Federal Register, Volume 86 Issue 11 (Tuesday, January 19, 2021)

[Federal Register Volume 86, Number 11 (Tuesday, January 19, 2021)]
[Rules and Regulations]
[Pages 5864-6135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00538]

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Vol. 86

Tuesday,

No. 11

January 19, 2021

Part IX

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 405, 417, 422, et al.

Medicare and Medicaid Programs; Contract Year 2022 Policy and Technical
Changes to the Medicare Advantage Program, Medicare Prescription Drug
Benefit Program, Medicaid Program, Medicare Cost Plan Program, and
Programs of All-Inclusive Care for the Elderly; Final Rule

Federal Register / Vol. 86 , No. 11 / Tuesday, January 19, 2021 /
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 417, 422, 423, 455, and 460

[CMS-4190-F2]
RIN 0938-AT97

Medicare and Medicaid Programs; Contract Year 2022 Policy and
Technical Changes to the Medicare Advantage Program, Medicare
Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan
Program, and Programs of All-Inclusive Care for the Elderly

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).

ACTION: Final rule.

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SUMMARY: This final rule will revise regulations for the Medicare
Advantage (Part C) program, Medicare Prescription Drug Benefit (Part D)
program, Medicaid program, Medicare Cost Plan program, and Programs of
All-Inclusive Care for the Elderly (PACE) to implement certain sections
of the Bipartisan Budget Act of 2018 and the Substance Use Disorder
Prevention that Promotes Opioid Recovery and Treatment--(SUPPORT) for
Patients and Communities Act (hereinafter referred to as the SUPPORT
Act), enhance the Part C and D programs and the PACE program, codify
several existing CMS policies, make required statutory changes,
implement other technical changes, and make routine updates. As stated
in the final rule that appeared in the Federal Register on June 2,
2020, CMS is fulfilling its intention to address the remaining
proposals from the February 2020 proposed rule here. Although the
provisions adopted in this second final rule will be in effect during
2021, most provisions will apply to coverage beginning January 1, 2022.
Notwithstanding the foregoing, for proposals from the February 2020
proposed rule that would codify statutory requirements that were
already in effect prior to this rule's appearance in the Federal
Register, CMS reminds organizations, plan sponsors, and other readers
that the statutory provisions apply and will continue to be enforced.
Similarly, for the proposals from the February 2020 proposed rule that
would implement the statutory requirements in sections 2007 and 2008 of
the SUPPORT Act, CMS intends to implement these statutory provisions
consistent with their effective provisions.

DATES:
Effective Date: These regulations are effective March 22, 2021.
Applicability Dates: Most of the provisions in this rule will be
applicable to coverage beginning January 1, 2022, except as noted
below.
The Part D Income Related Monthly Adjustment Amount (IRMAA)
calculation update in Sec. 423.286(d)(4)(ii) is applicable March 22,
2021. The provision defining targeted beneficiaries for MTM at Sec.
423.153(d)(2) is applicable March 22, 2021. The provisions on automatic
escalation to the independent outside entity under a Medicare Part D
drug management program (DMP) at Sec. Sec. 423.590(i) and 423.600(b)
and the related provisions on information on appeal rights in the
beneficiary notices at Sec. Sec. 423.153(f)(5)(ii)(C)(3),
423.153(f)(6)(ii)(C)(4), and 423.153(f)(8)(i) are applicable March 22,
2021. The provisions defining the term ``parent organization'' for MA
and Part D plans at Sec. Sec. 422.2 and 423.4 are applicable March 22,
2021. The General Requirements for Applicable Integrated Plans and
Continuation of Benefits provisions at Sec. Sec. 422.629 and 422.632
are applicable March 22, 2021.
In order to help ensure that Part D sponsors have sufficient
implementation time, the beneficiary real time benefit tool (RTBT)
(Sec. 423.128(d)(4)) requirement will not be applicable until January
1, 2023.
Due to operational considerations, revisions to the Special Needs
Plan Model of Care requirements in Sec. 422.101(f) are intended for
implementation (that is, applicability) for models of care for contract
year 2023. Plans that are required to submit models of care for
contract year 2022 are due to submit MOCs by February 17, 2021; those
submissions will be evaluated based on the regulations in effect at
that time (that is, without the amendments adopted here) and SNPs must
implement and comply with their approved MOCs in connection with
coverage in 2022. Moving the applicable implementation of the SNP MOC
provisions to contract year 2023 will allow SNPs and CMS to construct
the necessary processes for full implementation and enforcement of the
final rule. When MOCs for contract year 2023 are submitted for review
and approval in early 2022, the regulations in this final rule will be
used to evaluate those MOCs for approval.

SUPPLEMENTARY INFORMATION: The Code of Federal Regulations (CFR) will
be updated consistent with the respective effective date of each
provision. The applicability and effective dates are discussed in the
summary and preamble for each of these items. Because CMS is finalizing
the call center, marketing, and communications requirements under
Sec. Sec. 422.111(h)(1), 422.2260 through 422.2274, Sec. Sec.
423.128(d)(1), and 423.2260 through 423.2274 as applicable for the
contract year and coverage beginning January 1, 2022, these
requirements will apply to call center operations, marketing, and
mandatory disclosures occurring in 2021 for enrollments made for
contract year 2022.

FOR FURTHER INFORMATION CONTACT:
Cali Diehl, (410) 786-4053, Theresa Wachter, (410) 786-1157, or
Christopher McClintick, (410) 786-4682--General Questions.
Kimberlee Levin, (410) 786-2549--Part C Issues.
Lucia Patrone, (410) 786-8621--Part D Issues.
Kristy Nishimoto, (206) 615-2367--Beneficiary Enrollment and
Appeals Issues.
Daniel Deisroth, (443) 431-4171--PACE Issues.
Debra Drew, (410) 786-6827--Program Integrity Issues.
Tobey Oliver, (202) 260-1113--D-SNP Appeals and Grievances.

I. Executive Summary and Background

A. Executive Summary

1. Purpose
The primary purpose of this final rule is to implement certain
sections of the following federal laws related to the Medicare
Advantage (MA or Part C) and Prescription Drug Benefit (Part D)
programs:
The Bipartisan Budget Act of 2018 (hereinafter referred to
as the BBA of 2018), and
The Substance Use-Disorder Prevention that Promotes Opioid
Recovery and Treatment (SUPPORT) for Patients and Communities Act
(hereinafter referred to as the SUPPORT Act).
The rule also includes a number of changes to: Strengthen and
improve the Part C and D programs and the PACE program, codify in
regulation several CMS interpretive policies previously adopted through
the annual Call Letter and other guidance documents, make required
statutory changes, implement other technical changes, and make routine
updates.
In the June 2020 final rule (85 FR 33796), CMS addressed a
selection of proposals from the February 2020 proposed rule (85 FR
9002). In this final rule, CMS is addressing the remaining proposals
from the February 2020 proposed rule with two exceptions: (1)

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Maximum Out-of-Pocket (MOOP) Limits for Medicare Parts A and B Services
(Sec. Sec. 422.100 and 422.101) and (2) Service Category Cost Sharing
Limits for Medicare Parts A and B Services and per Member per Month
Actuarial Equivalence Cost Sharing (Sec. Sec. 422.100 and 422.113).
Therefore, we may address the two remaining proposals from the February
18, 2020, proposed rule (85 FR 9002) not included in this final rule in
subsequent rulemaking.
In so doing, the final rule addresses the following needs for
federal regulatory action as set forth below:
The regulations implementing the provisions of BBA of 2018
relating to Medicare Advantage Special Needs Plans address, as directed
by law, care management requirements through the development and
implementation of models of care. Given the context of these provisions
is a federal program, Congress has mandated a federal regulatory
approach with respect to these provisions.
The provisions implementing the provisions of BBA of 2018
relating to the Coverage Gap Discount Program and the Part D Income
Related Monthly Adjustment Amount (IRMAA) improve the operation of
government programs by ensuring the regulations conform to the statute
and the distribution of resources determined by Congress in statute.
Given the context of these provisions is a federal program, Congress
has mandated a federal regulatory approach with respect to these
provisions.
The provisions implementing the SUPPORT Act address the
misuse and abuse of opioids in the manners directed by Congress. This
includes the provisions related to Mandatory Drug Management Programs,
Beneficiaries with History of Opioid-Related Overdose Included in Drug
Management Programs, Automatic Escalation to External Review under a
Medicare Part D Drug Management Program for At-Risk Beneficiaries,
Suspension of Pharmacy Payments Pending Investigations of Credible
Allegations of Fraud and Program Integrity Transparency Measures,
Section 2008 of the SUPPORT Act, Section 6063 of the SUPPORT Act,
Beneficiaries' Education on Opioid Alternatives, and Beneficiaries with
Sickle Cell Disease. Given the context of these provisions is a federal
program or impacts on several federal programs, Congress has mandated a
federal regulatory approach with respect to these provisions.
The provisions which strengthen and improve the PACE
program with respect to Service Delivery Request Processes under PACE
improve the operation of government programs by ensuring documentation
is available for oversight required by statute. Given the context of
these provisions is a federal program, a federal regulatory approach is
appropriate with respect to these provisions.
The provisions relating to Beneficiary Real Time Benefit
Tools address inadequate and incomplete information available to Part D
beneficiaries with regards to the choices they have for prescription
drugs. Given the context of these provisions is a federal program, a
federal regulatory approach is appropriate with respect to these
provisions.
The provisions relating to permitting a second,
``preferred,'' specialty tier in Part D address externalities caused by
the current specialty tier regulation--specifically the absence of
negotiation leverage and incentives within the Part D specialty tier.
Given the context of these provisions as a federal program, a federal
regulatory approach is appropriate with respect to these provisions.
The provisions relating to the Medicare Advantage (MA) and
Part D Prescription Drug Program Quality Rating System improve the
operation of government programs by making updates to reflect changes
in measures (thereby ensuring the government program does not use
outdated methodologies) and clarifying existing regulations (thereby
answering questions regulated parties may have). These and other
provisions also codify sub-regulatory guidance, which is an improvement
in that regulated parties and CMS have greater clarity regarding the
application of these policies as a rule. Given the context of these
provisions is a federal program, a federal regulatory approach is
appropriate with respect to these provisions.
2. Summary of the Major Provisions
a. Mandatory Drug Management Programs (DMPs) (Sec. 423.153)
Section 704 of the Comprehensive Addiction and Recovery Act of 2016
(hereinafter referred to as CARA) included provisions permitting Part D
sponsors to establish drug management programs (DMPs) for beneficiaries
at-risk for misuse or abuse of frequently abused drugs (FADs). Under
the DMPs in place today, Part D sponsors engage in case management of
potential at-risk beneficiaries (PARBs) through contact with their
prescribers to determine whether the beneficiary is at-risk for
prescription drug misuse or abuse. If a beneficiary is determined to be
at-risk, after notifying the beneficiary in writing, the sponsor may
limit their access to coverage of opioids and/or benzodiazepines to a
selected prescriber and/or network pharmacy(ies) and/or through a
beneficiary-specific point-of-sale (POS) claim edit.
While the majority of Part D sponsors have already voluntarily
implemented DMPs, CMS proposed regulations to implement section 2004 of
the SUPPORT Act which require Part D sponsors to establish DMPs for
plan years beginning on or after January 1, 2022.
CMS is finalizing the requirement for mandatory DMPs with an
additional modification so that plans without a Pharmacy and
Therapeutics (P&T) committee can comply with the DMP regulation.
b. Beneficiaries With History of Opioid-Related Overdose Included in
Drug Management Programs (DMPs) (Sec. 423.153)
A past overdose is the risk factor most predictive for another
overdose or suicide-related event.\1\ In light of this fact, in section
2006 of the SUPPORT Act, Congress required CMS to include Part D
beneficiaries with a history of opioid-related overdose (as defined by
the Secretary) as PARBs under a Part D plan's DMP. CMS is also required
under this section to notify the sponsor of such identifications. In
line with this requirement, in lieu of modifying the definition of
``potential at-risk beneficiary'' at Sec. 423.100 as proposed, CMS is
finalizing the clinical guideline criteria at new paragraph Sec.
423.153(f)(16)(ii)(2) to include a Part D eligible individual who is
identified as having a history of opioid-related overdose, beginning
January 1, 2022. Inclusion of beneficiaries with a history of opioid-
related overdose as PARBs in DMPs will allow Part D plan sponsors and
providers to work together to closely assess these beneficiaries'
opioid use and determine whether any additional action is warranted.
The clinical guideline criteria CMS is finalizing at Sec.
423.153(f)(16)(ii)(2) specify that both a principal diagnosis of
opioid-related overdose and a recent Part D opioid prescription are
required components to meet the definition of a PARB based on the
history of opioid-related overdose. Additionally, CMS is making some
revisions to the terminology used in the clinical

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guideline criteria at Sec. 423.153(f)(16)(ii)(2) from what was
initially proposed in the definition at Sec. 423.100 to better
characterize the data sources and opioid prescription criteria to be
used to identify beneficiaries meeting the definition of a PARB based
on a history of opioid-related overdose. The clinical guideline
criteria mirror the definition of ``potential at-risk beneficiary''
that was initially proposed but relocated to Sec.
423.153(f)(16)(ii)(2) to improve clarity of the regulation text.
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\1\ Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, Katz IR.
Substance use disorders and the risk of suicide mortality among men
and women in the U.S. Veterans Health Administration. Addiction.
2017 Jul;112(7):1193-1201. doi: 10.1111/add.13774.
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c. Beneficiaries' Education on Opioid Risks and Alternative Treatments
(Sec. 423.128)
Sponsors of Part D prescription drug plans, including MA-PDs and
standalone PDPs, must disclose certain information about their Part D
plans to each enrollee in a clear, accurate, and standardized form at
the time of enrollment and at least annually thereafter under section
1860D-4(a)(1)(a) of the Act. Section 6102 of the SUPPORT Act amended
section 1860D-4(a)(1)(B) of the Act to require that Part D sponsors
also must disclose to each enrollee information about the risks of
prolonged opioid use. In addition to this information, with respect to
the treatment of pain, MA-PD sponsors must disclose coverage of non-
pharmacological therapies, devices, and non-opioid medications under
their plans. Sponsors of standalone PDPs must disclose coverage of non-
pharmacological therapies, devices, and non-opioid medications under
their plans and under Medicare Parts A and B. Section 6102 also amended
section 1860D-4(a)(1)(C) to permit Part D sponsors to disclose this
opioid risk and alternative treatment coverage information to only a
subset of plan enrollees rather than disclosing the information to each
plan enrollee. We are finalizing our proposal with only one
modification to make the requirement applicable beginning January 1,
2022, rather than January 1, 2021 as proposed.
d. Automatic Escalation to External Review Under a Medicare Part D Drug
Management Program (DMP) for At-Risk Beneficiaries (Sec. Sec. 423.153,
423.590, and 423.600)
CMS proposed that, if on reconsideration a Part D sponsor affirms
its denial of a DMP appeal, the case shall be automatically forwarded
to the independent outside entity for review and resolution by the
expiration of the adjudication timeframe applicable to the plan level
appeal. We also proposed conforming revisions to the notices that are
sent to beneficiaries. In the February 2020 proposed rule, we solicited
feedback on these proposals. As a result, we received several comments
related to the timeframe in which a plan sponsor has to forward the
case file to the IRE. Specifically, commenters requested that plan
sponsors have additional time beyond the applicable adjudication
timeframe in which to assemble and forward the administrative case file
to the IRE. As a result of this feedback, we are finalizing the
automatic escalation provision with a modification to reflect that plan
sponsors must forward the case file to the independent outside entity
no later than 24 hours following the expiration of the adjudication
timeframe applicable to the plan level appeal. This approach is
consistent with regulations applicable to cases that must be forwarded
to the IRE if the plan sponsor is untimely in its decision making and,
we believe, remains consistent with the enrollee protections set forth
in the SUPPORT Act. We are also finalizing the provisions related to
beneficiary notices. The following provisions of this final rule are
applicable 60 days after the publication date of this final rule:
Sec. Sec. 423.590(i) and 423.600(b) related to auto-forwarding
redeterminations made under a DMP to the IRE and the provisions related
to information on appeal rights in the beneficiary notices at
Sec. Sec. 423.153(f)(5)(ii)(C)(3), 423.153(f)(6)(ii)(C)(4), and
423.153(f)(8)(i).
e. Suspension of Pharmacy Payments Pending Investigations of Credible
Allegations of Fraud and Program Integrity Transparency Measures
(Sec. Sec. 405.370, 422.500, 422.503, 423.4, 423.504, and 455.2)
In the proposed rule, CMS proposed to undertake rulemaking to
implement the provisions outlined in sections 2008 and 6063 of the
SUPPORT Act, which are summarized in the following sections (1) and
(2). Implementing these provisions will allow CMS, MA organizations and
Medicare Part D plan sponsors (including MA organizations offering MA-
PD plans) to share data and information regarding unscrupulous actors,
take swift action based on such data and information, and achieve
enhanced outcomes in our efforts to fight the opioid crisis. In
addition, this regulation will provide the means for more effective
referrals to law enforcement based on plan sponsor reporting,
ultimately resulting in reduced beneficiary harm and greater savings
for the Medicare program.
(1) Section 2008 of the SUPPORT Act
Title XVIII of the Social Security Act (the Act) provides authority
for CMS to suspend payments to Medicare fee-for-service (FFS) providers
and suppliers pending an investigation of a credible allegation of
fraud, unless a good cause exception applies. While Part D plan
sponsors currently have the discretion to suspend payments to
pharmacies in the plans' networks, section 2008 requires that plan
sponsors' payment suspensions based on credible allegations of fraud be
implemented in the same manner as CMS implements such payment
suspensions in FFS Medicare. Under this provision, plan sponsors are
required to notify the Secretary of the imposition of a payment
suspension that is based on a credible allegation of fraud and may do
so using a secure website portal. The reporting requirement applicable
to plan sponsors will only apply to suspended payments based on
credible allegations of fraud as required by section 2008 and will not
extend to other payment suspensions for which plan sponsors already
have authority. Section 2008 also clarifies that a fraud hotline tip,
without further evidence, is not considered a credible fraud allegation
for payment suspension purposes. The statutory effective date for
section 2008 is for plan years beginning on or after January 1, 2020.
(2) Section 6063 of the SUPPORT Act
Section 6063 requires, effective not later than 2 years after the
date of enactment, the Secretary to establish a secure internet website
portal to enable the sharing of data among MA plans, prescription drug
plans, and the Secretary, and referrals of ``substantiated or
suspicious activities'' of a provider of services (including a
prescriber) or a supplier related to fraud, waste, or abuse to initiate
or assist with investigations conducted by eligible entities with a
contract under section 1893 of the Act, such as a Medicare program
integrity contractor. The Secretary is also required to use the portal
to disseminate information to all MA plans and prescription drug plans
on providers and suppliers that were referred to CMS for fraud, waste,
and abuse in the last 12 months; were excluded or the subject of a
payment suspension; are currently revoked from Medicare; or, for such
plans that refer substantiated or suspicious activities to CMS, whether
the related providers or suppliers were subject to administrative
action for similar activities. The Secretary is required to define what
constitutes substantiated or suspicious activities. Section 6063
specifies that a

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fraud hotline tip without further evidence shall not be treated as
sufficient evidence for substantiated fraud, waste, or abuse.
Section 6063 also requires the Secretary to disseminate quarterly
reports to MA plans and prescription drug plans on fraud, waste, and
abuse schemes and suspicious activity trends reported through the
portal. The Secretary's reports are to maintain the anonymity of
information submitted by plans and to include administrative actions,
opioid overprescribing information, and other data the Secretary, in
consultation with stakeholders, determines important.
Beginning with plan year 2021, section 6063 also requires Part D
plan sponsors to submit to the Secretary information on investigations,
credible evidence of suspicious activities of providers or suppliers
related to fraud, and other actions taken by the plans related to
inappropriate opioid prescribing. The Secretary is required to issue
regulations that define the term inappropriate prescribing with respect
to opioids, identify a method to determine if providers are
inappropriately prescribing, and identify the information plan sponsors
are required to submit.
The applicability date of the section 2008 and section 6063
provisions will be for plan years beginning on or after January 1, 2022
because of several factors. The first factor is the need to ensure that
the web-based portal is complete and operational for plan sponsor's
use. While the development of the web-based portal began when the
legislation was enacted, CMS was unable to complete the development of
the portal in time for its full implementation in plan year 2021. In
addition, the portal has required several key updates to reflect the
requirements in this regulation. Additional factors include the time
needed for plan sponsors to determine internal procedures to meet the
requirements outlined in this rule; the need for CMS to obtain feedback
from plan sponsors to address any challenges encountered with the web-
based portal; and the need to provide plan sponsors with the
opportunity to address any other operational challenges with
implementing these provisions, including potential changes that may be
needed due to the COVID-19 public health emergency. Furthermore, the
applicability date is later than the effective dates in the SUPPORT Act
because the publication of this final rule is occurring after the bid
deadline for plan year 2021. However, where the statute is self-
implementing, the delay in applicability of these regulations is not a
barrier to enforcement of the statutory provisions.
f. Medicare Advantage (MA) and Part D Prescription Drug Program Quality
Rating System (Sec. Sec. 422.162, 422.164, 422.166, 422.252, 423.182,
423.184, and 423.186)
In the Medicare Program; Contract Year 2019 Policy and Technical
Changes to the Medicare Advantage, Medicare Cost Plan, Medicare Fee-
for-Service, the Medicare Prescription Drug Benefit Programs, and the
PACE Program Final Rule (hereinafter referred to as the April 2018
final rule), we codified the methodology for the Star Ratings system
for the MA and Part D programs, respectively, at Sec. Sec. 422.160
through 422.166 and Sec. Sec. 423.180 through 423.186. We have stated
we will propose through rulemaking any changes to the methodology for
calculating the ratings, the addition of new measures, and substantive
measure changes.
At this time we are codifying additional existing rules for
calculating the ratings used for MA Quality Bonus Payments,
implementing updates to the Health Outcomes Survey measures, adding new
Part C measures, clarifying the rules around contract consolidations
and application of the adjustment for extreme and uncontrollable
circumstances when data are missing due to data integrity concerns, and
making additional technical clarifications. Unless otherwise stated,
data will be collected and performance measured using these rules and
regulations for the 2022 measurement period and the 2024 Star Ratings.
g. Permitting a Second, ``Preferred,'' Specialty Tier in Part D
(Sec. Sec. 423.104, 423.560, and 423.578)
We are finalizing regulations to allow Part D sponsors to establish
up to two specialty tiers and design an exceptions process that exempts
drugs on these tiers from tiering exceptions to non-specialty tiers.
Under this final rule, Part D sponsors will have the flexibility to
determine which Part D drugs are placed on either specialty tier,
subject to the ingredient cost threshold established according to the
methodology we proposed and the requirements of the CMS formulary
review and approval process under Sec. 423.120(b)(2). To maintain Part
D enrollee protections, we will codify a maximum allowable cost sharing
that would apply to the higher cost-sharing specialty tier. Further, we
will require that if there are two specialty tiers, one must be a
``preferred'' tier that offers lower cost sharing than the proposed
maximum allowable cost sharing.
We note that we did not propose to revise and are not revising
Sec. 423.578(c)(3)(ii), which requires Part D sponsors to provide
coverage for a drug for which a tiering exception was approved at the
cost sharing that applies to the preferred alternative. Because the
exemption from tiering exceptions for specialty tier drugs under Sec.
423.578(a)(6)(iii) as proposed would apply only to tiering exceptions
to non-specialty tiers, the existing requirement at Sec.
423.578(c)(3)(ii) will require Part D sponsors to permit tiering
exception requests for drugs on the higher cost-sharing specialty tier
to the lower cost-sharing, specialty tier.
To improve transparency, we will codify current methodologies for
cost sharing and calculations relative to the specialty tier, with some
modifications. First, we will codify a maximum allowable cost sharing
permitted for the specialty tiers of between 25 percent and 33 percent,
depending on whether the plan includes a deductible, as described
further in section IV.E.4. of this final rule. We determine the
specialty-tier cost threshold--meaning whether the drug has costs high
enough to qualify for specialty tier placement--based on a 30-day
equivalent supply. Additionally, we base the determination of the
specialty-tier cost threshold on the ingredient cost reported on the
prescription drug event (PDE). We will also maintain a specialty-tier
cost threshold for both specialty tiers that is set at a level that, in
general, reflects drugs with monthly ingredient costs that are in the
top 1 percent, as described further in section IV.E.6. of this final
rule. Finally, we will adjust the specialty-tier cost threshold, in an
increment of not less than 10 percent, when an annual analysis of PDE
data shows that an adjustment is necessary to recalibrate the
specialty-tier cost threshold so that it only reflects Part D drugs
with the top one percent of monthly ingredient costs. We will determine
annually whether the adjustment would be triggered and announce the
specialty-tier cost threshold annually via an HPMS memorandum or a
comparable guidance document.
We are finalizing these provisions as proposed, except that we are
not finalizing our proposal to specify a specialty-tier cost threshold
of $780. Additionally, in response to comments, we are finalizing new
paragraph Sec. 423.104(d)(2)(iv)(A)(6), which describes the
eligibility for placement on the specialty tier of newly-FDA-

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approved Part D drugs. These provisions will apply for coverage year
2022.
To retain the policies in effect before coverage year 2022, we are
amending the definition of specialty tier at Sec. 423.560 by adding
paragraph (i) to clarify that the existing definition will be in effect
before coverage year 2022, and paragraph (ii) to cross reference the
definition which appears in Sec. 423.104(d)(2)(iv), which will apply
beginning coverage year 2022. Additionally, as discussed in section
IV.E.2. of this final rule, we are amending Sec. 423.578(a)(6)(iii) by
adding paragraph (A) to cross reference the definition of specialty
tier which will apply before coverage year 2022, and paragraph (B) to
cross reference placement of the definition of specialty tier at Sec.
423.104(d)(2)(iv) which will apply beginning coverage year 2022.
Additionally, paragraph (A) will remove the phrase ``and biological
products,'' and paragraph (B) will (1) reflect the possibility of a
second specialty tier, and (2) clarify that Part D sponsors may design
their exception processes so that Part D drugs on the specialty tier(s)
are not eligible for a tiering exception to non-specialty tiers.
h. Beneficiary Real Time Benefit Tool (RTBT) (Sec. 423.128)
This rule finalizes regulations to require that Part D plan
sponsors implement a beneficiary real-time benefit tool (RTBT) by
January 1, 2023. The RTBT must allow enrollees to view the information
included in the prescriber RTBT system, which will include accurate,
timely, and clinically appropriate patient-specific real-time formulary
and benefit information (including cost, formulary alternatives and
utilization management requirements). This rule permits plans to use
existing secure patient portals to fulfill this requirement, to develop
a new portal, or use a computer application. Plans are required to make
this information available to enrollees who call the plan's customer
service call center.
In order to encourage enrollees to use the beneficiary RTBT, plans
are permitted to offer rewards and incentives (RI) to their enrollees
who log onto the beneficiary RTBT or seek to access this information
via the plan's customer service call center, provided the value of the
RI offered is a reasonable amount.
i. Service Delivery Request Processes Under PACE (Sec. Sec. 460.104
and 460.121)
Currently, PACE participants or their designated representatives
may request to initiate, eliminate or continue a service, and in
response, the PACE organization must process this request under the
requirements at Sec. 460.104(d)(2). These requests are commonly
referred to by CMS and the industry as ``service delivery requests.''
In response to feedback from PACE organizations and advocacy groups,
and based on our experience monitoring PACE organizations' compliance
with our current requirements, we proposed moving the requirements for
processing service delivery requests from Sec. 460.104(d)(2) and
adding them to a new Sec. 460.121 in order to increase transparency
for participants and reduce confusion for PACE organizations. We also
proposed modifying these provisions in order to reduce unnecessary
burden on PACE organizations and eliminate unnecessary barriers for
participants who have requested services that a PACE organization would
be able to immediately approve. Specifically, we proposed to more
clearly define what constitutes a service delivery request, and provide
transparent requirements for how those requests would be processed by
the PACE organization, including who can make a request, how a request
can be made, and the timeframe for processing a service delivery
request. We also proposed allowing the interdisciplinary team (IDT) to
bypass the full processing of a service delivery request under the new
proposed requirements in Sec. 460.121 when the request can be approved
in full by an IDT member at the time it is made. For all other service
delivery requests that are brought to the IDT, we proposed maintaining
the requirement that an in-person reassessment must be conducted prior
to a service delivery request being denied, but we proposed eliminating
the requirement that a reassessment (either in-person or through remote
technology) be conducted when a service delivery request can be
approved. Lastly, we proposed adding participant protections;
specifically, we proposed increasing notification requirements in order
to ensure participants understand why their request was denied, and we
proposed adding reassessment criteria in order to ensure reassessments
are meaningful to the service delivery request, and that the IDT takes
them into consideration when rendering a decision.
We are finalizing these provisions as proposed, with some minor
modifications. For example, all references to ``service delivery
requests'' in Sec. Sec. 460.104, 460.121 and 460.122 have been
replaced with the term ``service determination request.'' In addition,
we have modified Sec. 460.121(d)(2) to limit service determination
requests to requests that are received by PACE organization employees
and contractors who provide direct care in the participant's residence,
the PACE center, or while transporting participants.
j. Beneficiaries With Sickle Cell Disease (SCD) (Sec. 423.100)
Beneficiaries with active cancer-related pain, residing in a long-
term care facility, or receiving hospice, palliative, or end-of-life
care currently meet the definition of ``exempt beneficiary'' with
respect to DMPs in Sec. 423.100. Section 1860D-4(c)(5)(C)(ii)(III) of
the Act provides the Secretary with the authority to elect to treat
other beneficiaries as exempted from DMPs. Due to concerns of
misapplication of opioid restrictions in the sickle cell disease (SCD)
patient population, CMS proposed that beneficiaries with SCD be
classified as exempt beneficiaries. CMS is finalizing the definition of
an exempted beneficiary to include beneficiaries with SCD as proposed
with one modification to clarify that this definition is applicable
starting in plan year 2022.
3. Summary of Costs and Benefits

----------------------------------------------------------------------------------------------------------------
Primary impact to plans and
sponsors, enrollees, and
Provision Description medicare trust fund as
applicable
----------------------------------------------------------------------------------------------------------------
a. Mandatory Drug Management Programs This provision will codify the SUPPORT Act There is a 10 year cost of
(DMPs) (Sec. 423.153). requirement making it mandatory that Part $4.0 million. Part D
D sponsors implement DMPs, starting in sponsors will incur s a
plan year 2022. special first year cost of
3.2 million with ongoing
costs of $0.1 million in
later years.

[[Page 5869]]

b. Beneficiaries with History of As finalized, this provision will require Part D beneficiaries with a
Opioid-Related Overdose Included in that, starting in plan year 2022, CMS history of opioid-related
Drug Management Programs (DMPs) identify beneficiaries enrolled in overdose have higher than
(Sec. 423.153). Medicare Part D with a history of opioid- average drug costs. CMS
related overdose (as defined by the estimates that as a result
Secretary) and include such individuals of reduced utilization of
as PARBs for prescription drug abuse or drugs for beneficiaries
misuse under sponsors' DMPs. participating in DMPs, there
will be a savings of 5
percent of the current
annual drug costs for
enrollees with a history of
opioid overuse. After the
first year, the reduction in
drug utilization may result
in an annual savings of $7.7
million to the Medicare
Trust Fund resulting from
reduced drug spending by
beneficiaries. The costs for
case management and related
paperwork is estimated at
$10.1 million annually.
c. Beneficiaries' Education on Opioid CMS is finalizing requirements that Part D The requirements set forth
Risks and Alternative Treatments sponsors and MA-PDs must provide under 1860D-4(a)(1)(B) will
(Sec. 423.128). information on the risks of opioids and cost approximately $0.5
alternative therapies to all Part D million in the first year to
beneficiaries with modification starting account for one-time
in plan year 2022. programming costs and $0.4
million in the following
years.
d. Automatic Escalation to External Under this final rule, if a Part D sponsor We estimate there will be
Review under a Medicare Part D Drug denies a DMP appeal, the case shall be about 28,600 appeals per
Management Program (DMP) for At-Risk automatically forwarded to the year, of which 0.08 percent
Beneficiaries (Sec. Sec. 423.153, independent outside entity for review and will be denied and
423.590, and 423.600). resolution. A plan sponsor must forward automatically escalated to
the case to the independent outside the independent review
entity no later than 24 hours following entity (IRE). Therefore,
the expiration of the adjudication there are approximately 23
timeframe applicable to the plan level cases (0.08 percent *
appeal. Finally, this final rule 28,600) annually affected by
establishes conforming revisions to the this provision. Since most
notices that are sent to beneficiaries. IRE cases are judged by a
physician at a wage of
$202.46, and typically an
IRE will take at most 1 hour
to review, the total burden
is about $4,656.58 (23 cases
* $202.46 * 1 hour).
e. Suspension of Pharmacy Payments CMS is finalizing policies to implement While we believe there may be
Pending Investigations of Credible two sections of the SUPPORT Act, which savings generated through
Allegations of Fraud and Program will--(1) require Part D plan sponsors to actions taken by plans that
Integrity Transparency Measures notify the Secretary of the imposition of will conduct their own due
(Sec. Sec. 405.370, 422.500, a payment suspension on pharmacies that diligence from the reporting
422.503, 423.4, 423.504, and 455.2). is based on a credible allegation of and sharing of
fraud, impose such payment suspensions administrative actions
consistent with the manner in which CMS between CMS and plans
implements payment suspensions in fee-for sponsors, as well as
service Medicare, and report such additional law enforcement
information using a secure website actions, we cannot estimate
portal; (2) define inappropriate the impact at this time. The
prescribing with respect to opioids; (3) Part C and Part D sponsors
require plan sponsors to submit to the will incur an initial
Secretary information on investigations aggregate cost of $15.2
and other actions related to million with level
inappropriate opioid prescribing; (4) subsequent year aggregate
define ``substantiated or suspicious costs of $9.6 million.
activities'' related to fraud, waste, or
abuse; and (5) establish a secure portal
which would enable the sharing of data
and referrals of ``substantiated or
suspicious activities'' related to fraud,
waste, or abuse among plan sponsors, CMS,
and CMS's program integrity contractors.
f. Medicare Advantage (MA) and Part D We are codifying additional existing rules There will be no, or
Prescription Drug Program Quality for calculating MA Quality Bonus Payments negligible, impact on the
Rating System (Sec. Sec. 422.162, ratings, implementing updates to the Medicare Trust Fund from
422.164, 422.166, 422.252, 423.182, Health Outcomes Survey measures, adding these provisions.
423.184, and 423.186). new Part C measures, clarifying the rules
around contract consolidations and
application of the adjustment for extreme
and uncontrollable circumstances when
data are missing due to data integrity
concerns, and making additional technical
clarifications.
g. Permitting a Second, CMS is finalizing regulations to (1) allow Permitting Part D sponsors to
``Preferred,'' Specialty Tier in Part D sponsors to establish a second, establish a second,
Part D (Sec. Sec. 423.104, ``preferred,'' specialty tier at a lower ``preferred,'' specialty
423.560, and 423.578). cost-sharing threshold than the current tier is unlikely to have a
specialty tier; (2) codify the existing material impact on Part D
maximum cost sharing for the highest costs to either the
specialty tier; (3) codify a methodology government or Part D
to determine annually the enrollees.
specialty[dash]tier cost threshold using
ingredient cost and increase the
threshold when certain conditions are
met; (4) require sponsors to permit
tiering exceptions between the two
specialty tiers; and (5) permit sponsors
to determine which drugs go on either
specialty tier.

[[Page 5870]]

h. Beneficiary Real Time Benefit Tool CMS is finalizing regulations to require Adoption of a beneficiary
(RTBT) (Sec. 423.128). that each Part D plan implement a RTBT will be an additional
beneficiary real time benefit tool by cost and burden on Part D
January 1, 2023. he RTBTl must enable sponsors. Based on our
enrollees to have the information estimates, we believe this
included in the prescriber RTBT system will cost Part D plans about
which includes accurate, timely, and $4.0 million for all plans
clinically appropriate patient-specific in the first year based on
real-time formulary and benefit the costs for them to
information (including cost, formulary reprogram their computer
alternatives and utilization management systems.
requirements). Additionally, the voluntary
provision of rewards by Part
D sponsors to enrollees
using RTBT will have an
impact of $0.7 million in
the first year, in order to
implement the program, and
$0.4 million in subsequent
years in order to maintain
the program. These are
maximum impacts assuming all
Part D sponsors choose to
implement the rewards and
incentives, and it remains
to be seen whether or not
this will be the case.
i. Service Delivery Request Processes CMS is finalizing the process by which The proposed revisions create
under PACE (Sec. Sec. 460.104 and PACE organizations address service efficiencies which are
460.121). determination requests. Currently the IDT estimated to create cost
must determine the appropriate member(s) savings of $16.8 million in
of the IDT to conduct a reassessment, the first year and gradually
perform a reassessment, and render a increase to $ 21.3 million
decision on each service determination in 2031. The net savings
request. However, our experience shows over 10 years is $193.8
that approximately 40 percent of all million. The savings are
requests could be immediately approved in true savings to PACE
full by an IDT member. We are therefore organizations as a result of
removing the obligation for a request to reduced administrative
be brought to the IDT or for a burden.
reassessment to be conducted when a
member of the IDT receives and can
approve a service determination request
in full at the time it is made. We are
also removing the requirement to conduct
a reassessment in response to a service
determination request except when a
request would be partially or fully
denied.
j. Beneficiaries with Sickle Cell CMS is finalizing that beneficiaries with We estimate that the impact
Disease (SCD) (Sec. 423.100). SCD are classified as exempted from DMPs of this provision is
starting in plan year 2022. negligible because it will
result in under 70
beneficiaries (i.e.,
beneficiaries with SCD who
meet DMP inclusion criteria
by meeting the definition of
a PARB) being exempted from
DMPs.
----------------------------------------------------------------------------------------------------------------

B. Background

We received approximately 667 timely pieces of correspondence
containing multiple comments for the provisions implemented within this
final rule from the proposed rule titled ``Medicare and Medicaid
Programs; Contract Year 2021 and 2022 Policy and Technical Changes to
the Medicare Advantage Program, Medicare Prescription Drug Benefit
Program, Medicaid Program, Medicare Cost Plan Program, and Programs of
All-Inclusive Care for the Elderly'' which appeared in the Federal
Register on February 18, 2020 (85 FR 9002) (February 2020 proposed
rule). Comments were submitted by MA health plans, Part D sponsors, MA
enrollee and beneficiary advocacy groups, trade associations,
providers, pharmacies and drug companies, states, telehealth and health
technology organizations, policy research organizations, actuarial and
law firms, MACPAC, MedPAC, and other vendor and professional
associations. As mentioned previously, we are finalizing the policies
from the February 2020 proposed rule in more than one final rule. The
first part titled ``Medicare Program; Contract Year 2021 Policy and
Technical Changes to the Medicare Advantage Program, Medicare
Prescription Drug Benefit Program, and Medicare Cost Plan Program''
appeared in the Federal Register on June 2, 2020 (85 FR 33796), and
contained a subset of regulatory changes that impacted MA organizations
and Part D sponsors more immediately, including information needed to
submit their bids by the statutory deadline (the first Monday in June).
The majority of the remaining provisions are addressed here in this
final rule.
The proposals we are finalizing in this final rule range from minor
clarifications to more significant modifications based on the comments
received. Summaries of the public comments received and our responses
to those public comments are set forth in the various sections of this
final rule under the appropriate headings.
We also note that some of the public comments received for the
provisions implemented in this final rule were outside of the scope of
the proposed rule. CMS did not make any proposals in the February 2020
proposed rule on these topics, and as such, these out-of-scope public
comments are not addressed in this final rule. The following paragraphs
summarize the out-of-scope public comments.
We received comments about how CMS will assess compliance with PACE
regulatory requirements, recommendations for changes to PACE grievance
requirements, and a recommendation to require plan sponsors to
automatically escalate all adverse Part D benefit appeals to the
independent review entity. Related to Star Ratings, we received
comments that CMS should only apply the Categorical Adjustment Index if
it positively impacts a contract's Star Rating, and that we adopt
completely new Star Ratings measures or change HEDIS measures during
the COVID-19 pandemic. Related to establishing pharmacy performance
measure reporting requirements, we received comments in favor of
abolishing Direct and Indirect Remunerations, applying 100 percent of
direct pharmacy price concessions at the point-of sale, prohibiting use
of a scoring method that

[[Page 5871]]

solely uses contractual pay-for-performance metrics, and the inclusion
of clinical data as part of any standardized performance measures.
With regard to our proposals to permit Part D sponsors to maintain
up to two specialty tiers, several commenters expressed that, in
general, tiered-formulary structures have misaligned incentives, and
that specialty tiers (particularly a second specialty tier), exacerbate
the impact of such misaligned incentives. These commenters expressed
concerns over the transparency of Part D rebate mechanisms and
suggested that Part D sponsors have incentives to grant more expensive
products with preferred status even when preferred products are not
always the least expensive products, which the commenters posited
increases costs for both Part D enrollees and the government. Some
commenters suggested that CMS should eliminate the specialty tier,
reasoning that elimination of the specialty tier would only produce
modest increases in premiums and cost sharing in other tiers. Some
commenters also suggested that the tiers should be relabeled and
reordered in the hierarchy relative to Part D enrollee cost sharing to
be more consistent with current industry practices. Some commenters
suggested that CMS should mandate that denials at the pharmacy counter
trigger the appeals process. Other commenters suggested that Part D
enrollees stabilized on a specialty drug be exempt from unfavorable
coverage changes (for example, increased cost sharing) resulting from a
secondary specialty tier. Some commenters suggested that CMS should
adjust the Part D rebate sharing formulas to remove plan incentives for
high-cost, high-rebate brand drugs. Some commenters encouraged CMS to
investigate alternative catastrophic reinsurance models to incent the
most savings for health plans implementing a preferred specialty tier.
Some commenters suggested that, like private insurance plans with more
than one specialty tier, CMS should establish an out-of-pocket max in
Part D. Some commenters suggested a comprehensive reform of the Part D
program. Some commenters suggested that transitioning to a biosimilar
biological product on a lower specialty tier may have negative clinical
implications for a patient stabilized on a reference product. (We refer
readers to the Food and Drug Administration (FDA) regarding the safety
and efficacy of biosimilar biological products, and their use in
patients who have previously been treated with the reference product,
as well as in patients who have not previously received the reference
product.) Some commenters took the opportunity to suggest that CMS
should expand the scope of our mid-year formulary change policy to
include biosimilar biological products, reasoning that they are
``equivalent'' to the reference biological products. Some commenters
suggested that CMS should improve the exceptions and appeal process.
Some commenters suggested that CMS should ensure independent pharmacies
cannot be excluded from providing non-preferred specialty tier drugs.
Finally, some commenters suggested that CMS should institute conflict
of interest provisions for pharmacy chains owned by PBMs. (We note that
this rule, as we are finalizing it, would not provide Part D sponsors
with any additional basis to exclude independent pharmacies from their
networks.)
In response to proposed changes to the Coverage Gap Discount
Program (CGDP), two commenters offered suggestions about how the Part D
program could be more cost effective. One of these commenters urged CMS
to prohibit Part D plans from using utilization management tools to
steer utilization away from lower cost biosimilar products. The other
commenter suggested that Congress change the CGDP in a way that would
result in greater use of lower cost drugs throughout the program and
suggested that the program's existence shifts the lower net cost
determinations of generic and biosimilar products.
With regard to Medication Therapy Management (MTM), one commenter
expressed concern about how pharmacists are paid for providing
services, while another questioned the overall cost benefit of the MTM
program.
A commenter recommended that CMS align exemption criteria for the
Pharmacy Quality Alliance's Initial Opioid Prescribing Measures with
DMP exemption criteria; however, these measures are not developed by
CMS and are outside the scope of the proposed rule. We also received a
number of comments that did not refer specifically to our Part D opioid
proposals but more generally (1) referenced the opioid epidemic, (2)
cited concerns that existing restrictions on opioid access may drive
chronic pain patients to illicit markets and/or reduce their quality of
life and functional status, (3) raised questions about Drug Enforcement
Agency (DEA) actions against opioid prescribers and whether they
address the root cause of the opioid epidemic, and (4) opined that
interventions should be focused on illegal drugs.

