, responsible for the cost of kidney acquisition and excluded such costs from MA benchmarks but did not dictate minimum time and distance standards or other network adequacy outpatient dialysis facility standards for MA plans); and approved two new special enrollment periods (SEPs) among other policy and technical changes to Special Supplemental Benefits for the Chronically Ill (SSBCI), “Look Alike” Dual-Eligible Special Needs Plans, and MA reinsurance.
Economic Impact
Provisions in this first final rule result in an estimated $3.65 billion net reduction in spending over 10 years, in part due to refinements to the MA and Part D Quality Star Ratings System, which offset costs associated with other provisions, including the MLR provisions.
Modifications to the MA and Part D Prescription Drug Program Quality Reporting System
CMS increased the measure weights for patient experience/complaint measures and access measures from 2 to 4. It updated the classification of the Statin Use in Persons with Diabetes (SUPDs) measure from an intermediate outcome measure to a process one, and it adopted a number of changes in the March 31, 2020 Interim Final Rule with Comment (CMS-1744-IFC) for 2021 and 2022 to address the COVID-19 public health emergency. CMS also retired the Rheumatoid Arthritis measure.
Most impactfully, CMS finalized the use of Tukey outlier deletion, which is a standard statistical methodology for removing outliers, to increase the stability and predictability of the star measure cut points. However, the application of Tukey outlier deletion will be delayed until the 2024 Star Ratings. CMS noted that it recognizes that there may be impacts from COVID-19 on measure scores and is delaying the implementation of Tukey outlier deletion for an additional year to allow these impacts to play out before adding an additional methodological change for the cut point calculations.
Medicare Advantage Medical Loss Ratio
CMS finalized three proposed amendments to the MA MLR regulations:
· CMS is allowing MA organizations to include in the MLR numerator as “incurred claims” all amounts paid for covered services, including amounts paid to individuals or entities that do not meet the definition of “provider” at § 422.2.
· CMS is codifying its definitions of partial, full, and non-credibility and credibility factors that CMS published in the May 2013 Medicare MLR final rule (78 Fed. Reg 31296) for MA and Part D MLRs.
· CMS is finalizing its proposal to apply a deductible factor to the MLR calculation for MA Medical Savings Account (MSA) contracts receiving a credibility adjustment. According to CMS, the deductible factor, which functions as a multiplier on the credibility adjustment factor, is calibrated so that the probability that a contract will fail to meet the MLR requirement is the same for all contracts that receive a credibility adjustment, regardless of the deductible level.
Table 5 includes an impact analysis of the implementation of these amendments.
Access to MA Plans for Individuals with ESRD
CMS is codifying requirements under section 17006 of the 21st Century Cures Act that allow individuals with ESRD to enroll in MA plans. Effective for plan year beginning January 1, 2021, CMS is removing the prohibition on beneficiaries with ESRD enrolling in a MA plan. However, in a notable development, CMS is removing outpatient dialysis centers as a facility type that is subject to network adequacy standards. Under its authority, CMS will require that MA plans submit an attestation that it has an adequate network that provides the required access and availability to dialysis services, including outpatient facilities.
In response to commenters concerned about outpatient clinic treatment proximity, CMS said the current law network adequacy maximum time and distance standards are “one way” to quantify prevailing patterns of health care delivery in areas, “but it is not the only way to evaluate a network.” CMS made clear that removing outpatient dialysis centers as a facility type does not mean that MA plans do not need to maintain an adequate contracted network of contracted providers simply because a provider or facility type is not included in the network adequacy standards. MA organizations, CMS said, must maintain a network of contracted providers that is sufficient to provide adequate access to covered services to meet the needs of the population served and is consistent with the prevailing community pattern of health care delivery in the areas where the network is being offered.
In further commentary in support of its position, CMS said it believed MA plans should have the “freedom to enhance their networks by contracting with dialysis providers that offer dialysis treatment through home-based modalities.” According to CMS, these home-based modalities give enrollees flexibility and control over their lives so that enrollees can choose the treatments that best meet their needs. CMS also said its decision to remove dialysis facilities could encourage greater competition in dialysis treatment and treatment modalities, which, CMS contended, will eventually lead to lower costs for Medicare beneficiaries without resulting in the denial of, or access to, lesser care. “The removal of outpatient dialysis as a facility type from our network adequacy standards allows all dialysis treatments to be treated equally, which will encourage MA organizations to contract with facilities that offer different forms of dialysis treatments, rather than just dialysis at an outpatient facility,” CMS said, adding “[W]e believe this increased competition among treatment modalities could drive down plan and patient costs for dialysis services.”