II. Implementation of Certain Provisions of the Bipartisan Budget Act
of 2018

A. Improvements to Care Management Requirements for Special Needs Plans
(SNPs) (Sec. 422.101)

Congress authorized special needs plans (SNPs) as a type of
Medicare Advantage (MA) plan designed to enroll individuals with
special needs. The three types of SNPs are those designed for: (1)
Institutionalized individuals (defined in Sec. 422.2 as an individual
continuously residing, or expecting to continuously reside, for 90 days
or longer in specified facility) or institutionalized-equivalent
(defined in Sec. 422.2 as living in the community but requiring an
institutional level of care, which is determined using a specified
assessment instrument and conducted consistent with specified
standards); (2) individuals entitled to medical assistance under a
State Plan under title XIX of the Act; or (3) other individuals with
severe or disabling chronic conditions that would benefit from
enrollment in a SNP. As noted in the proposed rule (85 FR 9013 through
9014), there have been a number of changes to the requirements for MA
SNPs since their initial authorization. We proposed changes to Sec.
422.101(f) to implement and extend the latest of those statutory
changes, made by the Bipartisan Budget Act of 2018 (BBA).
As of July 2019, there were 321 SNP contracts with 734 SNP plans
that had at least 11 members. These figures included 208 Dual Eligible
SNP contracts (D-SNPs) with 480 D-SNP plans with at least 11 members,
57 Institutional SNP contracts (I-SNPs) with 125 I-SNP plans with at
least 11 members, and 56 Chronic or Disabling Condition SNP contracts
(C-SNPs) with 129 C-SNP plans with at least 11 members. For more
discussion of the history of SNPs, please see Chapter 16b of the
Medicare Managed Care Manual (MMCM).\2\ The proposed rule summarized
current processes and requirements for the models of care that all SNPs
must use and follow under current law. (85 FR 9014)
---------------------------------------------------------------------------

\2\ For more information pertaining to chapter 16b of the
Medicare Managed Care Manual, please see: https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/mc86c16b.pdf.
---------------------------------------------------------------------------

The Bipartisan Budget Act of 2018 (BBA), enacted into law on
February 9, 2018, amended section 1859(f) of the Act to include new
care management requirements for C-SNPs. We proposed, and are
finalizing here, regulations to

[[Page 5872]]

implement the provisions of the BBA of 2018 and establishes new care
management requirements at Sec. 422.101(f) for all SNPs, including
minimum benchmarks for SNP models of care. Due to operational
considerations, the requirements we are finalizing at Sec. 422.101(f)
are intended for implementation for coverage beginning contract year
2023. Plans that are required to submit MOCs for contract year 2022 are
due to submit MOCs by February 17, 2021; those submissions will be
evaluated based on the regulations in effect at that time (that is,
without the amendments adopted here) and SNPs must implement and comply
with their approved MOCs in connection with coverage in 2022. Moving
the applicable implementation of the SNP MOC provisions to contract
year 2023 will allow SNPs and CMS to construct the necessary processes
for the full implementation and enforcement of this final rule. When
MOCs for contract year 2023 are submitted for review and approval in
early 2022, the regulations in this final rule will be used to evaluate
those MOCs for approval.
Specifically, we proposed the following:
First, we proposed to implement the requirement in section
1859(f)(5)(B)(i) of the Act regarding the interdisciplinary team, or
sometimes called the interdisciplinary care team (ICT), in an amendment
to Sec. 422.101(f)(1)(iii) that would require the team to include
providers with demonstrated expertise, including training in an
applicable specialty, in treating individuals similar to the targeted
population of the plan, and in addition to implementing the statutory
requirement for C-SNPs, extend the requirement to all SNPs.
Second, we proposed to implement the requirement in
section 1859(f)(5)(B)(ii) of the Act requiring compliance with
requirements (developed by CMS) to provide a face-to-face encounter
with each enrollee in a new paragraph (f)(1)(iv) of Sec. 422.101 that
would extend the requirement to all SNPs. Under our proposal, face-to-
face encounters would have to be between each enrollee and a member of
the enrollee's ICT or the plan's case management and coordination staff
on at least an annual basis, beginning within the first 12 months of
enrollment, as feasible and with the individual's consent; we also
proposed that a face-for-face encounter must be either in-person or
through a visual, real-time, interactive telehealth encounter.
Third, we proposed to codify the requirement in section
1859(f)(5)(B)(iii) of the Act that, as part of the C-SNP model of care,
the results of the initial assessment and annual reassessment required
for each enrollee be addressed in the individual's individualized care
plan. As with the other provisions in section 1859(f)(5)(B) of the Act,
we proposed to extend this requirement to the model of care for all
SNPs, in revisions to Sec. 422.101(f)(1)(i).
Fourth, we proposed to codify the requirement in section
1859(f)(5)(B)(iv) of the Act that the evaluation and approval of the
model of care take into account whether the plan fulfilled the previous
MOC's goals and to extend this evaluation component to all SNP models
of care, rather than limiting it to C-SNPs. We proposed a new provision
at Sec. 422.101(f)(3)(ii) to require that, as part of the evaluation
and approval of the SNP model of care, National Committee for Quality
Assurance (NCQA) must evaluate whether goals were fulfilled from the
previous model of care. We also proposed, in new paragraphs
(f)(3)(ii)(A) through (C) that: (A) Plans must provide relevant
information pertaining to the MOC's goals as well as appropriate data
pertaining to the fulfillment of the previous MOC's goals; (B) plans
submitting a new model of care must provide relevant information
pertaining to the MOC's goals for review and approval; and (C) if the
SNP model of care did not fulfill the previous MOC's goals, the plan
must indicate in the MOC submission how it will achieve or revise the
goals for the plan's next MOC. We also proposed to move an existing
regulation at Sec. 422.101(f)(2)(vi) that requires all SNPs must
submit their MOC to CMS for NCQA evaluation and approval in accordance
with CMS guidance to a new paragraph at Sec. 422.101(f)(3)(i), using
the same language.
Lastly, we proposed to implement new regulation text at
Sec. 422.101(f)(3)(iii) to impose the requirement for benchmarks to be
met for a MOC to be approved. Section 1859(f)(5)(B)(v) of the Act
requires that the Secretary establish a minimum benchmark for each
element of the C-SNP model of care, and that the MOC can only be
approved if each element meets a minimum benchmark. The proposed
regulation in Sec. 422.101(f)(3)(iii) would extend these benchmarks
for all SNP models of care.
We proposed to extend the new requirements enacted by the BBA of
2018 to all SNP plan types for several reasons. We explained that these
additional requirements are consistent with current regulations and
sub-regulatory guidance CMS provides to all SNPs regarding care
management and MOC compliance. Second, we believe that these proposed
regulations are important safeguards to preserve the quality of care
for all special needs individuals, including those enrolled in D-SNPs
and I-SNPs and not just those enrolled in C-SNPs. Given the prevalence
of medically complex chronic conditions among I-SNP and D-SNP
enrollees, we believe the proper application of these new care
improvement requirements would improve care for enrollees with complex
chronic conditions. Finally, we stated that the application of
multiple, different MOC standards would be operationally complex and
burdensome for MA organizations that sponsor multiple SNP plan types,
for instance, a D-SNP and a C-SNP. Our proposal would streamline
operational and administrative obligations by making the different SNPs
have similar requirements as well as establish minimum standards to
benefit all special needs individuals in these plans.
In the proposed rule, we solicited comment on the extension of the
new care management and MOC requirements for C-SNPs to the care
management and MOC requirements for all SNP types and then discussed
each of the specific proposed policies in turn. We address comments
about the extension of the requirements to all SNP types first,
followed by a review of each proposed policy and the relevant comments
and the response to such comments. 1. Extension of the C-SNP
requirements to all SNP types
Comment: CMS received a number of comments in support of or in
opposition to the extension of C-SNP requirements, added to section
1859(f)(5) of the Act by the BBA of 2018, to apply to all SNP types,
instead of limiting the applicability of these requirement to just C-
SNPs. A handful of commenters were concerned about the applicability of
several of the proposed regulations to I-SNP and D-SNP care management
protocols with some arguing that the proposed rule would result in
requirements that are duplicative of the current MOC approval process
requirements. Several commenters specifically noted that SNPs of all
types have existing processes and practices that cover the areas
discussed in the proposed rule. They contend that the NCQA Model of
Care, review, and scoring guidelines comprehensively cover the
coordination of care, provider, and quality requirements outlined in
the proposed rule. In addition, commenters noted that CMS audits
include review of

[[Page 5873]]

performance by SNPs on these processes.
Response: Regarding the extension of section 1859(f)(5) of the Act
to include all SNP types, we agree this rule is consistent with current
CMS policy, including several current regulations implementing section
1859; the statute and several regulations establish similar
requirements for all SNPs regardless of type. Specifically, section
1859(f)(5)(A) of the Act requires that MA organizations offering a SNP
implement an evidence-based model of care. The MOC and other SNP-
specific requirements have been incorporated into the MA application
for MAOs that wish to offer a SNP so that these MAOs can demonstrate
that they meet CMS' SNP specific requirements and are capable of
serving the vulnerable special needs individuals who enroll in SNPs. In
the Medicare Program; Medicare Advantage and Prescription Drug Benefit
Programs: Negotiated Pricing and Remaining Revisions (74 FR 1493),
known hereafter as the January 2009 final rule, CMS outlined the
overarching purpose of section 422.101(f) and noted that SNPs,
regardless of type, are required to meet the same requirements
including that each plan must have networks with clinical expertise
specific to the special needs population of the plan; use performance
measures to evaluate models of care; and be able to coordinate and
deliver care targeted to people with disabilities, frail older adults,
and those near the end of life based on appropriate protocols. (74 FR
1498 through 1450) CMS's belief that these measures are critical to
providing care to the types of special needs populations served by SNPs
has not changed in the intervening years since finalizing Sec.
422.101(f) in 2009. As noted in this section of this rule, for each
specific provision we proposed and are finalizing at Sec. 422.101(f),
CMS is codifying certain requirements that are part of the current SNP
MOC approval process. Rather than forcing a duplication of processes,
we believe that SNPs have already implemented many of these new
requirements into their MOC. Understanding this, we proposed and are
finalizing these provisions in line with current MOC review and scoring
guidelines, covering all facets of the MOC including care coordination,
provider, and quality requirements.
As discussed in the proposed rule, extending the statutory
requirements for C-SNPs to all SNPs will provide improvements to the
care coordination model in all SNPs. For example, section
1859(f)(5)(B)(ii), as added by the BBA of 2018, requires C-SNPs to
provide face-to-face encounters with each enrollee on an annual basis,
consistent with standards adopted by CMS. We proposed and are
finalizing, at Sec. 422.101(f)(1)(iv), that all SNPs provide for face-
to-face encounters between each enrollee and a member of the enrollee's
interdisciplinary team or the plan's case management and coordination
staff on at least an annual basis, beginning within the first 12 month
of enrollment, as feasible and with the individual's consent. Face-to-
face encounters are appropriate to require for all SNP enrollees
because these SNP enrollees have similar healthcare needs, including
the need for treatment of multiple chronic conditions and for services
such as care coordination.
Comment: Another comment supported the proposal, but added that CMS
should explore the application of a more rigorous set of requirements
focused on person-centered care to strengthen the MOC and meet the
needs of SNP enrollees.
Response: We thank the commenter for their comment and suggestions.
As proposed and finalized, the new provisions in Sec. 422.101(f)
provide both a structure for creating a care management process
specifically designed to provide targeted care to individuals with
special needs and allow flexibilities enabling plans to create
innovative approaches to person-centered care. As noted in the Interim
Final Rule with comment, titled ``Medicare Program; Revisions to the
Medicare Advantage and Prescription Drug Benefit Programs'' (CMS-4138-
IFC), issued in September 2008 (``September 2008 IFC'') (73 FR 54225,
54228), we expect the MA organizations that have the commitment and
resources to serve vulnerable special needs beneficiaries through SNPs
will perpetually evaluate their own model of care by collecting and
analyzing performance data to continually improve their model of care.
We also noted in the September 2008 IFC that CMS would continue to
evaluate models of care through the analysis of SNP performance data
and monitoring visits, the review of scientific research on the
efficacy of other care models, and feedback from beneficiaries,
advocacy groups, and healthcare professionals (73 FR 54228). The
revisions to Sec. 422.101(f) adopted in this final rule represent a
continuation of this process to evaluate and refine SNP care
management.
This final rule establishes and clarifies delivery of care
standards for SNPs and codifies standards which we have included in
other CMS guidance and instructions. As such, we are finalizing the
revisions to paragraph (f) to Sec. 422.101 generally as proposed to
extend certain statutory requirements to all SNPs.
1. The Interdisciplinary Team (ICT) in the Management of Care
As amended by the BBA of 2018, section 1859(f)(5)(B)(i) of the Act
requires the interdisciplinary team (ICT) of each C-SNP to include
providers with specified expertise and training. We proposed to
implement this through an amendment to Sec. 422.101(f)(1)(iii) that
would apply the requirement to all SNPs. We proposed to require that
each MA organization offering a SNP plan must provide each enrollee
with an ICT that includes providers with demonstrated expertise and
training, and, as applicable, training in a defined role appropriate to
their licensure in treating individuals similar to the targeted
population of the plan.
We explained in the proposed rule that MIPPA required SNPs to
conduct initial and annual comprehensive health risk assessments,
develop and implement an individualized plan of care, and implement an
ICT for each beneficiary. Specifically, Section 1859(f)(5)(A)(ii)(III)
of the Act requires all SNPs to use ICTs as part of offering a
specialized MA plan for special needs individuals. As stated in the
proposed rule, we believe that the combination of MIPPA's statutory
elements and our regulatory prescription for the SNP model of care
establishes a standardized architecture for effective care management
while giving plans the flexibility to design the unique services and
benefits that enable them to meet the needs and preferences of their
target population. We believe our proposal, which amends paragraph
(f)(1)(iii) and applies the additional requirements pertaining to
demonstrated expertise and training of interdisciplinary team providers
to all SNPs, is consistent with the MIPPA requirements and the
rulemakings that first adopted requirements for the use of
interdisciplinary teams (73 FR 54228, 74 FR 1498).
All SNPs must have an ICT to coordinate the delivery of services
and benefits, but the current regulation provides flexibility as
necessary for each SNP: One SNP may choose to contract with an ICT to
deliver care in community health clinics; and another SNP may hire its
team to deliver care in the home setting. Under the current rule, and
our proposal, all SNPs must coordinate the delivery of services and
benefits through integrated systems of communication among plan
personnel, providers, and beneficiaries. However, as we explained in
the proposed rule, one SNP may coordinate care through a

[[Page 5874]]

telephonic connection among all stakeholders and another SNP may
coordinate care through an electronic system using Web-based records
and electronic mail accessed exclusively by the plan, network
providers, and beneficiaries. All SNPs must coordinate the delivery of
specialized benefits and services that meet the needs of their most
vulnerable beneficiaries. However, D-SNPs may need to coordinate
Medicaid services while an institutional SNP may need to facilitate
hospice care for its beneficiaries near the end of life. We provided
these examples in the proposed rule to demonstrate the variety of ways
SNPs currently implement their systems of care and how we believe all
SNP enrollees should have access to a team of providers with expertise
and training that are appropriate for each individual enrollee.
We received the following comments and our responses follow:
Comment: A commenter recommended that CMS clarify that
``providers,'' as used in this section, follows the definition of
``provider'' in 42 CFR 422.2, and also recommended that CMS provide
additional details about what constitutes ``demonstrated expertise and
training.'' Specifically, the commenter requested that CMS clarify
whether there are minimal expertise or training requirements that the
provider must meet or whether each special needs plan would have
discretion to make this determination.
Response: As proposed and finalized, Sec. 422.101(f)(1)(iii)
requires SNPs to use an interdisciplinary team that includes a team of
providers with demonstrated expertise and training, and, as applicable,
training in a defined role appropriate to their licensure in treating
individuals similar to the targeted population of the plan. Our current
guidance for the MOC approval process provides that a SNP's MOC
describe the composition of the ICT, including how the SNP determines
ICT membership and the roles and responsibilities of each member.
Additional information can be found in Chapter 5 of the MMCM, section
20.2.2, specifically guidance on MOC 2, Element D.\3\ A compliant and
well-developed MOC includes a description that specifies how the
expertise and capabilities of the ICT members align with the identified
clinical and social needs of the SNP beneficiaries. As proposed and as
finalized, the requirement in Sec. 422.101(f)(1)(iii) to have training
in a defined role appropriate to their licensure in treating
individuals similar to the targeted population of the plan means that
individual providers and providers in one type of SNP (compared to
other SNPs) may have training and expertise that differ based on the
SNP-type or each individual enrollee's needs. For example, a C-SNP that
targets diabetes mellitus may seek to establish an ICT for each
enrollee that has a specialist with training and expertise in
endocrinology while a D-SNP may want to establish ICTs for individual
enrollees that focus on a particular set of chronic conditions or focus
on specific service delivery needs for an enrollee, such as long-term
services and supports. This is consistent with our current guidance and
we believe that any additional burden here for SNPs will be minimal.
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\3\ Please see Chapter 5 of the MMCM, which can be found at:
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c05.pdf.
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As defined in Sec. 422.2, a provider is: (1) An individual who is
engaged in the delivery of health care services in a State and is
licensed or certified by the State to engage in that activity in the
State; or (2) an entity that is engaged in the delivery of health care
services in a State and is licensed or certified to deliver those
services if such licensing or certification is required by State law or
regulation. Therefore, the providers in the ICT must be licensed or
certified to furnish the health care services they deliver. Under this
new regulation, providers in an ICT must also be trained in a defined
role appropriate to their licensure in treating individuals similar to
the targeted population of the plan, when applicable. We expect that
plans are already meeting this requirement that members of the ICT have
training and expertise specific to the SNP's target population based on
MOC scoring guidelines provided to all SNPs by NCQA; for example, MOC
submissions specify how the expertise and capabilities of the ICT
members align with the identified clinical and social needs of the SNP
enrollees and describe how specific care plans for enrollees are used
to determine the composition of the ICT.\4\ In conclusion, under the
amendment to paragraph (f)(1)(iii) that we are finalizing here, all
members of the ICT must be licensed or certified to deliver the
applicable health care furnished to enrollees of the SNP in compliance
with Sec. 422.2 and all of the members of the ICT must have
demonstrated expertise and training, and, as applicable, training in a
defined role appropriate to their licensure in treating individuals
similar to the targeted population of the plan. The revisions at Sec.
422.101(f)(1)(iii) are being finalized as applicable beginning with
2023 so MOCs for that period will be reviewed and approved based on
demonstrated compliance with this final rule. The specifics of the
expertise and necessary training will vary with the SNP and the covered
population, and we are not adopting specific, uniform minimum
requirements for all providers in all SNPs ICTs.
---------------------------------------------------------------------------

\4\ The scoring guidelines can be found at: https://snpmoc.ncqa.org/wp-content/uploads/MOC-Scoring-Guidelines_CY-2021-1.pdf. See section MOC 2, Element D.
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The revisions at Sec. 422.101(f)(1)(iii) are being finalized as
applicable beginning 2023 so MOCs for that period and subsequent years
will be reviewed and approved based on demonstrated compliance with the
amendments to the regulation that we are finalizing here.
Comment: CMS received several comments regarding the extension of
the new statutory interdisciplinary team requirements to D-SNPs and I-
SNPs. Some commenters believed that plan implementation of additional
ICT requirements would be unnecessarily burdensome because some D-SNPs
have difficulty contracting with and requiring specialists to take part
in the ICT process. Other commenters noted that the new rule would be
redundant, given existing regulations and policies are already in
place, including regulations applying to the institutional settings in
which I-SNP beneficiaries reside. Some of these commenters noted that
adding ICT requirements will increase the burden on long-term care
facilities and may require some patients to be managed to different
standards than others. Others noted that this provision could interfere
with plans' current practices that promote the identification of
providers from disciplines that are most relevant to the beneficiary's
needs. Another commenter noted that for D-SNPs, there are credentialing
and network adequacy standards already in place to ensure appropriate
access for D-SNP enrollees to high-quality providers. Lastly, CMS
received a comment stating that the ICT should include the enrollee's
managed care long term services and supports (MLTSS) care manager in
cases where the enrollee receives those services.
Response: We believe the revisions we proposed and are finalizing
at Sec. 422.101(f)(1)(iii) are consistent with the current review and
approval process for each MOC submission under MOC 2, Element D. While
there might be overlap and redundancies for Sec. 422.101(f)(1)(iii)
and existing standards either for SNPs and SNP MOCs or for
institutional providers that furnish services to SNP enrollees, that
only reinforces that finalizing

[[Page 5875]]

Sec. 422.101(f)(1)(iii) as proposed is appropriate. As SNPs are
designed to furnish services and coordinate care based on the needs of
its target population, ensuring that the providers and ICT that deliver
that care have expertise that is specific to the target population is
consistent with the overall goals of SNPs.
As noted in Chapter 5 of the MMCM, section 20.2.2, the role and
conditions of MOC approval for the ICT are described in MOC 2 Element
D. All SNPs are required in Sec. 422.101(f) to implement an evidence
based model of care (MOC) that has been evaluated and approved by the
NCQA. As part of the approval process, SNPs are also required to meet
ICT requirements under Element D. Each SNP must describe how its
organization determines the composition of ICT membership. Under factor
1 of MOC 2, Element D, all SNPs must explain how the SNP facilitates
the participation of beneficiaries and their caregiver(s) as members of
the ICT. In addition, each SNP must describe how the beneficiary's
Health Risk Assessment Tool (HRAT) and ICP are used to determine the
composition of the ICT for each enrollee, including where additional
team members are needed to meet the unique needs of a beneficiary.
Lastly, SNPs must explain how the ICT uses health care outcomes to
evaluate processes established to manage changes or adjustments to the
beneficiary's health care needs on a continuous basis. The new
regulation text concerning the ICT and the need to include providers
with certain expertise and training are similar to these existing
requirements and standards for the MOC, so any additional burden should
be minimal. To the extent that a SNP is already using the needs and
assessments of each enrollee to identify ICT members that are qualified
and trained to meet that individual enrollee's unique needs (and does
this for each enrollee), this new standard may require some additional
documentation from the SNP about the demonstrated expertise, licensure
and training of the ICT. CMS believes plans will be able to implement
the new ICT provisions without significant changes to current processes
based on two critical factors: (1) All SNPs are already required under
Sec. 422.101(f)(1)(iii) to establish an ICT for each enrollee, and
thus, plans have in place steps for reviewing ICT composition and
qualification; and (2) more importantly, SNPs are currently employing a
process similar to the new provision for establishing an ICT as part of
the MOC application approval process. Again, the new ICT provision is a
natural extension of and generally codifies elements of the current MOC
approval process covering the ICT, which should facilitate a seamless
transition for SNPs as they implement the necessary processes to comply
with new ICT requirements. These changes to the MOC, and the others
contained in the amendments to Sec. 422.101(f) will apply to MOCs and
SNP performance for 2023. This means that SNPs submitting MOCs for 2023
will need to develop and implement their MOCs for 2023 based on the
amendments in this final rule. However, CMS will not require SNPs that
currently employ MOCs that have been approved by NCQA and are not due
for review and approval in 2023 to resubmit their MOCs to demonstrate
compliance with Sec. 422.101(f)(1)(iii) as amended in this rule; so
long as the SNP and its MOC meets all other requirements, the SNP may
continue to operate under its current MOC based on how similar the ICT
provision of this final rule is to current law and policy. We strongly
encourage D-SNPs and I-SNPs that do not have MOCs up for review and
approval for 2023 to review their MOCs and implement changes as
necessary to ensure the interdisciplinary team for each enrollee
includes a team of providers with demonstrated expertise and training,
and, as applicable, training in a defined role appropriate to their
licensure in treating individuals similar to the targeted population of
the plan.
While the commenter states that some SNPs may face obstacles when
seeking ICT participation from some providers (including certain types
of specialists), CMS has not seen evidence suggesting such
difficulties. Due to the similarity of Sec. 422.101(f)(1)(iii) as
revised in this rule to CMS's current policy and the standards used in
NCQA reviews, it is likely that any difficulty that would lead to an
inability to comply with this provision would have been apparent in
past reviews of MOCs.
As we noted in the preamble of the proposed rule, SNPs are in the
best position to identify an ICT with the appropriate expertise and
training necessary to meet the clinical needs for each enrollee, based
on the medical and behavioral health conditions of their member
population and the SNP's developed expertise. We expect that an MA
organization that offers a SNP for a particular population based on a
chronic condition, on residence in an institution or needing a similar
level of care as those who reside in an institution, or on eligibility
for both Medicare and Medicaid, will have considered the needs of such
populations in designing the plan and the network of providers. MA
organizations are not required to offer SNPs and those that choose to
do so must be capable of meeting the unique needs of the targeted
population, including gaining the participation of specialists and
other health care providers that have the most or best expertise for
serving these vulnerable populations, consistent with the regulatory
requirements. With respect to the inclusion of the enrollee's MLTSS
care manager, we again defer to SNPs to determine the appropriate
composition of the beneficiary's ICT in compliance with the MOC
standards, which includes consultation with the beneficiary. This final
rule is based on and reflects a policy that while all SNPs must develop
and use an ICT to coordinate the delivery of services and benefits for
each enrollee, the construction of the ICT must recognize and be built
to address the needs and wishes of each individual enrollee.
After consideration of the comments and for the reasons outlined in
the response to comments and in the proposed rule, we are finalizing
the amendment to Sec. 422.101(f)(1)(iii) regarding ICT expertise and
training as proposed without modification.
2. Face-to-Face Annual Encounters
We proposed to implement section 1859(f)(5)(B)(ii) of the Act
requiring compliance with requirements (developed by CMS) to provide a
face-to-face encounter with each enrollee. We proposed that the face-
to-face encounter be between each enrollee and a member of the
enrollee's interdisciplinary team or the plan's case management and
coordination staff on at least an annual basis, beginning within the
first 12 months of enrollment, as feasible and with the individual's
consent. We also proposed to codify that a face-for-face encounter must
be either in-person or through a visual, real-time, interactive
telehealth encounter. We proposed to adopt this in a new paragraph
(f)(1)(iv) in Sec. 422.101 that would extend the requirement to all
SNPs. Under our proposal, SNPs would be required to provide an annual
face-to-face visit that is in-person or by remote technology and occurs
starting within the first 12 months of enrollment within the plan. For
instance, a plan enrolling a beneficiary on October 1 would need to
facilitate a face-to-face encounter with that enrollee by September
30th of the following year. We indicated in the proposed rule that SNPs
should implement this requirement in a manner that honors

[[Page 5876]]

any enrollee's decision not to participate in any qualifying encounter.
We received the following comments and our responses follow:
Comment: CMS received a number of comments both supporting and
opposing the requirement for SNPs to provide a face-to-face encounter
with each enrollee. Some plans noted that this is already part of their
program. Some commenters, however, were concerned that implementation
could be a burden for enrollees, while others were concerned that the
requirements would be particularly difficult for SNP types with larger
enrollments, such as D-SNPs. Still others believed that the new
regulation would be hard for plans to track encounters between
enrollees and providers. Others suggested that CMS allow SNPs to use
encounters with non-ICT plan contracted providers to meet this
requirement.
Response: We are finalizing the proposal to add Sec.
422.101(f)(1)(iv) to require each SNP to provide an annual face-to-face
encounter with each enrollee, with some modifications to address
concerns raised by the commenters. As proposed and finalized, the
required face-for-face encounter must be either in-person or through a
visual, real-time, interactive telehealth encounter. The final rule
requires, as proposed, that the MA organization provide for face-to-
face encounters between each enrollee and a member of the enrollee's
interdisciplinary team or the plan's case management and coordination
staff. And finally, we are also finalizing that the face-to-face
encounter occur on at least an annual basis, beginning within the first
12 month of enrollment, as feasible and with the individual's consent.
However, we are finalizing additional flexibility as well for SNPs in
connection with Sec. 422.101(f)(1)(iv) by including that the required
face-to-face encounter may also be with a contracted health plan
provider and clarification as to the type of encounter that is
required.
As we noted in the proposed rule, we intend for this requirement to
be met in a number of different ways. In the proposed rule, we provided
examples of encounters that would meet the requirement, including a
visit to or by a member of an individual's interdisciplinary team or
the plan's case management and coordination staff that perform clinical
functions, such as direct beneficiary care. We agree with commenters
that have requested that encounters with health care providers
contracted with the enrollee's SNP qualify under the implementation of
the final rule. This would include the enrollee's regular primary care
physician, a specialist related to the enrollee's chronic condition, a
behavioral health provider, health educator, social worker, and MLTSS
plan staff or related MLTSS health care providers provided that such
providers are (i) a member of the enrollee's interdisciplinary team;
(ii) part of the plan's case management and coordination staff; or
(iii) contracted plan healthcare providers. Requiring at a minimum that
a healthcare provider with a contractual relationship with the SNP be
part of the annual face-to-face encounter in this way will ensure that
the annual encounter is a meaningful one from the perspective of the
enrollee's overall health and wellbeing. We also believe that a
healthcare provider with a contractual relationship will facilitate the
sharing of critical health information among the plan, the ICT, and
other key healthcare providers, and thus ensure coordination of care
for the enrollee under Sec. 422.112(b), and result in increased care
coordination and facilitate any necessary follow-up care or referrals.
Therefore, we are finalizing the new regulation at Sec.
422.101(f)(1)(iv) with additional text to list contracted plan
healthcare providers as well as members of the ICT and the plan's care
coordination team. We defer to each SNP to identify which providers are
part of the plan's case management and coordination staff or contracted
plan healthcare providers so long as the SNP's policies are reasonable
and not a means to evade compliance with the rule.
We intend for this mandatory face-to-face encounter to serve a
clinical or care coordination/care management purpose. Ensuring that a
special needs individual has been contacted by the SNP at least once a
year and that there has been a face-to-face encounter that pertains to
the individual's health care is a way of ensuring that the goals of a
SNP are met. Examples of the necessary services or engagement happening
during the required encounter include: (i) Engaging with the enrollee
to manage, treat and oversee (or coordinate) their health care (such as
furnishing preventive care included in the individualized care plan
(ICP)); (ii) annual wellness visits and/or physicals; (iii) completion
of a health risk assessment (HRA), such as the one annually required
for all SNPs under the current regulation at Sec. 422.101(f)(1); (iv)
care plan review or other similar care coordination activities; or (v)
health related education whereby the enrollee receives information or
instructions critical to the maintenance of their health or
implementing processes for maintaining the enrollee's health, such as
the administration of a medication. These examples are not the only
activities that satisfy the new regulatory requirement. Encounters may
also address any concerns related to the enrollee's physical, mental/
behavioral health, or overall health status, including functional
status. Plans may also use qualifying encounters--those that meet
qualifications as stipulated in this final rule--that are the result of
plan efforts to satisfy state-mandated Medicaid or MTLSS requirements.
We believe many SNPs would already meet this standard in current
practice and have sufficient encounters on at least an annual basis
with each enrollee that this new regulation will not be burdensome.
Encounters that are sufficient to meet the regulatory requirement we
are finalizing could occur either through regular visits by the
enrollee to a member of the beneficiary's interdisciplinary team or
through the care coordination process established by the plan's staff
or contracted plan healthcare providers. We anticipate that, consistent
with good clinical practice, concerns are addressed and any appropriate
referrals, follow-up, and care coordination activities provided or
scheduled as necessary as a result of these face-to-face encounters.
We are cognizant that enrollees should have the final authority
over their health care and our proposed regulation text reflected this
by requiring that these face-to-face encounters be as feasible and with
the enrollee's consent. A SNP must comply with this requirement in a
manner that honors any enrollee's decision not to participate in a
face-to-face (either in-person or virtual) encounter. If an enrollee
does not consent to the encounter required by Sec. 422.101(f)(1)(iv),
the plan should document that in order to demonstrate compliance with
the regulation. The rule addresses feasibility barriers to a SNP
providing for the required annual encounter, such as where a SNP
enrollee may be non-responsive to plan outreach or the state of the
member's health (such as if the member is dealing with a
hospitalization) prohibits a face-to-face encounter with the type of
provider or staff that are described in the final regulation. In these
circumstances, CMS recognizes that a SNP may not be able to comply with
the rule's mandate of an annual face-to-face encounter and we intend
the ``as feasible'' standard in the regulation to address such
situations. Since the enrollee has refused or because the SNP could not
reach the enrollee after reasonable attempts, the plan has

[[Page 5877]]

complied with the requirement despite the lack of a qualified
encounter. However, plans should document the basis or reason that a
face-to-face encounter is not feasible in order to demonstrate that
where there are no face-to-face encounters in the year, that failure is
not a violation of the regulation. Note that a feasibility barrier does
not include a SNP having to provide a reasonable accommodation, such as
interpreter services, in order for the enrollee to participate in the
encounter.
Lastly, restricting the manner of face-to-face encounters to those
that are in-person or as a visual, real-time, interactive telehealth
encounter is consistent with section 1859(f)(5)(B)(ii) of the Act as
amended by section 50311 of the Bipartisan Budget Act of 2018. The
statute requires CMS to set requirements for face-to-face encounters
that must happen on an annual basis for C-SNPs; and in extending that
requirement to I-SNPs and D-SNPs, we do not believe there is reason to
develop different standards. For this specific requirement, we believe
that a real-time, interactive, visual telehealth encounter permits
face-to-face interaction even though electronic or telecommunications
technology is used to facilitate the encounter. The real-time,
interactive, visual encounter serves the same function and permits
sufficiently similar engagement between the enrollee and the required
member of the ICT, the SNP's case management or care coordination
staff, or other contracted provider of the SNP as an in-person
encounter for purposes of this specific requirement; our regulation
here does not address when or how telehealth encounters may be
clinically appropriate or sufficient but only specifically addresses
the need for SNPs to ensure there is one annual encounter of a certain
type for each enrollee. While not all covered services are necessarily
appropriate to furnish through electronic means, MA plans (including
SNPs) have broader flexibility in this regard under Sec. 422.135.
Therefore, face-to-face encounters required for all SNPs under this new
rule may include visual, real-time, interactive telehealth encounters.
As we noted in the Medicare and Medicaid Programs; Policy and Technical
Changes to the Medicare Advantage, Medicare Prescription Drug Benefit,
Programs of All Inclusive Care for the Elderly (PACE), Medicaid Fee-
For-Service, and Medicaid Managed Care Programs for Years 2020 and 2021
Final Rule (hereinafter referred to as the April 2019 final rule), we
believe MA additional telehealth benefits will increase access to
patient-centered care by giving enrollees more control to determine
when, where, and how they access benefits.
Comment: A few commenters suggested that in the implementation of
the face-to-face encounter requirement that SNPs should be allowed to
develop their own technical specifications for capturing compliance
with this requirement. For example, An MAO recommended that SNPs be
allowed to capture verbal confirmation from members or providers of
completed face-to-face encounters from external parties and/or
telehealth encounters as evidence of compliance.
Response: CMS believes plans are in the best position to develop
the processes and technical specifications for documenting how they
meet this requirement and that a face-to-face encounter for purpose of
satisfying this regulation has taken place. While Sec.
422.101(f)(1)(iv) imposes some parameters for these encounters, there
is a broad range of flexibility for how SNPs may meet the requirement.
However, we clarify that our guidance here is specific to Sec.
422.101(f)(1)(iv) and does not address any other Medicare program
requirements. Because an encounter must pertain to the delivery of
health care to the enrollee, we encourage SNPs to take the information
from these encounters into account and to document them consistent with
how other health care visits are documented. Lastly, CMS will monitor
compliance with the requirement and consider additional rulemaking if
necessary.
Comment: Several commenters suggested the addition of the face-to-
face requirement would create additional reporting burden for plans
associated with capturing compliance to the rule.
Response: We are also cognizant that new regulations sometimes
include additional reporting or record keeping requirements. The final
rule does not create any additional, explicit reporting requirements.
However, SNPs are required under Sec. 422.503(b)(4)(vi) to adopt and
implement an effective compliance program, which must include measures
that prevent, detect, and correct non-compliance with CMS' program
requirements as well as measures that prevent, detect, and correct
fraud, waste, and abuse. CMS will be monitoring compliance by SNPs with
this requirement. In addition, SNPs should have information about all
health care encounters and deliveries of covered services for many
purposes, including: Payment to providers for furnishing services;
complying with the existing data submission requirements in Sec.
422.310; and meeting the requirements of Sec. 422.112(b)(4), which
requires procedures for plans and their provider networks to have the
information necessary for effective and continuous patient care and
quality review.
Comment: Several commenters stated that some enrollees lack access
to technology that would provide visual, real-time, interactive
telehealth encounter, which may create a barrier to beneficiary
participation in such encounters. Others requested that CMS allow
telephonic encounters to count towards the annual face-to-face
requirement under the new regulation.
Response: We are cognizant that enrollees should have the final
authority over their health care and our proposed regulation text
reflected this by requiring that these face-to-face encounters be as
feasible and with the enrollee's consent. First, SNPs have the
flexibility to meet the requirement for a face-to-face encounter,
either in-person or virtually. We believe that many beneficiaries are
already meeting the requirement through in-person face-to-face
encounters with qualified healthcare providers, which we believe will
create minimal additional burden for plans implementing this final
rule. The final rule does not mandate that SNPs utilize a visual, real-
time, interactive telehealth encounter, though it is a permissible
option when appropriate. Second, the SNP must comply with this
requirement in a manner that honors any enrollee's decision not to
participate in a face-to-face (either in-person or virtual) encounter.
If an enrollee does not consent to the encounter required by Sec.
422.101(f)(1)(iv), the plan should document that in order to
demonstrate compliance with the regulation. The rule addresses
feasibility barriers to a SNP providing for the required annual
encounter, such as where a SNP enrollee may be non-responsive to plan
outreach or the state of the member's health (such as if the member is
dealing with a hospitalization in an out-of-network facility) prohibits
a face-to-face encounter. In these circumstances, CMS recognizes that a
SNP may not be able to comply with the rule's mandate of an annual
face-to-face encounter and we intend the ``as feasible'' standard in
the regulation to address such situations. By clarifying that a face-
to-face encounter for delivery of health care services by a contracted
provider will satisfy this requirement, it seems likely that most SNPs
will be able to meet this requirement for most enrollees, as most
enrollees in SNPs receive health care

[[Page 5878]]

services at some point each year. If the enrollee has refused or
because the SNP could not reach the enrollee after reasonable attempts,
the plan would be considered to have complied with the requirement
despite the lack of a qualified encounter.
This final rule allows many types of face-to-face encounters,
including visual, real-time, interactive telehealth encounters, to
suffice for meeting the requirement. We do not believe that telephonic
encounters should count towards the fulfilling the requirements of
Sec. 422.101(f)(1)(iv) for several reasons. First, the statute at
section 1859(f)(5)(B)(ii) of the Act is specific in requiring that the
encounters provided annually must be face-to-face with individuals
enrolled in the plan. An audio-only encounter does not meet the
statutory requirement that the encounter be face-to-face. Even though
the statutory requirement is for C-SNPs, we believe that requiring all
SNPs to meet this standard is appropriate in light of the health care
needs and characteristics of the other populations of special needs
individuals. Second, an audio-only encounter does not permit the
provider to see the patient to use visual clues (for example, bruising,
physical symptoms, or lack of focus) that could indicate something is
wrong with the patient. This is a requirement for only one visit of
this type a year and does not prohibit the use of audio-only encounters
when those are appropriate for addressing other health care needs or
visits. Further, for enrollees who do not use telehealth or lack the
technological resources for such encounters, in-person delivery of
health care services from one of the types of providers described in
the regulation satisfies this requirement; there is no requirement for
telehealth-based encounters to be used instead of in-person encounters.
However, we will continue to monitor the ability of beneficiaries to
take part in virtual encounters, the applicability of non-telephonic
face-to-face encounters, and to assess the adequacy of substituting
telephonic encounters in addition to the set of qualifying face-to-face
encounters for I-SNPs and D-SNPs through future rulemaking.
After consideration of the comments and for the reasons outlined in
the response to comments and in the proposed rule, we are finalizing
Sec. 422.101(f)(1)(iv) regarding face-to-face encounters substantially
as proposed, but with modifications to clarify that the required face-
to-face encounters pertain to the delivery of certain kinds of services
(health care or care coordination services or care management) and must
be with a contracted health care provider or certain SNP staff (a
member of the enrollee's interdisciplinary team or the plan's case
management and coordination staff). In addition, our final regulation
text at paragraph (f)(1)(iv) is somewhat reorganized from the proposed
rule to improve the readability of the provision.
3. Health Risk Assessments and the SNP Enrollee's Individualized Care
Plan
We proposed to codify the requirement in section 1859(f)(5)(B)(iii)
of the Act that, as part of the C-SNP model of care, the results of the
initial assessment and annual reassessment required for each enrollee
be addressed in the individual's individualized care plan. We also
proposed to extend this requirement to the model of care for all SNPs
in revisions to Sec. 422.101(f)(1)(i). Currently, MA organizations
offering SNPs must conduct a comprehensive initial health risk
assessment of the individual's physical, psychosocial, and functional
needs as well as an annual HRA, using a comprehensive risk assessment
tool that CMS may review during oversight activities. The proposed
revision to paragraph (f)(1)(i) would also require the MA organization
to ensure that results from the initial assessment and annual
reassessment conducted for each individual enrolled in the plan are
addressed in the individual's individualized care plan required under
Sec. 422.101(f)(1)(ii).
We received the following comments and our responses follow:
Comment: Several commenters sought clarification concerning what
type of information must be included in the ICP from the HRA. In
addition, a few commenters wanted to know what information plans could
omit from the ICP while adhering to the regulation. Another commenter
asked if D-SNPs would be permitted to align the HRA with other
beneficiary assessments that some D-SNPs are required to submit for a
state's requirement that enrollees be assessed as to Medicaid managed
long-term services and supports (MLTSS) needs.
Response: Existing CMS guidance addresses the first part of these
comments--pertaining to the information from the HRA that must be
incorporated into the ICP--and that guidance is consistent with the
regulatory provision being finalized at Sec. 422.101(f)(1)(i). Chapter
5 of the Medicare Managed Care Manual, section 20.2.2, addresses how
each SNP's MOC includes a clear and detailed description of the
policies and procedures for completing the health risk assessment tool
(HRAT).\5\ Because this existing guidance adequately describes how
information from the annual HRA is incorporated into the enrollee's
ICP, the guidance remains applicable. Part of NCQA's review of SNP MOCs
is an evaluation of MOC 2, Element B, which includes the following
subfactors:
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\5\ Please see Chapter 5 of the MMCM, which can be found at:
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c05.pdf.
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How the organization uses the HRAT to develop and update
the Individualized Care Plan (ICP) for each beneficiary (Element 2C).
How the organization disseminates the HRAT information to
the Interdisciplinary Care Team (ICT) and how the ICT uses that
information (Element 2D).
How the organization conducts the initial HRAT and annual
reassessment for each beneficiary.
The detailed plan and rationale for reviewing, analyzing
and stratifying (if applicable), the HRA results.
Under Element B, the content of and methods used to conduct the
HRAT have a direct effect on the development of the ICP and ongoing
coordination of ICT activities. The HRAT must assess the medical,
functional, cognitive, psychosocial and mental health needs of each SNP
beneficiary, as noted in Chapter 5 of the MMCM, section 20.2.2.
To meet the requirements of the first 2 factors of MOC 2, Element
B, the SNP's MOC must include a description of how the HRAT is used to
develop and update, in a timely manner, the ICP for each beneficiary
and how the HRAT information is disseminated to and used by the ICT.
Under factor 3, the description must include the methodology used to
coordinate the initial and annual HRAT for each beneficiary (for
example, mailed questionnaire, in-person assessment, phone interview)
and the timing of the assessments. There must be a provision in the MOC
for reassessing beneficiaries if and when warranted by a health status
change or care transition (for example, hospitalization or a change in
medication). The SNP must describe in the MOC the SNP's process for
attempting to contact beneficiaries and have them complete the HRAT,
including provisions for beneficiaries that cannot or do not want to be
contacted or complete the HRAT. This approach in our current guidance
provides plans the flexibility to develop an ICP that is appropriate
for each beneficiary based on and using HRA information; the
requirement added to

[[Page 5879]]

Sec. 422.101(f)(1)(i) that each SNP ensure that results from the
initial assessment and annual reassessment conducted for each enrollee
are addressed in the individual's individualized care plan would be met
by a SNP that does these things in its development of the MOC and the
ICP. CMS intends to implement and enforce the revisions to Sec.
422.101(f)(1)(i) consistent with existing CMS guidance regarding the
information from the HRA and HRAT that must be incorporated into the
ICP.
We understand that some D-SNPs may be required to complete and use
other assessments related to the Medicaid program. Integrated D-SNPs
may choose to combine Medicaid and Medicare assessments as long as the
assessment includes a review of the medical, functional, cognitive,
psychosocial and mental health needs of each SNP beneficiary and is
described in the MOC. Other assessments may (or may not) require the
same elements or scope as the HRA required of MA SNPs so alignment and
overlap of the assessments and how they are used depends on the
specifics of each situation. As we implement Sec. 422.101(f)(1)(i), we
will continue to monitor the alignment of multiple assessments on SNP
enrollees to determine whether further rulemaking is necessary.
However, plans have created an HRA process as part of their approved
MOC in the past, so we do not anticipate that SNPs will have difficulty
complying with the changes we are finalizing to Sec. 422.101(f)(1)(i).
To the extent that there is overlap and the HRA required by Sec.
422.101(f)(1)(ii) can be aligned with other assessments conducted by
the SNP, the MOC should include a description of that alignment,
consistent with the standards in MOC 2, Element B of Chapter 5, Sec.
20.2.2.
We believe the current factors outlined in MOC 2, Element B allows
SNPs the flexibility to align a MOC-approved HRAT with other assessment
tools (as noted above), and is consistent with the intent of the
changes being finalized here in Sec. 422.101(f)(1)(i). Current
guidance will be the basis for how CMS will implement and enforce Sec.
422.101(f)(1)(i) to ensure that SNPs incorporate and address the
results from the initial assessment and annual reassessment conducted
for each individual enrolled in the individual's individualized care
plan.
After consideration of the comments and for the reasons outlined in
the response to comments and in the proposed rule, we are finalizing
the amendment to Sec. 422.101(f)(1)(i) as proposed without
modification.
4. SNP Fulfillment of the Previous Year's MOC Goals
We also proposed to codify the requirement in section
1859(f)(5)(B)(iv) of the Act that the evaluation and approval of the
model of care take into account whether the plan fulfilled the previous
MOC's goals and to extend this evaluation component to all SNP models
of care, rather than limiting it to C-SNPs. We proposed new regulation
text at Sec. 422.101(f)(3)(ii) to provide that, as part of the
evaluation and approval of the SNP model of care, NCQA must evaluate
whether goals were fulfilled from the previous model of care and plans
must provide relevant information pertaining to the MOC's goals as well
as appropriate data pertaining to the fulfillment of the previous MOC's
goals. Under our proposal, if the SNP MOC did not fulfill the previous
MOC's goals, the plan must indicate in its MOC submission how it will
achieve or revise those goals for the plan's next MOC. We also proposed
to move an existing regulation at Sec. 422.101(f)(2)(vi) that requires
all SNPs to submit their MOC to CMS for NCQA evaluation and approval in
accordance with CMS guidance to a new paragraph at Sec. 422.101(f)(3);
our proposed paragraph (f)(3)(i) contains the same language as current
Sec. 422.101(f)(2)(vi).
We also proposed at paragraph (f)(3)(ii)(A) through (C) specific
provisions regarding how NCQA would evaluate the MOC in terms of
achievement of goals from the prior MOC. We explained how we intended
that NCQA would determine whether each SNP, as part of NCQA's process
for evaluation and approval of MOCs, provided adequate information to
perform the evaluation required by Sec. 422.101(f)(3)(ii) as well as
whether the SNP met goals from the previous MOC submission. After
stating that it is implicit in the evaluation of the MOC and the
requirement for the SNP to submit relevant information that the
information submitted by the SNP must be adequate for NCQA to use to
evaluate the MOC, we solicited comment whether more explicit
requirements on this point should be part of the regulation text.
We received the following comments on the proposal regarding
evaluation of outlining and fulfillment of the MOC's goals and our
responses follow:
Comment: CMS received several suggestions related to providing
information for evaluation whether the SNP achieved the goals from the
prior MOC. One commenter proposed CMS look to the Healthcare
Effectiveness Data and Information Set (HEDIS) reporting and measures
for direction. Another commenter suggested that CMS evaluate plan
performance monitoring and evaluation metrics included in the MOC, and
not goals included in the Individual Care Plan.
Response: We appreciate these suggestions as to the type and scope
of information that should be used to evaluate whether a SNP has
fulfilled the goals of its prior MOC. We clarify that it is the goals
of the MOC (and whether those goals have been met) and not the goals of
the ICP that are to be evaluated by NCQA under Sec. 422.101(f)(3)(ii)
as proposed and finalized.
We explained in the proposed rule that proposed Sec.
422.101(f)(3)(ii) would align with our current guidance on the MOC
submission and review process regarding SNP fulfillment of goals and
summarized the current review process. (85 FR 9016) This includes the
type of information submitted by SNPs and used by NCQA in evaluating
whether the goals of a prior MOC have been fulfilled. Currently, all
SNPs are required to identify and clearly define measurable goals and
health outcomes as part of their model of care under MOC 4, Element B:
Measurable Goals and Health Outcomes for the MOC, as addressed in
Chapter 5 of the MMCM. It is critical for all SNPs to use the results
of the quality performance indicators and measures to support ongoing
improvement of the MOC, and all SNPs should continuously assess and
evaluate plan quality outcomes. This is reflected in current guidance
in Chapter 5, Sec. 20.2.2 of the Medicare Managed Care Manual. MOC 4,
Element B currently contains the following subfactors:
Identify and define the measurable goals and health
outcomes used to improve the health care needs of SNP beneficiaries.
Identify specific beneficiary health outcome measures used
to measure overall SNP population health outcomes at the plan level.
Describe how the SNP establishes methods to assess and
track the MOC's impact on SNP beneficiaries' health outcomes.
Describe the processes and procedures the SNP will use to
determine if health outcome goals are met.
Explain the steps the SNP will take if goals are not met
in the expected timeframe.
The measures identified in the MOC as part of addressing these
subfactors are the measures that should be used in evaluating whether
the goals of the prior MOC have been fulfilled. Current CMS guidance
permits the SNP to identify

[[Page 5880]]

and describe the measures and data used by the SNP and does not require
specific quality measures, such as HEDIS, be used. SNPs may use data
and quality performance that CMS measures for the Star Ratings program
or through the HEDIS surveys (or other surveys and required quality
performance data) but are not limited to those measures and data
sources. Subfactors 3 and 4 of Element B provide for descriptions of
how the SNP assesses and tracks the impact of the MOC and determines if
health outcome goals are met. As proposed and finalized, paragraph
(f)(3)(ii)(A) does not list specific types of data or information but
requires submission of relevant information pertaining to the MOC's
goals and whether those goals were fulfilled. For example, a SNP may
submit plan-level health or clinical goals such as controlling diabetes
or improving mental health screening access, and provide data showing
progress towards these goals. This means that the type and scope of
data required are tied to what the MOC's goals are and how the previous
MOC addressed MOC 4, Element B. At a minimum, the data and measures
described in the previous MOC should be submitted under Sec.
422.101(f)(3)(ii)(A) for determining whether the MOC's goals have been
fulfilled but other data may be relevant and pertinent. We expect SNPs
to make reasonable determinations about what other data could be
submitted as relevant and pertinent for the NCQA evaluation that is
required under Sec. 422.101(f)(3)(ii).
For SNPs submitting their initial MOC, NCQA will evaluate the
information under MOC 4 Element B as whether the SNP has set clearly
definable and measurable goals and health outcomes in the MOC for the
upcoming MOC period of performance. For the following submission year,
the SNP MOC will be evaluated on whether the measurable goals and
health outcomes set in the initial MOC were achieved. We proposed
specific regulation text at Sec. 422.101(f)(3)(ii)(B) that plans
submitting an initial model of care must provide relevant information
pertaining to the MOC's goals for review and approval and are
finalizing that provision. This new regulation is consistent with our
existing regulation and we intend that similar standards will be used
going forward as those that are used now regarding the amount of
information required from SNPs.
Comment: CMS received several comments expressing concern regarding
the incorporation of MOC performance information and data from the
previous MOC into the next submission. Commenters noted that plans
would need to have complete information on the achievement of goals
from the previous year before submission of the next year's MOC in
order to meet the new requirement 42 CFR 422.101(f)(3)(ii), and that
this short timeframe may prevent plans from being able to provide a
complete representation of their performance from the previous year.
Others sought further clarification regarding how plans should
operationalize the regulation or specific metrics to be evaluated by
NCQA.
Response: While we understand the commenters' concern about
sufficient information being available each year about the previous
year's MOC and performance, we believe that SNPs and NCQA can meet the
requirements of the regulation. For SNPs submitting a MOC renewal after
one year (because an annual review and approval is necessary),
preliminary data from the immediately prior year can provide evidence
to the level of fulfillment of the previous MOC's goals. For many I-
SNPs and D-SNPs, they will be able to share findings from multiple
years of data as part of this requirement because their MOCs will not
necessarily need to be reviewed and approved on an annual basis. C-
SNPs, which must submit annually under section 1859(f)(5)(B)(iv) of the
Act, will be able to select preliminary findings each year from
measures that provide evidence of progress on the MOC's goals. Further,
for goals that are tied to building on prior performance or making
incremental progress in the same or similar area each year, information
about performance in more than one prior year may be relevant and
pertinent to show how the SNP is fulfilling the MOC's goals. Under MOC
4, Element B of the MOC, SNPs must currently provide a description of
the processes and procedures the plan will use to determine if health
outcome goals are met. By sharing the findings from these processes,
SNPs can outline achievable steps toward long term goals so that small
steps using limited data year to year can be evaluated. Therefore, we
believe that SNPs can effectively demonstrate progress to meet the
requirements of Sec. 422.101(f)(3)(ii).
As proposed and finalized, Sec. 422.101(f)(3)(ii) requires, as
part of the evaluation and approval of the SNP model of care, that NCQA
evaluate whether goals were fulfilled from the previous model of care.
To serve this purpose, the regulation also requires that:
Plans must provide relevant information pertaining to the
MOC's goals as well as appropriate data pertaining to the fulfillment
the previous MOC's goals.
Plans submitting an initial model of care must provide
relevant information pertaining to the MOC's goals for review and
approval.
If the SNP model of care did not fulfill the previous
MOC's goals, the plan must indicate in the MOC submission how it will
achieve or revise the goals for the plan's next MOC.
In each MOC submission and evaluation of the MOC, the SNP must be
able to demonstrate that it is continuing to work towards achieving the
MOC goals even if the SNP requires additional time or metrics to
evaluate the progress. Each MOC should reflect modification of the
SNP's strategies to meet the goals of the MOC as needed. Again, under
MOC 4 Element B, SNPs are currently submitting health outcome measures
used to measure overall SNP population health outcomes at the plan
level. SNPs may submit final or preliminary findings from these
measures in order to provide evidence of progress as part of each MOC
submission.
Comment: Several commenters questioned the applicability of the
proposed regulation to D-SNPs and stated that dual eligible enrollees
experience changes in eligibility based on their Medicaid status, which
the commenters stated impacts the plan's ability to implement and
operationalize the MOC.
Response: First, we believe that the process for setting health
outcome goals and choosing a set of measures to determine progress
permits all SNPs, including D-SNPs, to select measures that make sense
for the population that the plan serves in so far as those measures
speak to benchmarks, specific time frames, and how achieving those
goals will be determined. A SNP that believes it suffers from
disproportionate rates of disenrollment can seek to align outcome
measures in a way that recognizes these perceived challenges; however,
any measures that the plan selects must be approved by NCQA as part of
the MOC approval process. Second, we also believe that the extension of
the provision in this rule requiring fulfillment of the previous MOC's
goals is consistent with current MOC approval requirements as outlined
in Chapter 5, section 20.2.2 (Model of Care Scoring Criteria), as
applied currently to all MOC types. The goal of performance improvement
and quality measurement is to improve the SNP's ability to deliver
high-quality health care services and benefits to its SNP enrollees;
our commitment to this is

[[Page 5881]]

reflected in how it is explicitly stated in section 20.2.2 under MOC 4:
MOC Quality Measurement and Performance Improvement, Element B:
Measurable Goals and Health Outcomes for the MOC. This goal may be
achieved as a result of increased organizational effectiveness and
efficiency through incorporation of quality measurement and performance
improvement concepts that drive organizational change. The leadership,
managers and governing body of a SNP must have a comprehensive quality
improvement program in place to measure its current level of
performance and determine if organizational systems and processes must
be modified, based on performance results.
In addition, section 20.2.2 of Chapter 5 of the Medicare Managed
Care Manual provides additional information for plans to identify and
clearly define measurable goals and health outcomes for the MOC in
listing the five subfactors for Element B of MOC 4. Under factor 1, the
SNP's description of measurable goals must include benchmarks, specific
time frames, and how achieving goals will be determined. For factor 2,
the SNP must include the specific data sources it will use for
measurement for the stated health outcome measures. SNPs have
flexibility in setting health outcome goals, particularly flexibility
to align those goals with the population being served by the plan, but
such measures must be approved by NCQA in its review of the MOC. The
rule we are finalizing at Sec. Sec. 422.101(f)(3)(ii) maintains the
current level of flexibility for different SNP types in setting goals
and the measures and data used to determine if the goals are met. By
allowing such flexibilities, the regulation permits SNPs to take into
account unique challenges facing their plan (such as potential changes
in enrollment due to changes in eligibility for enrollees) and to set
goals that allow SNPs to measure progress against these challenges.
For factor 2, the SNP must identify in the MOC the specific data
sources it will use for measurement for the stated health outcome
measures. We believe that the process for setting health outcome goals
and choosing a set of measures to determine progress permits D-SNPs,
and all SNPs, to select measures that makes sense for the population of
beneficiaries that the plan serves in so far as those measures speak to
benchmarks, specific time frames, and how achieving goals will be
determined. The regulation we are finalizing at Sec. 422.101(f)(3)(ii)
maintains the level of flexibility for different SNP types as it is
currently constructed through NCQA's MOC approval process. By allowing
such flexibilities, plans can take into account unique challenges
facing their plan and to set goals that allow SNPs to measure progress
against these challenges.
After consideration of the comments and for the reasons outlined in
the response to comments and in the proposed rule, we are finalizing
the amendment to Sec. 422.101(f)(3)(ii) as proposed without
modification.
5. Establishing a Minimum Benchmark for Each Element of the SNP Model
of Care
Finally, we proposed a new regulation at Sec. 422.101(f)(3)(iii)
imposing the requirement that benchmarks for each MOC element set by
CMS must be met for a MOC to be approved. Section 1859(f)(5)(B)(v) of
the Act requires that the Secretary establish a minimum benchmark for
each element of the C-SNP model of care and that the MOC can only be
approved if each element meets a minimum benchmark. We proposed to
implement this requirement and a minimum 50% benchmark for all SNP
models of care because medically complex conditions are found in
enrollees across all SNP types and implementation of the benchmark
requirement only for C-SNPs would be operationally challenging for MA
organizations that operate more than one SNP. In the proposed rule, we
stated that each SNP model of care would be evaluated based on a
minimum benchmark for each of the four elements and how that was
consistent with our current policy. Currently, each subfactor of a MOC
element is valued at 0-4 points with the score of each element based on
the number of factors met for that specific element; the aggregate
total of all possible points across all elements equals 60, which is
then converted to percentage scores based on the number of total points
received. We proposed that each element of the MOC must meet a minimum
benchmark of 50 percent of total points as allotted, and a plan's MOC
would only be approved if each element of the model of care meets the
applicable minimum benchmark.
We received the following comments and our responses follow:
Comment: CMS received several comments that, while receptive to the
establishment of the minimum benchmark as proposed, were concerned
about the timing of the implementation of the rule. Commenters sought
implementation to begin in Contract Year 2022.
Response: We are finalizing the changes to Sec. 422.101(f) as
being applicable for contract year 2023 and subsequent years. While
this final rule will have an earlier effective date, making these
provisions applicable for the period beginning January 1, 2023 provides
time for MA organizations to plan and time for NCQA to implement these
new standards for use in evaluating MOCs developed and submitted for
2023. Plans that are required to submit MOCs for contract year 2022 are
due to submit MOCs by February 17, 2021; those submissions will be
evaluated based on the regulations in effect at that time (that is,
without the amendments adopted here) and SNPs must implement and comply
with their approved MOCs in connection with coverage in 2022. Moving
the applicable implementation of the SNP MOC provisions to contract
year 2023 will allow SNPs and CMS to construct the necessary processes
for the full implementation and enforcement of this final rule. When
MOCs for contract year 2023 are submitted for review and approval in
early 2022, the regulations in this final rule will be used to evaluate
those MOCs for approval.
Comment: A number of commenters asked for additional clarity
regarding how CMS will implement the scoring of each MOC sub-element.
Response: First, we clarify that NCQA evaluates and scores the
MOCs, as part of the NCQA approval requirement that has been in place
since 2012 and that will be codified at Sec. 422.101(f)(3) under this
final rule. Second, we intend that scoring using the 50 percent
benchmarks will be consistent with how MOCs are evaluated and scored
now with the addition that the MOC submitted by the SNP must score at
least 50% on each element; the scope, content and number of elements
and the points available for each element remain the same as outlined
in Chapter 5 of the Medicare Managed Care Manual, section 20.2.2.
Currently, the MOC narrative in Chapter 5 addresses four
overarching categories: (1) Description of the SNP Population, (2) Care
Coordination, (3) SNP Provider Network, and (4) MOC Quality Measurement
& Performance Improvement. Each of the four categories is then
comprised of a set of required elements, such as Element B:
Subpopulation--Most Vulnerable Beneficiaries under the MOC 1 category.
These elements and their various factors are reviewed and scored by
NCQA and contribute to the overall score for that element. All total,
there are 15 elements among the 4 MOC categories. A full list of
categories, elements, and factors, as

[[Page 5882]]

well as additional guidance pertaining to MOC submission requirements
and structure, can be found in Chapter 5 of the MMCM. As we explained
in the proposed rule, there are a total of 60 points available, across
all categories and elements. Each element is scored by NCQA on a range
of 0 to 4. To meet the new standard at Sec. 422.101(f)(3)(iii), each
MOC must earn at least 2 points for each element.
As proposed and finalized, Sec. 422.101(f)(3)(iii) does not alter
the current characteristics or the number of categories, elements, and
factors and the mandatory benchmarks will be applied at the element
level. For example, the category MOC 2: Care Coordination is made up of
five elements:
Element A: SNP Staff Structure;
Element B: Health Risk Assessment Tool (HRAT);
Element C: Individualized Care Plan (ICP);
Element D: Interdisciplinary Care Team (ICT); and
Element E: Care Transition Protocols.
A SNP will need to meet a minimum benchmark score of 50 percent for
each of Elements A-E. Failing to meet the minimum score in any one
element would result in disapproval of the MOC by NCQA during the first
round of evaluation. The current process and procedures for the
evaluation is not changing under this final rule, so the SNP would be
able to resubmit a revised MOC during the cure period after having an
opportunity to address the failures identified by NQCA and to revise
how the MOC addresses the applicable element(s).
Starting with the MOC for contract year 2023, each SNP will need to
meet a minimum benchmark score of 50 percent for each element, and a
plan's model of care will only be approved if each element of the model
of care meets the minimum benchmark. CMS and NCQA will provide an
overview of any category and/or element deficiencies in our
correspondence to plans at the completion of NCQA's MOC evaluation. In
addition, each SNP MOC will need to meet an overall score in order to
meet NCQA approval, as is the case now.
Comment: CMS received one comment concerned that the introduction
of this new scoring process at the element level would potentially
derail an otherwise worthy MOC submission.
Response: We believe the final rule is largely consistent with
existing regulations and guidance regarding review of SNP MOC standards
as plans already receive scores at the element level, though under our
current policy approval is based only on the aggregate score. However,
use of minimum benchmarks for each element serves important policy
goals by ensuring that each MOC is minimally compliant and that each
MOC addresses all of the elements. We also have concerns that the
current system potentially allows a MOC to pass while containing a
significant deficiency in a specific element. We believe continued
guidance and training by CMS and NCQA will mitigate disruption that may
stem from the changes associated with the new scoring process under
Sec. 422.101(f)(3)(iii).
As we noted in the proposed rule, we anticipate that there will be
some impact to the number of MOC submissions that will not pass NCQA's
initial MOC review. Looking at MOC score data for contract year 2020,
our proposed element benchmark of 50 percent would have impacted 20 of
the 273 MOCs submitted, or 7.3 percent. Meaning 20 of the 273 MOCs in
2020 would have been required to resubmit during the cure period of the
approval process. For comparison, for contract year 2020, under our
current aggregate scoring system, seven plans were required to submit
revised MOCs based on the current scoring system and an additional
seven plans decided to withdraw their MOCs before the revision process,
for a total of 14 MOCs. CMS intends to work with NCQA to ensure that
the transition for SNPs to using the new scoring benchmarks for each
element is as seamless as possible. Further, the cure period will
provide an opportunity to make revisions to address deficiencies
identified by NCQA for SNPs that must submit their MOCs for review and
approval by NCQA for 2023.
Comment: A commenter expressed concerns that the amended scoring
process would be particularly problematic for D-SNPs that enroll
beneficiaries with significant and complex medical and social needs.
Response: We believe the MOC review and approval processes are
structured to provide a uniform apparatus that already takes into
account differences among SNP types and the populations that they
serve. As a quality improvement tool, the MOC acts as an important
roadmap for ensuring that the unique needs of SNP enrollees are
addressed and is a fundamental component of SNP quality improvement.
NCQA uses a review process that scores a MOC based on how well a plan
has addressed process details and narrative descriptions. Each MOC
renewal is an opportunity for a SNP to plan for, lay out, and implement
improvements to its processes for each specific element and factor.
Even when the MOC guidelines focus on quality improvement and enrollee
health outcomes, the MOC review is centered on the SNP's processes and
procedures used to determine if those health outcome goals are met.
Under the MOC rubric, CMS does not intend for SNPs to meet specific
metric thresholds denoting quality. For example, under MOC, Element B,
factor 4, the MOC must describe how it determines if the goals
described in factor 1 are met rather than address performance on a
specific metric set by CMS. Regardless of SNP type, NCQA applies the
review standards uniformly across each MOC submission under this
regulation.
Comment: A commenter noted concern that the MOC benchmark was
duplicative of the reporting and tracking of plan performance under the
Star Rating system.
Response: The MOC requirement is distinct from the goals and
purpose of the Star Ratings system so even though there may be some
overlap in MA organization and SNP processes in order to successfully
implement the MOC and achieve high Star Ratings, we do not believe that
these are duplicative or that one should be eliminated in favor of the
other.
Section 1859(f)(5)(A)(i) of the Act requires that all SNPs be
approved by NCQA based on standards developed by the Secretary; this
requirement was added by section 164 of the Medicare Improvements for
Patients and Providers Act (hereinafter referred to as MIPPA) (Pub. L.
110-275) and became effective with the 2012 contract year. As provided
in Sec. Sec. 422.4(a)(1)(iv), 422.101(f), and 422.152(g), the NCQA
approval process is based on evaluation and approval of the SNP MOC.
Therefore, all SNPs must submit their MOCs to CMS for NCQA evaluation,
and an MA organization must develop separate MOCs to meet the needs of
the targeted population for each SNP type it offers. NCQA, based on
guidance from CMS, has applied scoring standards applicable to all SNP
types. The MOC is a forward-looking tool used by SNPs to design
processes to perform and improve their performance over a set time
period. The Star Ratings system, on the other hand, is used to measure
and provide comparative information about the performance of MA
organizations on defined measures. Under sections 1853(o) and 1854(b)
of the Act, Star Ratings are used in determining payment and
beneficiary rebates for MA plans; CMS has adopted provisions, at
Sec. Sec. 422.504(a)(17) and 423.505(a)(26), to use historical,
sustained poor

[[Page 5883]]

performance on the Star Ratings to evaluate compliance with MA and Part
D program requirements and, thus, whether an MA contract should be
terminated. In this way, the Star Ratings are retrospective and provide
information about past performance, not the MA organization's
intentions or plans for improvement and to address enrollee needs in
the coming year. Even if past performance can sometimes predict future
performance, the Star Ratings program is not the duplicative of a
quality improvement program like the MOC. There are other differences
between the Star Ratings program and the MOC review and approval
process, but these differences in purpose are fundamental and
sufficient to conclude that it is appropriate to use a minimum
benchmark for approval of all SNP MOCs. Therefore, we are finalizing
Sec. 422.101(f)(3)(iii) as proposed to require use of a 50 percent
minimum benchmark for each MOC element.
After consideration of the comments and for the reasons outlined in
the proposed rule and our responses to comments, we are finalizing
amendments to Sec. 422.101(f)(1) introductory text, (f)(1)(i),
(f)(1)(iii), and (f)(2) introductory text and adding Sec.
422.101(f)(1)(iv) and (f)(3). These provisions are finalized
substantially as proposed with a modification in paragraph (f)(1)(iv)
to set standards for the required face-to-face encounter.

B. Coverage Gap Discount Program Updates (Sec. Sec. 423.100 and
423.2305)

We proposed to amend our regulations at Sec. Sec. 423.100
(definition of applicable drug) and 423.2305 (determination of coverage
gap discount) to reflect changes to the relevant statutory provisions
made by the BBA of 2018. Sections 53113 and 53116 of the BBA of 2018
amended section 1860D-14A of the Act to (a) increase the coverage gap
discount for applicable drugs from 50 to 70 percent of the negotiated
price beginning in plan year 2019, and (b) revise the definition of an
applicable drug to include biosimilar biological products, also
beginning in plan year 2019.
Specifically, section 53116 of the BBA of 2018 revised the
definition of ``discounted price,'' meaning the price provided to the
beneficiary, in section 1860D-14A(g)(4)(A) of the Act to mean, for a
plan year after 2018, 30 percent of the negotiated price. This means
that the coverage gap discount is 70 percent, rather than 50 percent.
To make our regulations consistent with this change, we proposed to
amend the definition of ``applicable discount'' in Sec. 423.2305 to
provide that, with respect to a plan year after plan year 2018, the
applicable discount is 70 percent of the portion of the negotiated
price (as defined in Sec. 423.2305) of the applicable drug of a
manufacturer that falls within the coverage gap and that remains after
such negotiated price is reduced by any supplemental benefits that are
available.
Section 53113 of the BBA of 2018 amended section 1860D-14A(g)(2)(A)
of the Act to specify that biological products licensed under
subsection (k) of section 351 of the Public Health Service Act (that
is, biosimilar and interchangeable biological products) are excluded
from the coverage gap discount program only with respect to plan years
prior to 2019. Accordingly, CMS has treated biosimilar biological
products as applicable drugs under the Discount Program since 2019.
Therefore, we proposed to revise the definition of applicable drug at
Sec. 423.100 to specify that such biological products are excluded
only for plan years prior to 2019. \6\
---------------------------------------------------------------------------

\6\ Unless our policy specifically distinguishes biosimilar
biological products from interchangeable biological products, we use
the term ``biosimilar biological product(s)'' in this preamble to
reference biosimilar or interchangeable (when such products become
available) biological products.
---------------------------------------------------------------------------

We received four comments on our proposal. The two comments that
were within the scope of the rule were supportive of the proposed
changes. Therefore, we are finalizing the regulatory change as proposed
to amend the definition of ``applicable discount'' in Sec. 423.2305 to
increase the applicable discount from 50 to 70 percent of the
negotiated price beginning in 2019, and to revise the definition of
applicable drug at Sec. 423.100 such that biosimilar biological
products are excluded only for plan years before 2019. As previously
noted, these changes are being made to update the regulations to
reflect statutory and operational changes that became effective in
2019.

C. Part D Income Related Monthly Adjustment Amount (IRMAA) Calculation
Update for Part D Premium Amounts (Sec. 423.286)

Section 3308 of the Affordable Care Act amended section 1860D-13(a)
of the Act and established an income-related monthly adjustment amount
for Medicare Part D (hereinafter referred to as Part D-IRMAA) for
beneficiaries whose modified adjusted gross income (MAGI) exceeds the
same income threshold amount tiers established under section 1839(i) of
the Act with respect to the Medicare Part B income-related monthly
adjustment amount (Part B-IRMAA). The Part D-IRMAA is an amount that a
beneficiary pays in addition to the monthly plan premium for Medicare
prescription drug coverage under the Part D plan in which the
beneficiary is enrolled when the beneficiary's MAGI is above the
specified threshold.
The Part D-IRMAA income tiers mirror those established for the Part
B-IRMAA. As specified in section 1839(i) of the Act, when the Part B-
IRMAA went into effect in 2007, individuals and joint tax filers
enrolled in Medicare Part B whose modified adjusted gross income
exceeded $80,000 and $160,000, respectively, were assessed the Part B-
IRMAA on a sliding scale. As specified in section 1839(i)(5) of the
Act, each dollar amount within the income threshold tiers shall be
adjusted annually based on the Consumer Price Index (CPI). As a result
of the annual adjustment, for calendar year 2010, the income threshold
amounts had increased to reflect four income threshold amount tiers for
individuals and joint tax filers whose modified adjusted gross income
exceeded $85,000 and $170,000, respectively. (We note that section 3402
of the Affordable Care Act froze the income thresholds for 2011 through
2019 at the level established for 2010.)
Consistent with section 3308 of the Affordable Care Act, the Part
D-IRMAA is calculated using the Part D national base beneficiary
premium (BBP) and the applicable premium percentage (P) as follows: BBP
x [(P - 25.5 percent)/25.5 percent]. The premium percentage used in the
calculation will depend on the level of the Part D enrollee's modified
adjusted gross income.
Section 3308 of the Affordable Care Act required CMS to provide the
Social Security Administration (SSA) with the national base beneficiary
premium amount used to calculate the Part D-IRMAA no later than
September 15 of each year, starting in 2010. Also, effective in 2010,
CMS must provide SSA no later than October 15 of each year, with: (1)
The modified adjusted gross income threshold ranges; (2) the applicable
percentages established for Part D-IRMAA in accordance with section
1839 of the Act; (3) the corresponding monthly adjustment amounts; and
(4) any other information SSA deems necessary to carry out Part D-
IRMAA.
To determine a beneficiary's IRMAA, SSA considers the beneficiary's
MAGI, together with their tax filing status, to determine the
percentage of the: (1) Unsubsidized Medicare Part B premium the
beneficiary must pay; and (2) cost of basic Medicare prescription drug
coverage that the beneficiary must pay.

[[Page 5884]]

Since the implementation of the Part D-IRMAA in 2011, subsequent
revisions to the statute have modified the associated income tiers used
in IRMAA calculations:
Section 402 of the Medicare Access and CHIP
Reauthorization Act (MACRA) of 2015, revised the income thresholds for
the Part B- and Part D-IRMAA income groups such that beneficiaries with
incomes greater than $85,000 but not more than $107,000 were required
to pay 35 percent of Part B and Part D program costs; beneficiaries
with incomes greater than $107,000 but not more than $133,500 would pay
50 percent of Part B and Part D program costs; beneficiaries with
incomes greater than $133,500 but not more than $160,000 would pay 65
percent of Part B and Part D program costs; while beneficiaries with
incomes greater than $160,000 were required to pay 80 percent of Part B
and Part D program costs.
Section 53114 of the Bipartisan Budget Agreement (BBA) of
2018 revised the income thresholds again such that, beginning in 2019,
beneficiaries with incomes greater than $500,000 ($750,000 for joint
tax filers) are required to pay 85 percent of program costs (an
increase from 80 percent).
We proposed to revise Sec. 423.286(d)(4)(ii) for consistency with
the changes made by section 53114 of the BBA of 2018 and to make other
technical changes to ensure that the calculations used in the
methodology for updating Part D-IRMAA are described correctly. We
proposed to remove the language ``the product of the quotient obtained
by dividing the applicable premium percentage specified in Sec.
418.2120 (35, 50, 65, or 80 percent) that is based on the level of the
Part D enrollee's modified adjusted gross income for the calendar year
reduced by 25.5 percent and the base beneficiary premium as determined
under paragraph (c) of this section'' and replace it with ``the product
of the standard base beneficiary premium, as determined under paragraph
(c) of this section, and the ratio of the applicable premium percentage
specified in 20 CFR 418.2120, reduced by 25.5 percent; divided by 25.5
percent (that is, premium percentage-25.5)/25.5).''
We received no comments on this proposal and are finalizing the
proposed revisions to Sec. 423.286(d)(4)(ii) without modification.
Although we are finalizing this provision as applicable 60 days after
publication, it codifies current policies so we anticipate that there
will be no change in operations or administration of the MA and Part D
programs and encourage MA organizations and Part D sponsors to take
this final rule into account immediately. We note that the revisions to
this provision that we are finalizing in this final rule simply codify
the Part D-IMRAA calculation that is currently used by SSA.