MA and Cost Plan Network Adequacy
Responding to directives in the Bipartisan Budget Act to increase access to telehealth services CMS took several steps to strengthen networks and enhance telemedicine deployment. In order to expand access to MA plans where network development can be challenging, CMS reduced the percentage of beneficiaries that must reside within the maximum time and distance standards in non-urban counties (Micro, Rural, and Counties with Extreme Access Considerations (CEAC) county type designations) from 90 percent to 85 percent in order for an MA plan to comply with network adequacy standards. Also, CMS will apply a 10-percentage point credit to MA plans towards the percentage of beneficiaries residing within published time and distance standards when they contract with telehealth providers in the following provider specialty types: Dermatology, Psychiatry, Cardiology, Otolaryngology, Neurology, Ophthalmology, Allergy and Immunology, Nephrology, Primary Care, Gynecology/ OB/GYN, Endocrinology, and Infectious Diseases. Finally, CMS will also apply a 10-percentage point credit to an MA plan towards the percentage of beneficiaries residing within published time and distance standards for affected provider and facility types in states that have Certificate Of Need (CON) laws, or other state imposed anti-competitive restrictions, that limit the number of providers or facilities in a county or state
Special Election Periods (SEPs)
The Secretary has the authority to create SEPs for individuals who meet exceptional conditions. In this final rule, CMS codified a number of SEPs that it has adopted and implemented through sub-regulatory guidance as exceptional circumstances SEPs. CMS said that by codifying its current policy for these SEPs, it provides transparency and stability to the MA and Part D programs by ensuring that these SEPs are known and changed only through additional rulemaking. Among the finalized SEPs are the SEP for Government Entity-Declared Disaster or Other Emergency, the SEP for Employer/Union Group Health Plan (EGHP) elections, and the SEP for Individuals Who Disenroll in Connection with a CMS Sanction. CMS also established two additional SEPs for exceptional circumstances: a SEP for Individuals Enrolled in a Plan Placed in Receivership and a SEP for Individuals Enrolled in a Plan that has been identified by CMS as a Consistent Poor Performer or plans that are identified with the low performing icon (LPI).
Special Supplemental Benefits for the Chronically Ill (SSBCI)
In codifying what it considers current practice regarding SSBCI – a special supplemental benefit for the chronically ill that has, with respect to a chronically ill enrollee, a reasonable expectation of improving or maintaining the health or overall function of the enrollee, including benefits that are not primarily health related[1] – CMS finalized four SSBCI provisions with accompanying paperwork burdens (the burden summary is detailed in Table 3). It required MA plans offering SSBCI to:
develop written policies for determining enrollee eligibility and document the determination that an enrollee is a chronically ill enrollee based on the definition in statute and regulation;
make information and documentation related to determining enrollee eligibility available to CMS upon request;
have written policies based on objective criteria for determining a chronically ill enrollee’s eligibility to receive a particular SSBCI and document these criteria; and
document each determination that an enrollee is eligible to receive an SSBCI and make this information available to CMS upon request.
In addition, to offering SSBCI, a plan must determine that an enrollee is chronically ill and that the items or services furnished under the SSBCI have a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee. This determination requires a review of the enrollee's health records (for example, diagnosis codes, frequency of hospitalizations, and doctor’s notes) as well as a determination and review by plan medical staff that the SSBCI has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee.
CMS established that MA plans may offer SSBCI only as a mandatory supplemental benefit but that, upon CMS approval, a MA plan may offer SSBCI that are not uniform for all chronically ill enrollees in the plan, and may consider social determinants of health as one (but not the only) factor to help identify chronically ill enrollees whose overall health function could be improved or maintained with SSBCI.
Dual-Eligible Special Needs Plans and “Look-Alikes”
CMS finalized its proposal to control for and limit Dual Eligible Special Needs Plan (D-SNP) “look-alikes.” Such plans have similar levels of dual eligible enrollment as traditional D-SNPs but bypass controlling federal and state contracting standards. CMS’ decision to reduce and ultimately eliminate D-SNP look-alikes will, in its evaluation, strengthen the ability of states and CMS to meaningfully implement new requirements for D-SNPs that Congress created in the Bipartisan Budget Act. In the final rule, CMS said it would not enter into a contract in 2022 with a new MA plan (other than a SNP) that projects in its bid that 80 percent or more of the plan’s total enrollment will be entitled to Medicaid. For 2023, CMS said it would not enter into a contract for a renewing MA plan (other than a SNP) that has actual enrollment of 80 percent or more of enrollees who are entitled to Medicaid, unless the MA plan is comparatively new and has limited enrollment (less than one year and fewer the 200 enrollees) at the time of determination.
CMS said it would allow one additional year for existing D-SNP look-alikes to wind down and could transition into a D-SNP or another qualifying zero-premium plan offered by the MA plan beginning in 2021.
Reinsurance
CMS noted in its proposed rule that a number of MA organizations expressed concern to CMS about the legal uncertainty associated with utilizing reinsurance within the MA program. To resolve this uncertainty, CMS finalized its proposal to approve the use of reinsurance arrangements by MA plans, with some caveats. As finalized, CMS provided that a MA plan may obtain insurance or make other arrangements for the cost of providing basic benefits to an individual enrollee during the contract year in one of two ways. First, CMS said it would permit an MA plan to use insurance or make other arrangements for the cost of providing basic benefits to an individual enrollee during the contract year so long as the MA plan retained risk for at least the first $10,000 of that cost. Second, CMS said it would permit reinsurance on a per member per year first dollar basis so long as the MA plan retained at least some actuarially equivalent reserve, utilizing any reasonable actuarial methodology to determine actuarial equivalence. CMS also clarified that it will consider a parent organization to be part of an MA plan.
* * *
[1] In prior guidance, CMS provided examples of what could be non-primarily health related SSBCI benefits, depending on the needs and health or overall function of the chronically ill enrollee. Those examples included: meals (beyond a limited basis), food and produce, transportation for non-medical needs, pest control, indoor air quality and equipment and services, access to community or plan-sponsored programs and events to address enrollee social needs (such as nonfitness club memberships, community or social clubs, park passes, etc.), complementary therapies (offered alongside traditional medical treatment), services supporting self-direction, structural home modifications, and general supports for living (for example, plan-sponsored housing consultations and/or subsidies for rent or assisted living communities or subsidies for utilities such as gas, electric, and water).