III. Implementation of Several Opioid Provisions of the Substance Use-
Disorder Prevention That Promotes Opioid Recovery and Treatment
(SUPPORT) for Patients and Communities Act

A. Mandatory Drug Management Programs (DMPs) (Sec. 423.153)

Section 2004 of the SUPPORT Act requires that all Part D sponsors
must have established DMPs no later than January 1, 2022. We proposed
to amend regulatory language at Sec. 423.153(f) to reflect this
requirement. As discussed in the proposed rule preamble, the
Overutilization Monitoring System (OMS) criteria used to identify
``potential at-risk beneficiaries'' (PARBs) (defined in Sec. 423.100)
are based on a history of filling opioids from multiple doctors and/or
multiple pharmacies. While implementation of DMPs has been optional
since codified for 2019, 85.9 percent of Part D contracts in calendar
year 2019 and 87.2 percent in calendar year 2020 have established DMPs
to address opioid overutilization among their enrollees. Thus, of about
49 million beneficiaries who were enrolled in the Medicare Part D
program in 2019, about 48.5 million enrollees (99 percent) are covered
under Part D contracts that offer a DMP already. We received the
following comments on this proposal and our responses follow:
Comment: CMS received numerous comments that were generally
supportive of our proposal to codify the statutory requirement that all
Part D plans implement a DMP.
Response: We thank commenters for their support.
Comment: Several commenters expressed concerns that enrollees being
treated for pain would be forced, through mandatory DMPs, to see a new
doctor or use a new pharmacy and that the proposed regulation would
undermine the doctor-patient relationship.
Response: The concerns expressed in some of these comments appeared
to reflect a misunderstanding of the requirements in section 2004 of
the SUPPORT Act. Although section 2004 mandates the establishment of
DMPs for all Part D sponsors beginning January 1, 2022, section 2004
did not expand DMPs' scope. Thus, it is not the case that a
``mandatory'' DMP would now require all Part D beneficiaries taking
opioids to be subject to coverage limitations or quantity limits.
Rather, the statute and the regulations we are finalizing in this rule
will now require the few Part D sponsors who have not already
established a DMP to do so. DMPs identify a subset of opioid users in
the Part D program who may be at the highest risk of an adverse health
event, for example, due to uncoordinated care. As mentioned in the
proposed rule, CMS' internal analysis estimated that only 158
additional PARBs will be identified per year by applying the current
minimum OMS criteria across all Part D contracts that do not already
have DMPs in place. CMS expects that only a few of these additional
beneficiaries will be subject to a coverage limitation after case
management with their opioid prescribers.
CMS does not agree that DMP activities undermine the doctor-patient
relationship. In fact, the goal of case management under a DMP is for
Part D sponsors to assist prescribers in coordinating care for PARBs to
ensure their opioid use is appropriate and medically necessary. The
case management process increases safety and accountability within the
doctor-patient relationship, as prescribers may or may not be aware
that there are other prescribers of opioids or benzodiazepines for
their patients. Any potential coverage limitation under a DMP is put in
place only after the plan conducts case management, solicits the views
of the enrollee's prescriber(s), and provides advance written notice to
the enrollee. If a Part D sponsor implements a prescriber and/or a
pharmacy limitation, the affected beneficiary is provided opportunities
to select their preferred pharmacy and prescriber when they receive an
Initial Notice of their PARB status and a Second Notice of their at-
risk beneficiary (ARB) status, as described in regulation at Sec.
423.153(f)(5)(ii)(4) and Sec. 423.153(f)(6)(ii)(5). The sponsor is
required to consider the beneficiary's preferences consistent with
Sec. 423.153(f)(9). These aspects of DMPs safeguard beneficiary's
access to coverage of opioids, prescriber and pharmacy choice, and the
integrity of the doctor/patient relationship.
Comment: Several commenters requested that PACE organizations be
exempt from the requirement to establish a DMP. These commenters noted
that drug utilization management programs, quality assurance measures,
and medication therapy management (MTM) program requirements

[[Page 5885]]

(Sec. 423.153(a) through (d)) are currently waived for PACE under
Sec. 423.458(d). Commenters also stated that the PACE model of care
already addresses opioid overutilization through use of a closed
provider network; care coordination through primary care providers and
the interdisciplinary team; proactive drug utilization review; and in-
person health assessments already required for PACE enrollees.
Some of these commenters noted that, while the majority of PACE
participants do not reside in an LTC facility, PACE participants are
required to meet their state's eligibility criteria for nursing home
care and therefore share characteristics with beneficiaries who are
exempt from DMPs because they are residents of LTC facilities. They
also state that PACE organizations typically contract with a single
pharmacy which inherently coordinates access and achieves the goals of
a DMP. One commenter noted that many PACE organizations do not have
formularies and therefore no Pharmacy and Therapeutic (P&T) committee
to develop and carry out DMP policies and procedures.
Response: CMS thanks these commenters for their feedback, but
disagrees that PACE organizations should be exempt from the statutory
requirement to establish a DMP. While the DMP statute does outline
certain exempted beneficiaries, such as individuals with cancer or who
reside in a LTC facility, it does not specify or contemplate exemptions
based on Part D plan type. CMS notes that MA-PDs that require enrollees
to access routine care from contracted and/or employed prescribers
through an HMO or integrated care model are similarly required under
Part 422 to provide coordinated care, but are not exempt from the DMP
requirement. As commenters noted, PACE participants are an especially
vulnerable Medicare population, and for those who live in the
community, additional monitoring will serve as a valuable safeguard to
help prevent misuse of opioids. Depending on the frequency of
engagement between the participant and PACE organization, as well as
participant preferences, the in-person assessments required under
Sec. Sec. 460.104 and 460.121 may not always coincide with
identification through the OMS, and may present missed opportunities to
intervene.
Under the existing regulatory framework where DMPs are voluntary,
approximately 40 percent of PACE contracts have reported to CMS that
they already have a DMP in place. In 2019, PACE enrollees accounted for
0.03 percent of all Part D enrollees belonging to a plan with a DMP,
and 0.07 percent of Part D enrollees identified in OMS as PARBs because
they met the minimum OMS criteria. Based on CMS' analysis used in the
proposed rule, PACE enrollees account for 0.14 percent of total Part D
enrollees identified as PARBs because they meet the criteria for
history of opioid overdose (see discussion in this section of this
rule), which is proportional to the number of PACE enrollees in Part D
(for January 2020, 0.1 percent of all Part D enrollment). In other
words, the likelihood of a PACE participant being identified as a PARB,
either based on OMS criteria or history of opioid overdose, is at least
as high as the likelihood of any Part D enrollee to meet those
criteria. Therefore, a PACE participant is as likely as any other Part
D enrollee to benefit from case management and should not be deprived
of this aspect of the Part D program. As discussed in the proposed rule
preamble, Part D sponsors with DMPs infrequently implement coverage
limitations after case management. This reflects the goals of case
management as a means through which Part D sponsors engage prescribers,
gather relevant patient-specific information not available to CMS, such
as more recent medical or prescription claims data, and seek to
coordinate care tailored to the unique needs of the beneficiary. CMS
expects the volume of PARBs identified through minimum OMS criteria in
the PACE organizations that have not yet implemented a DMP will
continue to be minimal and present a low overall burden for these
organizations. As with other Part D plans, such burden includes
conducting case management, implementing any needed coverage
limitations, and reporting of case management outcomes and coverage
limitations back to CMS via OMS. Reporting outcomes of case management
provides CMS with valuable information to help track the safe use of
opioids and benzodiazepines in the Part D program and serves as a means
to document that case management occurred.
CMS agrees with commenters that a PACE organization, or for that
matter, any Part D plan sponsor, that does not have a P&T committee
would not be in compliance with existing Sec. 423.153(f)(1), which
requires approval of DMP policies and procedures by the ``applicable
P&T committee.'' As specified in Sec. 423.120(b), only Part D sponsors
that use formularies must have a P&T committee, and CMS did not propose
to broaden that requirement to apply to Part D sponsors that do not use
formularies. For this reason, after consideration of the comments, CMS
is amending the language at Sec. 423.153(f)(1) to account for Part D
sponsors, including PACE organizations, that do not have their own or a
contracted P&T committee (for example, through their PBM) because they
do not use a formulary. Such sponsors can comply with this requirement
by having written DMP policies and procedures that are approved by the
Part D sponsor's medical director and applicable clinical and other
staff or contractors, as determined appropriate by the medical
director. We have also added cross references to the existing
regulations requiring that Part D sponsors have a medical director at
Sec. 423.562(a)(5), and for PACE organizations, at Sec. 460.60(b).
Comment: Several commenters stated general concerns or
recommendations regarding DMPs. Commenters expressed concerns regarding
the misapplication of the CDC Guideline for Prescribing Opioids for
Chronic Pain \7\ and recommended that CMS direct sponsors towards
appropriate disease-specific pain management guidelines. Additional
recommendations included facilitating or encouraging providers to refer
patients to non-pharmacologic therapies for pain; ensuring provider
education about overdose and naloxone prescribing, including evaluation
for substance use disorder; ensuring shared decision-making between
beneficiaries and prescribers such that access to medically necessary
opioids is not impeded; ensuring beneficiaries with a coverage
limitation are not forced to use a pharmacy in which the sponsor has a
financial interest; and generally ensuring DMP activities are non-
punitive or stigmatizing.
---------------------------------------------------------------------------

\7\ Dowell D, Haegerich TM, Chou R. CDC Guideline for
Prescribing Opioids for Chronic Pain--United States, 2016. MMWR
Recomm Rep 2016;65(No. RR-1):1-49. DOI: http://dx.doi.org/10.15585/mmwr.rr6501e1.
---------------------------------------------------------------------------

Response: CMS appreciates the concerns and recommendations
commenters shared regarding case management activities. We note that
the recommendations are not inconsistent with the current DMP
requirements.
In finalizing the regulatory framework for DMPs (83 FR 16440), CMS
made a conscious effort that DMP activities would not be punitive or
stigmatizing and would not inappropriately limit access or result in
abrupt opioid tapering. This is consistent with the CDC's commentary
\8\ published in 2019,

[[Page 5886]]

which advised against the misapplication of the Guideline for
Prescribing Opioids for Chronic Pain, including the inflexible
application of the Guideline's dosage recommendations and policies that
encourage abrupt tapering, sudden discontinuation, or dismissal of the
patient from their physician.
---------------------------------------------------------------------------

\8\ https://www.cdc.gov/media/releases/2019/s0424-advises-misapplication-guideline-prescribing-opioids.html.
---------------------------------------------------------------------------

CMS agrees that many of the suggestions proposed could be of value
in many cases, and encourages sponsors to incorporate them, as
appropriate, into their DMP policies and procedures, as well as protect
against the unintended consequences identified by the CDC. Finally, CMS
notes that beneficiaries are provided opportunities to select their
preferred pharmacies and prescribers, if their plan intends to apply a
pharmacy or prescriber limitation under the DMP. See Sec.
423.153(f)(5)(ii)(4) and Sec. 423.153(f)(6)(ii)(5).
Comment: A few commenters stated that mandatory DMPs are redundant
with existing prescription drug monitoring programs (PDMPs).
Response: CMS disagrees that DMPs are redundant with PDMPs. PDMPs
are state-level electronic databases that are used to collect
information on all controlled substance prescriptions in a state. While
PDMPs, which allow providers to access their patients' prescription
history, are one tool to combat the opioid epidemic, PDMPs do not exist
in all states, and health plans may not have access to them. Also,
while CMS encourages providers to use PDMPs prior to issuing
prescriptions for controlled substances, it is not mandatory for
providers to do so in all states.\9\ Therefore, CMS believes that DMPs
provide additional value for ensuring safe opioid prescribing in the
Part D program through the initiation of case management and care
coordination activities. Moreover, the CARA statute required CMS to
establish a regulatory framework for DMPs.
---------------------------------------------------------------------------

\9\ Centers for Disease Control and Prevention. What States Need
to Know about PDMPs. Accessed June 10, 2020 from https://www.cdc.gov/drugoverdose/pdmp/states.html.
---------------------------------------------------------------------------

Comment: Several commenters requested CMS clarify existing guidance
with regard to identification of PARBs, criteria for identifying exempt
beneficiaries, reporting requirements for ARBs, and notice requirements
for exempt beneficiaries. Several commenters provided additional
recommendations, including suggestions to expand the list of frequently
abused drugs to drugs beyond opioids and benzodiazepines (for example,
other central nervous system depressants such as gabapentin) and
allowing beneficiaries with existing beneficiary-specific POS edits
that were implemented prior to 2019 be integrated into the DMP.
Response: CMS' proposal was to implement the statutory requirement
that Part D sponsors establish DMPs as of January 1, 2022. As discussed
in section VII.L, CMS also proposed to designate beneficiaries with
sickle cell disease as exempted individuals in the regulation for
purposes of a Part D sponsor's DMP. CMS did not propose any changes to
the other existing requirements, except to solicit comment about case
management for PARBs with a history of opioid related-overdose, which
is discussed later in this section. CMS will consider revisions to the
guidance and OMS criteria as appropriate. CMS also regularly reviews
data submitted into OMS and MARx and will update guidance and/or
communicate with sponsors if needed.
After consideration of the comments received, CMS is finalizing the
proposal to make DMPs mandatory at Sec. 423.153(f) with a modification
at Sec. 423.153(f)(1) to accommodate Part D plans, such as PACE
organizations, that do not have a P&T committee, as described earlier.

B. Beneficiaries With History of Opioid-Related Overdose Included in
Drug Management Programs (DMPs) (Sec. 423.153)

Under section 2006 of the SUPPORT Act, CMS is required to identify
Part D beneficiaries with a history of opioid-related overdose (as
defined by the Secretary) and notify the sponsor of such
identification, as those individuals must be included as PARBs for
prescription drug abuse under their Part D plan's DMP. In line with
this requirement, CMS proposed to modify the definition of ``potential
at-risk beneficiary'' at Sec. 423.100 to include a Part D eligible
individual who is identified by CMS as having a history of opioid-
related overdose, which is also defined in this regulation.
Based on the analyses and rationale described in detail in the
proposed rule, CMS proposed to operationalize this definition by: (1)
Using diagnosis codes that include both prescription and illicit opioid
overdoses; (2) using a 12-month lookback period from the end of each
OMS reporting quarter for record of opioid-related overdose; and (3)
using a 6-month lookback period from the end of each OMS reporting
quarter for record of a recent Part D opioid PDE. The number of unique
beneficiaries identified under this proposal is approximately 18,268
annually (based on opioid-related overdose claims from July 1, 2017 to
June 30, 2018). Under existing rules, which CMS did not propose to
change, Part D sponsors with DMPs must conduct case management for each
PARB identified by CMS through OMS, which includes sending written
information to the beneficiary's prescribers that the beneficiary has
been identified as a PARB. In expanding the definition of PARB by
adding beneficiaries with a history of opioid overdose, Part D sponsors
must conduct the same case management process for this additional group
of beneficiaries that they currently conduct for PARBs identified based
on their use of multiple opioid prescribers and/or pharmacies. As
discussed in the proposed rule, CMS expects that case management for
these individuals will involve sponsors communicating with their
provider(s), who may or may not already be aware of the beneficiary's
overdose history.\10\ CMS also solicited comments on whether the
proposal needed any additional features to facilitate the case
management process for PARBs with a history of opioid-related overdose.
---------------------------------------------------------------------------

\10\ Additionally, the beneficiary with an overdose may or may
not meet OMS criteria.
---------------------------------------------------------------------------

CMS received numerous comments on this provision, which were
largely supportive of the proposal, with several commenters expressing
concerns or requesting clarification on various aspects as discussed in
this section of this rule.
Comment: A few commenters pointed out that the regulatory text
defining potential at-risk beneficiary at Sec. 423.100 was unclear
with regard to whether both an overdose diagnosis and an opioid PDE
were necessary to meet the new definition of a PARB based on the
proposed regulation.
Response: In response to these comments, CMS clarifies that both
criteria are required to meet the definition of a PARB with a history
of opioid-related overdose. In order to improve overall clarity in this
final rule, in lieu of revising the PARB definition at Sec. 423.100 as
proposed, we are incorporating the elements of the proposed definition
into the clinical guideline regulation as criteria in a new paragraph
at Sec. 423.153(f)(16)(ii)(2). That is, the criteria initially
proposed in the definition of PARB at Sec. 423.100 have been relocated
to the DMP clinical guidelines section of the regulation at Sec.
423.153(f)(16)(ii)(2). CMS has also made some technical changes to the
criteria now located at Sec. 423.153(f)(16)(ii)(2) to clarify that a
plan can use its own data to identify PARBs. Specifically, instead of
referring to ``PDE,'' the criteria will refer to

[[Page 5887]]

``claim'' and the words ``has been submitted'' are struck from the
criteria.
Comment: A few commenters expressed concern with identification of
overdose based on diagnosis code, citing anecdotal reports that the
codes are unreliable due to being assigned inappropriately or over-
diagnosed in beneficiaries taking opioids who present for emergency
care for other health conditions.
Response: CMS disagrees and was unable to find evidence to
substantiate this claim specific to opioid-related overdose in the
published literature. In the event a situation such as this does occur,
during the case management process the prescriber will likely review
the diagnosis and determine whether to discuss it with their patient on
a case by case basis. Such review and discussion will present an
opportunity for the provider to evaluate whether the diagnosis appears
to be inaccurate and to communicate this information back to the
sponsor's DMP.
Comment: A commenter suggested CMS include both primary and
secondary diagnosis codes for opioid-related overdose to avoid under-
reporting.
Response: CMS believes the principal diagnosis code is the most
reliable means to identify overdoses in order to meet the statutory
requirement for the reasons that follow.
According to the ICD-10-CM Official Guidelines for Coding and
Reporting,\11\ the principal diagnosis code is the condition, after
study, to be chiefly responsible for occasioning the admission of a
patient to the hospital. The terms principal and primary are used
interchangeably to define the diagnosis that is sequenced first on a
claim. Other diagnoses, including secondary diagnoses, are conditions
that may coexist at the time of admission, or develop subsequently. As
such, secondary diagnoses may capture overdoses not directly related to
the beneficiary's recent use of opioids that triggered the overdose
event. CMS' proposed criteria for identification of a PARB based on
history of opioid overdose specifies ``recent'' overdose so that DMP
activities can be the most relevant and impactful. Since secondary
diagnoses may be historical, CMS does not believe that they as reliably
reflect ``recent'' opioid-related overdoses as do principal diagnoses.
---------------------------------------------------------------------------

\11\ https://www.cms.gov/Medicare/Coding/ICD10/Downloads/2020-Coding-Guidelines.pdf.
---------------------------------------------------------------------------

Taking program size into account, focusing on the principal or
primary diagnosis chiefly responsible for the admission or event is
most appropriate to capture overdoses related to a beneficiary's recent
use of opioids and increase the likelihood that the beneficiary would
benefit from case management. Using the same time period, diagnosis
codes, PDE, and lookback period criteria described in the proposed rule
methodology, CMS evaluated the number of PARBs that would be identified
by the proposed definition, both including and excluding secondary
diagnoses. Including secondary diagnosis codes for identification of
opioid-related overdoses was found to increase the number of PARBs
identified by about 40 percent (for a total of 25,566) relative to the
number of PARBs identified only on the basis of principal diagnosis
(18,268, as described in burden estimates). However, due to the
limitations of secondary diagnoses themselves, described earlier, CMS
believes the additional PARBs identified solely on the basis of a
secondary diagnosis would not necessarily be those with the most
relevant history of opioid-related overdose. Therefore, CMS does not
believe that the increased program size due to including secondary
diagnosis codes for the purpose of identifying PARBs is a cost-
effective use of DMP resources, when these resources would be better
focused on beneficiaries at highest risk of misuse or abuse.
In evaluating this comment, CMS noticed that the proposed
regulatory language in the definition of PARB at Sec. 423.100 was not
sufficiently broad to include data sources and methodology discussed in
the proposed rule. As mentioned in response to a prior comment, the
criteria initially proposed in the definition of PARB at Sec. 423.100
have been relocated to Sec. 423.153(f)(16)(ii)(2). Specifically, in
the clinical guideline criteria for identifying PARBs on the basis of
history of opioid-related overdose at Sec. 423.153(f)(16)(ii)(2), the
words ``Medicare fee-for-service'' and ``code'' were stuck from what
was in the initially proposed definition at Sec. 423.100. This revised
language, which CMS is finalizing, better reflects CMS' intention to
use claims, including encounter data, resulting from healthcare visits
involving opioid-related overdoses. With this modification, the broader
criteria will encompass both inpatient and outpatient locations of
care.
Comment: A commenter requested addition of the ICD-10 code Z91.5
for method suicide attempt to capture intentional overdose in the
methodology CMS will use to identify PARBs based on history of opioid-
related overdose.
Response: CMS disagrees, as the ICD-10 code Z91.5 indicates a
history of self-harm, and does not specify self-harm via opioid use.
Although the literature CMS cited in the proposed rule preamble does
reference history of opioid-related overdose being a risk factor for
future overdoses or suicide-related events, the SUPPORT Act directs CMS
to identify beneficiaries with a history of opioid-related overdose.
Thus, including the ICD-10 code for history of self-harm would be
overly inclusive. Other ICD-10 codes are more specific to identify
injury due to opioid-related poisoning or overdose, and are used in the
methodology applied by CMS and described in more detail in the February
2020 proposed rule. CMS believes the ICD-10 codes used in this
methodology will capture both intentional and unintentional overdoses.
Comment: A commenter pointed out that using Medicare data will not
capture overdose history from new Medicare enrollees.
Response: CMS acknowledges this is a limitation to the methodology;
however, it is not feasible to gather all non-Medicare claims data for
Medicare beneficiaries. We believe using Medicare claims data strikes
the right balance to permit inclusion of beneficiaries with a history
of opioid-related overdose in DMPs without undue burden.
Comment: A commenter expressed the opinion that for beneficiaries
with overdoses due to illicit opioids, coverage limitations on
prescription opioids would not likely impact future overdose risk.
Response: CMS disagrees with the commenter's assertion given the
criteria CMS has proposed for identifying a PARB based on history of
opioid-related overdose. The statute requires that beneficiaries with a
history of opioid-related overdose be included as PARBs without
specifying that the overdose involve a prescription opioid; therefore,
we believe it is appropriate to include beneficiaries with a history of
illicit opioid overdose. In the methodology presented in the proposed
rule, CMS discussed the fact that in some cases, it is not possible to
identify whether an opioid that contributed to overdose was obtained
legally or illicitly. CMS also notes that any beneficiaries identified
in OMS due to a history of opioid overdose, regardless of whether such
overdose was illicit, will have also received an opioid prescription,
consistent with the proposed criteria. Thus, there is still a potential
role for case management, including conveying the overdose diagnosis to
the beneficiary's prescriber(s), who may

[[Page 5888]]

consider this information for ongoing opioid prescribing or referral
for other health services, with or without the implementation of a
coverage limitation for Part D prescription opioids. For example, a
prescriber may refer the beneficiary for medication-assisted treatment,
if appropriate, based on evaluation of their patient.
Comment: A commenter suggested that CMS' proposal may discourage
overdose patients who self-treated with naloxone from seeking follow-up
medical care to avoid an overdose diagnosis and potential DMP
enrollment.
Response: CMS appreciates the commenter's concerns for these
beneficiaries, and recognize the stigma they may face because of such
diagnosis. However, the statute requires including these beneficiaries
as PARBs, and the commenter's concerns do not obviate the need for CMS,
Part D plan sponsors, or health care providers from engaging in
rigorous patient safety programs, especially for this vulnerable
population. CMS encourages plan sponsors, prescribers, and advocacy
organizations to assist in efforts to educate beneficiaries about the
risks and benefits of opioid use, as well as their options for opioid
use disorder treatment. See section III.D of this final rule for
additional information about CMS' efforts, as well as the ``Information
for Patients'' resource provided on the Drug Management Program page of
the CMS website.\12\
---------------------------------------------------------------------------

\12\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxUtilization.
---------------------------------------------------------------------------

Comment: A commenter requested clarification if a beneficiary would
no longer be considered a PARB once they no longer meet the overdose
criteria.
Response: It depends. Once a beneficiary is identified as a PARB
based on a history of opioid-related overdose and reported to Part D
sponsors, sponsors must review the case and submit responses through
the OMS. CMS will update the guidance, including the OMS user guide, to
account for scenarios appropriate to PARBs identified based on a
history of opioid-related overdose, including where these beneficiaries
simultaneously or at a different time meet the definition of a PARB
based on the existing OMS criteria, or where the situation changes
while the plan is engaged in review/case management.
Comment: Many commenters, while supportive of the proposed
regulation, asked CMS to clarify expectations for case management,
outline expectations for case management outcomes, and provide guidance
for management of PARBs identified by a history of opioid-related
overdose.
Response: CMS acknowledges these comments about Part D plans
conducting case management with prescribers who are treating PARBs with
a history of opioid-related overdose. Case management is an integral
part of the DMP process. It serves the purpose of engaging in clinical
contact with the prescribers of FADs, verifying whether the beneficiary
is at risk for abuse or misuse of FADs, and obtaining agreement to a
coverage limitation on FADs, if a limitation is deemed necessary. The
goal of case management under a DMP is to improve patient safety and
care coordination, while protecting beneficiary access to coverage of
needed medications.
CMS expects that the overall elements of case management should be
similar for all PARBs, regardless of whether identified by existing OMS
criteria based on use of multiple opioid prescribers and/or pharmacies
or on a history of opioid-related overdose. CMS continues to recognize
that every case is unique and that the approach to case management will
vary depending on many factors, such as the complexity of the case and
the promptness with which prescribers respond to sponsors' outreach.
CMS continues to encourage sponsors to use flexibility and clinical
discretion depending on prescriber input and patient-related variables.
Case management activities should align with desired goals of the DMP,
for example, reducing multiple opioid prescribers and/or reducing risk
of a subsequent overdose. In estimating the burden for this provision
in the proposed rule, CMS estimated that beneficiaries with a history
of opioid-related overdose would potentially have a higher rate of
coverage limitations imposed by sponsors than beneficiaries meeting
minimum or supplemental OMS criteria because a history of overdose is
the most predictive risk factor for another overdose or suicide-related
event.\13\ However, this is only a pre-implementation estimate and CMS
continues to emphasize that the implementation of coverage limitations
should be based on individual risk factors and goals identified through
case management.
---------------------------------------------------------------------------

\13\ Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, Katz IR.
Substance use disorders and the risk of suicide mortality among men
and women in the U.S. Veterans Health Administration. Addiction.
2017 Jul; 11/2(7):1193-1201. doi: 10.1111/add.13774.
---------------------------------------------------------------------------

Plan sponsors should continue to refer to CMS guidance on elements
that may be incorporated into case management, including prescriber
education on opioid overutilization, encouraging prescribers to perform
or refer their patients for substance use disorder screening and/or
assessment, referral for follow-up treatment with pain specialists or
addiction treatment providers, if indicated, and encouraging
prescribers to utilize PDMPs to which they have access.
DMPs should notify providers and patients of the coverage of
naloxone and its availability through their plan. The U.S. Department
of Health and Human Services also issues guidance for safe opioid
prescribing, including naloxone co-prescribing.\14\
---------------------------------------------------------------------------

\14\ https://www.hhs.gov/opioids/prevention/safe-opioid-prescribing/index.html.
---------------------------------------------------------------------------

Comment: Many commenters inquired about sponsor flexibility with
regard to identification of PARBs based on a sponsor's own claims data,
applying the criteria to identify PARBs with a history of opioid-
related overdose more frequently than the OMS quarterly reports, or
using criteria beyond those proposed by CMS to identify beneficiaries
at risk of overdose at the time of their first opioid fill.
Response: CMS appreciates these comments. Just as currently
permitted with the minimum OMS criteria, sponsors are permitted to
identify PARBs with a history of opioid-related overdose more
frequently than the CMS-generated reports through OMS. CMS expects that
Part D sponsors identify PARBs consistent with the revised clinical
guidelines CMS is finalizing at Sec. 423.153(f)(16)(ii)(2). The
clinical guidelines specify a recent (that is, within the past 12
months) claim containing a principal diagnosis indicating opioid
overdose and a recent claim (that is, within the past 6 months) for an
opioid medication. Sponsors are required by regulation to submit
responses through OMS within 30 days of the most recent OMS report for
all CMS-identified or sponsor-identified beneficiaries. Sponsors do not
need to wait to receive an OMS report from CMS to initiate case
management for sponsor-identified cases and send beneficiary notices,
if applicable. Also, as we previously noted, the clinical guidelines
for identifying PARBs that we are finalizing in this rule no longer
require that history of opioid-related overdose be determined by CMS.
This better reflects sponsors' ability to identify PARBs meeting the
clinical guidelines using their own data.
Comment: A commenter requested CMS report Part D beneficiaries to
sponsors through OMS with overdose diagnoses, but without a subsequent

[[Page 5889]]

opioid claim, to proactively target these additional beneficiaries who
may be at risk. Another commenter stated that beneficiaries with a
history of overdose are already being managed outside of DMPs and
therefore DMP activities may be duplicative.
Response: CMS does not agree with the request to report
beneficiaries with an overdose diagnosis but no subsequent opioid
claim. As discussed in detail in the proposed rule preamble (85 FR
9026), it is essential that all Part D plan sponsors, including
standalone PDPs, can identify a prescriber with whom to conduct case
management.
Without the presence of an opioid claim, Part D DMPs are not
implicated. This does not preclude plans from conducting outreach
towards beneficiaries with a history of opioid-related overdose who
have not received a Part D prescription opioid, if they are able to
identify them. A plan may offer services or interventions tailored to
these beneficiaries, as the purpose of the DMP is not to supplant other
health care activities that may be of benefit to the beneficiary, but
rather to promote safe opioid prescribing practices and utilization in
the Part D program. However, these beneficiaries should not be included
in DMPs unless they meet the clinical guidelines specified in Sec.
423.153(f)(16).
Comment: Some commenters suggested a 6-month, as opposed to a 12-
month, lookback to identify opioid-related overdoses. Commenters
suggested this would enable more timely engagement with beneficiaries
and align with the Pharmacy Quality Alliance's (PQA) Initial Opioid
Prescribing (IOP) measure.
Response: CMS agrees that identifying beneficiaries as soon as
possible after their opioid-related overdose is likely to make DMP
activities most impactful; however, we disagree with changing the
lookback to 6 months for two reasons. First, CMS describes the
rationale for the 12-month lookback. Second, CMS describes why it is
not relevant to align the lookback with PQA's IOP measure.
Using a 12-month lookback, CMS anticipates that the first report
will contain the largest proportion of overdoses occurring greater than
6 months prior to the report being generated. Going forward, however,
CMS anticipates that subsequent quarterly reports will reflect a
greater proportion of more recent, and thus, more timely, claims and a
smaller proportion of earlier claims that were delayed due to
processing errors or late submissions.\15\ CMS expects that with
regular reporting, the majority of PARBs with a history of opioid-
related overdose will be identified on a timely basis. As discussed in
the proposed rule, 12 months allows CMS to identify the majority of
overdoses and appears to reflect the window of time necessary to
capture the majority of processed claims or encounters. CMS will
evaluate the implementation of the new clinical guidelines to identify
PARBs based on history of opioid-related overdose and revise the
operational specifications in the future if needed.
---------------------------------------------------------------------------

\15\ CMS data indicates that, historically, 90% of FFS claims
across all claim types are submitted within 3 months and 90% of MA
encounters across all claim types are submitted within 12 months.
See: https://www.cms.gov/files/document/medicare-covid-19-data-snapshot-fact-sheet.pdf.
---------------------------------------------------------------------------

The PQA's IOP measure set includes three separate measures. CMS has
included one of these measures, IOP-LD (Initial Opioid Prescribing--
Long Duration), in Part D sponsors' patient safety reports. The IOP-LD
measure does not consider opioid overdoses; rather, it evaluates when
there has been no other opioid prescription in the 90-day lookback
period prior to the start of an opioid with a long duration of therapy.
Because the IOP-LD measure is largely unrelated to the overdose
lookback window, CMS is not persuaded to change the overdose lookback
to align with the IOP-LD measure.
Comment: A commenter recommended that CMS exclude beneficiaries
with only one opioid prescription during the lookback period from the
definition of PARB with a history of opioid overdose. Specifically, the
commenter raised concerns about the efficacy of using plan resources to
engage emergency department prescribers in case management based on a
one-time, short-term opioid prescription.
Response: While CMS understands the commenter's concerns about
engaging emergency department prescribers in case management, CMS
disagrees with the recommendation to exclude beneficiaries with only
one opioid prescription during the lookback period. Given the level of
risk to beneficiaries with a history of opioid-related overdose, CMS
strongly believes the best policy approach is for plans to attempt to
engage their opioid prescribers through case management, even if the
prescriber only ordered a single prescription for the beneficiary. CMS
does not believe it is appropriate to presume that all such opioid
prescribers would decline to engage in case management, given the
statutory requirement to include this population in DMPs. Additionally,
the DMP regulation at Sec. 423.153(f)(4)(ii) specifies the
circumstances under which sponsors may implement a coverage limitation
for FADs in the event prescribers are not responsive. Thus, reporting
these beneficiaries in OMS as PARBs despite there only being one PDE
provides the opportunity for prescriber engagement, but still maintains
plan flexibility through the DMP in the event outreach is unsuccessful.
Comment: A commenter cited their concerns with including PARBs with
a history of opioid-related overdose in DMPs in light of the Substance
Abuse and Mental Health Services Administration's (SAMSHA) 42 CFR part
2 (``part 2'') regulations regarding disclosure of substance use
disorder (SUD) information. The commenter expressed concern that
because Part D sponsors would have to conduct case management with
prescribers of all PARBs, which will include beneficiaries with a
history of opioid-related overdose, CMS is in effect requiring Part D
sponsors to disclose SUD information about beneficiaries to providers
and that such disclosure would be in violation of the part 2
regulations. The commenter requested that CMS provide guidance and/or a
safe harbor for sponsors making such disclosures to protect them from
any compliance issues.
Response: CMS thanks the commenter for the comment. SAMSHA's part 2
regulations protect the confidentiality of SUD treatment records by
restricting the circumstances under which part 2 programs or other
lawful holders can disclose such records without the patient's consent.
CMS considered these regulations in the development of our February
2020 proposed rule. The requirement to include beneficiaries with a
history of opioid-related overdose as PARBs does not require Part D
sponsors to disclose SUD information to providers under a DMP; rather,
they are communicating to the prescriber as part of case management
that the beneficiary has a history of opioid-related overdose. A
diagnosis of overdose is not synonymous with SUD or SUD treatment, and
CMS will not be reporting SUD treatment records, nor the specific
overdose diagnosis code, to Part D plans via the OMS report. We
anticipate reporting overdose history in the form of a binary indicator
(e.g. ``yes/no,'' ``0/1,'' or other code) on the OMS report if the PARB
was identified based on having a history of opioid-related overdose.
Additional information, such as the date of overdose, may be provided
as well. CMS will provide the updated OMS report file layout and

[[Page 5890]]

OMS technical guidance in advance of the 2022 contract year. The
information CMS will provide in the OMS report will be limited such
that 42 CFR part 2 does not apply to the disclosures required under
this rule. The restrictions on disclosure and use of SUD information
only apply to such information that ``would identify a patient as
having or having had a substance use disorder either directly, by
reference to publicly available information, or through verification of
such identification by another person.'' (42 CFR 2.12(a)(1)(i)).
Furthermore, under part 2, overdose information that does not reveal
the identity of an individual as a SUD patient is not covered by the
part 2 rule. The rule does not apply to ``[a] diagnosis of drug
overdose or alcohol intoxication which clearly shows that the
individual involved does not have a substance use disorder (e.g.,
involuntary ingestion of alcohol or drugs or reaction to a prescribed
dosage of one or more drugs).'' (42 CFR 2.12(e)(4)(2)). As detailed in
the proposed rule preamble, the diagnosis codes that CMS will use to
identify PARBs with a history of opioid-related overdose do not capture
the nature of the intent or circumstances of the overdose. CMS is
making no assumptions as to the factors that contributed to the
overdose, but rather, is deferring to the providers who will be engaged
in case management to appropriately evaluate and triage their patients
as necessary.
CMS has suggested in the previously cited November 20, 2018 DMP
guidance memo that an element of case management could be encouraging
prescribers to consider performing or referring their patients for SUD
screening and/or assessment. The sponsor should not presume a
beneficiary has SUD on the basis of the opioid overdose diagnosis.
Comment: A commenter recommended that beneficiaries with a history
of opioid-related overdose be excluded from the criteria for
identifying a PARB if there was a subsequent medical claim for opioid
treatment program (OTP) services or a PDE for medication-assisted
treatment (MAT). The commenter stated that case management through the
DMP would not likely offer benefit since presence of either scenario
would suggest that an intervention had already been made and risk
factors are being addressed.
Response: CMS disagrees that beneficiaries with a claim for OTP
services or MAT should be automatically excluded from the criteria for
identifying a PARB. Referral to an OTP or initiation of MAT are not the
only goals of case management through a DMP. While a claim for OTP
services or MAT indicate that an intervention has begun, it does not
necessarily mean that the intervention has been successful. CMS
believes beneficiaries may still benefit from other elements of the
DMP. For example, a coverage limitation on future opioid prescriptions
may be beneficial for an individual while in treatment.
In reviewing this comment, CMS realized that the proposed rule had
not specified how prescriptions for MAT were treated in the context of
requiring an opioid prescription claim in addition to the opioid-
related overdose diagnosis to meet the new PARB criteria. The
methodology that CMS used to identify PARBs based on the proposed
criteria excluded PDEs for MAT. Only PDEs for non-MAT opioids were
included in the analysis and corresponding burden estimates. This is
how CMS plans to operationalize the clinical guideline criteria for the
purposes of reporting PARBs with a history of opioid-related overdose
via OMS. CMS has revised the clinical guidelines at Sec.
423.153(f)(16)(ii)(2) to clarify that prescriptions for MAT will not
satisfy the opioid prescription claim criteria for identification of
PARBs on the basis of history of opioid-related overdose. Therefore, a
beneficiary who has at least one claim with a principal diagnosis
indicating opioid overdose, but only has prescription claims for MAT
and no other opioids, will not be included as a PARB in the OMS report.
Comment: A few commenters requested that CMS conduct outreach and
education to prescribers regarding DMPs and the new criteria for
identifying PARBs based on history of opioid-related overdose.
Response: CMS will update educational materials and guidance as
appropriate.
Comment: Several commenters requested CMS provide updated model
documents to reflect the new criteria for identifying PARBs based on
opioid-related overdose history.
Response: Revisions have been made in accordance with the Paperwork
Reduction Act (PRA) model notice revision process. Revised notices will
be published in the Federal Register for public comment before being
finalized and posted on the CMS website.\16\
---------------------------------------------------------------------------

\16\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxUtilization.
---------------------------------------------------------------------------

Comment: Many commenters requested that CMS provide technical
specifications, such as OMS report file layout and response codes, well
in advance (that is, 6 months) of the expected implementation date so
that sponsors would have sufficient time to update internal systems.
Response: CMS appreciates that plans will need time to make
operational changes to incorporate this new beneficiary population into
their DMPs, and intends to issue guidance and technical specifications
to ensure such changes are in place prior to the compliance deadline.
Comment: A commenter recommended that naloxone prescribing should
be mandatory.
Response: In the proposed rule, CMS stated that the provider should
consider prescribing the beneficiary an opioid-reversal agent if they
are newly aware of the beneficiary's history of opioid-related overdose
and DMPs should notify providers and patients of the coverage of
naloxone and its availability through their plan. CMS does not have
statutory authority to mandate naloxone prescribing in Part D.
Comment: A commenter suggested that naloxone education be added to
model beneficiary notice letters.
Response: CMS will consider this recommendation during the PRA
model notice revision process. Revised notices will be published in the
Federal Register for public comment before being finalized and posted
on the CMS website.\17\
---------------------------------------------------------------------------

\17\ Ibid.
---------------------------------------------------------------------------

Comment: Some commenters requested clarification that the DMP
exemptions still apply to PARBs identified based on history of opioid-
related overdose.
Response: Section 1860D-4(c)(5)(C)(v)(I) of the Act specifies that
beneficiaries who are not exempted individuals and who have a history
of opioid-related overdose must be included as PARBs. Therefore, even
if a beneficiary has a history of opioid-related overdose, if the
beneficiary also meets the regulatory definition of an exempted
beneficiary, as codified at Sec. 423.100, that beneficiary is not to
be included in a DMP. Beneficiaries with a known exemption will not be
reported via OMS; however, it is possible that it will not be known
whether a beneficiary is exempt until case management takes place.
Thus, beneficiaries may initially be reported as PARBs but will later
be found to be exempt. In this scenario, the beneficiary would no
longer be considered a PARB. In response to this comment, CMS is making
a technical change to the definition of potential at-risk beneficiary
at Sec. 423.100 to clarify that it excludes exempted beneficiaries.

[[Page 5891]]

This technical change is described in more detail in section VI.M.
After consideration of the comments received, CMS is not finalizing
the remaining changes we had proposed to the definition of ``potential
at-risk beneficiary'' at Sec. 423.100. Rather, we are incorporating
those proposed changes into the DMP clinical guidelines at Sec.
423.153(f)(16)(ii)(2). Thus, the clinical guidelines used to identify
PARBs, beginning January 1, 2022, will include a Part D eligible
individual who is identified as having a history of opioid-related
overdose and at least one recent opioid claim, in addition to the
existing clinical guidelines based on obtaining frequently abused drugs
from multiple prescribers and/or pharmacies. The finalized clinical
guidelines for identifying PARBs with history of opioid-related
overdose also include modifications to encompass potential data sources
and clarify the exclusion of MAT from the opioid prescription component
of the guidelines, as discussed earlier in this section.

C. Information on the Safe Disposal of Prescription Drugs (Sec.
422.111)

Section 6103 of the SUPPORT Act amends section 1852 of the Act by
adding a new subsection (n). Section 1852(n)(1) requires MA plans to
provide information on the safe disposal of prescription drugs that are
controlled substances when furnishing an in-home health risk
assessment. Section 1852(n)(2) requires us to establish, through
rulemaking, criteria that we determine appropriate with respect to
information provided to an individual during an in-home health risk
assessment to ensure that he or she is sufficiently educated on the
safe disposal of prescription drugs that are controlled substances.
In order to implement the requirements of Section 1852(n)(1) for MA
plans, CMS in its proposed rule (CMS 4190-P) proposed to revise the
Sec. 422.111, Disclosure Requirements, to add a paragraph (j), which
would require MA plans that furnish an in-home health risk assessment
on or after January 1, 2022, to include both verbal (when possible) and
written information on the safe disposal of prescription drugs that are
controlled substances in such assessment. Consistent with Section
1852(n)(1), we proposed that information must include details on drug
takeback programs and safe in-home disposal methods.
In educating beneficiaries about the safe disposal of medications
that are controlled substances, we proposed that MA plans would
communicate to beneficiaries in writing and, when feasible, verbally.
We proposed that MA plans must do the following to ensure that the
individual is sufficiently educated on the safe disposal of controlled
substances: (1) Advise the enrollee that unused medications should be
disposed of as soon as possible; (2) advise the enrollee that the US
Drug Enforcement Administration allows unused prescription medications
to be mailed back to pharmacies or other authorized sites using
packages made available at such pharmacies or other authorized sites;
(3) advise the enrollee that the preferred method of disposing of
controlled substances is to bring them to a drug take back site; (4)
identify drug take back sites that are within the enrollee's MA plan
service area or that are nearest to the enrollee's residence; and (5)
instruct the enrollee on the safe disposal of medications that can be
discarded in the household trash or safely flushed. Although we did not
propose to require MA plans to provide more specific instructions with
respect to drug disposal, we did propose that the communication to
enrollees would provide the following additional guidance: If a drug
can be safely disposed of in the enrollee's home, the enrollee should
conceal or remove any personal information, including Rx number, on any
empty medication containers. If a drug can be discarded in the trash,
the enrollee should mix the drugs with an undesirable substance such as
dirt or used coffee grounds, place the mixture in a sealed container
such as an empty margarine tub, and discard in the trash.
We also proposed that the written communication include a web link
to the information available on the United States Department of Health
and Human Services website identifying methods for the safe disposal of
drugs available at the following address: https://www.hhs.gov/opioids/prevention/safely-dispose-drugs/index.html. We noted in our proposed
rule that the safe disposal of drugs guidance at this website can be
used for all medications not just medications that are controlled
substances. We stated in our proposed rule that we believed that plan
communications consistent with the standard on this website would
furnish enrollees with sufficient information for proper disposal of
controlled substances in their community. We thank commenters. We
received 35 comments on this proposal; we summarize these comments and
our responses to the comments follow.
Comment: A commenter expressed concern about the significant
operational burden required in performing a health risk assessment in
person. This commenter also recommends that CMS allow risk assessments
through telehealth such as video conference or a phone call
particularly in rural areas where access is an issue.
Response: In-home HRAs are performed in-person where the
beneficiary resides and not via telehealth. However, we clarify that
this rule is not requiring MA plans to conduct in-home HRAs. In-home
HRAs are optional and MA plans may choose to conduct HRAs in this
manner. Specifically, the information on the safe disposal of
controlled substances is only required to be furnished when an MA plan
chooses to conduct an in-home HRA. In this final rule, in consideration
of the comments received, we have sought to minimize unnecessary plan
burden while also ensuring consistency with the statutory requirement
that enrollees who receive an in-home HRA are furnished useful and
accessible information on the safe disposal of controlled substances.
With the exception of MA SNP plans, all other MA plans are required
under Sec. 422.112(b)(4)(i) to make a best effort to conduct an HRA
annually and generally do so as part of an enrollee's covered annual
wellness visit (see 42 CFR 410.15), but there is no requirement that
the HRA be conducted in-home. We note that MA special needs plans
(SNPs), as part of their model of care, are required to conduct annual
HRAs for their enrollees (42 CFR 422.101(f)(1)(i), but are also not
required to conduct in-home HRAs.
Comment: A commenter asked us to clarify whether the requirement to
furnish information about safe drug disposal during an in-home risk
assessment applies to risk assessments conducted at other locations
where seniors reside, such as senior-living centers, nursing homes or
assisted living facilities.
Response: If the enrollee's primary residence is in an
institutional setting (such as a nursing home) the enrollee typically
will not be responsible for the disposal of unused medications.
Therefore, for purposes of this requirement, we would not consider a
health risk assessment furnished to an individual who is residing in an
institutional setting such as a nursing facility to be an ``in-home''
health risk assessment, and the MA plan is not required to furnish the
enrollee with the guidance on the safe disposal of controlled
substances during the HRA as required at Sec. 422.111(j). We have
added language to Sec. 422.111(j) clarifying this exception.

[[Page 5892]]

Comment: Several commenters questioned how CMS will confirm
compliance with these disclosure requirements. The commenter asked CMS
to clarify any member material requirements regarding confirming
receipt of this information. For example, the commenter questioned
whether enrollee attestations would be required. A commenter asked that
CMS provide additional clarity about what must be included in the
health risk assessment to be compliant with this requirement.
Response: MA plans conducting an in-home HRA must document the
visit and their provision of the required disclosure to the enrollee as
described at Sec. 422.111(j). However, we are not imposing any
additional requirements beyond written documentation that would
otherwise be available to CMS upon review or audit that the safe
disposal instructions have been met.
Comment: A commenter recommend that CMS explore additional methods
to improve take-back programs, such as allowing direct-to-consumer
incentives for returning unused opioids. The commenter proposed that
rewards and incentives (R&I) could take the form of coupons, gift
cards, and electronic deposits to a digital wallet, or other options
chosen by the consumer. Another commenter also proposed that CMS
explore mechanisms that reverse distributors use to return prescription
drugs from healthcare providers and pharmacies back to manufacturers
could be leveraged to enable manufacturer-funded incentives that could
be shared with consumers. These commenters stated they believed R&I
would help spur individuals to return substantially more unused
prescription opioids.
Response: This comment is outside of the scope of this regulation.
MA plans may offer R&I programs as specified in our regulations at
Sec. 422.134 in section V.D of this final rule.
Comment: A commenter stated that they will be furnishing free kits
in a retail pharmacy chain that can be used to dispose of medications
in the home. The commenter asked that CMS require plans to inform MA
enrollees about this option. Another commenter indicated that they
would be selling in-home drug deactivation kits and that CMS should
inform MA enrollees of this option. This commenter recommended that CMS
require that patient education include information about commercially
available in-home disposal products that may be used in disposing of
unused medications. Another commenter cited a report indicating that
the use of in-home drug deactivation kits is a particularly effective
way to facilitate the safe in-home disposal of controlled medications.
This commenter also noted that drug deactivation kits would be
particularly useful in rural areas where an authorized collector may
not be nearby, and that the use of such kits would complement Take Back
Day events and give consumers more options.
Response: We recognize that other technologies, such as drug
deactivation kits, have been developed and can provide additional
options for the safe disposal of unused medications in the home.
Accordingly, we are revising the regulation text at Sec. 422.111(j)
(5) to add that the written and verbal information on the safe disposal
of controlled medications may also include information about the
availability of drug deactivation kits for in-home disposal of unused
medications. Because these products may not be available to all
enrollees and may have varying associated costs for the enrollee, CMS
defers to MA organizations to determine whether and how to include such
information. As we discuss in more detail in this section of this rule,
MA plans have the flexibility to amend the information they furnish on
the safe disposal of controlled substances to reflect innovations such
as home drug disposal kits that may become available.
Comment: Several commenters asked that CMS develop a model document
that all MA plans could present to enrollees regarding the safe
disposal of controlled substances and identification of community Rx
take back sites. Several commenters also recommend that this model
information be developed and provided in a format, reading level, and
use appropriate visuals to ensure understanding by Medicare
beneficiaries. A commenter also asked that CMS consider including in
the model general information on drug take-back sites. Another
commenter states that with thousands of health plans offering Medicare
Advantage products and thousands of health professionals providing
HRAs, the need for a common educational document is clear.
Response: We do not believe that developing a model document will
allow MA plans the flexibility to tailor their information to the local
needs or changes in this rapidly evolving area. For example, the use
and expanding availability of drug deactivation kits for in-home use is
a relatively new development, and may vary in cost and availability
across plans and depending on location. Other new developments or
changes in how medications can be safely disposed may become available
and we want to preserve the flexibility of MA plans to respond to
possible future innovations in drug disposal methods by updating their
information without depending on a CMS model document to make those
changes. We believe that within the parameters we have established in
this regulation, MA plans will have the flexibility to tailor their
information to the specific conditions present in the rural, urban or
metropolitan community where the enrollee receiving an in-home HRA
resides. We expect that as with all written information furnished to MA
enrollees that MA plans will use a format, reading level, and use
appropriate visuals to aid understanding by Medicare beneficiaries
consistent with Sec. 422.2267, which we are adopting elsewhere in this
rule.
Comment: Several commenters expressed concern about the burden of
the proposed enrollee disclosure requirement. These commenters
specifically mentioned that a verbal explanation of the safe disposal
options and also the proposed requirement of identifying local take
back sites are particularly burdensome. This commenter stated it would
be impractical to tailor local takeback information for every
individual nationwide who receives an in-home HRA. Rather, this
commenter urges CMS to adopt a rule that the health professional's
reference to the safe disposal website, where local takeback locations
can be found, satisfies the requirement to provide such information.
Response: The regulations we are finalizing in this final rule will
require the verbal instructions to supplement the written guidance on
the safe disposal of medications when possible. However, verbal
instruction is not required if the enrollee is impaired to a degree
where they are unable to receive verbal information. To assist plans in
furnishing a verbal communication to enrollees and reduce the burden we
are revising the final rule to specify that MA plans will inform
enrollees in writing and verbally of two or more drug take back sites
that are consistent with the community pattern of access to drug take
back sites where the enrollee resides. The verbal instructions should
also note that the written instructions contain the DEA website where
the enrollee can identify other community drug take back sites through
a search engine where the enrollee can also find current information on
the safe disposal of drugs. If the enrollee's spouse or caregiver is
the responsible party it would be appropriate to furnish this
information (written and verbal) to them when conducting an in-home HRA
of an impaired enrollee. We have amended

[[Page 5893]]

Sec. 422.111(j) to clarify the information that should be shared with
the enrollee when a verbal summary of the instructions is possible. We
believe providing this information in both written and verbal format is
important for the effective transmission of this information to help
enrollees appreciate the importance of disposing of unused medications
that are controlled substances and that the written document can be
used for more details on how to dispose of these unused medications.
With respect to identifying local take back sites we recognize that
simply referencing a website would be less burdensome. However, as
previously noted, in response to these comments, we are modifying our
proposal and will require a written and verbal disclosure of at least
two drug take back locations that are consistent with the enrollee's
community pattern of access to drug take back sites. Specifically, the
identified drug take back sites must be among the drug take back sites
that are generally utilized by people residing in the same community as
the enrollee receiving the in-home HRA. That is, drug take back sites
that are physically located within the shortest travel times. While the
identification of two drug take back sites available to the enrollee
identifies two choices we encourage plans to identify additional
community take back sites.
Comment: A commenter asked that rather than furnishing written
guidance on the safe disposal of controlled substances the information
could be furnished to all MA enrollees in ANOC/EOC documents. Another
commenter states that adding this information to the MA plan website
would also be less burdensome for members and health plans. One
commenter recommends that CMS promote inclusion of safe disposal
information within a member's enrollment welcome packet.
Response: We are implementing the statutory requirement at section
1852(n)(1), which requires that specific information on the safe
disposal of controlled medications must be provided to MA enrollees who
are furnished an in-home HRA. While we acknowledge that this
information could be beneficial to other enrollees, given the specific
statutory language referencing this subset of enrollees, we are not
requiring the inclusion of this information in other MA plan
communications, nor are we adding it to the EOC template. While not
required, we recognize that information on safe disposal may be useful
for all Medicare beneficiaries, and therefore we encourage MA plans to
make it available to other plan enrollees, for example by posting it on
their website.
Comment: Another commenter asks that CMS maintain flexibility for
plans to provide beneficiary education and outreach in a way that best
suits the needs of individual members while minimizing burden. A
commenter asks that CMS allow plans the flexibility to determine what
information to provide, including relying on existing, externally
validated sources. For example, the U.S. Drug Enforcement Agency (DEA)
website at www.deatakeback.com already hosts an up-to-date, searchable
database of locations for safe disposal (located specifically at
https://apps2.deadiversion.usdoj.gov/pubdispsearch/spring/main?execution=e2s1), and local law enforcement stations routinely
collect controlled substances or can direct beneficiaries elsewhere as
needed.
Response: The proposed regulation at Sec. 422.111(j)(1)(vi) (which
we are renumbering as Sec. 422.111(j)(6)) requires that MA plans
include in their written guidance a link to the United States
Department of Health and Human Services website identifying methods for
the safe disposal of drugs available at the following address: https://www.hhs.gov/opioids/prevention/safely-dispose-drugs/index.html.
However, we agree that the previously identified DEA website is a
useful tool for locating drug take back sites available in specific
communities. We will require that MA plans include a link to the DEA
website in their written instructions and will require MA plans to
provide a verbal summary of the written instruction noting the
availability of the DEA website as a source for locating drug take back
sites. Therefore, we are amending Sec. 422.111(j)(2) to include the
DEA link.
Comment: Several commenters stated that pharmacists are trusted and
qualified and should be the source of information to inform enrollees
about methods for the safe disposal of medications. The commenters
stated that delivering this information to the beneficiary at the point
of sale where the beneficiary gets or refills their prescription could
be more effective . The commenter believed that at these times,
information on safe disposal is more likely to be understood, and the
drugs are more likely to be disposed of safely as part of the
beneficiary's care routine (for example, expired medications can be
disposed of at or near the same location where a new prescription is
filled).
Response: As we have previously noted in this preamble, we are
implementing the statutory requirement at Section 1855(n), which
requires MA plan to furnish information on the safe disposal of
controlled substances when conducting an in-home HRA. Elsewhere in this
rule we discuss the statutory requirement for this information to be
furnished as part of a Part D MTM program.
Comment: A commenter expressed concern that the various
requirements for providing beneficiaries with safe disposal information
may result in a beneficiary receiving multiple and varied messages with
the adverse effect of beneficiary confusion and/or beneficiary
resistance to the safe disposal message. This commenter recommends that
CMS and plans make certain such efforts are coordinated with pharmacies
to ensure consistent messaging, particularly around treatment
alternatives.
Response: As we have previously discussed we are laying out
parameters rather than mandating model language with respect to the
information that MA plans must furnish to enrollees during an in-home
HRA. We believe the parameters we are finalizing at Sec. 422.111(j)
give MA plans the flexibility to ensure that their written information
remains reasonably consistent with the current drug disposal options
available in the communities where their enrollees reside.
We thank the commenters for sharing their concerns and
recommendations regarding our proposed implementation of Section
1855(n)(1) in the MA regulations at Sec. 422.111(j). After careful
examination of all comments received and for the reasons set forth in
the proposed rule and our responses to comments, we are finalizing
Sec. 422.111(j) with the following modifications from the proposal. We
are renumbering Sec. 422.111(j). We recognized the that DEA website is
a useful tool for locating drug take back sites available in specific
communities. We will require that MA plans include a link to the DEA
website in their written guidance and note the availability of the DEA
website as part of the verbal instructions to enrollee's when
conducting in-home HRAs. Therefore, we are amending Sec. 422.111(j)(2)
(as renumbered) to include the DEA link at: www.deatakeback.com which
includes a page with a searchable database where drug take back sites
nearest to a person's home can be identified at the following web link:
https://apps2.deadiversion.usdoj.gov/pubdispsearch/spring/main?execution=e2s1.
We are also amending Sec. 422.111(j)(4) to require that the
written and verbal

[[Page 5894]]

instructions identify two or more drug take back sites available in the
community where the enrollee resides. We are adding a new provision at
Sec. 422.111(j)(5) specifying that as part of its educational
information on the safe disposal of controlled medications, the plan
may inform enrollees in writing and verbally about the availability of
drug disposal kits for the in-home disposal of unused medications.
Finally, we are revising Sec. 422.111(j) to clarify that for purposes
of this requirement, a health risk assessment is not considered ``in
home'' if the enrollee's primary place of residence, such as a nursing
facility, manages the disposal of unused medications.

D. Beneficiaries' Education on Opioid Risks and Alternative Treatments
(Sec. 423.128)

Sponsors of Part D prescription drug plans, including MA-PDs and
standalone PDPs, must disclose certain information about their Part D
plans to each enrollee in a clear, accurate, and standardized form at
the time of enrollment and at least annually thereafter under section
1860D-4(a)(1)(a) of the Act. Section 6102 of the SUPPORT Act amended
section 1860D-4(a)(1)(B) of the Act to require that Part D sponsors
also must disclose to each enrollee, with respect to the treatment of
pain, information about the risks of prolonged opioid use. In addition
to this information, with respect to the treatment of pain, MA-PD
sponsors must disclose coverage of non-pharmacological therapies,
devices, and non-opioid medications under their plans. Sponsors of
standalone PDPs must disclose coverage of non-pharmacological
therapies, devices, and non-opioid medications under their plans and
under Medicare Parts A and B. Section 6102 also amended section 1860D-
4(a)(1)(C) to permit Part D sponsors to disclose this opioid risk and
alternative treatment coverage information to only a subset of plan
enrollees, such as enrollees who have been prescribed an opioid in the
previous 2-year period, rather than disclosing the information to each
plan enrollee.
To implement section 6102, we proposed to amend our regulations at
Sec. 423.128 to require Part D sponsors to send information on opioid
risks and alternative treatment information to all Part D enrollees,
with the option to provide such information to a subset of such
enrollees, in accordance with section 1860D-4(a)(1)(C), in lieu of
providing it to all enrollees.
Paragraph (a) of section 423.128 requires Part D sponsors to
disseminate specific plan information to enrollees, under which a
sponsor must disclose the information specified in paragraph (b) of
this section in the manner specified by CMS. Paragraph (b) lays out
information requirements the plan must include for qualified
prescription drug coverage offered under the Part D plan. We proposed
to revise these requirements by adding paragraph subsection (b)(11) to
mandate that Part D sponsors send information about the risks
associated with prolonged opioid use, coverage of non-pharmacological
therapies, devices, and non-opioid medications, for MA-PDs, coverage
under the plan, and for PDPs, coverage under Parts A and B.
Additionally, we proposed to add subsection (b)(11)(ii), which gives
Part D sponsors the option of sending these resources to a subset of
enrollees, in lieu of providing it to every enrollee. In the proposed
rule, as shown in Table C1, we suggested 6 different enrollee subsets
to whom sponsors could send the required opioid risk and alternate pain
treatment coverage information, generally grouped by retrospective
review of prescription opioid fills using several different timeframes,
with the exception of the subgroup that contains all Part D enrollees.
The lookback periods ranged from use of any opioids in last 2 years to
greater than 90 days continuous use with a 7-day gap or less in the
past year. Table C1 also shows the estimated number of enrollees in
each suggested subgroup, as well as the estimated percent of total
opioid users in Part D that each subgroup constitutes.

Table C1--Suggested Subset Options To Receive Education on Opioid Risks and Alternate Treatments *
----------------------------------------------------------------------------------------------------------------
Number of Percent of
Subset Suggested subset enrollees in total Part D
this subset opioid users
----------------------------------------------------------------------------------------------------------------
1................................... All Part D Enrollees................... 46,759,911 N/A
2................................... Any opioid use in last 2 years......... 16,134,063 100
3................................... Any opioid use in past year............ 11,027,271 100
4................................... 7 days continuous opioid use........... 7,163,615 65
5................................... Greater than 30 days continuous opioid 3,816,731 35
use, 7 day or less gap.
6................................... Greater than 90 days continuous opioid 2,698,064 24
use, 7 day or less gap.
----------------------------------------------------------------------------------------------------------------
* All figures based on 2018 PDE data as of 7/6/2019, except subset 2 which is based on 2017 and 2018 PDE data.
Beneficiaries were excluded from the opioid use subsets if they were in hospice, in a resident facility, or
had a palliative care diagnosis (07/01/2018-12/31/2018). Beneficiaries were also excluded if they had a cancer
diagnosis (01/01/2018-12/31/2018). No exclusions were applied to the all Part D enrollees figure (subset 1).

We specifically solicited comments from stakeholders on the various
suggested subsets of enrollees to whom the required information could
be sent, in order to determine if there was any consensus that might
inform sponsors' decisions, whether based on our suggested subsets or
otherwise.
Comment: Many commenters were supportive of our proposal as an
additional means to support efforts to address the national opioid
crisis.
Response: We thank these commenters for their support of the
proposed provision.
Comment: A few commenters expressed concern about overreach in
sending the required information to all Part D enrollees. They
highlighted the potentially negative reactions enrollees may have if
they receive this information without having record of a previous
opioid prescription. Conversely, other commenters believed that it was
important for all enrollees to receive the information whether or not
they had a record of a prior opioid prescription, noting that
successful public health campaigns are not always tailored to specific
populations. Other commenters supporting that the information be
disclosed to all Part D enrollees noted that some beneficiaries may
have paid cash for opioids or used illicit ones, and thus would be
missed in any subset based on prescription opioid use. A few commenters
believed that plans could focus their efforts on beneficiaries who have
received an opioid in the last 7 days, so as to not

[[Page 5895]]

be over-inclusive with the information disseminated to them. No other
commenters suggested a different subset of enrollees to whom the
information should be provided.
Response: We appreciate the commenters' feedback. Although some
commenters offered their opinion on the enrollee population that might
be the best group to receive the information, there was no consensus to
inform sponsors' ultimate decisions on to whom to send the information.
As we have noted, the statute leaves this decision to the sponsor's
discretion.
Comment: Several commenters encouraged CMS to develop a model
document for sponsors to use for consistent messaging about the risk of
opioid use and coverage of alternative pain treatments.
Response: We do not believe a model document is appropriate or
necessary. Both MA-PDs and standalone PDPs should be able to describe
the risks of prolonged opioid use without a model document, as they
possess the expertise in both the coverage and clinical use of drugs
and their associated risks. In addition, Part D sponsors have available
to them federal government websites as resources for consistent
messaging. For example, the U.S. Department of Health and Human
Services website (https://www.hhs.gov/opioids/) contains information
about opioid risks and pain management options, and CMS' Pain
Management website (https://www.medicare.gov/coverage/pain-management)
also contains information about the risks of opioids and pain
management.
Moreover, we anticipate that sponsors will require some flexibility
when it comes to developing the content for these beneficiary notices,
given that they have the discretion to choose a subset of enrollees to
whom they will send the notices. Also, coverage of alternative pain
treatments will likely vary among plans. Additionally, a plan's
beneficiary population can be unique and opioid issues may vary
regionally and over time. Thus, the degree of flexibility any model
document would require to allow each plan to tailor its message and
information to its specific plan population in terms of coverage of the
risks of prolonged opioid use and alternate pain treatments would
decrease the utility of a model document.
Comment: A commenter suggested that this information could be
conveyed to Part D enrollees through the EOC.
Response: We respectfully disagree. While the EOC does contain
information about plan coverage of alternate pain treatments, such as
coverage of physical therapy services in an MA-PD, it is a very large
document containing hundreds of pages of material, which is not the
best method to provide the specific, cohesive, and concise information
on opioid alternatives that is required under this provision.
Moreover, given that Section 6102 of the SUPPORT Act provides for
specific opioid education to Part D beneficiaries, we do not believe
that adding opioid risk and alternative pain treatment coverage to a
lengthy technical document would draw sufficient attention to the
required information. For this reason, we believe that a separate
beneficiary communication is a more effective means of conveying this
information. We may consider revising the EOC template in future years
so that a plan may include this information; however, our current focus
is on implementing the statutory requirement and believe it is best
implemented as we proposed.
Comment: Some commenters requested clarification on whether Part D
plans are permitted to send the required information electronically
without prior consent of the beneficiary, based on requirements they
referenced from Sec. 423.128(b), which allowed for electronic delivery
of EOCs without prior beneficiary authorization. Specifically, the
regulation allowed plans to meet the disclosure and delivery
requirements for certain documents by relying on notice of electronic
posting and provision of the documents in hard copy when requested,
when previously the documents, such as the EOC, had to be provided in
hard copy.
Response: As stated under Sec. 423.2267(d)(2)(ii), which we are
finalizing as discussed elsewhere in this rule, we will not allow for
electronic delivery without prior approval from the beneficiary for
this type of material. Part D sponsors may only mail new and current
enrollees a notice for electronic access to the EOC, Provider and
Pharmacy Directories, and Formulary without beneficiary authorization.
Conversely, the separate beneficiary notice on opioid risk and coverage
of alternate pain treatment is a new document that will convey
important safety information related to a national epidemic, and we
want to make sure that beneficiaries will see the information. For this
reason, we are not making any exceptions to Sec. 423.2267(d) for this
information, and Part D plans must obtain the beneficiary's consent
before they may provide this information electronically.
Comment: As we noted earlier in section A, we received many general
comments expressing concern that the opioid provisions of the proposed
rule would limit access to pain medicine, including opioids.
Response: We are not persuaded that educating beneficiaries about
the risks of opioid use and coverage of alternative pain treatments
will prevent people who need opioids for treatment of their pain from
receiving them. It is commonly accepted that beneficiaries should
discuss their health care treatment choices and the potential risks
associated with each choice with their health care providers, and that
the more education beneficiaries have about their options and the
associated risks when they have these conversations, the better able
they will be to make the best choice for themselves in consultation
with their providers.
After consideration of the comments received, we are finalizing the
new requirement at Sec. 423.128(b)(11) to disclose information to
enrollees about opioid risks and alternatives without modification
except thatthis provision will be applicable beginning on January 1,
2022 rather than January 1, 2021 as initially proposed. However, given
the ongoing national opioid epidemic and public health emergency, we
strongly encourage Part D sponsors to disclose this information to
their enrollees in 2021, if possible. We also encourage sponsors to
include information in these notices, as they deem appropriate, to help
increase awareness among Part D enrollees about access to medication-
assisted treatment (MAT) and naloxone. In this regard, we note that the
CMS web page (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Opioid-Treatment-Program/Index) includes information about the
dispensing and administration of MAT medications (if applicable) now
covered under the new Opioid Treatment Program (OTP) benefit under
Medicare Part B. We also note that in the CY 2020 Call Letter, CMS
previously encouraged Part D sponsors to engage in targeted education
of enrollees on co-prescribing of naloxone,\18\ and that this
beneficiary notice may be an ideal avenue to include such information.
---------------------------------------------------------------------------

\18\ Announcement of Calendar Year (CY) 2020 Medicare Advantage
Capitation Rates and Medicare Advantage and Part D Payment Policies
and Final Call Letter, page 204 (April 1, 2019). https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf.
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E. Eligibility for Medication Therapy Management Programs (MTMPs)
(Sec. 423.153)

We proposed to amend Part D Medication Therapy Management

[[Page 5896]]

(MTM) program requirements in Sec. 423.153 to conform with the
relevant SUPPORT Act provisions. The SUPPORT Act modifies MTM program
requirements for Medicare Part D plans by expanding the population of
beneficiaries who are targeted for MTM program enrollment (``targeted
beneficiaries'') to include at-risk beneficiaries (ARBs), and by adding
a new service component requirement for all targeted beneficiaries.
Section 6064 of the SUPPORT Act amended section 1860D-4(c)(2)(A)(ii) of
the Act by adding a new provision requiring that ARBs be targeted for
enrollment in the Part D plan's MTM program. We proposed to codify this
requirement at Sec. 423.153(d)(2). Section 6103 of the SUPPORT Act
amended the MTM program requirements in section 1860D-4(c)(2)(B) of the
Act by requiring Part D plans to provide MTM enrollees with information
about the safe disposal of prescription drugs that are controlled
substances, including information on drug takeback programs, in-home
disposal, and cost-effective means for safe disposal of such drugs. We
proposed to codify this requirement by adding new paragraphs at Sec.
423.153(d)(1)(vii)(E) and (F).
1. ARBs and MTM
Under our proposed revisions to Sec. 423.153(d), ARBs would be
targeted for enrollment in a sponsor's MTM program. The existing
criteria that Part D sponsors currently use to target beneficiaries for
MTM program enrollment would remain unchanged, so that two groups of
enrollees would now be targeted for enrollment: (1) Enrollees who meet
the existing criteria (multiple chronic diseases, multiple Part D drugs
and Part D drug costs); and (2) enrollees who are determined to be ARBs
under Sec. 423.100.
Under our proposal, Part D sponsors would be required to
automatically enroll all ARBs in their MTM programs on an opt-out only
basis as required in Sec. 423.153(d)(1)(v). We did not propose to
change any existing MTM program requirements for targeted beneficiaries
enrolled in a Part D sponsor's MTM program, including service
requirements such as annual comprehensive medication reviews (CMRs) and
targeted medication reviews (TMRs). Accordingly, the MTM program
requirements would be the same for all targeted beneficiaries enrolled
in a Part D sponsor's MTM program, regardless of whether they are
targeted for enrollment based upon the existing criteria or because
they are ARBs.
As discussed in detail in the February 2020 proposed rule (85 FR
9031), CMS encourages sponsors to design MTM interventions for this new
population of targeted beneficiaries to reflect their simultaneous
inclusion in the sponsors' DMPs. CMS also encourages sponsors to
consult existing clinical guidelines, such as those issued by the
Centers for Disease Control and Prevention for Prescribing Opioids for
Chronic Pain,\19\ when developing MTM strategies and materials. CMS
solicited input into how sponsors can best coordinate DMPs and MTM
programs and effectively perform outreach to offer MTM services. We
also solicited feedback on how to leverage MTM services to improve
medication use and reduce the risk of adverse events in this
population, how to measure the quality of MTM services delivered, and
how to increase meaningful engagement of the new target population in
MTM. Lastly, we solicited comments on the type of information that we
should use to monitor the impact of MTM services on ARBs, who will now
be targeted for MTM services.
---------------------------------------------------------------------------

\19\ Accessible at https://www.cdc.gov/mmwr/volumes/65/rr/rr6501e1.htm?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fmmwr%2Fvolumes%2F65%2Frr%2Frr6501e1er.htm.
---------------------------------------------------------------------------

CMS also sought comment in the proposed rule on how the CMS
Standardized Format (CMS-10396; OMB control number 0938-1154) might be
modified in order to accommodate the new population of ARBs that will
be enrolled in Part D sponsors' MTM programs. Additionally, CMS posted
the CMR Standardized Format with rule-related changes in conjunction
with the proposed rule. A version reflecting non-rule related revisions
was posted in the Federal Register on February 24, 2020 (85 FR 10444)
through the Paperwork Reduction Act (PRA) process with a 60-day public
comment period. We also solicited feedback on whether using Health
Level Seven (HL7[supreg])-enabled CMRs could positively impact the
sharing of CMR data with the prescriber for an MTM enrollee, and the
value of encouraging Part D MTM providers to use FHIR-enabled platforms
when providing MTM to Part D enrollees to facilitate integration of the
MTM service elements into prescribers' EHRs.
Comment: CMS received multiple comments expressing concerns about
the timing of the proposed requirements to include ARBs in MTM programs
and to provide information on safe disposal of controlled substances to
beneficiaries enrolled in MTM. Commenters requested that CMS postpone
implementation of the requirement to add ARBs to MTM programs until
2022, citing the time involved to develop an effective MTM program that
would serve the new population, including the need to coordinate
between MTM providers, behavioral health teams, DMPs, and others. They
stated that plans will need time to create the systems required for
information exchange to facilitate care coordination. One commenter
pointed out that resources are currently being consumed by COVID-19
needs.
Response: Recognizing the impact of the COVID-19 public health
emergency on plans and other stakeholders, we are modifying the
regulation text at Sec. 423.153(d)(1)(vii)(E) and Sec.
423.153(d)(2)(ii) to specify that these changes to MTM programs must be
implemented by Part D plan sponsors beginning January 1, 2022, rather
than January 1, 2021 as initially proposed. The applicability date for
Sec. 423.153(d)(2) is 60 days after the date of publication of this
final rule.
Comment: Many commenters opined on the usefulness of targeting ARBs
for enrollment in the Part D MTM program. Some commenters believe that
these beneficiaries would benefit from MTM interventions that would
create additional opportunities to provide counseling and education to
a generally underserved population. Other commenters expressed concern
that targeting these beneficiaries for MTM would make this vulnerable
population believe they are being singled out or stigmatized, or would
increase the size of MTM programs. A commenter questioned CMS'
authority to propose this requirement, calling our proposal
``bureaucratic over-reach.'' Other commenters stated that providing
ARBs with both DMP and MTM services would be duplicative and
potentially confusing; a commenter pointed out that plans often use one
vendor to perform DMP-related services and another for MTM which could
lead to a lack of coordination between service providers. A few
commenters suggested alternative mechanisms to provide services to the
ARBs such as enhancing DMPs or making a beneficiary's at risk status
another condition to be considered when developing MTM targeted
population.
Response: Section 6064 of the SUPPORT Act, as codified at section
1860D-4(c)(2)(A)(ii) of the Act, requires that Part D plan sponsors
include ARBs in their MTM programs. As discussed in the proposed rule,
the MTM program requirements are the same for all targeted
beneficiaries enrolled in a Part D sponsor's MTM program, regardless of
whether they are targeted for enrollment based upon the existing
criteria or because they are ARBs. In order to

[[Page 5897]]

provide services for ARBs, plans will need to coordinate services
across both their DMP and MTM program without regard for which vendors
furnish such services. Part D plan sponsors are ultimately responsible
for ensuring that all delegated functions are compliant with CMS
requirements. See 42 CFR 423.505(i)(1). This includes making sure that
downstream entities used to provide a plan's DMP and/or MTM program
coordinate, as necessary, to ensure that communications with and
services furnished to plan enrollees comply with applicable Part D
requirements. To the extent that MTM can be provided within a plan's
DMP while meeting all MTM service requirements, this approach would be
permissible provided it complies with all other applicable Part D
requirements. Further, if a plan wishes to target all PARBs for
enrollment in its MTM program instead of only targeting ARBs, it is
permitted to do so, provided that the plan meets all CMS requirements
for both DMPs and MTM services. The criteria specified in the
regulation reflect what is required under the Act, and do not preclude
plans from electing to offer MTM services to an expanded population of
beneficiaries who do not meet the eligibility criteria under Sec.
423.153(d).\20\
---------------------------------------------------------------------------

\20\ See HPMS memorandum dated April 5, 2019, ``CY 2020
Medication Therapy Management Program Guidance and Submission
Instructions'' at: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Memo-Contract-Year-2020-Medication-Therapy-Management-MTM-Program-Submission-v-041019-.pdf.
---------------------------------------------------------------------------

Comment: Several commenters asked CMS for more direction in
developing MTM programs that will meet the needs of the new cohort of
beneficiaries.
Response: CMS typically gives plans the latitude to develop MTM
programs that meet their beneficiaries' needs within the framework of
the applicable statutory and regulatory requirements. Most Part D plans
have gained experience with their ARB population through DMPs and
earlier Part D opioid overutilization policy, and we expect plans to
draw on this experience when working with their clinical teams,
including any downstream entities, in developing clinically appropriate
MTM interventions for these individuals. Consistent with section 1860D-
4 (c)(2)(E) of the Act, MTM programs must be developed in cooperation
with licensed and practicing pharmacists and physicians.
Comment: Multiple commenters expressed concerns that the addition
of ARBs to the MTM population could impact the Part D MTM Program
Completion Rate for CMR Star Rating measure, and expressed concerns
that including the new population of MTM-eligible beneficiaries in the
CMR completion rate might adversely affect a plan's overall Star
rating. A commenter cited internal data indicating an expected CMR
acceptance rate of 23 percent for current MTM-eligible beneficiaries
who also meet the DMP criteria for ARBs. Commenters requested that CMS
proactively implement safeguards in the scoring of this measure--some
commenters suggesting the measure be excluded from Star Ratings and
others asking that ARBs be excluded from the measure--in order to
ensure plans with a high population of ARBs are not adversely and
unintentionally affected.
Response: CMS appreciates these comments but believes it is
premature to assume that ARBs will be less receptive to offers of MTM
services than other beneficiaries prior to gaining program experience.
Congress enacted a statutory requirement that Part D plans engage with
this population through their MTM programs, and CMS expects plans to
develop effective engagement strategies based on their beneficiary
population and business model.
The MTM CMR completion rate is a Pharmacy Quality Alliance (PQA)
endorsed measure. The denominator currently used to derive the measure
includes all individuals who met the MTM eligibility criteria;
therefore, while the methodology for the measure is outside the scope
of our proposal, as currently defined, the measure would include ARBs
beginning with the 2022 measurement period. The extent to which any
potential change in a plan's rating on this measure may affect its
overall Star Rating would also depend on that plan's performance on all
other Star Ratings measures. Lastly, CMS codified the methodology for
the Part C and D Star Ratings program in the CY 2019 Medicare Part C
and D Final Rule (83 FR 16519 through 16589), published in April 2018,
for performance periods beginning with 2019; that final rule lays out
the methodology for the 2021 Star Ratings and beyond. If the measure
steward changes the specifications for the MTM CMR completion rate
measure, the process for CMS to update the Star Ratings measures is
codified at Sec. 423.184(d).
Comment: A few commenters expressed concerns about the types of
reporting requirements that may be included when ARBs are enrolled into
MTM programs, and requested that CMS clarify what those requirements
will be. A few commenters urged CMS to consider reducing reporting
elements in view of the additional beneficiaries that will be added to
MTM programs.
Response: We are requiring plans to comply with the requirement to
extend MTM to ARBs beginning on January 1, 2022, and therefore this
requirement will not impact plan reporting until the 2022 plan year
data, which is collected in early 2023. Part D reporting requirements
for the 2021 plan year (CMS-10185; OMB control number: 0938-0992
expires December 31, 2023) have been approved by OMB and are available
at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/RxContracting_ReportingOversight.
Comment: A commenter voiced support for conducting CMR sessions via
telemedicine.
Response: We appreciate the reminder that the CMR can be provided
via telemedicine, which may be preferable in many situations. The
regulation at Sec. 423.153(d)(1)(vii)(B)(1)(i) specifies that the
annual CMR must be provided by an interactive, person-to-person, or
telehealth consultation.
Comment: A few commenters requested additional information on when
a beneficiary may be considered to be ``unable to accept the offer to
participate'' in a CMR. These commenters contend that it may be
necessary to conduct outreach to a provider in cases where barriers due
to social determinants of health (SDOH) may prevent the beneficiary
from accepting the offer of a CMR, while conducting the CMR with the
prescriber would allow the member to receive the benefits that go with
MTM programs.
Response: As we explained in the proposed rule, the only situation
in which CMS would consider a beneficiary to be unable to accept an
offer to participate in a CMR is when the beneficiary is cognitively
impaired and cannot make decisions regarding his or her medical needs.
The CMS Standardized Format provides instructions for those
circumstances. The flexibility to perform the CMR with a prescriber,
caregiver or other authorized individual does not apply to situations
where the sponsor is unable to reach the beneficiary (such as no
response by mail, no response after one or more phone attempts, or lack
of phone number or address), if there is no evidence of cognitive
impairment, or where the beneficiary declines the CMR offer. Further,
perceived barriers due to a beneficiary's SDOH does not mean that the
beneficiary is unable to participate in a CMR. MTM providers are
expected to make sure that they engage the target population in a
manner that these beneficiaries can

[[Page 5898]]

understand and use, regardless of any language or other barriers that
exist. We also want to caution that the failure to provide services to
beneficiaries disadvantaged by poverty, language, or other SDOH
suggests discriminatory practices, which may be in violation of the
Social Security Act or other federal requirements regarding access to
services.
Comment: A commenter asked CMS to clarify the definition of an ARB.
Response: An ARB, as defined at Sec. 423.100, means a Part D
eligible individual (1) who is: (i) Identified using clinical
guidelines (also defined in Sec. 423.100); (ii) not an exempted
beneficiary; and (iii) determined to be at-risk for misuse or abuse of
such frequently abused drugs (FADs) under a Part D sponsor's drug
management program in accordance with the requirements of Sec.
423.153(f); or (2) with respect to whom a Part D sponsor receives a
notice upon the beneficiary's enrollment in such sponsor's plan that
the beneficiary was identified as an ARB (as defined in paragraph (1)
of this definition) under the prescription drug plan in which the
beneficiary was most recently enrolled and such identification had not
been terminated upon disenrollment.
Comment: A commenter asked whether CMS expects to ``grandfather''
existing ARBs who have an active coverage limitation placed prior to
January 1, 2021 that extends into the 2021 plan year, or whether the
new MTM requirement would apply only to ARBs who are newly identified
after January 1, 2021.
Response: As discussed earlier, under the regulation we are
adopting in this final rule, Part D plan sponsors must comply with the
requirement to include ARBs in MTM programs by January 1, 2022.
Accordingly, all existing ARBs--that is, enrollees with an active
limitation under a DMP as of January 1, 2022, although such limitation
may have commenced prior to January 1, 2022--as well as ARBs identified
on or after January 1, 2022, must be targeted for enrollment in MTM.
Comment: CMS received a number of comments on how to improve the
Standardized Format including suggestions on the content and format.
Most commenters indicated that electronic sharing of completed CMRs to
the prescriber's EHR would promote continuity of care. These commenters
urged CMS to produce a template that encouraged HL7[supreg]-enabled
submissions. A commenter asked when a new MTM Standardized Format will
be available for use and when MTM providers will be required to start
using any newly developed format.
Response: We thank all commenters for their suggestions. Comments
received in response to this regulation will be considered when
finalizing the Standardized Format along with those received in
response to the PRA package for the CMS Standardized Format (CMS-10396;
OMB control number 0938-1154) that was published separately from the
rule. An additional 30-day notice for CMS-10396 will be published for
public comment following publication of this final rule, and a package
will be delivered for OMB review. The 30-day notice will address the
comments received in response to the rule- and non-rule solicitations,
provide additional proposed revisions if applicable to address the
comments, and propose a date for when the changes would become
effective. The finalized Standardized Format will be released after
approval by the OMB.
Comment: A commenter was concerned that the pecuniary interest of
the sponsor will be the primary driver for MTM reviews and that it
would create an incentive to ``say no'' to appropriate and safe opioid
therapies for hundreds of thousands of pain patients.
Response: It appears that the commenter may be unfamiliar with the
use and purpose of Part D MTM programs. The goal of MTM is to improve
medication use and therapeutic outcomes driven by the individual
beneficiary clinical needs and does not result in any denials of
medications or services.
2. Information on Safe Disposal of Prescription Drugs That Are
Controlled Substances for MTM Enrollees
Section 6103 of the SUPPORT Act added a new requirement that Part D
plans provide beneficiaries enrolled in their MTM programs with
information about the safe disposal of prescription drugs that are
controlled substances, including information on drug takeback programs,
in-home disposal, and cost-effective means for safe disposal of such
drugs. To implement this new requirement, we proposed that Part D
sponsors would be required to provide this information to all
beneficiaries enrolled in their MTM programs at least annually, as part
of the CMR or through the quarterly TMRs or follow up. Furthermore,
while not required, we encouraged sponsors to provide information on
safe disposal of all medications, not just controlled substances, to
MTM enrollees.
Section 6103 of the SUPPORT Act states that the information
provided to beneficiaries regarding safe disposal of prescription drugs
that are controlled substances must meet the criteria established in
section 1852(n)(2) of the Act, including information on drug takeback
programs that meet such requirements determined appropriate by the
Secretary and information on in-home disposal. Section 1852(n)(2)
states that the Secretary shall, through rulemaking, establish criteria
the Secretary determines appropriate to ensure that the information
provided to an individual sufficiently educates the individual on the
safe disposal of prescription drugs that are controlled substances. We
described our proposed criteria and requirements for MA plans to
furnish information on safe disposal of controlled substances when
providing an in-home health risk assessment and our proposal to codify
these requirements in a new provision of the regulations at Sec.
422.111(j) in section III.C. of the proposed rule. In section III.E.2
of the proposed rule, we proposed that Part D plans would be required
to furnish materials in their MTM programs regarding safe disposal of
prescription drugs that are controlled substances that meet the
criteria specified in Sec. 422.111(j). Under this proposal, Part D
plans, like MA plans, would retain the flexibility to refine their
educational materials based on updated information and/or on
beneficiary feedback, so long as the materials meet the proposed
criteria. Section 1860D-4(c)(2)(B)(ii) of the Act expressly directs
that the information on safe disposal furnished as part of an MTM
program meet the criteria established under section 1852(n)(2) of the
Act for MA plans. Accordingly, to ensure consistency and to avoid
burdening MA-PD plans with creating separate documents addressing safe
disposal for purposes of conducting in-home health risk assessments and
their MTM programs, we explained our belief that it is appropriate to
apply the same criteria that would apply under the proposed provision
at Sec. 422.111(j) to MTM programs by including a reference to the
requirements of Sec. 422.111(j) in the regulation at Sec. 423.153(d)
governing MTM programs.
Specifically, we proposed to revise Sec. 423.153(d)(1)(vii) to
include a requirement that all MTM enrollees receive at least annually,
as part of the CMR, a TMR, or another follow up service, information
about safe disposal of prescription drugs that are controlled
substances, take back programs, in-home disposal, and cost-effective
means of safe disposal that meets the criteria in Sec. 422.111(j).

[[Page 5899]]

Comment: A few commenters suggested that plans be allowed to
include information on safe disposal in documents other than the TMR or
CMR, or on a plan website. Another commenter suggested that the MTM
program welcome letter (or written initial offer of the CMR) be used to
convey safe disposal information as well, and asked if doing so would
meet the intent of this requirement. This commenter stated that plans
may have difficulty reaching beneficiaries after enrollment in the MTM
program if they have disenrolled from the plan for any reason, and it
would be useful for plans to have more ways to provide this important
information.
Response: As an initial matter, we note that plans have no
obligation to provide MTM services to beneficiaries once they have
disenrolled from the plan. Given the importance of information on the
safe disposal of medicines, we support posting the information on plan
or network pharmacy websites, but we do not believe that website
postings alone will fulfill the statutory requirement that the
information be provided to individual MTM recipients. However, we do
agree with the comment recommending that safe disposal information
could be provided in an MTM program welcome letter. While the statutory
language at section 1860D-4(c)(2)(B)(ii) of the Act does not identify a
specific format for providing this information, CMS believes that using
the MTM welcome letter meets the statutory intent. Beneficiaries would
then have an opportunity to ask any clarifying questions during a
follow-up MTM service, including during the CMR. While not specifically
addressed in the comments received, we would also support sending the
safe disposal information electronically, for example through a member
portal, provided the plan can document that the individual received the
information. Accordingly, in this final rule we are modifying the
proposed regulation text at Sec. 423.153(d)(1)(vii)(E) by including a
reference to ``other MTM correspondence or service'' to give plans the
flexibility to provide this information in the manner they determine is
most effective for reaching the beneficiaries enrolled in their MTM
program.
Comment: All those who commented on the proposed requirement to
include materials on safe disposal were supportive of the concept. A
few commenters expressed appreciation that the proposed requirements in
Sec. 423.153(d) echoed those proposed in Sec. 422.111(j). Some also
commented that newly-developed disposal technologies that make the
medications unusable, such as in-home deactivation kits, provide a
viable option for safe disposal of controlled substances, and supported
requiring information about these options in the educational materials.
Response: We appreciate commenters' support for the concept of
furnishing information on safe disposal to MTM enrollees. We agree that
the types of products referenced by the commenters may present
additional means for safe disposal of prescription drugs that would
complement the approaches described in the proposed rule. Therefore, as
discussed in section III.C of this preamble, in this final rule we are
modifying the proposed regulation text at Sec. 422.111(j)(5) to permit
plans to include information about the availability of in-home
deactivation kits in the enrollee's community, where applicable. MA-PD
plans will be able to use the same communication materials on safe
disposal to educate MTM enrollees as they use for enrollees receiving
this information as part of an in-home health risk assessment under MA.
After consideration of the comments received, we are finalizing the
proposed changes to the Part D MTM program requirements with the
modifications discussed. We are finalizing our proposal to expand the
definition of beneficiaries targeted for enrollment in MTM programs at
Sec. 423.153(d)(2) to include ARBs, as defined in Sec. 423.100. We
are finalizing the provision at Sec. 423.153(d)(1)(vii)(E) with
modifications to allow plans to meet the safe-disposal educational
requirement through use of a CMR, TMR, or other MTM correspondence or
service, such as an MTM welcome letter. We are finalizing as proposed
the requirement at Sec. 423.153(d)(1)(vii)(F) specifying that the
information provided must comply with all requirements of Sec.
422.111(j). Lastly, we are modifying the regulation text at Sec.
423.153(d)(1)(vii)(E) and Sec. 423.153(d)(2)(ii) to specify that these
requirements are applicable beginning on January 1, 2022. As noted in
the Executive Summary of this final rule, the revisions to Sec.
423.153(d)(2) as a whole are applicable 60 days from the date of
publication in the Federal Register.

E. Automatic Escalation to External Review Under a Medicare Part D Drug
Management Program (DMP) for At-Risk Beneficiaries (Sec. Sec. 423.153,
423.590, and 423.600)

CARA amended the Act to include new authority for Medicare Part D
drug management programs effective on or after January 1, 2019. If an
enrollee is identified as at-risk under a drug management program
(DMP), the individual has the right to appeal an at-risk determination
under the rules in part 423, subparts M and U. In addition to the right
to appeal an at-risk determination, an enrollee has the right to appeal
the implementation of point-of-sale claim edits for frequently abused
drugs that are specific to an ARB or a limitation of access to coverage
for frequently abused drugs to those that are prescribed for the
beneficiary by one or more prescribers or dispensed to the beneficiary
by one or more network pharmacies (lock-in). Section 2007 of the
SUPPORT Act amended section 1860D-4(c)(5) of the Act to require that,
if on reconsideration a Part D sponsor affirms its denial of a DMP
appeal, in whole or in part, the case shall be automatically forwarded
to the independent outside entity contracted with the Secretary for
review and resolution.
To implement the changes required by the SUPPORT Act, we proposed
to revise the requirements related to adjudication timeframes and
responsibilities for making redeterminations at Sec. 423.590 by adding
paragraph (i) to state that if on redetermination the plan sponsor
affirms, in whole or in part, its decision related to an at-risk
determination under a DMP in accordance with Sec. 423.153(f), the plan
sponsor must forward the case to the IRE by the expiration of the
applicable adjudication timeframe under paragraph (a)(2), (b)(2), or
(d)(1) of Sec. 423.590. We also proposed revisions to the requirements
for the content of the initial notice at Sec. 423.153(f)(5)(ii)(C)(3)
and the requirements for the second notice at Sec.
423.153(f)(6)(ii)(C)(4)(iii). Specifically, we proposed that these
notices explain that if on redetermination a plan sponsor affirms its
at-risk decision, in whole or in part, the enrollee's case shall be
automatically forwarded to the IRE for review and resolution.
Finally, we proposed to revise Sec. 423.600(b) to clarify that the
requirement that the IRE solicit the views of the prescribing physician
or other prescriber applies to decisions that are auto-forwarded to the
IRE.
We summarize the comments we received on these proposals related to
automatic escalation and respond to them as follows.
Comment: Several commenters expressed support for our proposal that
if on redetermination a plan sponsor affirms, in whole or in part, its
denial related to an at-risk determination under a DMP in accordance
with Sec. 423.153(f),

[[Page 5900]]

the plan sponsor must forward the case to the IRE for review and
resolution. One commenter noted that it has been their experience in
general that most patients do not formally contest their at-risk
determination status, but the commenter supports a beneficiary's right
to appeal. Some of the commenters that supported the proposal related
to auto-escalation of these cases to the IRE also expressed specific
concerns. A few commenters noted that requiring denied cases to be
forwarded to the IRE by the expiration of the applicable adjudication
timeframe will significantly decrease the amount of time that plans
have to review at-risk redeterminations. These commenters stated that
these types of cases generally take longer to complete due to more
outreach and coordination between providers than other types of
redetermination cases and that reducing the timeframe to complete these
cases in order to prepare a case for the IRE will decrease the quality
of the plan's review. One commenter stated the belief that CMS's
proposed timeframe for auto-escalation is not realistic or achievable,
noting that DMP cases are complicated, and multiple delegated entities
must coordinate to prepare a complete case file for forwarding.
Commenters stated that plans need time to prepare case files and to
ensure their completeness by acquiring the complete case management
information from the DMP team, and that plans should have the full
adjudication time for review of these cases.
Commenters noted that, in situations where a plan affirms its
denial of an at-risk determination, it would pose operational burden
and challenges to complete a thorough investigation, reach a
determination, and automatically forward the case to the IRE within the
72-hour adjudication timeframe for expedited determinations and the 7-
day timeframe for standard at-risk determinations. A couple of
commenters noted that plans are afforded 24 hours after the expiration
of the adjudication timeframe to prepare and forward the case file to
the IRE in those Part D benefit appeal cases in which the plan misses
its adjudication timeframe. Some of the commenters suggested that plans
be afforded 24 hours to prepare and send the case file to the IRE and
other commenters suggested 48 or 72 hours from the end of the
adjudication timeframe. A commenter believes that the process of
automatic escalation to external review should be consistent with Part
D requirements for standard or expedited requests, so as to mitigate
any additional administrative burden and requests that CMS ensure that
this process mirror Part D requirements so that the systems and
policies in place are seamless.
Response: We thank the commenters for their overall support and
agree with those commenters who expressed concern that requiring the
administrative case file to be assembled and forwarded to the IRE
within the applicable adjudication timeframe could unnecessarily
curtail the amount of time a plan has to conduct a thorough review of
the case. The regulations at Sec. 423.590(c) and (e) that govern Part
D benefit redeterminations require a case to be auto-forwarded to the
IRE when the plan misses the adjudication timeframe. Specifically, a
plan has 24 hours from the end of the applicable adjudication timeframe
to send the case file to the Part D IRE. For consistency with how cases
currently subject to auto-forwarding to the IRE are handled, we believe
it is reasonable and permissible under the statute to allow plans up to
an additional 24 hours after the expiration of the applicable
redetermination adjudication timeframe to assemble and forward the
administrative case file to the IRE. In this final rule, the proposed
regulation text at Sec. 423.590(i) has been modified to state that if
on redetermination the plan sponsor affirms, in whole or in part, its
denial related to an at-risk determination under a drug management
program in accordance with Sec. 423.153(f), the Part D plan sponsor
must forward the case to the IRE contracted with CMS within 24 hours of
the expiration of the applicable adjudication timeframe under paragraph
(a)(2), (b)(2), or (d)(1) of this section.
Comment: A few commenters disagreed with the proposals related to
the DMP notices. Commenters stated that providing the appeal
notification on the first notice does not add value to the beneficiary,
since the first notice has a 30-day window to gain additional
information, if necessary, before a final decision is made to implement
a lock-in or POS edits. These commenters recommend that appeal language
only be included on the second notice. To reduce member confusion, a
few commenters urged CMS to consider addressing escalation to the IRE
only in the second notice as it relates to redeterminations
specifically, and to ensure that it is clear the IRE escalation process
will only apply when a redetermination in whole or in part is denied.
Commenters also noted that if CMS is going to update member notices for
the DMP, it is critically important for plans to receive updates to the
notices in a timely manner to allow plans sufficient time to revise,
implement, and test new notices. A few commenters also requested that
CMS update the model redetermination denial notice to account for auto-
forwarding of an adverse DMP case to the Part D IRE.
Response: We thank the commenters for their perspective on the
notices intended to inform at-risk beneficiaries of their rights under
a plan sponsor's DMP. We proposed that the initial and second notice
explain that if on redetermination a plan sponsor affirms its at-risk
decision, in whole or in part, the enrollee's case shall be
automatically forwarded to the IRE for review and resolution. SUPPORT
Act section 2007 specifically requires that notice of the automatic
escalation of adverse decisions be included on the initial and second
notice. Therefore, we do not believe we have the discretion to omit
information on this right from the initial notice, as suggested by some
of the commenters. With respect to the model redetermination notice, we
plan to update that model consistent with this final rule. However, we
note that this notice is a model that plan sponsors have the discretion
to modify.
Comment: A few commenters requested that CMS train the IRE
appropriately to ensure consistent reviews of drug management cases.
One commenter noted that these are unique case reviews and cannot
simply be overturned by the IRE based on a provider attestation of
medical necessity. The commenter also stated that the IRE should have
specific criteria in place to conduct these reviews and, further, that
plans should also have recourse to address instances when the IRE
overturns a plan decision.
Response: We thank the commenter for these comments and note that
the IRE is already conducting reviews of DMP cases based on published
regulations and guidance that govern plan sponsor activities with
respect to drug management programs. The IRE review function is a
beneficiary protection set forth in statute and there may be instances
where the independent review performed by the IRE will result in a
plan's decision being overturned based on a finding of medical
necessity given the facts and circumstances of the enrollee's case,
including clinical information furnished by the enrollee's prescriber.
If a plan believes the IRE has made an error in its decision making,
the IRE's reconsideration decision may be reopened consistent with the
rules at Sec. 423.1980.
Comment: A couple of commenters expressed support for the proposal
to require automatic escalation of DMP to

[[Page 5901]]

external review, but also urged the Secretary to either exercise his
authority or support legislation to extend such auto-escalation to
external review for all adverse appeal decisions regarding Part D
drugs, similar to the rules applicable to Medicare Advantage appeals.
Response: We appreciate the commenters' support for the proposed
rules related to automatic escalation of DMP appeals, but note that the
comment related to extending automatic escalation to all Part D benefit
appeals is outside the scope of this rule.
Comment: While recognizing that the automatic escalation provision
is required under the SUPPORT Act, some commenters expressed specific
concerns with this proposal. One commenter encouraged CMS to find a
path that allows the beneficiary to exercise their appeal rights
following the standard appeals process outlined in Part C and D
guidance, as must all other Medicare beneficiaries who receive an
adverse redetermination. The commenter stated that the SUPPORT Act
creates a discrepancy in the uniformity of the Medicare benefit by
devising a unique process for ARBs to have their denied
redeterminations automatically auto-forwarded to the IRE. The commenter
stated that CMS should clarify how the IRE might reach a decision other
than the decision the plan reached in consultation with the at-risk
beneficiary's prescriber and requested that CMS share with plans the
additional data sources the IRE may have that plans will not. The
commenter also requested that CMS provide plans any training materials
that may be provided to the IRE to help process these reconsiderations.
Another commenter expressed concern that the process of automatic
escalation to an external reviewer sets up the patient's care for
review involving third parties who may be unreasonably biased with an
anti-opioid mindset and incentivized by institutional conflicts of
interest, such as the reduction of costs to insurance companies. This
commenter also noted that it has been his experience that outside
reviews fail to reflect adequate perspective on the patient, their
problems, and their care and that the process inevitably involves the
patient or their doctor negotiating a complex and time consuming phone
triage system and may require an hour or more of a physician's time.
Response: We appreciate the comments, but note that the automatic
escalation of a beneficiary's case to the IRE is a statutory provision
that creates a protection for beneficiaries who are in a DMP. Part of
the competitive process of contracting with an outside independent
entity involves consideration of any potential institutional conflicts
of interest. The very nature of an outside independent review means
that there may be cases where the IRE reaches a different decision from
that reached by a plan, based on clinical information supplied by the
enrollee's prescriber. The IRE is required to follow the same
regulations and guidance related to DMPs as is followed by plan
sponsors. There may be instances where the IRE's review of supporting
documentation received from an enrollee's prescriber reasonably
supports a different decision from that reached by the plan sponsor.
With respect to the time an enrollee or prescriber may have to expend,
automatic escalation to IRE review should reduce the time a beneficiary
has to spend disputing a limitation on access under a DMP because,
under this final rule, the beneficiary will no longer have to request
IRE review. In addition, the IRE is required to solicit the views of
the prescribing physician or other prescriber when it receives a case
from a plan sponsor, which may reduce the time a physician or other
prescriber will have to expend providing necessary clinical information
to the IRE.
Comment: A commenter asked CMS to clarify how an ARB will exercise
his or her appeal rights and whether the auto-forwarded denied appeal
be considered the first level of appeal.
Response: As with Part D benefit appeals, an ARB exercises his or
her right to appeal by requesting a redetermination from the plan,
which is the first level of appeal. The IRE review is the second level
of appeal, including those DMP cases that will be subject to auto-
forwarding under this final rule.
Comment: A commenter questioned what the impact will be if the plan
does not auto-forward the denied appeal within the required timeframe.
Response: The SUPPORT Act requires plans to auto-forward to the IRE
for review and resolution those redeterminations where a plan affirms
its denial, in whole or in part. As with other regulatory requirements,
CMS can exercise enforcement authority to ensure plan compliance.
Pursuant to contract provisions at Sec. 423.505(b)(7), plan sponsors
must comply with all requirements of 42 CFR part 423, subpart M
governing coverage determinations, grievances, and appeals, and
formulary exceptions and CMS may impose sanctions on any plan sponsor
with a contract for violations listed in Sec. 423.752(a).
Comment: A commenter questioned how these auto-forwarded
redeterminations will be differentiated by CMS from other reviews
forwarded to the IRE and requested that CMS clarify whether the auto-
forwarded denial or the IRE's decision on the auto-forwarded
redetermination will be included in reporting or audit universes.
Response: Adverse redetermination decisions related to coverage
limitations imposed under a plan sponsor's DMP that will be auto-
forwarded to the IRE consistent with this final rule will be reported
by plan sponsors as adverse redetermination decisions. For purposes of
any necessary data gathering, the Part D IRE will be able to
distinguish cases that are auto-forwarded for untimeliness from the DMP
appeals auto-forwarded to the Part D IRE. With respect to the audit
universes, if a plan sponsor's decision was made during the relevant
universe period, those redeterminations will be reported in the
redeterminations universe. If the determination was fully or partially
overturned by the IRE, ALJ, or MAC during the relevant universe period,
the overturn decision will be reported in the Part D effectuations of
overturned decisions universe.
Comment: Some commenters suggested that CMS define what a plan
sponsor is to include in a case packet for auto-forwarded denials.
Response: We appreciate the commenters' suggestion and note that
the Part D IRE's reconsideration procedures manual and case file
transmittal form lists the documents that should be included by plan
sponsors as part of the administrative case file. These documents will
be updated, as necessary. For example, the case file transmittal form
will be modified so that a plan sponsor can clearly indicate that a
case is being automatically forwarded to the Part D IRE as a result of
an adverse DMP redetermination.
Comment: A commenter asked whether the plan is required to notify
the ARB, their prescriber(s) or others and, if so, questioned if there
is a required timeframe to complete the notification.
Response: Redetermination decisions related to a denied
redetermination involving a DMP are subject to existing notice
requirements at Sec. Sec. 423.590(a)(d) and (g).
Comment: A commenter who expressed support for the proposal
requested clarification on whether the Part D sponsor or the Part C
plan would be responsible for making this determination when the member
is enrolled in a standalone PDP. The commenter requested clarification
on whether it is the Part D sponsor's responsibility to forward a
redetermination to IREs for all drugs for

[[Page 5902]]

any member enrolled in a DMP. We believe the commenter is asking about
a situation where an individual is enrolled in an MA plan and a
separate, standalone Part D drug plan and whether it is the
responsibility of the standalone Part D drug plan to forward an adverse
DMP plan appeal to the IRE.
Response: Consistent with section 1860D-4(c)(5)(E) of the Act, it
is the responsibility of an enrollee's Part D plan sponsor to auto-
forward to the IRE an adverse redetermination decision related to an
individual's identification as an ARB, a coverage determination made
under a DMP, the selection of prescriber or pharmacy under the DMP and
information to be shared for subsequent plan enrollment.
Comment: A commenter that expressed support for automatically
escalating redeterminations associated with DMP appeals to the Part D
independent review entity (IRE) noted that automatically escalating an
appeal for an at-risk determination to an IRE without having to wait
for the enrollee or prescriber on their behalf to request a review will
serve to reduce the lag time in final determinations being issued and
enable patients to access needed care sooner. This commenter also noted
support for proposed changes to the required initial and second notice
in addition to adjudication timeframes and redetermination
responsibilities. This commenter encouraged us to reiterate the need
for the prescribing physician to provide all requested information
associated with the adverse decision to the IRE within a timely manner.
Further, the commenter urged us to consider requiring the IRE to make a
good faith effort to obtain relevant information from the prescribing
physician in instances in which there is not an automatic escalation as
well to ensure consistency in the resolution of all cases involving
Part D appeals.
Response: We appreciate the support for these proposals and agree
that it is important for the prescriber to submit the clinical
information necessary for a thorough adjudication of the case. In this
final rule, we are finalizing our proposal to modify the existing
regulations at Sec. 423.600(b) such that the requirement that the IRE
solicit the views of the prescribing physician or other prescriber and
include a written account of the prescriber's views in the IRE's record
will apply to adverse DMP redeterminations that will be auto-forwarded
to the IRE.
Comment: A commenter expressed the belief that automatic escalation
to the IRE weakens the authority of Part D plans as partners to CMS in
the fight against the opioid epidemic. An ARB appealing a decision to
lock them into a specific pharmacy for opioid prescriptions would
essentially ``skip the line'' if a plan denies their appeal and then
upholds the denial upon review. The commenter stated the belief that
this is unfair to non-ARBs, who must then wait behind ARBs for an IRE
decision. The commenter also believes that this diminishes the ability
of the plan to impact the behavior of providers and that rather than
making changes to prescribed therapies, providers will wait for the
result of the redetermination. Further, commenter believes that
automatic escalation removes the ability of the plan to reconsider its
decision when more information is submitted to it. The commenter also
believes that automatic escalation will increase denials because the
turnaround time clock will expire prior to the IRE having full
information, and the beneficiary's denial is likely to be upheld. The
commenter recommends, to the extent that CMS cannot relax the
requirements in this final rule, that CMS provide the IRE with opioid-
specific training prior to receiving these automatically escalated
cases, to minimize process-related denials. The commenter recommends
that CMS broadly consider a creative approach to meeting the statutory
intent behind this provision and delay its implementation, or at least
enforcement, until it can implement a policy that does not punish Part
D plans and does not punish beneficiaries (at-risk and otherwise) while
appropriately administering the pharmacy lock-in program.
Response: As previously stated, the SUPPORT Act requires plan
sponsors to auto-forward adverse DMP redeterminations to the IRE for
review and resolution. We do not believe we have the discretion to
interpret the statutory language in a manner that results in a plan
sponsor not being required to auto-forward a denied DMP redetermination
to the IRE for review and resolution. We continue to believe that,
given the extensive case management involved in these types of cases,
there will be very few cases that will be subject to auto-forwarding.
We note that the IRE is already performing reviews of DMP cases based
on existing regulations and guidance. We believe the intent of the
SUPPORT Act provision requiring automatic escalation to the IRE is to
enhance protections for at-risk beneficiaries and not intended to
``punish'' plans or beneficiaries. We disagree that this requirement
weakens a plan sponsor's authority to partner with CMS in the fight
against the opioid epidemic. As we've previously noted, the extensive
case management involved with DMPs affords plans ample opportunity to
work with an ARB to ensure appropriate limitations and will likely
result in a very low volume of appeals.
Based on the comments we received, we are finalizing, with
modification, our proposal to require a Part D plan sponsor to auto-
forward to the IRE those redeterminations where a plan sponsor affirms,
in whole or in part, its denial related to an at-risk determination
under a DMP in accordance with Sec. 423.153(f). Consistent with
existing processes for untimely cases that are auto-forwarded to the
IRE, we are modifying our proposal to state in this final rule that
plans will be required to forward adverse DMP redetermination decisions
to the IRE within 24 hours after expiration of the applicable
adjudication timeframe. In addition, we are finalizing the proposed
revision at Sec. 423.600(b) that will apply the requirements related
to the IRE soliciting the views of the prescribing physician or other
prescriber if a case is forwarded to the IRE by a Part D plan sponsor.
We are also finalizing the proposed requirements for the content of the
initial notice at Sec. 423.153(f)(5)(ii)(C)(3) and the requirements
for the second notice at Sec. 423.153(f)(6)(ii)(C)(4)(iii) to require
that these notices explain that if on redetermination a plan sponsor
affirms its at-risk decision, in whole or in part, the enrollee's case
shall be automatically forwarded to the IRE for review and resolution.
Finally, necessary modifications will be made to the Part D IRE's
contract consistent with these final rules and related operational
issues will be addressed in the IRE's reconsideration procedures
manual. Pursuant to section 2007 of the SUPPORT Act, the automatic
escalation provisions being finalized in this rule--at Sec.
423.153(f)(5)(ii)(C)(3), Sec. 423.153(f)(6)(ii)(C)(4)(iii), Sec.
423.590(i), and Sec. 423.600(b)--apply 60 days following publication
of this final rule.

F. Suspension of Pharmacy Payments Pending Investigations of Credible
Allegations of Fraud and Program Integrity Transparency Measures
(Sec. Sec. 405.370, 422.500, 422.503, 423.4, 423.504, and 455.2)

1. Medicare Parts C and D Anti-Fraud Efforts
CMS's role in overseeing the Medicare program includes ensuring
that payments are made correctly and that fraud, waste, and abuse are
prevented and detected. Failure to do so endangers the Trust Funds and
may result in harm

[[Page 5903]]

to beneficiaries. CMS has established various regulations over the
years to address potentially fraudulent and abusive behavior in
Medicare Parts C and D. For instance, 42 CFR 424.535(a)(14)(i)
addresses improper prescribing practices and permits CMS to revoke a
physician's or other eligible professional's enrollment if he or she
has a pattern or practice of prescribing Part B or D drugs that is
abusive or represents a threat to the health and safety of Medicare
beneficiaries, or both.
2. SUPPORT Act--Sections 2008 and 6063
a. Background
Opioid use disorder (OUD) and deaths from prescription and illegal
opioid overdoses have reached alarming levels. The Centers for Disease
Control and Prevention (CDC) estimated 47,000 opioid overdose deaths in
2017, and 36 percent of those deaths involved prescription opioids.\21\
On October 26, 2017, the Acting Health and Human Services Secretary,
Eric D. Hargan, declared a nationwide public health emergency on the
opioid crisis as requested by President Donald Trump.\22\ This public
health emergency has since been renewed several times by Secretary Alex
M. Azar II.\23\
---------------------------------------------------------------------------

\21\ https://www.cdc.gov/drugoverdose/data/index.html.
\22\ https://www.hhs.gov/about/news/2017/10/26/hhs-acting-secretary-declares-public-health-emergency-address-national-opioid-crisis.html.
\23\ https://www.phe.gov/emergency/news/healthehactions/phe/Pages/opioid-19apr2019.aspx.
---------------------------------------------------------------------------

Section 2008 of the SUPPORT Act amends and adds several sections of
the Act to address the concept of a ``credible allegation of fraud.''
Specifically:
Sections 2008(a) and (b) of the SUPPORT Act amends
sections 1860D-12(b) and 1857(f)(3) of the Act, respectively, by adding
new requirements for Medicare Part D plan sponsors and MA organizations
offering MA-PD plans. Specifically, the provisions--
++ Apply certain parts of section 1862(o) of the Act, regarding
payment suspensions based on credible allegations of fraud, to Medicare
Part D plan sponsors and MA organizations offering MA-PD plans,
allowing them to impose payment suspensions on pharmacies in the same
manner as these provisions apply to CMS.
++ Require these Part D plan sponsors and MA organizations offering
MA-PD plans to notify the Secretary regarding the imposition of a
payment suspension on a pharmacy pending an investigation of a credible
allegation of fraud (but does not extend the requirement to report to
the Secretary other payment suspensions for which plan sponsors already
have authority).
++ Require this notification to be made such as via a secure
internet website portal (or other successor technology) established
under section 1859(i).
Section 2008(d) of the SUPPORT Act, which amended section
1862(o) of the Act, states that a fraud hotline tip (as defined by the
Secretary) without further evidence shall not be treated as sufficient
evidence for a credible allegation of fraud.
Although the effective date for these provisions of section 2008 of
the SUPPORT Act is for plan years beginning on or after January 1,
2020, we will be implementing these provisions with an applicability
date that is for plan years beginning on or after January 1, 2022. This
applicability date is necessary due to several factors. The first
factor is the need to ensure that the web-based portal is complete and
operational for plan sponsor's use. While the development of the web-
based portal began when the legislation was enacted, CMS was unable to
complete the development of the portal in time for its full
implementation in plan year 2021. In addition, the portal has required
several key updates to reflect the requirements in this regulation.
Additional factors include the need to ensure the web-based portal is
complete and operational for plan sponsor's use; the time needed for
plan sponsors to determine internal procedures to meet the requirements
outlined in this rule; the need for CMS to obtain feedback from plan
sponsors to address any challenges encountered with the web-based
portal; and the need to provide plan sponsors with the opportunity to
address any other operational challenges with implementing these
provisions, including potential changes that may be needed due to the
COVID-19 public health emergency. Furthermore, the applicability date
is later than the effective dates in the SUPPORT Act because the
publication of this final rule is occurring after the bid deadline for
plan year 2021. However, where the statute is self-implementing, the
delay in applicability of these regulations is not a barrier to
enforcement of the statutory provisions.
Section 6063(a) of the SUPPORT Act, which added a new paragraph
(i)(1) to section 1859 of the Act, requires the following:
The Secretary, after consultation with stakeholders, shall
establish a secure web-based program integrity portal (or other
successor technology) that would allow secure communication among the
Secretary, MA plans, and prescription drug plans, as well as eligible
entities with a contract under section 1893, such as Medicare program
integrity contractors. The purpose is to enable, through the portal:
++ The referral by such plans of substantiated or suspicious
activities (as defined by the Secretary) of a provider of services
(including a prescriber) or supplier related to fraud, waste, or abuse
for the purpose of initiating or assisting investigations conducted by
the eligible entity; and
++ Data sharing among such MA plans, prescription drug plans, and
the Secretary.
The Secretary shall disseminate the following information
to MA plans and prescription drug plans via the portal: (1) Providers
and suppliers referred for substantiated or suspicious activities
during the previous 12-month period; (2) providers and suppliers who
are currently either excluded under section 1128 of the Act or subject
to a payment suspension pursuant to section 1862(o) or otherwise; (3)
providers and suppliers who are revoked from Medicare, and (4) in the
case the plan makes a referral via the portal concerning substantiated
or suspicious activities of fraud, waste, or abuse of a provider or
supplier, the Secretary shall notify the plan if the related providers
or suppliers were subject to administrative action under title XI or
XVIII for similar activities.
The Secretary shall, through rulemaking, specify what
constitutes substantiated or suspicious activities of fraud, waste, or
abuse, using guidance such as that provided in the CMS Pub. 100-08,
Medicare Program Integrity Manual (PIM), chapter 4, section 4.8. In
section 4.8 of the PIM, CMS provides guidance to its Medicare program
integrity contractors on the disposition of cases referred to law
enforcement. Similar to what is stated in section 2008(d) of the
SUPPORT Act, a fraud hotline tip without further evidence does not
constitute sufficient evidence for substantiated fraud, waste, or
abuse.
On at least a quarterly basis, the Secretary must make
available to the plans information on fraud, waste, and abuse schemes
and trends in identifying suspicious activity. The reports must include
administrative actions, pertinent information related to opioid
overprescribing, and other data determined appropriate by the Secretary
in consultation with stakeholders. This information must be anonymized
data submitted by plans without identifying the source of such
information.

[[Page 5904]]

Although the effective date for these provisions of section 6063(a)
of the SUPPORT Act is beginning not later than 2 years after the date
of enactment, or by October 24, 2020, we will be implementing these
provisions with an applicability date that is for plan years beginning
on or after January 1, 2022. This applicability date is necessary for
the same reasons described previously in this section related to the
provisions in section 2008 of the SUPPORT Act.
Furthermore, section 6063(b) of the SUPPORT Act, which amended
section 1857(e) of the Act, requires MA organizations and Part D plan
sponsors to submit to the Secretary, information on investigations,
credible evidence of suspicious activities of a provider of services
(including a prescriber) or supplier related to fraud, and other
actions taken by such plans, related to inappropriate prescribing of
opioids. The Secretary shall, in consultation with stakeholders,
establish a process under which MA organizations and Part D plan
sponsors must submit this information. In addition, the Secretary shall
establish a definition of inappropriate prescribing, which will reflect
the reporting of investigations and other corrective actions taken by
MA organizations and Part D plan sponsors to address inappropriate
prescribing of opioids and the types of information that must be
submitted.
Although the effective date for these provisions of section 6063(b)
of the SUPPORT Act is for plan years beginning on or after January 1,
2021, we will be implementing these provisions with an applicability
date that is for plan years beginning on or after January 1, 2022. This
applicability date is necessary for the same reasons described
previously in this section related to the provisions in section 2008 of
the SUPPORT Act.
b. Need for Additional Measures
Existing regulations for MA and Part D plan sponsors in Sec. Sec.
422.503(b)(4)(vi)(G)(3) and 423.504(b)(4)(vi)(G)(3) specify that plan
sponsors should have procedures to voluntarily self-report potential
fraud or misconduct related to the MA and Part D programs to CMS or its
designee. (We note that Sec. 422.503(b) generally outlines
requirements that MA organizations must meet. Section 423.504(b)
outlines conditions necessary to contract as a Part D plan sponsor.)
Presently, MA organizations and Part D plan sponsors voluntarily report
such data to CMS through either--(1) direct submissions to CMS, or (2)
communication with the Investigations Medicare Drug Integrity
Contractor (IMEDIC). Given the gravity of the nationwide opioid
epidemic and the need for CMS and the plans to have as much information
about potential and actual prescribing misbehavior as possible in order
to halt such misbehavior, we are taking further regulatory action
consistent with sections 2008 and 6063. Sections 2008 and 6063 of the
SUPPORT Act provide the authority to establish regulations to implement
a requirement for plans to report certain related data.
3. Proposed Provisions
Consistent with the foregoing discussion, we proposed the following
regulatory provisions to implement sections 2008 and 6063 of the
SUPPORT Act. As explained, some of our proposals modify or supplement
existing regulations, while others establish new regulatory paragraphs
altogether. Regulations related to Part C are addressed in 42 CFR part
422; those pertaining to Part D are addressed in 42 CFR part 423.
Regulations pertaining to or contained in other areas of title 42 will
be noted as such.
a. Definitions
The definitions outlined in this section of this rule will be
effective following the required statutory deadlines for each reporting
piece described in the SUPPORT Act. In the proposed rule, we proposed
the definitions of substantiated or suspicious activities of fraud,
waste or abuse and fraud hotline tip would be effective beginning
October 24, 2020, and the definitions of inappropriate prescribing of
opioids and credible allegations of fraud would be effective beginning
January 1, 2021.
(1) Substantiated or Suspicious Activities of Fraud, Waste, or Abuse
We indicated earlier that section 6063(a) of the SUPPORT Act added
a new section 1859(i)(1) to the Act requiring the establishment of a
regulatory definition of ``substantiated or suspicious activities of
fraud, waste, or abuse,'' using guidance such as that in CMS Pub. 100-
08, PIM, chapter 4, section. 4.8. To this end, we proposed to add to
Sec. Sec. 422.500 and 423.4 a definition specifying that substantiated
or suspicious activities of fraud, waste or abuse means and includes,
but is not limited to allegations that a provider of services
(including a prescriber) or supplier: Engaged in a pattern of improper
billing; submitted improper claims with suspected knowledge of their
falsity; submitted improper claims with reckless disregard or
deliberate ignorance of their truth or falsity; or is the subject of a
fraud hotline tip verified by further evidence. Consistent with the
reference in section 6063(a) of the SUPPORT Act to chapter 4 of the
PIM, our proposed definition largely mirrored that in section 4.8 of
the PIM. We also believe that this definition is, importantly, broad
enough to capture a wide variety of activities that could threaten
Medicare beneficiaries and the Trust Funds. We solicited public comment
on this definition.
We received several comments on the definition of ``substantiated
or suspicious activities of fraud, waste or abuse'' and our responses
to those comments follow.
Comment: A professional organization supported this definition and
mentioned that it would ensure targeted streamlined fraud reporting.
Response: We appreciate the comment and support of the definition
and we are finalizing the definition as proposed.
Comment: Several commenters raised concerns with the definition of
substantiated and suspicious activity. Some commenters requested
additional information regarding the scope of the definition. One
commenter recommended that CMS provide additional guidance on the
definition of ``pattern of improper billing.'' Other commenters wanted
to know what specific criteria will be used for substantiated and
suspicious reporting. Another commenter was concerned with CMS's use of
language such as ``substantiated'' and ``suspicious.''
Response: In defining what constitutes substantiated or suspicious
activities of fraud, waste, and abuse, we looked to guidance currently
in the Medicare Program Integrity Manual 4.8. Section 6063 of the
SUPPORT Act further clarifies that a fraud hotline tip without further
evidence shall not be treated as sufficient evidence for substantiated
fraud, waste, or abuse. We believe the definition that we are
finalizing will address the commenters' concerns as it reflects the
SUPPORT Act requirement to establish the definition using guidance such
as that provided in the Medicare Program Integrity Manual 4.8. In an
effort to be consistent across our programs, we believe the definition
as proposed provides a similar context for what is to be reported as
the PIM outlines for fee-for-service. Based on the comments received
and our responses we are finalizing the proposed definition without
modification; however, the applicability date for this definition will
be for plan years beginning on or after January 1, 2022 for reasons
previously discussed in this section.

[[Page 5905]]

(2) Inappropriate Prescribing of Opioids
Section 6063(b) of the SUPPORT Act, as mentioned previously, states
the Secretary is required to establish: (1) A definition of
inappropriate prescribing; and (2) a method for determining if a
provider of services meets that definition. MA organizations and Part D
Plan Sponsors must report actions they take related to inappropriate
prescribing of opioids. We accordingly proposed to add the following
definition of inappropriate prescribing with respect to opioids to
Sec. Sec. 422.500 and 423.4. We proposed that inappropriate
prescribing means that, after consideration of all the facts and
circumstances of a particular situation identified through
investigation or other information or actions taken by MA organizations
and Part D Plan Sponsors, there is an established pattern of potential
fraud, waste and abuse related to prescribing of opioids, as reported
by the Plan Sponsors.
In determining whether inappropriate prescribing of opioids has
occurred we proposed that plan sponsors may consider any number of
factors including, but not limited to the following: Documentation of a
patient's medical condition; identified instances of patient harm or
death; medical records, including claims (if available); concurrent
prescribing of opioids with an opioid potentiator in a manner that
increases risk of serious patient harm; levels of Morphine Milligram
Equivalent (MME) dosages prescribed; absent clinical indication or
documentation in the care management plan, or in a manner that may
indicate diversion; State level prescription drug monitoring program
(PDMP) data; geography, time and distance between a prescriber and the
patient; refill frequency and factors associated with increased risk of
opioid overdose.
We believe the many steps that CMS, the CDC, and HHS have taken in
response to the nation's opioid crisis have had an overall positive
impact on clinician prescribing patterns, resulting in safer and more
conscientious opioid prescribing across clinician types and across the
settings where beneficiaries receive treatment for pain, and have also
resulted in heightened public awareness of the risks associated with
opioid medications. For example, recent HHS guidance \24\ highlights
the importance of judicious opioid prescribing that minimizes risk and;
urges collaborative, measured approaches to opioid dose escalation,
dose reduction, and discontinuation; furthermore, a 2019 HHS Task Force
report \25\ outlines best practices for multimodal approaches to pain
care. In this definition, we recognized that there are legitimate
clinical scenarios that may necessitate a higher level of opioid
prescribing based on the clinician's professional judgement, including,
the beneficiary's clinical indications and characteristics, whether the
prescription is for an initial versus a subsequent dose, clinical
setting in which the beneficiary is being treated, and various other
factors. We sought public comments on specific populations or diagnoses
that could be excluded for purposes of this definition, such as cancer,
hospice, and/or sickle cell patients. Based upon widely accepted
principles of statistical analysis and taking into account clinical
considerations mentioned previously, we noted that CMS may consider
certain statistical deviations to be instances of inappropriate
prescribing of opioids. We requested evidence from clinical experts
regarding evidence based guidelines for opioid prescribing across
clinical specialties and care settings that could be considered to
develop meaningful and appropriate outlier methodologies. Therefore, we
proposed that inappropriate prescribing of opioids should be based on
an established pattern as previously described in this section
utilizing many parameters.
---------------------------------------------------------------------------

\24\ ``HHS Guide for Clinicians on the Appropriate Dosage
Reduction or Discontinuation of Long-Term Opioid Analgesics'' found
at https://www.hhs.gov/opioids/sites/default/files/2019-10/8-Page%20version__HHS%20Guidance%20for%20Dosage%20Reduction%20or%20Discontinuation%20of%20Opioids.pdf.
\25\ https://www.hhs.gov/ash/advisory-committees/pain/index.html.
---------------------------------------------------------------------------

We solicited public comment on other reasonable measures of
inappropriate prescribing of opioids.
We received numerous comments regarding the definition of
inappropriate prescribing and on other reasonable measures of
inappropriate prescribing of opioids and our responses follow.
Comment: Two professional associations supported the definition
outlined in the rule.
Response: We appreciate the comments from prescribing professionals
that also support our proposed definition. We will be finalizing the
definition, as described in this final rule.
Comment: We received comments from one advocacy group which
criticize the definition of ``inappropriate prescribing''. The comments
made by the advocacy group were also referred to by several other
individual commenters who endorsed their concerns. The advocacy group
asserted that CMS's proposal contains an inappropriate view of the
``risks'' of opioid prescribing for people in pain, which could be used
for denial of pain treatment.'' As an alternative, they recommend
better training of physicians in the management of chronic pain.
Furthermore, the commenters noted that HHS' actions have focused on
``what is likely to be a minor problem (physician overprescribing)''
instead of illegal drug use and abuse.
Response: Section 6063 of the SUPPORT ACT required us to adopt a
definition of inappropriate prescribing of opioids. In response to the
statement that overprescribing may be a minor problem, we disagree and
cite a real example of how prescribing authority can be used
inappropriately. In September 2019, federal law enforcement officials
announced ``charges against 13 individuals across five Appalachian
federal districts for alleged offenses relating to the over
prescription of controlled substances through `pill mill' clinics. Of
those charged, 12 were charged for their role in unlawfully
distributing opioids and other controlled substances and 11 were
physicians. The alleged conduct resulted in the distribution of more
than 17 million pills.'' \26\ In relation to concerns raised about
provider education and training, we would note that the subject is out
of scope for this regulation.
---------------------------------------------------------------------------

\26\ https://www.justice.gov/opa/pr/second-appalachian-region-prescription-opioid-strikeforce-takedown-results-charges-against-13.
---------------------------------------------------------------------------

Comment: One commenter stated that CMS should consider certain
statistical outliers and/or individual beneficiary cases of
overutilization while another commenter stated that the definition of
inappropriate prescribing must be limited to suspected fraud, not only
outlier prescribing patterns. Another commenter noted that CMS should
amend the proposed definition of inappropriate prescribing to
``potential'' with ``material and repeated intentional acts of''.
Another commenter recommended that CMS add reasonable measures of
inappropriate prescribing of opioids- for example, CMS should consider
including any off-guideline use, including prescriptions for large
quantities to opioid-na[iuml]ve members. Another commenter believed
that a peer physician from the same specialty, after considering
specific patient needs, is most qualified to determine whether opioids
have been prescribing appropriately. Another commenter was concerned
that without specifically defining ``inappropriate prescribing'' a
subjective approach may be taken in initiating actions involving
suspicious

[[Page 5906]]

activities that may warrant investigation.
Response: We believe the proposed rule was clear in that plan
sponsors may consider a number of factors when determining what
constitutes inappropriate prescribing of opioids. The list of factors
is not meant to be exhaustive list of factors that would contribute to
the identification of fraud waste and abuse related to inappropriate
prescribing of opioids. The information provided in the definition is
sufficient and will assist the agency in identifying providers with
patterns of potential fraud, waste and abuse related to opioid
prescribing. It is important to note that most Part D plan sponsors
already have detection and prevention measures in place to address
cases of inappropriate prescribing of opioids.
Comment: A few commenters believe the insurance companies'
authority is too broad in determining inappropriate prescribing.
Response: The Medicare prescription drug benefit is delivered
through Medicare Part D plans and many of the plan sponsors are
insurance companies. We have considered industry guidelines and
policies in defining inappropriate prescribing. Most Part D plan
sponsors already have Special Investigative Units which have detection
and prevention procedures in place to address cases of inappropriate
prescribing of opioids.
Comment: A commenter stated that although the definition of
inappropriate prescribing calls for a more comprehensive review, there
are concerns that the focus will be on dose and quantity without
consideration of other factors that affect patients and physicians.
Response: As we have stated in our previous responses to comments,
we believe the proposed rule was clear in that plan sponsors may
consider a number of factors when determining what constitutes
inappropriate prescribing of opioids. The list of factors is not meant
to be an exhaustive list that would contribute to the identification of
fraud waste and abuse related to inappropriate prescribing of opioids.
In addition to the list of factors, we have also considered industry
guidelines and policies in defining inappropriate prescribing. We
believe the information provided is sufficient in assisting plans to
identify established patterns of potential fraud, waste and abuse
related to prescribing of opioids. As we stated previously in this
section, most Part D plan sponsors already have detection and
prevention measures in place to address cases of inappropriate
prescribing of opioids. However, under section 6063 of the SUPPORT Act,
plans will now be required to report any information related to the
inappropriate prescribing of opioids and concerning investigations,
credible evidence of suspicious activities of a provider of services
(including a prescriber) or supplier, and other actions taken by the
plan.
Comment: There were numerous commenters who suggested that CMS
consider exceptions such as Long Term Care, cancer survivors, high risk
surgical patients, chronic pain, end stage chronic lung disease and
rare genetic disorders, when reviewing for inappropriate prescribing.
There were also comments that recommended that CMS consider prescriber
specialties when defining inappropriate prescribing. One commenter
suggested that CMS specify that the factors listed does not include an
exhaustive list of patterns that would contribute to inappropriate
opioid prescribing. A commenter also expressed concern that CMS
creating blanket exclusions from the analysis has the potential for
fraud and recommended that CMS not exclude any drug type, specific
populations or diagnosis.
Response: As mentioned in the preamble, we recognize that there are
legitimate clinical scenarios that may necessitate a higher level of
opioid prescribing. Cancer, hospice, and sickle cell patients have been
identified as exclusions in other sections of the regulation, such as
the updated drug management program provisions at Sec. 423.100. To
ensure that vulnerable populations continue to have access to care, we
are finalizing the proposed definition of inappropriate prescribing
with a modification such that beneficiaries with cancer and sickle-cell
disease, as well as those patients receiving hospice and long term care
(LTC) services will be exempt from consideration for the inappropriate
prescribing of opioids. We clarify that LTC, in this context, means a
skilled nursing facility as defined in section 1819(a) of the Act, or a
medical institution or nursing facility for which payment is made for
an institutionalized individual under section 1902(q)(1)(B) of the Act.
These exemptions were added to be consistent with other areas of the
proposed regulation as well as the current regulatory exemptions at
Sec. 423.100. However, just as plan sponsors may consider a number of
factors such as MME levels, concurrent prescribing of opioids with an
opioid potentiator, and time and distance between the prescriber and
the patient when determining inappropriate prescribing of opioids, plan
sponsors may also apply the same judgment when considering other
diseases or clinical factors or scenarios that have not been listed in
the definition. Plan sponsors should use all information available to
them in determining inappropriate opioid prescribing. These exclusions
also do not preclude plan sponsors from reporting on a voluntary basis
under Sec. Sec. 422.503(b)(4)(vi)(G)(3) and 423.504(b)(4)(vi)(G)(3).
Comment: Several comments were received in response to use of MME
levels as a factor in determining opioid overprescribing. Commenters
were concerned that CMS does not exempt opioid use disorder treatment
from MME guidelines. Another commenter stated a consensus definition of
MME dosages does not exist and expressed concern with a policy that
allows Plan Sponsors to rely on MME dosages. Another commenter
mentioned that the MME is not an appropriate factor in determining
abuse. A commenter suggested excluding MME levels as a factor in any
analysis of inappropriate prescribing.
Response: We believe the proposed rule is clear in that plan
sponsors may consider a number of factors when determining what
constitutes inappropriate prescribing of opioids. Most Part D plan
sponsors already have detection and prevention measures in place to
address cases of inappropriate prescribing of opioids. It is our
understanding that MME are already utilized as part of many plan
sponsors measures to address FWA. As such, we believe MME is an
important factor that might be considered when identifying
inappropriate prescribing of opioids. The list of factors is not meant
to be an exhaustive list of factors that would contribute to the
identification of fraud waste and abuse related to inappropriate
prescribing of opioids. The information provided in the definition is
sufficient in assisting plans to identify established patterns of
potential fraud, waste and abuse related to prescribing of opioids.
Comment: There were comments seeking clarification regarding if a
pharmacy would be considered a provider and could be identified as
having ``Inappropriate Prescribing of Opioids,'' or if this proposed
policy would only refer to actual medical professionals who can
prescribe opioids.
Response: Based on the comments, there may be some misunderstanding
of the reporting requirements cited in section 2008 of the SUPPORT Act
versus section 6063 of the SUPPORT Act. Section 2008 of the SUPPORT Act
requires plan sponsors to notify the Secretary of the imposition of a
pharmacy payment suspension that is

[[Page 5907]]

based on a credible allegation of fraud. That reporting will be done
using a secure website portal. Section 6063 of the SUPPORT Act requires
reporting information on investigations, credible evidence of
suspicious activities of providers or suppliers related to fraud, and
other actions taken by the plans related to inappropriate opioid
prescribing. For purposes of section 6063(b), plan sponsors may
consider a pharmacy a supplier.
Comment: Commenters expressed concern with the use of geography,
time and distance between the prescriber and the patient as a factor
for opioid overprescribing. Specifically, one commenter stated that
many people are forced to travel long distances not because of doctor
shopping or pharmacy hopping, but because pain clinics have been shut
down and primary doctors are refusing to see pain patients. Another
commenter stated that for people with complex disabilities,
geographically distant specialists may be the best (or only) care
providers available. Another commenter stated that absent of fraud,
high dosage and distance should not be considered indicators of
inappropriate prescribing.
Response: We realize that there may be some circumstances in which
a beneficiary may travel a considerable distance for access to a
pharmacy or provider, for legitimate reasons. Plan sponsors may
consider any number of factors when determining what constitutes
inappropriate prescribing of opioids, in addition to geography time and
distance. The list included in the proposed rule is not meant to be an
exhaustive list of factors that may be used in the identification of
fraud waste and abuse related to inappropriate prescribing of opioids.
Comment: We received several comments stating that illicit drugs,
not prescription drugs, have contributed to the opioid crisis.
Commenters also requested that CMS monitor to ensure that these actions
do not encourage providers to be unnecessarily conservative when
prescribing opioids which could limit access to older adults.
Commenters also noted that CMS should encourage plan sponsors to align
best practices, as published in the HHS Pain Management Best Practices
Inter-Agency Task Force report.
Response: In response to the statement that illicit drugs, not
prescription drugs, have contributed to the opioid, we disagree and
cite a real example of how prescribing of prescription opioids can be
used inappropriately. In September 2019, federal law enforcement
officials announced ``charges against 13 individuals across five
Appalachian federal districts for alleged offenses relating to the over
prescription of controlled substances through `pill mill' clinics. Of
those charged, 12 were charged for their role in unlawfully
distributing opioids and other controlled substances and 11 were
physicians. The alleged conduct resulted in the distribution of more
than 17 million pills.'' \27\ Our proposed provisions are to ensure
that fraud, waste, and abuse are prevented and detected and our
Medicare population is protected from harm from opioid prescriptions.
We have established several regulations over the years to promote
patient safety and address potentially fraudulent and abusive behavior
in Medicare Parts C and D. We are considering ways to effectively
monitor the impact of these provisions. The provisions in the SUPPORT
Act that we proposed to implement will add additional ways to ensure
effective monitoring and oversight of prescribing practices related to
opioids.
---------------------------------------------------------------------------

\27\ https://www.justice.gov/opa/pr/second-appalachian-region-prescription-opioid-strikeforce-takedown-results-charges-against-13.
---------------------------------------------------------------------------

Based on the overwhelming feedback from health plans, professional
societies, advocacy groups and individuals, we have determined there is
a need to add exemptions when determining inappropriate prescribing of
opioids. While there is no way to include every possible disease state
that could be considered, we will add beneficiaries with cancer and
sickle-cell disease, as well as those patients receiving hospice and
long term care (LTC) services as exclusions. These disease states were
selected not only because they are clinically applicable but they align
with existing exemptions in other CMS policies, such as the updated
drug management program provisions at Sec. 423.100. In addition, the
applicability date for this definition will be for plan years beginning
on or after January 1, 2022 for reasons previously discussed in this
section.
(3) Credible Allegation of Fraud
Somewhat similar to section 6063(a) of the SUPPORT Act, section
2008(d) of the SUPPORT Act states that a fraud hotline tip (as defined
by the Secretary) without further evidence shall not be treated as
sufficient evidence for a credible allegation of fraud. The term
``credible allegation of fraud'' is currently defined at Sec. Sec.
405.370 and 455.2 (which, respectively, apply to Medicare and Medicaid)
as an allegation from any source including, but not limited to the
following: (1) Fraud hotline complaints; (2) claims data mining; and
(3) patterns identified through provider audits, civil false claims
cases, and law enforcement investigations. Allegations are considered
to be credible when they have indicia of reliability, and, in the case
of Sec. 455.2, the State Medicaid agency has reviewed all allegations,
facts, and evidence carefully and acts judiciously on a case-by-case
basis.
To address the requirements of section 2008(d) of the SUPPORT Act,
we proposed to revise the term ``credible allegation of fraud'' in
Sec. Sec. 405.370 and 455.2 as follows. We proposed that the existing
version of paragraph (1) in both Sec. Sec. 405.370 and 455.2 would be
amended to state ``Fraud hotline tips verified by further evidence.''
The existing version of paragraph (2) and (3) would remain unchanged.
Similarly, we proposed to add in Sec. 423.4 a definition of credible
allegation of fraud stating that a credible allegation of fraud is an
allegation from any source including, but not limited to: Fraud hotline
tips verified by further evidence; claims data mining; patterns
identified through provider audits, civil false claims cases, and law
enforcement investigations. Allegations are considered to be credible
when they have indicia of reliability. In the case of Sec. 423.4, we
proposed that examples of claims data mining would include, but are not
limited to, prescription drug events and encounter data mining. We
solicited public comment on this definition.
We received several comments on the definition of Credible
Allegation of Fraud and our responses follow.
Comment: A professional organization supported the proposed revised
definition of credible allegation of fraud.
Response: We appreciate the comments from prescribing professionals
that also support our proposed definition. We are finalizing the
definition, as proposed in this final rule.
Comment: A commenter expressed concern that a credible allegation
results in damage to the professional reputations of doctors and
pharmacists.
Response: We note that credible allegation of fraud in this context
is used when plan sponsors are implementing payment suspensions of
pharmacies. Plan sponsors already have the authority to implement a
payment suspension at their discretion according to their contracts
with the pharmacies. When they implement a payment suspension that is
based on a credible allegation of fraud and meets the regulatory
definition, now they must report it to CMS. We have defined

[[Page 5908]]

credible allegations of fraud under Sec. 405.370 in previous
rulemaking. The regulations are being amended as specified in the
SUPPORT Act section 2008(d). The intent is to only apply definitions
for MA and Part D plans that are consistent with regulatory standards
that are applied to both traditional Medicare and Medicaid.
Accordingly, plan sponsors currently impose payment suspensions based
on credible allegations of fraud and we recognize that MA and Part D
plans currently use multiple sources in determining what may be
considered ``credible allegation of fraud'' as part of ensuring
measures have been implemented to prevent, detect and correct fraud,
waste and abuse.
Comment: Some commenters requested that CMS provide examples of
credible evidence and provide clarification on the standards,
thresholds and responsible party for reporting. One commenter believes
that examples will assist plans in determining credible allegations of
fraud and address fraudulent opioid prescribing. Another commenter
recommended that CMS proactively communicate with plans on fraud
schemes to assist in enhancing the plans oversight efforts.
Response: The regulations are being amended as specified in the
SUPPORT Act section 2008(d) to extend a consistent regulatory
definition for MA and Part D plans. We have defined credible
allegations of fraud under 405.370 in previous rulemaking. As noted
previously, the Plans will be required to report payment suspensions of
pharmacies to CMS based on credible allegations of fraud. Accordingly,
we recognize that MA and Part D plans currently may use a variety of
sources in determining what may be considered ``credible allegation of
fraud'' as part of ensuring measures have been implemented to prevent,
detect and correct fraud, waste and abuse. We also conduct regular
training and education for Plan Sponsors on fraud detection and
prevention and provides opportunities for the Plans to share
information on fraud schemes. Therefore, we will continue to allow
plans the flexibility in determining credible allegations of fraud and
will finalize this provision without additional examples other than
what is currently defined.
Comment: A commenter recommended amending the proposed definition
of credible allegation to an allegation from a plan of a material and
repeated pattern of intentional violations of law or regulations that
has been confirmed beyond suspicion through independent evidence.
Allegations by third parties, including False Claims Act cases, law
enforcement investigations and provider audits shall not constitute
credible allegations of fraud.
Response: We have defined credible allegations of fraud under
405.370 in previous rulemaking. The regulations are being amended as
specified in the SUPPORT Act section 2008(d). The intent of this
provision is to implement the SUPPORT ACT which extends a consistent
definition for MA and Part D plans. Accordingly, we recognize that MA
and Part D plans currently use a variety of sources in determining what
may be considered ``credible allegation of fraud'' as part of ensuring
measures have been implemented to prevent, detect and correct fraud,
waste and abuse. We will proceed as noted previously in this section
with finalizing the proposed definition without modification.
Comment: An association supported the proposed revision of the
regulatory definition of credible allegation of fraud described in the
proposed rule, changing ``fraud hotline complaints'' to ``fraud hotline
tips verified by further evidence.'' Another association also
specifically supported our proposal that a fraud hotline top without
further evidence shall be not be treated as credible allegation of
fraud.
Response: We appreciate the support for the proposal to further
define credible allegation of fraud by expanding the definition of
fraud hotline complaint to fraud hotline tips verified by further
evidence. We believe this will further assist plans in determining
cases of fraud.
Comment: A commenter recommended that CMS provide training programs
for health plan fraud units and guidance regarding the definition of
credible allegation.
Response: We have defined credible allegations of fraud under
405.370 in previous rulemaking. The regulations are being amended as
specified in the SUPPORT Act section 2008(d). The intent is to only
establish similar and consistent definitions for MA and Part D plans.
We conduct regular training and education for Plan Sponsors on fraud
detection and prevention and provides opportunities for the Plans to
share information on fraud schemes. We recognize that MA and Part D
plans currently use a variety of sources in determining what may be
considered ``credible allegation of fraud'' as part of ensuring
measures have been implemented to prevent, detect and correct fraud,
waste and abuse.
Comment: A commenter specifically did not support the definition of
credible allegation of fraud given that further evidence is not
defined.
Response: The definition uses plain language and is intended to
allow flexibility since evidence to corroborate the fraud hotline
complaint or tip would vary on a case by case basis. Additionally, Part
D sponsors have systems in place and experience with the evaluation and
verification of fraud hotline tips.
Based on the comments received and our responses we are finalizing
the provision as proposed without modification; however, the
applicability date for this definition will be for plan years beginning
on or after January 1, 2022 for reasons previously discussed in this
section.
(4) Fraud Hotline Tip
Sections 2008(d) and 6063(a) of the SUPPORT Act require the
Secretary to define a fraud hotline tip. To this end, we proposed to
add to Sec. Sec. 405.370, 422.500, 423.4, and 455.2 a plain language
definition of this term. We proposed that a fraud hotline tip would be
defined as a complaint or other communications that are submitted
through a fraud reporting phone number or a website intended for the
same purpose, such as the federal government's HHS Office of the
Inspector General (OIG) Hotline or a health plan's fraud hotline. This
definition is intended to be broad enough to describe mechanisms such
as the federal government's HHS OIG Hotline or a commercial health
plan's fraud hotline. Many private plans, which have their own fraud
reporting hotlines, participate as plan sponsors in Medicare Part D and
this definition would seek to reflect their processes for reporting
information on potential fraud, waste and abuse. We solicited public
comment on this definition.
We received several comments on the definition of Fraud Hotline
Tip. Our responses to those comments follow.
Comment: Several commenters supported the proposed definition of a
fraud hotline tip including a professional association. Commenters that
were supportive agreed that this definition will assist plans on
ensuring investigative measures are taken and focus on those that
indicate fraud.
Response: We appreciate the support and feedback on the proposal to
further define a fraud hotline tip. As mentioned in the proposed rule
we believe the definition is broad enough to describe mechanisms such
as the federal government's HHS OIG Hotline or a commercial health
plan's hotline.

[[Page 5909]]

Comment: A commenter also recommended that CMS provide examples of
other communications that may be submitted through a fraud reporting
phone number or website.
Response: As mentioned in the proposed regulation, the definition
is intended to be broad in an effort to allow flexibility. Part D
sponsors are currently required to have systems established to receive
and process fraud hotline tips. Therefore, we believe many Part D
sponsors have the experience with using ``other communications'' which
could include information such as supporting documentation submitted
with the tip that may be used to support a complaint or document
potential fraud.
Comment: Another commenter urged that CMS ensure tips are verified
before they are used to suspend a provider or prescriber.
Response: The definition proposed does include language to state
that a fraud hotline tip must be verified by further evidence. As
mentioned in the proposed regulation the definition is intended to be
broad in an effort to allow flexibility since many plan sponsors have a
fraud hotline and systems established for receiving and verifying
potential fraud.
Based on the comments received and our responses we are finalizing
the provision as proposed without modification; however, the
applicability date for this definition will be for plan years beginning
on or after January 1, 2022 for reasons previously discussed in this
section.
b. Reporting
(1) Vehicle for Reporting
We stated that we planned to utilize a module within the HPMS as
the program integrity portal for information collection and
dissemination. We stated that the portal would serve as the core
repository for the data addressed in sections 2008 and 6063 of the
SUPPORT Act. We stated that the program integrity portal would not
duplicate reporting requirements and is the only source that would be
used to report and disseminate information as required in the final
rule. Such data and the regular submission and dissemination of this
important information would, in our view, strengthen CMS' ability to
oversee plan sponsors' efforts to maintain an effective fraud, waste,
and abuse program. We further believe that data sharing via use of a
portal would, in conjunction with our proposals, help accomplish the
following objectives in our efforts to alleviate the opioid epidemic:
Enable CMS to perform data analysis to identify fraud
schemes.
Facilitate transparency among CMS and plan sponsors
through the exchange of information.
Provide better information and education to plan sponsors
on potential fraud, waste, and abuse issues, thus enabling plan
sponsors to investigate and take action based on such data.
Improve fraud detection across the Medicare program,
accordingly allowing for increased recovery of taxpayer funds and
enrollee expenditures (for example, premiums, co-insurance, other plan
cost sharing).
Provide more effective support, including leads, to plan
sponsors and law enforcement.
Increase beneficiary safety through increased oversight
measures.
We received a few comments on our planned reporting vehicle and our
responses follow.
Comment: Several commenters noted reporting through a new HPMS
module will create duplication of information and recommended that CMS
institute one consistent reporting mechanism since plans can report
directly to the MEDIC or into the HPMS, allow greater access to
expedite reporting and provide further clarification where Part D
sponsors should report.
Response: The program integrity portal will not duplicate reporting
requirements and is the only source that will be used to report and
disseminate information as required in the final rule.
Comment: A commenter inquired about the difference between the new
portal and existing HPMS module and also questioned how plans will be
assured that CMS will investigate the allegations submitted.
Response: The current Analytics and Investigations Collaboration
Environment for Fraud, Waste, and Abuse (AICE-FWA) module in HPMS will
continue to serve as a repository for data projects that plan sponsors
currently use as leads and a resource in conducting oversight of their
fraud detection and prevention efforts. The new program integrity
portal in HPMS will be the primary source for plan sponsors to submit
information related to the inappropriate prescribing of opioids,
payment suspensions of Part D pharmacies, and referral of substantiated
or suspicious activities of a provider of services or supplier related
to fraud, waste, and abuse.
(2) Type of Data To Be Reported by Plans
Sections 422.503(b)(4)(vi)(G)(3) and 423.504(b)(4)(vi)(G)(3), as
noted, state that plan sponsors should have procedures to voluntarily
self-report potential fraud or misconduct related to the MA and Part D
programs, respectively, to CMS or its designee. To conform to the
aforementioned requirements of sections 2008(a) and (b) and section
6063(b) of the SUPPORT Act, we proposed to add new regulatory language,
effective beginning in 2021, in parts 422 and 423 as stated throughout
this section.
First, we proposed new language at Sec. Sec.
422.503(b)(4)(vi)(G)(4) and 423.504(b)(4)(vi)(G)(4) to include the new
provisions. The new Sec. Sec. 422.503(b)(4)(vi)(G)(4) and
423.504(b)(4)(vi)(G)(4) would state that the MA organization or Part D
plan sponsor, respectively, must have procedures to identify, and must
report to CMS or its designee either of the following, in the manner
described in paragraphs (b)(4)(vi)(G)(4) through (6) of this section:
Any payment suspension implemented by a plan, pending
investigation of credible allegations of fraud by a pharmacy, which
must be implemented in the same manner as the Secretary does under
section 1862(o)(1) of the Act; and
Any information concerning investigations, credible
evidence of suspicious activities of a provider of services (including
a prescriber) or supplier, and other actions taken by the plan related
to the inappropriate prescribing of opioids.
Second, the new Sec. Sec. 422.503(b)(4)(vi)(G)(5) and
423.504(b)(4)(vi)(G)(5) would require the data referenced in proposed
Sec. Sec. 422.503(b)(4)(vi)(G)(4) and 423.504(b)(4)(vi)(G)(4) to be
submitted via the program integrity portal. We proposed that MA
organizations and Part D plan sponsors would have to submit the data
elements, specified later in this section, in the program integrity
portal when reporting payment suspensions pending investigations of
credible allegations of fraud by pharmacies; information related to the
inappropriate prescribing of opioids and concerning investigations and
credible evidence of suspicious activities of a provider of services
(including a prescriber) or supplier, and other actions taken by plan
sponsors; or if the plan reports a referral, through the portal, of
substantiated or suspicious activities of a provider of services
(including a prescriber) or a supplier related to fraud, waste or abuse
to initiate or assist with investigations conducted by CMS, or its
designee, a Medicare program integrity contractor, or law enforcement
partners. The data elements, as applicable, are as follows:

[[Page 5910]]

Date of Referral
Part C or Part D Issue
Complainant Name.
Complainant Phone.
Complainant Fax.
Complainant Email.
Complainant Organization Name.
Complainant Address.
Complainant City.
Complainant State.
Complainant Zip.
Plan Name/Contract Number.
Plan Tracking Number.
Parent Organization.
Pharmacy Benefit Manager.
Beneficiary Name.
Beneficiary Phone.
Beneficiary Health Insurance Claim Number (HICN)
Beneficiary Medicare Beneficiary Identifier (MBI).
Beneficiary Address.
Beneficiary City.
Beneficiary State.
Beneficiary Zip.
Beneficiary Date of Birth (DOB).
Beneficiary Primary language.
Beneficiary requires Special Accommodations. If Yes, Describe.
Beneficiary Medicare Plan Name.
Beneficiary Member ID Number.
Whether the Beneficiary is a Subject.
Did the complainant contact the beneficiary? If Yes, is there
a Report of the Contact?
Subject Name.
Subject Tax Identification Number (TIN).
Does the Subject have Multiple TIN's? If Yes, provide.
Subject NPI.
Subject DEA Number.
Subject Medicare Provider Number.
Subject Business.
Subject Phone Number.
Subject Address.
Subject City.
Subject State.
Subject Zip.
Subject Business or Specialty Description.
Secondary Subject Name.
Secondary Subject Tax Identification Number (TIN)
Does the Secondary Subject have Multiple TIN's? If Yes,
provide.
Secondary Subject NPI.
Secondary Subject DEA Number.
Secondary Subject Medicare Provider Number.
Secondary Subject Business.
Secondary Subject Phone Number.
Secondary Subject Address.
Secondary Subject City.
Secondary Subject State.
Secondary Subject Zip.
Secondary Subject Business or Specialty Description.
Complaint Prior MEDIC Case Number.
Period of Review.
Complaint Potential Medicare Exposure.
Whether Medical Records are Available.
Whether Medical Records were Reviewed.
Whether the submission has been Referred to Law Enforcement.
Submission Accepted? If so, provide Date Accepted.
What Law Enforcement Agency(ies) has it been Referred to.
Whether HPMS Analytics and Investigations Collaboration
Environment for Fraud, Waste, and Abuse (AICE-FWA) was Used.
Whether the submission has indicated Patient Harm or Potential
Patient Harm.
Whether the submission has been Referred. If so, provide Date
Accepted.
What Agency was it Referred to.
Description of Allegations/Plan Sponsor Findings.

We noted that the requirement for reporting payment suspensions
pending investigations of credible allegations of fraud by pharmacies
under new Sec. 422.503(b)(4)(vi)(G)(4) would only apply to Medicare
Part C in the context of Medicare Advantage Prescription Drug Plans
(MA-PD plans). We stated our belief that this information is necessary
to enable CMS to fully and completely understand the identity of the
applicable party, the specific behavior involved, and the status of the
action. We solicited public comment on these requirements.
We received several comments on the ability to impose payment
suspensions on pharmacies and our responses to those comments follow.
Comment: A commenter supported CMS' implementation of the SUPPORT
Act language that a fraud hotline tip, without further evidence, is not
a credible fraud allegation for payment suspension purposes. However,
the commenter was concerned that CMS did not include what guidelines
should be taken into consideration for procedures and data collection.
Response: We appreciate the commenter's support. However, many plan
sponsors currently implement payment suspensions based on credible
allegations of fraud and other reasons that may be contractual in
nature. We believe that plan sponsors have established procedures and
data collection based on their existing internal policies and
procedures and as part of their fraud, waste and abuse oversight and
monitoring efforts. The data will be reported through a program
integrity portal that is discussed further later in this regulation.
Comment: Commenters requested that CMS further clarify the
definition of a payment suspension, such as what entities are subject
to payment suspensions, whether payment suspensions are applicable to
physicians, and the applicable standards and responsible parties for
making determinations.
Response: We believe the proposed regulation is clear in defining
that a Part D pharmacy payment suspension based on credible allegation
of fraud is applicable to Part D pharmacies. Additionally, we believe
the proposed regulation is clear in stating that Part D plan sponsors
are responsible for determining if a payment suspension should be
implemented. Part D plan sponsors currently impose payment suspensions
for other reasons that may be contractual in nature. Part D plan
sponsors are responsible for oversight of their contracted entities,
such as pharmacy benefit managers (PBMs) and pharmacies, and have
established policies and procedures in their contractual arrangements.
Comment: A commenter recommended that CMS consider a targeted
approach to payment suspensions, which would include pharmacy claim
adjudications suspensions that would allow non-problematic claims from
suspected pharmacies to be processed and paid. Another commenter
questioned if CMS will have a process to reverse or deny payments.
Response: Part D plan sponsors and MA-PD plans have the authority
to impose payment suspensions based on a credible allegation of fraud.
However, Part D plan sponsors and MA-PD plans also may consider a
targeted approach to payment suspensions pursuant to contractual
agreements. Part D plan sponsors and MA-PD plans are responsible for
oversight of their contracted entities, such as PBMs and pharmacies,
and have established policies and procedures in their contractual
arrangements.
Comment: A commenter opposed CMS' proposal to suspend payments to
fee-for-service (FFS) providers and suppliers pending a credible
allegation of fraud, given that patients and providers can be at risk
for an uncertain amount of time. The commenter also opposed the
definition for credible allegation of fraud based on the need to
establish clear guidance on how long a payment suspension will last and
the concern that LTC's will be financially liable.

[[Page 5911]]

Response: We appreciate this feedback; however, although we
proposed a modification to the reference to fraud hotline complains in
42 CFR 405.370, our proposal did not discuss payment suspensions for
fee-for-service providers generally. Instead, the scope of this rule is
limited to payment suspensions imposed on pharmacies by Part D plan
sponsors. Part D plan sponsors currently conduct pharmacy payment
suspensions based on credible allegations of fraud. This final rule is
requiring Part D plan sponsors to report to CMS any pharmacy payment
suspensions based on credible allegations of fraud through a website
portal. The length of a payment suspension may vary based on the
situation and the plan sponsors own business agreements.
Comment: We received a couple of comments regarding how the
reporting of payment suspensions may interfere or preempt state-level
requirements regarding payment to pharmacies.
Response: We have contractual agreements with the Part D plan
sponsors and do not oversee contractual relationships between a plan
sponsor, PBM and participating pharmacies. Part D Plan sponsors already
have the authority to implement payment suspensions for pharmacies
based on credible allegations of fraud. However, Section 2008 of the
SUPPORT Act requires Part D plan sponsors to report those payment
suspensions to the Secretary.
The requirement for Part D plan sponsors to report pharmacy payment
suspensions based on credible allegations of fraud does not replace
state law and this new federal requirement will not affect existing
state statutes and regulations. We believe addressing specific state
statutes and regulations are outside the scope of this regulation.
Comment: We received several comments expressing concerns with
ensuring pharmacies have due process rights, an appeals process and
advance notice prior to implementing a payment suspension. One
commenter opposed this proposed regulation because it lacks fundamental
due process protections for pharmacies. Another commenter noted that
pharmacies should not be subject to payment suspension without greater
certainty of fraud. Additionally, the commenter noted that pharmacies
should receive advance notice of potential allegations of fraud and
afforded an expeditious appeals process prior to any payment
suspension. Commenters also noted that payment suspensions should not
occur until there is legal evidence and also requested that CMS provide
guidance on ensuring that plan actions against pharmacies are fully
grounded with evidence and provides pharmacies the ability to quickly
address complaints and prevent suspension of payment.
Response: Section 2008 authorizes Part D sponsors and MA-PD plans
to suspend payments based on a credible allegation of fraud. Part D
plan sponsors and MA-PD plans may currently impose payment suspensions
for other reasons that may be contractual in nature. We have clarified
the definition for credible allegation of fraud, fraud hotline tip, and
substantiated and suspicious activities of fraud, waste and abuse. We
decline to accept the recommendation because Part D plan sponsors and
MA-PD plans are responsible for oversight of their contracted entities,
such as PBMs and pharmacies and have established policies and
procedures in their contractual arrangements.
We received a few comments on the data elements to be submitted by
plans and our responses follow.
Comment: A commenter recommended that CMS allow flexibility in
submitting data elements and allow Part D sponsors to enter ``blank''
fields if certain information is not available and not restrict the
number of users. Commenter also recommended that information provided
to Part D sponsors from the website portal be used for informational
purposes only. However, if action is required on behalf of the Part D
sponsors, then CMS should clearly specify.
Response: In response to the comment, we are clarifying that plan
sponsors will be provided reporting flexibility within the portal when
information is not available or not relevant to the referral being
reported. The comment also allowed us the opportunity to re-evaluate
the level of detail that we were requiring in the regulatory text for
the data reported. We are modifying the regulatory text to reflect
broad categories of information that will be collected rather than
individual data elements. The data categories, as applicable, include
referral information and actions taken by the plan sponsor on the
referral.
Examples of the types of data to be collected in these categories
include, but are not limited to, identifying information on the
complainant, beneficiary, and subject of the referral, description of
the referral (that is, services not rendered, prescriptions billed but
the beneficiary never received, and identity theft), and any actions
taken (that is, conducted an audit of the provider, referred the
provider to the IMEDIC or Law Enforcement, or removed a provider from
their network). The categories of data that we are making final in the
regulatory text will provide flexibility.
The commenter also inquired if action is required on behalf of the
Part D sponsors based on information provided from the website portal.
The quarterly reports we are sharing will assist plan sponsors with
their monitoring and oversight efforts. These reports themselves are
not a sufficient basis for a Medicare Part D plan sponsor to take
action without conducting its own supporting analysis of specific data.
We urge plan sponsors to confirm potential fraud waste and abuse
through a reliance upon their own established protocols. Any actions
taken as a result of the reports and the Sponsors follow-up activities
should be reported through the website portal. We also note, in
response to the commenter, that plan sponsors will also have the
ability to allow access to multiple users.
Comment: Commenters also requested that CMS clarify why the
required data elements list both the HICN and the MBI. Commenters also
requested clarification who should the reporting be submitted to and
the method that should be utilized.
Response: In response to the comment, we are clarifying that only
the MBI will be utilized, as part of the broad category of referral
information, to ensure that the beneficiary's information is captured
appropriately. Plan sponsors will be required to report information
through the program integrity portal in HPMS.
Based on the comments received and our responses we are modifying
the regulatory text regarding the data to be reported. The final
regulation text reflects the broad categories of data that CMS will
employ in the construction of the data that will be required for plans
to submit to the program integrity portal. In addition, the
applicability date for plan sponsor reporting will be for plan years
beginning on or after January 1, 2022 for reasons previously discussed
in this section.
(3) Timing of Plan Sponsor's reporting
We proposed in new Sec. Sec. 422.503(b)(4)(vi)(G)(6)(i) and
423.504(b)(4)(vi)(G)(6)(i) MA organizations and Part D plan sponsors
would be required to notify the Secretary, or its designee of a payment
suspension described in Sec. Sec. 422.503(b)(4)(vi)(G)(4)(i) and
423.504(b)(4)(vi)(G)(4)(i) 14 days prior to implementation of the
payment suspension. This timeframe will allow

[[Page 5912]]

us to provide our law enforcement partners sufficient notice of a
payment suspension to be implemented that may impact an ongoing
investigation into the subject. We proposed that Sec. Sec.
422.503(b)(4)(vi)(G)(6)(ii) and 423.504(b)(4)(vi)(G)(6)(ii) plans would
be required to submit the information described in Sec. Sec.
422.503(b)(4)(vi)(G)(4)(ii) and 423.504(b)(4)(vi)(G)(4)(ii) no later
than January 30, April 30, July 30, and October 30 of each year for the
preceding periods, respectively, of October 1 through December 31,
January 1 through March 31, April 1 through June 30, and July 1 through
September 30. We proposed that plans would be required to submit
information beginning in 2021. For the first reporting period (January
15, 2021), the reporting will reflect the data gathered and analyzed
for the previous quarter in the calendar year (October 1-December 31).
We believe that quarterly updates would be frequent enough to ensure
that the portal contains accurate and recent data while giving plans
sufficient time to furnish questioned information. We solicited public
comment on the timing of reporting by plans
We received several comments on the timing of reporting by plans
and our responses to those comments follow.
Comment: We received numerous comments regarding the 14-day advance
notice to CMS for payment suspensions. Most commenters are concerned
that this gives the bad actors too much time to continue the fraudulent
activity which could result in millions of dollars lost, prevent
overutilization of services and more importantly, beneficiary harm. A
commenter suggested a 72-hour wait period instead of 14 days. Another
commenter recommended allowing plans 72 hours to notify CMS after the
suspension rather than 14 days prior to the suspension. One commenter
recommended immediate payment suspension of pharmacies and then provide
referral within 14 days to CMS. Another commenter mentioned that
allowing plans to submit payment suspension immediately and provide an
update monthly will reduce burden for plans sponsors and PBMs. Another
commenter recommended CMS provide a list of providers for plans to
review prior to initiation of a payment suspension which would require
plans to notify the agency within 14 days prior to implementing.
Additionally, if providers are not included in the notification plans
would notify the agency within 5-10 days of the payment suspension
which would align with many Medicaid state guidelines. Commenters also
expressed confusion regarding whether plans were being prohibited from
suspending immediately. Another commenter recommended removal of a
suspension if it is determined that there is no good cause.
Response: Based on comments received requesting a reduced timeframe
for advance notice of imposing payment suspensions and balancing that
with concerns raised by our federal law enforcement partners to ensure
deconfliction, we will finalize the provision with a 7-day advance
notice requirement with a limited exception. The advance notice
provides collaboration and necessary deconfliction with law enforcement
but also allows an exception for instances where more immediate payment
suspension is warranted. For example, the exception would allow for
immediate suspension when a plan has concerns regarding a credible
allegation of fraud which may involve potential patient harm.
Comment: Commenters also recommended that CMS allow exceptions from
the proposed quarterly reporting when disclosure may jeopardize an
ongoing investigation. Commenters also requested that CMS extend
reporting to 30 days of the close of the quarter versus the proposed 15
days to allow data gathering and quality assurance before the report
submission.
Response: Based on the comments received we will modify the
proposed provision to extend the reporting timeframe for plan sponsors
to 30 days after the close of the quarter. We will not modify to allow
exceptions to the reporting requirement. Based on the comments received
and our responses in this section we are finalizing the following two
policies with modification.
We will require a 7-day advance notice with exemptions in
certain cases, such as potential for beneficiary harm.
We will adjust the timeline for submission to 30 days
after the close of the quarter. The applicability date for plan sponsor
reporting has been postponed until January 1, 2022.
(4) Requirements and Timing of CMS' Reports
As mentioned earlier in this final rule, section 6063(a) of the
SUPPORT Act requires the Secretary make available to the plans, not
less frequently than quarterly, information on fraud, waste, and abuse
schemes and trends in identifying suspicious activity. The reports must
include administrative actions, pertinent information related to opioid
overprescribing, and other data determined appropriate by the Secretary
in consultation with stakeholders. Moreover, the information must be
anonymized data submitted by plans without identifying the source of
such information.
Section 6063 of the SUPPORT Act requires the Secretary provide
reports no less frequently than quarterly. Consistent with this
requirement, we proposed in the new Sec. Sec.
422.503(b)(4)(vi)(G)(7)(i) through (iv) and 423.504(b)(4)(vi)(G)(7)(i)
through (iv) that we will provide MA organizations and Part D plan
sponsors with data report(s) or links to data no later than April 15,
July 15, October 15, and January 15 of each year based on the
information in the portal, respectively, as of the preceding October 1
through December 31, January 1 through March 31, April 1 through June
30, and July 1 through September 30. We proposed to provide this
information beginning in 2021. For the first quarterly report (April
15, 2021), the report will reflect the data gathered and analyzed for
the previous quarter submitted by the plan sponsors on January 15,
2021. Similar to the timing requirements related to new Sec. Sec.
422.503(b)(4)(vi)(G)(6)(ii) and 423.504(b)(4)(vi)(G)(6)(ii), we believe
that quarterly updates would strike a suitable balance between the need
for frequently updated information while giving us time to review and
analyze this data in preparation for complying with new Sec. Sec.
422.503(b)(4)(vi)(G)(4) through (7) and 423.504(b)(4)(vi)(G)(4) through
(7). We solicited public comment on the timing of CMS dissemination of
reports to plans.
We received no comments on this proposal and therefore are
finalizing this provision without modification; however, the
applicability date for the quarterly reports will be for plan years
beginning on or after January 1, 2022 for reasons previously discussed.

IV. Enhancements to the Part C and D Programs

A. Out-of-Network Telehealth at Plan Option

On April 16, 2019, CMS finalized requirements for MA plans offering
additional telehealth benefits (ATBs).\28\ Section 50323 of the BBA of
2018 created a new subsection (m) of section 1852 of the Act,
authorizing MA plans to offer ATBs to enrollees starting in plan year
2020 and treat ATBs as basic benefits. In the April 2019 final rule, we
finalized a new regulation at Sec. 422.135

[[Page 5913]]

to implement that authority. As part of the parameters for the
provision of ATBs, we finalized a requirement, at Sec. 422.135(d),
that MA plans furnishing ATBs only do so using contracted providers,
and Sec. 422.135 specifically provides that benefits furnished by a
non-contracted provider through electronic exchange (defined in the
regulation) may only be covered by an MA plan as a supplemental
benefit.
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\28\ https://www.federalregister.gov/documents/2019/04/16/2019-06822/medicare-and-medicaid-programs-policy-and-technical-changes-to-the-medicare-advantage-medicare.
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In the February 2020 proposed rule, we solicited comment on whether
Sec. 422.135(d) should be revised to allow all MA plan types,
including PPOs, to offer ATBs through non-contracted providers and
treat them as basic benefits under MA.
We received many responses to this request for comment. We thank
the commenters for the time and effort that went into developing these
detailed responses and feedback for CMS. We will carefully review and
consider all input received from stakeholders as we determine whether
to revise Sec. 422.135(d) to allow MA plans to offer ATBs through non-
contracted providers. At this time, we are not revising any
requirements at Sec. 422.135, and any revisions regarding ATBs will be
proposed through future notice and comment rulemaking.

B. Supplemental Benefits, Including Reductions in Cost Sharing (Sec.
422.102)

In the Medicare Program; Establishment of the Medicare Advantage
Program Final Rule, published in the Federal Register on January 28,
2005 (hereinafter referred to as the January 2005 MA final rule) (70 FR
4588, 4617), CMS established that an MA plan could reduce cost sharing
below the actuarial value specified in section 1854(e)(4)(B) of the Act
only as a mandatory supplemental benefit and codified that policy at
Sec. 422.102(a)(4). In order to clarify the scope of section
1854(e)(4)(A) of the Act, we proposed in the February 2020 proposed
rule to amend Sec. 422.102(a)(4) and add new rules at Sec.
422.102(a)(5) and (a)(6)(i) and (ii) to further clarify the different
circumstances in which an MA plan may reduce cost sharing for covered
items and services as a mandatory supplemental benefit; we also
proposed to specifically authorize certain flexibility in the
mechanisms by which an MA plan may make reductions in cost sharing
available.
Currently, reductions in cost sharing are an allowable supplemental
benefit in the MA program and may include:
Reductions in the cost-sharing for Parts A and B benefits
compared to the actuarially equivalent package of Parts A and B
benefits; and
Reductions in cost-sharing for Part C supplemental
benefits, for example provided for specific services for enrollees that
meet specific medical criteria, such that similarly situated enrollees
(that is, all enrollees who meet the identified criteria) are treated
the same and enjoy the same access to these targeted benefits.
We proposed to codify regulation text to clarify that reductions in
cost sharing for both (1) Part A and B benefits and (2) covered items
and services that are not basic benefits are allowable supplemental
benefits but may only be offered as mandatory supplemental benefits at
Sec. 422.102(a)(4) and (5). We proposed to revise the current language
at Sec. 422.102(a)(4) by inserting the phrase ``for Part A and B
benefits'' after the cite to section 1854(e)(4)(A) of the Act, and to
add a new paragraph (a)(5) to specify that reduced cost sharing may be
applied to items and services that are not basic benefits. Under our
proposal, the reductions in cost sharing for both categories may only
be provided as a mandatory supplemental benefit.
We explained in the proposed rule that MA plans may currently
choose to structure mandatory supplemental benefits that are in the
form of cost sharing reductions in a few ways. For example, the current
rules permit MA plans to offer, as a supplemental benefit, a manual
reimbursement process or use of a debit card to reduce cost sharing
towards plan covered services or to provide coverage of 100 percent of
the cost of covered items. MA plans may also decide to offer, as a
supplemental benefit, a reduction in enrollee's costs through a maximum
allowance. An MA plan may establish a dollar amount of coverage that
may be used to reduce cost sharing towards plan covered services and
subject to a plan-established annual limit; enrollees can ``spend'' the
allowance on cost sharing for whichever covered benefits the enrollee
chooses. In both scenarios, MA plans are expected to administer the
benefit in a manner that ensures the debit card and/or allowance can
only be used towards plan-covered services. We proposed to codify these
flexibilities in how reductions in cost sharing are offered at Sec.
422.102(a)(6)(i) and (ii). We clarified in the proposed rule that these
flexibilities are only for Part C supplemental benefits, as defined in
Sec. 422.100(c) and discussed in section VI.F. of the proposed rule
(and section V.E. of this final rule) and that cost sharing for Part D
drugs is not included in these flexibilities.
As proposed, the flexibilities identified would be permitted only
as a mandatory supplemental benefit, which is why we proposed to codify
them in Sec. 422.102(a). Further, we explained that the flexibility
was only for items and services that are identified in the MA plan's
bid and marketing and communication materials as covered benefits and
proposed the regulation text using the terms ``covered benefits'' and
``coverage of items and services'' to make that clear. Under our
proposal and consistent with current guidance in Chapter 4 of the
Medicare Managed Care Manual, Sec. 40.3 (allowing debit cards to be
used for plan-covered over-the-counter (OTC) items under the conditions
that the card is exclusively linked to the OTC covered items and has a
dollar limit tied to the benefit maximum), MA plans would not be able
to offer use of a debit card for purchase of items or services that are
not covered. We stated that a debit card could be utilized as a
reimbursement mechanism or as a means for the MA plan to make its
payment for an item or service; in either case, the use of the card
would have to be tied to coverage of the benefit. Like all other MA
coverage, the flexibilities we proposed would be limited to the
specific plan year and we clarified that this authority to use debit
cards or a basket of benefits up to a set value from which an enrollee
can choose cannot be rolled over into subsequent years. We proposed
specific text in paragraph (a)(6) limiting these forms of supplemental
benefits to the specific plan year to emphasize that rolling over
benefits to the following plan year is not permitted.
We explained in the proposed rule that for both benefit options, MA
plans would have the flexibility to establish a maximum plan benefit
coverage amount for supplemental benefits or a combined amount that
includes multiple supplemental benefits, such as a combined maximum
plan benefit coverage amount that applies to dental and vision
benefits. We reiterated that plans may not offer reimbursement,
including through use of a debit card, to pay for items and services
that are not covered by the plan and that reductions in cost sharing as
a supplemental benefit are subject to an annual limit that the enrollee
can ``spend'' on cost sharing for whichever covered benefits the
enrollee chooses. Under our proposal, MA plans could use a receipt-
based reimbursement system or provide the dollar amount on a debit card
(linked to an appropriate merchant and item/service codes) so that the
enrollee may pay the cost sharing at the point of service. Our proposal
was to codify and clarify existing guidance and practices and we stated
that it was not expected

[[Page 5914]]

to have additional impact above current operating expenses. We also
stated that the proposal would not impose any new collection of
information requirements.
We thank commenters for helping inform CMS' Reductions in Cost
Sharing policy. We received 11 comments on this proposal; we summarize
them and our responses follow:
Comment: Many comments were supportive of this proposal.
Response: We thank commenters for their feedback.
Comment: A commenter suggested CMS confirm that plans may implement
allowances as a multi-year benefit.
Response: We cannot confirm this and it would not be permitted. As
proposed and finalized, the changes adopted here are for benefits
offered in each plan year and cannot be rolled over or spread across
multiple plan years. This is necessary for a number of reasons. CMS
only has one-year contracts with MAOs; as such, there is no guarantee
that a particular plan will continue into the following year.
Additionally, there is also no guarantee an enrollee will remain in a
plan from year to year as an enrollee has the option to change plans
each year. Further, and more importantly, bids must be submitted by MA
organizations each year, showing the revenue requirements for
furnishing benefits for the contract year; bids are compared to
benchmarks that are set each year and used to determine the amount of
beneficiary rebates under Sec. 422.266. Under Sec. 422.266, these
rebates may be used to pay the premium for the supplemental benefits
described in Sec. 422.102(a)(6) or to buy down Part B or Part D
premiums; use of the beneficiary rebate for payment of a premium for
supplemental benefits in a different plan year is not permitted and
would be inconsistent with the statutory requirement in section
1854(b)(1)(C) of the Act that MA plans provide the rebate to enrollees
for the applicable year. It is not consistent with our regulations on
bidding (Sec. Sec. 422.250 through 422.266) for an MA plan to have a
multi-year benefit.
Comment: A commenter suggested CMS allow plans to offer reductions
in cost sharing for items and services that are not covered. This
commenter also suggested CMS not subject reductions to cost sharing or
allowances to an annual limit.
Response: In order to have a reduction in cost sharing, there has
to be a covered benefit. We allow plans to have a debit card to cover
cost sharing but they must identify the benefits as covered either in
the plan benefit package (PBP) category or notes in the bid. Consistent
with this, all the items and services for which payment may be made (in
the form of a reduction in cost sharing that would otherwise apply for
the item or service or in the form of the MA plan's payment of its
share of the amount owed to the provider) must meet the requirements to
be a supplemental benefit. These requirements are discussed in section
V.C. of this final rule regarding our proposal to amend Sec.
422.100(c)(2) to codify the requirements for supplemental benefits.
Comment: A commenter requested CMS provide additional guidance on
how plans can make sure that supplemental benefits furnished in the
form of an allowance meet the ``primarily health related'' requirement
as enrollees typically have discretion in how they use these allowance-
based dollars.
Response: The MA plan must ensure that its coverage, whether
through reimbursement or direct payment, of items and services is
consistent with the rules for supplemental benefits. The flexibility
provided in this allowance benefit to permit the enrollee to choose
among covered benefits does not change the rules for what may be
covered. For an MA plan that uses a receipt-based reimbursement method
of administering this allowance benefit, the MA plan must ensure that
the receipts support a determination that reimbursement is being
provided only for items and services that are covered supplemental
benefits. We understand that debit and stored value cards can be
programmed to permit their use only for purchase of specific items and
services and at certain locations, such as cost sharing payments at a
physician's office or payment for primarily health-related items such
as bandages at a pharmacy. If an MA organization is unable to limit use
of a debit or stored value card to the appropriate providers and
covered benefits (such as through programming limits to certain
merchant codes or inventory information approval system codes) to
ensure compliance with Sec. Sec. 422.100(c)(2) and 422.102(a), use of
a debit or stored value card as a means of reimbursing or providing
reductions in cost sharing may not be appropriate by that MA
organization. We note that the Internal Revenue Service has provided
guidance on how debit and stored value cards are permitted in
connection with health savings accounts and flexible spending accounts
when the cards are capable of being limited to qualified expenses; see,
for example: Revenue Ruling 2003-43, 2003-21 I.R.B. 935, available at
IRS.gov/pub/irs-drop/rr-03-43.pdf. We also clarify here that use of a
stored value or debit card is not the covered supplemental benefit;
such cards are only a means by which the MA plan makes direct payment
to the provider for or reimbursement to the enrollee for the covered
items and services.
The covered items and services that are paid or reimbursed this way
must meet the requirements and standards to be supplemental benefits
(or to be basic benefits in the case of reducing the cost sharing for a
Part A or B covered benefit). Related to this, we reiterate that that
payment of or reimbursement of cost sharing for Part D benefits by an
MA plan is not a permissible supplemental benefit. To clarify this, we
are finalizing Sec. 422.102(a)(5) with additional text that Part D
cost sharing may not be reduced or paid as a Part C supplemental
benefit. MA plans may, under Sec. 422.266, use rebates to pay the
premiums for Part D benefits, including the premiums for supplemental
drug coverage described at Sec. 423.104(f)(1)(ii). For more
information on the types of items and services that may be covered by
an MA plan as a supplemental benefit, we direct readers to the April
27, 2018 memo titled ``Reinterpretation of ``Primarily Health Related''
for Supplemental Benefits'' and section V.C of this rule, which
codifies those requirements for details.
Comment: A commenter expressed concern about potential limits on
these benefits and the idea that financial need must be proven in order
to allow access.
Response: Reduced cost sharing as a supplemental benefit must
follow the requirements concerning supplemental benefits, which include
uniformity requirements Sec. 422.100(d) discussed in section V.C of
this final rule. That is, if a plan chooses to offer reduced cost
sharing as a supplemental benefit, it must be offered uniformly to plan
enrollees. MA plans may not offer supplemental benefits based on
financial need. Because of the unique nature of Special Supplemental
Benefits for the Chronically Ill (SSBCI) and the statutory authority
for those benefits to not be primarily health related, the recently
adopted rule at Sec. 422.102(f)(2)(iii) permits an MA plan to consider
social determinants of health as a factor to help identify chronically
ill enrollees whose health could be improved or maintained with SSBCI.
(85 FR 33801, 33804) However, MA plans may not use social determinants,
such as financial need, as the sole basis for determining eligibility
for SSBCI.
Comment: A commenter mentioned that while stated in the preamble,
CMS did not include specific regulation text stating that reduced cost
sharing for basic benefits, specifically as it relates to

[[Page 5915]]

the value of Part A and B benefits, is permitted.
Response: In the proposed rule, we included amendatory instructions
to clarify that reductions in cost sharing for Part A and B benefits
may only be offered as mandatory supplemental benefits at Sec.
422.102(a)(4) and (5). Specifically, CMS proposed to revise the current
language at Sec. 422.102(a)(4) by inserting the phrase ``for Part A
and B benefits''. (85 FR 9213) Thus, specific regulation text
clarifying that reduced cost sharing for basic benefits, specifically
for Part A and B benefits, is permitted as a supplemental benefit was
included in the proposed language. We are finalizing this language.
After consideration of the comments received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the changes to Sec. 422.102(a)(4) and (a)(6)(i) and (ii) as
proposed and are adding language to Sec. 422.102(a)(5) further
clarifying that cost sharing for Part D drugs is not included in these
flexibilities.

C. Referral/Finder's Fees (Sec. Sec. 422.2274 and 423.2274)

In the Medicare Program; Contract Year 2015 Policy and Technical
Changes to the Medicare Advantage and the Medicare Prescription Drug
Benefit Programs Final Rule, published in the Federal Register on May
23, 2014 (79 FR 29960) (the May 2014 final rule), CMS codified rules in
Sec. Sec. 422.2274(h) and 423.2274(h) for MA organizations and Part D
sponsors to pay agents and brokers for referrals of beneficiaries for
enrollment in MA and Part D plans, also known as finder's fees.
Currently, under Sec. Sec. 422.2274(h) and 423.2274(h), CMS sets a
referral fee limit that reflects an amount CMS determined is reasonably
expected to provide financial incentive for an agent or broker to refer
a beneficiary for an enrollment into a plan that is not the most
appropriate to meet his or her needs. This is consistent with sections
1851(j)(2) and 1860D-1(l) of the Act, which direct that the Secretary
set limits on compensation to ensure that the use of compensation
creates incentives for agents and brokers to enroll individuals in the
Medicare Advantage plan that is intended to best meet their health care
needs. In an HPMS memo dated May 29, 2020, CMS limited referral fees to
$100 for MA plans and $25 for PDP plans. Since referral fees are part
of the definition of the term compensation in Sec. Sec. 422.2274 and
423.2274, organizations may not pay independent agents more than the
regulatory limits; CMS regulates referral fees as part of CMS's
regulations on the compensation paid by the plan to an agent/broker for
an enrollment, even if referral fees are paid separately from
commissions or compensation for completed enrollments. CMS explained in
the February 2020 proposed rule that because referral fees are already
incorporated into compensation, limiting the amount of a referral fee
does not impact the statutory requirement that CMS guidelines for
compensation to an agent or broke incentivize the agent or broker
enrolling a beneficiary in the plan that best meets their health care
needs. CMS also explained in the proposed rule that for captive and
employed agents and brokers, who only sell coverage for one
organization, referral fees would not have any impact on how much the
captive or employed agent is himself or herself paid.
Therefore, CMS proposed to remove Sec. Sec. 422.2274(h) and
423.2274(h) and thereby eliminate the specific limitation on the amount
a referral or finder fee paid by a plan to an agent or broker. CMS
explained generally how the current regulation treats compensation as
background for our proposal. As currently codified at Sec. Sec.
422.2274(b) and 423.2274(b), compensation for initial enrollments may
not exceed the fair market value and compensation for renewal
enrollments may not exceed 50 percent of the fair market value.
Compensation is defined in the same current regulation, at paragraph
(a), as all monetary or non-monetary remuneration of any kind relating
to the sale or renewal of a policy including, but not limited to,
commissions, bonuses, gifts, prizes or awards, and referral or finder
fees. By eliminating the individual referral fee limit, our proposal
would restructure the regulation to only provide a limit on referral
fees within the overall limit of Fair Market Value (FMV) that applies
to all compensation. CMS proposed to clarify that MA organizations and
Part D sponsors have the ability to compensate agents for referrals,
provided that the total dollar amount does not exceed FMV. CMS
explained that the primary value for this proposed additional
flexibility would be in connection with independent agents, as CMS
believes that for captive and employed agents, referral/finder fees do
not play a factor in making sure the agent enrolls the beneficiary in
the best plan, since captive and employed agents only sell for one
organization. CMS therefore proposed to eliminate the current specific
limit on finder or referral fees that is codified at paragraph (h). CMS
also explained that because the definition of compensation already
includes referral or finder fees (which CMS did not propose to change),
the result of this specific proposal would be an overall limit on
compensation for initial and renewal enrollments that would include
finder or referral fees. In section VI.H. of the proposed rule, CMS
proposed additional changes for Sec. Sec. 422.2274(g) and 423.2274(g)
regarding agent and broker compensation for Part C and Part D
enrollments; and under those proposals, the definition of compensation
would continue to include finder or referral fees. As a result, the
limits on overall compensation continued to include finder or referral
fees under the proposed rule. CMS solicited comment on whether removing
the limit on referral/finder's fees would generate concerns such as
those discussed in the 2010 Call Letter for MA organizations issued
March 30, 2009; CMS's October 19, 2011, memo entitled ``Excessive
Referral Fees for Enrollments;'' or the May 2014 final rule that
codified the referral/finder's fees limits in regulation. As
background, these concerns included marketing practices designed to
circumvent compensation limitations.
The comments CMS received on this specific proposal regarding
referral/finders' fees and our responses to them follow.
Comment: Several commenters stated that referrals and enrollments
are different activities and therefore, CMS should consider payment for
these activities separately. The commenters pointed out that referrals
are used to generate sales leads, that not all leads result in an
enrollment, and when a lead does result in enrollment, referral and
finder's fees are typically not paid to the individual completing the
sale. Some commenters pointed out that referral fees are not always
provided to individuals as part of the compensation they are paid for
an enrollment. The commenters suggested referral fees be removed from
compensation and that a separate, reasonable limit be placed on
referral fees. A commenter pointed out that the removal of the limit on
referral fees would result in larger, well-financed health plans paying
brokers more for referrals and that this would cause smaller health
plans to lose out on broker referrals.
Response: CMS agrees with the commenters that referral fees and
compensation are different types of payments and that plans distinguish
between referral fees for sales leads and compensation to agents and
brokers for enrollments. We understand that referral fees are a
distinct part of market practices which we have determined, based on
comments, should not be

[[Page 5916]]

modified. We also realize that our proposal to remove specific limits
on referral fees may put plans that can pay higher referral fees at an
advantage over other plans. Based on the issues identified through
comments we are maintaining the status quo. As such, CMS is finalizing
a separate limit on referral fees in Sec. Sec. 422.2274(f) and
423.2274(f) and is codifying the dollar figures currently used as the
limits for referral fees. The current sub-regulatory policy has in
place a $25 referral fee limit for PDPs and a $100 referral fee limit
for MA-PDs. The proposal was to remove the current limits since
referral fees are part of compensation paid to an agent for an
enrollment. However, commenters pointed out that referral fees are not
always provided to individuals as part of the compensation they are
paid for an enrollment. Therefore, we are finalizing a specific dollar
limit on fees paid for a single referral, recommendation, provision (as
in providing a lead), or other means of referring a beneficiary to an
agent, broker or other entity for potential enrollment in a plan
instead of finalizing our proposal.
Section 1851(j)(2)(D) of the Social Security Act requires CMS to
establish limitations to ensure that the use of compensation creates
incentives for the agent/broker to enroll a beneficiary in a plan that
best meets their needs. CMS does not require referral fees to be
contingent on a beneficiary being enrolled in a plan because referral
fees are essentially payments for sales leads. Plans may determine the
circumstances as to when they pay referral fees (for example, based on
whether the lead chooses to enroll in the plan), provided such payment
is in accordance with the requirements in this final rule. Therefore,
referral fees are a different type of payment than the payments that we
regulate as compensation to an agent or broker for enrollment of a
beneficiary in a plan. Based on this, CMS is finalizing changes to the
definition of the term ``compensation'' (codified in Sec. Sec.
422.2274(a) and 423.2274(a)) to remove referral or finder fees from the
list of what compensation includes. As discussed in more detail in
section V.E of this final rule, compensation as defined in paragraph
(a) is regulated as payment that is based on enrollment in a plan. CMS
is finalizing a new Sec. Sec. 422.2274(f) and 423.2274(f) to provide
that payments may be made to individuals for the referral,
recommendation, provision, or other means of referring beneficiaries to
an agent/broker or other entity for potential enrollment into a plan
and that such payments may not exceed $100 for a referral into an MA or
MA-PD plan and $25 for a referral into a standalone PDP.
Comment: A commenter requested more transparency into payment of
both referral fees and renewal fees. The commenter also suggested that
CMS eliminate the renewal compensation for agents, stating that 98
percent of beneficiaries remain in the same plan or make a plan change
to a ``like'' plan (that is, a plan that is similar enough to the
previous plan that it does not result in a change of the renewal
payment status to the agent/broker). The commenter stated that the
renewal compensation created an un-level playing field between
community-based non-profit plans and national competitors.
Response: We believe that the commenter may be conflating referral
fees and renewal compensation. Referral fees are paid by plans for
sales leads while renewal compensation is paid by a plan to an agent or
broker for enrollments. The dollar amount of the limit on referral fees
under the current regulation was set by CMS in subregulatory guidance,
applying the regulatory standard that referral fees not exceed an
amount that could be reasonably expected to provide a financial
incentive to enroll a beneficiary in a plan that is not appropriate to
the beneficiary's needs. Here, we are finalizing a specific dollar
amount as the limit on referral fees: $100 for a referral into an MA or
MA-PD plan and $25 for a referral into a PDP plan. Plans may pay an
amount per referral that is less than this limit but must not pay more
than this limit. By establishing a specific dollar limit for referral
fees in regulation, CMS is creating a level playing field for all plans
who pay referral fees according to this policy. CMS is not including
any type of increase to the referral fees since referrals do not
require the same type of effort or have the same requirements that are
associated with compensation.
The limit on renewal compensation is 50 percent of the fair market
value (FMV) set for initial enrollment year compensation, as provided
in Sec. Sec. 422.2274(b)(ii) and 423.2274(b)(ii) of the current
regulations and in Sec. Sec. 422.2274(d)(3) and 423.2274(d)(3) of this
final rule. As defined in Sec. Sec. 422.2274(a) and 423.2274(a) in
this final rule, FMV is calculated each year by increasing the prior
year's FMV dollar amount by the MA Growth Percentage for aged and
disabled beneficiaries, which is published for each year in the rate
announcement issued pursuant to Sec. 422.312. This provision permits a
change each year in compensation to agents and brokers that aligns with
the change in the growth of per capita costs. Agents provide valuable
assistance to beneficiaries whether the beneficiary is enrolling into a
plan for the first time or staying in their existing plan. Many
beneficiaries depend on their agents to assist them in reviewing their
choices each year and helping them make a determination on whether to
remain in their existing plan or to move into a new plan. Renewal
compensation provides an incentive to provide such assistance to
enrollees and we believe such compensation is appropriate to limit
under our statutory responsibility to regulate compensation for agents
and brokers. In addition, permitting renewal compensation avoids
providing an inadvertent and unintended incentive for agents and
brokers to churn beneficiaries through new enrollments into different
plans each year in order to generate stable income.
After consideration of the comments and for the reasons outlined in
the proposed rule, we are finalizing the definition of ``compensation''
(Sec. Sec. 422.2274(a) and 423.2274(a)) without including referral and
finder's fees and are finalizing a new paragraph (f) in Sec. Sec.
422.2274 and 423.2274 to impose specific limits on the payment amount
for referral and finder's fees for MA and Part D enrollments.

D. Medicare Advantage (MA) and Part D Prescription Drug Program Quality
Rating System (Sec. Sec. 422.162, 422.164, 422.166, 422.252, 423.182,
423.184, and 423.186)

1. Introduction
In the April 2018 final rule, CMS codified at Sec. Sec. 422.160,
422.162, 422.164, and 422.166 (83 FR 16725 through 83 FR 16731) and
Sec. Sec. 423.180, 423.182, 423.184, and 423.186 (83 FR 16743 through
83 FR 16749) the methodology for the Star Ratings system for the MA and
Part D programs, respectively. This was part of the Administration's
effort to increase transparency and give advance notice regarding
enhancements to the Part C and D Star Ratings program. In the April
2019 final rule, CMS amended Sec. Sec. 422.166(a)(2)(i) and
423.186(a)(2)(i) to update the methodology for calculating cut points
for non-Consumer Assessment of Healthcare Providers and Systems (non-
CAHPS) measures by adding mean resampling and guardrails, codified a
policy to adjust Star Ratings for disasters, and finalized some measure
updates. In the June 2020 final rule, CMS finalized an increase in the
weight of patient experience/complaints and

[[Page 5917]]

access measures from 2 to 4 for the 2023 Star Ratings. To further
increase the predictability and stability of the Star Ratings system,
we also finalized our proposal to directly remove outliers through
Tukey outlier deletion before applying the clustering methodology to
calculate the cut points, but we delayed the application of Tukey
outlier deletion until the 2022 measurement year which coincides with
the 2024 Star Ratings. We also finalized the removal of the Rheumatoid
Arthritis Management measure and updated the Part D Statin Use in
Persons with Diabetes measure weighting category for the 2021
measurement year and the 2023 Star Ratings.
In the Medicare and Medicaid Programs; Policy and Regulatory
Revisions in Response to the COVID-19 Public Health Emergency Interim
Final Rule placed on display at the Office of the Federal Register
website on March 31, 2020 (hereinafter referred to as the March 31st
COVID-19 IFC), CMS adopted a series of changes to the 2021 and 2022
Star Ratings to accommodate the disruption to data collection posed by
the COVID-19 pandemic. The changes adopted in the March 31st COVID-19
IFC addressed the need of health and drug plans and their providers to
adapt their current care practices in light of the public health
emergency (PHE) for COVID-19 and the need to care for the most
vulnerable patients, such as the elderly and those with chronic health
conditions. In addition to needing to address data collections
scheduled for 2020 during the initial part of the PHE, we believe that
there will be changes in measure-level scores because of increased
healthcare utilization due to COVID-19, reduced or delayed non-COVID-19
care due to advice to patients to delay routine and/or elective care,
and changes in non-COVID-19 inpatient utilization. We realize that this
will impact the data collected during the 2020 measurement year which
will impact the 2022 Part C and D Star Ratings. Thus, as part of the
March 31st COVID-19 IFC, we made some adjustments to account for the
potential decreases in measure-level scores so health and drug plans
can have some degree of certainty knowing how the Star Ratings will be
adjusted and can continue their focus on patients who are most in need
right now.
Specifically, the March 31st COVID-19 IFC:
Eliminates the requirement to collect and submit
Healthcare Effectiveness Data and Information Set (HEDIS) and Medicare
Consumer Assessment of Healthcare Providers and Systems (CAHPS) data
otherwise collected in 2020 and replaces the 2021 Star Ratings measures
calculated based on those HEDIS and CAHPS data collections with earlier
values from the 2020 Star Ratings (which are not affected by the PHE
for COVID-19);
Establishes how we would calculate or assign Star Ratings
for 2021 in the event that CMS's functions had become focused on only
continued performance of essential Agency functions and the Agency and/
or its contractors did not have the ability to calculate the 2021 Star
Ratings;
Modifies the current rules for the 2021 Star Ratings to
replace any measure that had a systemic data quality issue for all
plans due to the COVID-19 outbreak with the measure-level Star Ratings
and scores from the 2020 Star Ratings;
Replaces the measures calculated based on HOS data
collections with earlier values that are not affected by the public
health threats posed by COVID-19 for the 2022 Star Ratings in the event
that we were unable to complete Health Outcomes Survey (HOS) data
collection in 2020 (for the 2022 Star Ratings) due to the PHE for
COVID-19;
Removes guardrails (i.e., measure-specific caps on cut
point changes from one year to the next) for the 2022 Star Ratings by
delaying their application to the 2023 Star Ratings;
Expands the existing hold harmless provision for the Part
C and D Improvement measures to include all contracts for the 2022 Star
Ratings; and
Revises the definition of ``new MA plan'' so that for
purposes of 2022 QBPs based on 2021 Star Ratings only, new MA plan
means an MA contract offered by a parent organization that has not had
another MA contract in the previous 4 years, in order to address how
the 2021 Star Ratings are based in part on data for the 2018
performance period.
Please see the March 31st COVID-19 IFC for further information on
these changes for the 2021 and 2022 Star Ratings. In addition, the
Medicare and Medicaid Programs, Clinical Laboratory Improvement
Amendments (CLIA), and Patient Protection and Affordable Care Act;
Additional Policy and Regulatory Revisions in Response to the COVID-19
Public Health Emergency Interim Final Rule (CMS-3401-IFC) which
appeared in the Federal Register on September 2, 2020 (hereinafter
referred to as the September 2nd IFC), modifies application of the
extreme and uncontrollable circumstances policy for the calculation of
the 2022 Part C and D Star Ratings to address the PHE for COVID-19 to:
(1) Remove the 60 percent exclusion rule for cut point calculations for
non-CAHPS measures; and (2) remove the 60 percent exclusion rule for
the determination of the performance summary and variance thresholds
for the Reward Factor. These changes were made by amending the
regulations at Sec. Sec. 422.166(i)(11) and 423.186(i)(9).
In the February 2020 proposed rule, in addition to the policies
addressed in the June 2020 final rule, we proposed to implement
substantive updates to the specifications of the Health Outcomes Survey
(HOS) outcome measures, add two new Part C measures to the Star Ratings
program, clarify the rules around consolidations when data are missing
due to data integrity concerns, and add several technical
clarifications. We also proposed to codify additional existing rules
for calculating MA Quality Bonus Payment (QBP) ratings. We proposed
these changes to apply to the 2021 measurement period and the 2023 Star
Ratings, but as discussed in this final rule, we are finalizing these
policies from the proposed rule (that is, data would be collected and
performance measured) for the 2022 measurement period and the 2024 Star
Ratings.
CMS appreciates the feedback we received on our proposals. In the
sections that follow, which are arranged by topic area, we summarize
the proposal and comments we received on each proposal and provide our
responses.
2. Definitions (Sec. 422.252)
We proposed to amend the definition at Sec. 422.252 for new MA
plans by clarifying how we apply the definition. Under our proposed
changes, New MA plan would mean a plan that: (1) Is offered under a new
MA contract; and (2) is offered under an MA contract that is held by a
parent organization defined at Sec. 422.2 that has not had an MA
contract in the prior 3 years. In addition, we proposed to add text to
the definition to explicitly explain that the parent organization is
identified as of April of the calendar year before the payment year to
which the final QBP rating applies, and contracts associated with that
parent organization are also evaluated using contracts in existence as
of April of the 3 calendar years before the payment year to which the
final QBP rating applies.
Under our current policy, we identify the parent organization for
each MA contract in April of each year and then whether any MA
contracts have been held by that parent organization in the immediately
preceding 3 years to determine if the parent organization meets the 3-
year standard. For example,

[[Page 5918]]

if a parent organization is listed for an MA contract in April 2019,
and that parent organization does not have any other MA contracts at
any point during April 2017-April 2019, the plans under the MA contract
would be considered new MA plans for 2020 QBP purposes.
We received no comments on the proposed amended definition in Sec.
422.252 for a new MA plan and are finalizing the policy as proposed for
the reasons outlined in the proposed rule and this final rule. However,
we are not finalizing the last sentence included in the proposed
regulation text because the proposed regulation text mistakenly
included a sentence repeating how we would identify parent
organizations in April of the calendar year before the payment
year.\29\ Although we are finalizing this provision as applicable
beginning January 1, 2022, we reiterate that it codifies current
policies that have been in place since 2012 (76 FR 21486). In addition,
we note that the regulation text finalized here includes the language
adopted in the March 31st COVID-19 IFC (CMS-1744-IFC) to govern how the
definition is applied for 2021 Star Ratings (85 FR 19290).
---------------------------------------------------------------------------

\29\ The following sentence is excluded from the regulatory
text: Under our current policy, we identify the parent organization
for each MA contract in April of each year and then whether any MA
contracts have been held by that parent organization in the
immediately preceding 3 years to determine if the parent
organization meets the 3-year standard.
---------------------------------------------------------------------------

3. Contract Consolidations (Sec. Sec. 422.162(b)(3)(iv),
422.164(g)(1)(iii)(A), 423.182(b)(3)(ii), and 423.184(g)(1)(ii)(A))
The process for calculating the measure scores for contracts that
consolidate is specified as a series of steps at Sec. Sec.
422.162(b)(3) and 423.182(b)(3). We proposed to add a rule to account
for instances when the measure score is missing from the consumed or
surviving contract(s) due to a data integrity issue as described at
Sec. Sec. 422.164(g)(1)(i) and (ii) and 423.184(g)(1)(i) and (ii). CMS
proposed to assign a score of zero for the missing measure score in the
calculation of the enrollment-weighted measure score. We proposed that
these rules would apply for contract consolidations approved on or
after January 1, 2021. First, we proposed minor technical changes to
the regulation text in Sec. Sec. 422.162(b)(3)(iv)(A) and (B) and
423.182(b)(3)(ii)(A) and (B) to improve the clarity of the regulation
text. Second, we proposed to redesignate the current regulation text
(with the technical changes) as new paragraphs (b)(3)(iv)(A)(1) and
(b)(3)(iv)(B)(1) and (b)(3)(ii)(A)(1) and (b)(3)(ii)(B)(1) of these
regulations and to codify this new rule for contract consolidations
approved on or after January 1, 2021 as Sec. Sec.
422.162(b)(3)(iv)(A)(2) and (b)(3)(iv)(B)(2) and
423.182(b)(3)(ii)(A)(2) and (b)(3)(ii)(B)(2). We also proposed an
additional rule at Sec. Sec. 422.164(g)(1)(iii)(A) and
423.184(g)(1)(iii)(A) to address how the Timeliness Monitoring Project
(TMP) or audit data are handled when two or more contracts consolidate.
We proposed that the TMP or audit data will be combined for the
consumed and surviving contracts before carrying out the methodology as
provided in paragraphs B through N (for Part C) and paragraphs B
through L (for Part D). We proposed that these rules would apply for
contract consolidations approved on or after January 1, 2021 and the
proposed regulation text included language to that effect. We proposed
to redesignate the current regulation text as new paragraphs
(g)(1)(iii)(A)(1) and (g)(1)(ii)(A)(1) of these regulations and to
codify this new rule for contract consolidations on or after January 1,
2021 as paragraphs (g)(1)(iii)(A)(2) and (g)(1)(ii)(A)(2).
In this section of this rule, we summarize the comments we received
and provide our responses and final decisions.
Comment: Commenters supported the proposals related to how to
calculate scores when either the surviving or the consumed contract has
a measure-level data integrity issue. A commenter recommended in these
instances that the preview reports should include the combined TMP data
for contracts that consolidate.
Response: We appreciate these comments and will be combining the
TMP data in preview reports for the surviving and consumed contracts.
Summary of Regulatory Changes
After consideration of the comments and for the reasons set forth
in the proposed rule and our responses to the related comments, we are
finalizing the changes as proposed to Sec. Sec. 422.162(b)(3)(iv),
422.164(g)(1)(iii)(A), 423.182(b)(3)(ii), and 423.184(g)(1)(ii)(A) with
a revision to the applicable date. Given the timing of the finalization
of this rule, we are finalizing the provisions as applying to contract
consolidations that are approved on or after January 1, 2022.
4. Adding and Updating Measures (Sec. Sec. 422.164, 423.184)
The regulations at Sec. Sec. 422.164 and 423.184 specify the
criteria and procedures for adding, updating, and removing measures for
the Star Ratings program. As discussed in the April 2018 final rule,
due to the regular updates and revisions made to measures, CMS does not
codify a list in regulation text of the measures (and specifications)
adopted for the MA and Part D Star Ratings Program (83 FR 16537). CMS
lists the measures used for the Star Ratings each year in the Medicare
Part C & D Star Ratings Technical Notes or similar guidance document
with publication of the Star Ratings. In the February 2020 proposed
rule, CMS proposed measure changes to the Star Ratings program for
performance periods beginning on or after January 1, 2021.
a. Proposed Measure Updates--Updates to the Improving or Maintaining
Physical Health Measure and Improving or Maintaining Mental Health
Measure From the HOS (Part C).
In accordance with Sec. 422.164(d)(2), we proposed substantive
updates to two measures from the Medicare Health Outcomes Survey (HOS):
The Improving or Maintaining Physical Health measure and Improving or
Maintaining Mental Health measure.
First, we proposed to change the case-mix adjustment (CMA) for
these measures. Case-mix adjustment is critical to measuring and
comparing longitudinal changes in the physical and mental health of
beneficiaries across MA contracts. To ensure fair and comparable
contract-level scores, it is important to account for differences in
beneficiary characteristics across contracts for these two measures.
CMS proposed to modify the current approach used for adjusting for
differences in the case-mix of enrollees across contracts for these two
measures. The proposed approach would improve the case-mix model
performance and simplify the implementation and interpretation of case-
mix results when particular case-mix variables, such as household
income, are missing. The current method for handling missing case-mix
variables results in a reduced number of case-mix variables used for a
beneficiary because it does not use any of the case-mix variables in a
group of adjusters if one is missing from the group (see 2021 Medicare
Part C & D Star Ratings Technical Notes Attachment A for a full
description of the current HOS case-mix methodology). CMS stated in the
proposed rule that this ``all-or-nothing'' approach for each group of
adjusters may not be as efficient as alternative approaches for
handling missing case-mix adjusters. Under the proposed change, when an
adjuster is missing for

[[Page 5919]]

a beneficiary, it would be replaced with the mean value for that
adjuster for other beneficiaries in the same contract who also supply
data for the Improving or Maintaining Physical Health and Improving or
Maintaining Mental Health measures. This proposed approach has been
used for the Medicare Advantage and Prescription Drug Plan CAHPS
surveys for many years (see 2021 Medicare Part C & D Star Ratings
Technical Notes Attachment A for a description of the CAHPS case-mix
methodology). In simulation models, this approach either outperformed
the current approach for predicting outcomes or matched the current
approach. The proposed rule also explained how the proposed approach is
easier to implement than the current approach as replacing the missing
adjuster values with the contract mean scores for those adjusters
rather than deleting the grouping of adjusters is less burdensome
because it involves fewer steps and is easier to replicate and
understand.
Second, we proposed to increase the minimum required denominator
from 30 to 100 for the two measures. The proposed increase to the
minimum denominator would bring these measures into alignment with the
denominator requirements for the HEDIS measures that come from the HOS
survey and increase the reliability for these measures compared to the
current reporting threshold of 30.
In this section of this rule, we summarize the comments we received
and provide our responses and final decisions.
Comment: A majority of commenters expressed support for a
simplified case-mix methodology, increased minimum denominator, and
CMS's continued efforts to improve the quality and transparency of HOS
measures. Some commenters stated that the new methodology for dealing
with missing data will make the case-mix algorithm more accurate and
help ensure fair and comparable contract level results by strengthening
the measures' ability to adjust for beneficiary level differences. A
commenter suggested removing HOS measures from the Star Ratings
entirely, but most who expressed concerns about the proposed changes
recommended CMS move the two HOS outcome measures to the display page
for 2 years to allow stakeholders sufficient time to review. Some
commenters noted that these changes are substantive.
Response: CMS appreciates the support for the proposed
methodological changes. CMS agrees that the case-mix change is a
substantive update as described at Sec. 422.164(d)(2), so the
provision there for placing an updated measure on the display page for
at least 2 years prior to using the updated measure to calculate and
assign Star Ratings applies. Thus, CMS will move these two HOS outcomes
measures, Improving or Maintaining Physical Health and Improving or
Maintaining Mental Health, as updated, to the display page for the 2024
and 2025 Star Ratings. Though CMS has the option of retaining the
current specifications of these outcome measures in Star Ratings while
stakeholders review and study the updated measures, our regulations do
not require their retention during this interim period. Given the
importance of patient-reported outcome measures in the Star Ratings
program, CMS is opting to let stakeholders review the updated measures
on the display page without simultaneously considering an alternate
specification in the Star Ratings. We explained in the April 2018 final
rule that we may continue use of a legacy measure if the updated
measure expands the population covered in the measure or the measure
otherwise is critical to the Star Ratings (83 FR 16537).
Comment: A commenter stated that these two HOS measures reflect
experiences, not outcomes, and therefore should not be weighted as
outcome measures. Another commenter stated that it is inappropriate to
assign self-reported measures the weight of 3. A few commenters
suggested CMS reduce the weight of the two HOS outcome measures to 1.5
or 2. Several commenters requested CMS clarify the weight of the two
updated measures once they are reintroduced to the Star Ratings.
Response: The Improving or Maintaining Physical Health measure and
Improving or Maintaining Mental Health measure both focus on key
outcomes for a health plan: Improving or maintaining the physical
health and mental health of its enrollees. These measures reflect the
outcomes of the plan's entire membership based on the members'
perceptions of their own health. Thus, these measures do not measure
patient experiences or beliefs about the health plan but measure
changes over 2 years in the physical and mental health status of the
enrollees in an MA contract. The weights of measures are assigned by
measure type as codified at Sec. 422.166(e). These measures (Improving
or Maintaining Physical Health and Improving or Maintaining Mental
Health) are considered outcome measures; thus, as codified at Sec.
422.166(e)(1)(i), they receive a weight of 3. Under CMS's process to
add, update, and remove measures used to calculate the Star Ratings
codified at Sec. 422.164, substantive updates to an existing measure
result in the updated measure being on the display page for at least 2
years prior to its reintroduction to the Star Ratings. For weighting
purposes, a substantively updated measure is treated as a new measure,
and as described at Sec. 422.166(e)(2), will receive a weight of 1 for
the first year in the Star Ratings. In subsequent years, an updated
measure is assigned the weight associated with its category. Thus, the
Improving or Maintaining Physical Health and Improving or Maintaining
Mental Health measures will receive a weight of 1 in the 2026 Star
Ratings and a weight of 3 in the 2027 Star Ratings and beyond.
Comment: Several commenters expressed concern about the cultural
relevance of the survey questions, the applicability of the two HOS
outcome measures to the LIS/DE and disabled populations, and the
robustness of the case-mix models to control for these differences. A
commenter suggested the Improving or Maintaining Physical Health
measure conflates functional status with health and pointed out that
persons with functional limitations can still be in good health.
Another commenter questioned the role of death in the statistical
adjustment models that examine changes in expected physical health.
Response: There continues to be additional work in the research
community on both identifying the impact of social risk factors on
health outcomes and how to best to control for their impact on clinical
quality measurement such that comparisons across contracts yield
accurate representations of true differences in quality as opposed to
reflections of changes in the composition of beneficiaries within a
contract or across contracts over time. CMS also continues to test and
refine the HOS instrument with these issues in mind to ensure that
survey questions are relevant to different populations. The current
longitudinal measures, Improving or Maintaining Physical Health and
Improving or Maintaining Mental Health, adjust for a wide variety of
beneficiary demographic and socioeconomic characteristics to control
for differences in these characteristics across contracts. MA
organizations are held accountable for risk-adjusted changes in
functioning, including mortality, because to ignore death as a physical
health outcome would result in misleading results. We agree that people
with functional limitations can be in

[[Page 5920]]

good health and this is accounted for in the Improving or Maintaining
Physical Health measure since it examines person-level changes from a
baseline period to a follow-up period 2 years later. The HOS
methodology takes into account the case mix of enrollees within each
plan and controls for pre-existing baseline differences, including age,
sociodemographic characteristics, functional status, and chronic
medical conditions as reported in the HOS survey, to statistically
adjust each plan's expected outcomes, including survival rate, based on
national averages when calculating the results for Improving or
Maintaining Physical Health. Mortality is not considered in the
calculation of Improving or Maintaining Mental Health.
Comment: Several commenters expressed concern about the HOS survey,
including whether increasing the minimum denominator to 100 would
improve the stability of the specific measures. A few commenters urged
CMS to consider an even larger increase. Another commenter recommended
that CMS not implement the change until there is clear evidence it will
enhance measure stability in the Star Ratings. Several commenters
suggested involving stakeholders in future changes to the survey
methodology, because of their implications for measures. Many
commenters noted that these are significant changes to specifications,
while additional changes may also be needed to improve the measures,
such as to further increase reliability and stability of the measures.
Response: We have considered stakeholder feedback in the
development of measures of clinical outcomes in the Part C and Part D
Star Ratings program. The HOS was developed over the course of 2
decades under the guidance of several Technical Expert Panels (TEPs) of
industry experts and its survey questions are derived from well-
established patient reported outcome measures (PROs) that reflect
clinical standards. Patients are the ultimate source of information on
patient outcomes and CMS is committed to developing meaningful measures
for quality measurement and improvement that enhance outcomes for
beneficiaries. CMS continues to solicit stakeholder feedback on PROs,
most recently through the 2020 draft Call Letter dated January 30, 2019
and the Star Ratings TEP on April 30, 2019. Additionally, CMS routinely
seeks broad stakeholder input regarding measure enhancements, while
maintaining scientific objectivity and independence throughout the
process.
Our analyses do not show volatility of HOS measures in the Star
Ratings, and in particular of the two outcome measures, which because
of their weight in the Star Ratings calculation are of most concern to
plans and sponsors. As an example, most plans maintained or gained
stars on HOS measures between 2019 and 2020, and while there is some
movement in the Star Ratings, the change is generally not acute. Only
one plan dropped from 5 stars to 1 star for Improving or Maintaining
Physical Health, while 68 percent of plans had no change or an increase
in stars for the measure, and 85 percent had no change or an increase
in stars for Improving or Maintaining Mental Health. Analyses of
movement in Star Ratings for these outcome measures do not raise
concerns about stability, even over longer periods of time.
While CMS does not have concerns about the stability of the two
outcome measures derived from HOS, we understand how much plans have at
stake in their HOS-derived Star Ratings. Out of an abundance of caution
and to be responsive to stakeholder concerns, we are taking a number of
steps. One is to increase the denominator size to further increase
reliability. In addition, and as CMS stated in the 2021 Rate
Announcement, we are exploring alternative PROs as potential
replacements for the existing HOS outcome measures in the future; we
are particularly interested in less complex replacements that would
facilitate MA plans directing their quality improvement efforts on a
health focus relevant to their enrollee population.
Comment: A commenter suggested the HOS survey should not be fielded
during the COVID-19 pandemic because of the burden the survey places on
plan members and the impact of the pandemic on their health, and
recommended that HOS baselines be considered unavailable through 2023.
Response: As stated in the March 31st COVID-19 IFC (CMS-1744-IFC),
CMS delayed the HOS survey for 2020 until the late summer so as not to
risk the health and safety of survey vendor staff during the initial
stages of the pandemic. Since survey vendors have put in place
procedures to safely administer the surveys, consistent with the HPMS
memo released on July 20, 2020 titled ``2020 Medicare Health Outcomes
Survey (HOS) and HOS-Modified (HOS-M),'' CMS fielded the HOS and HOS-M
surveys in mid-August through mid-November of 2020. Longitudinal
studies like the HOS are vital to understanding the immediate and long-
term impacts of the COVID-19 pandemic on beneficiaries and health care.
The survey is voluntary for plan members so they are empowered to
decide whether to respond.
Comment: A commenter requested help identifying their members who
complete the survey so that they can do a root-cause analysis of any
issues reported or found. The commenter mentioned a long lag time of
approximately 3 years between baseline survey administration and when
plans receive results and requested real-time data on patient outcomes.
Response: It is by design that CMS does not provide the identity of
respondents until both baseline and follow-up surveying are complete in
order to preserve the integrity of the sample and reliability of the
results. Patient outcomes cannot be calculated using only baseline
data, since the outcomes measured through this survey are the changes
in physical and mental health status over time. It is important to
protect the confidentiality of the survey respondents to limit the
possibility of plans focusing solely on baseline survey respondents for
quality improvement (in order to achieve higher scores) rather than a
broad segment of the plan enrollment (which would improve the quality
of care provided to the plan's overall population). HOS is a cohort
study, and each year, the survey is administered to a new cohort, or
group, from each contract both at the beginning and end of a 2-year
period. The analysis of longitudinal data is complex, but CMS is
actively striving to decrease the timeframe between completion of
follow-up survey data collection and distribution of performance
measurement data while maintaining the usefulness, reliability, and
accuracy of the measures. In addition, CMS is working toward improved
presentation of HOS performance measurement results that will include
updates to the annual baseline and performance measurement reports and
enhancements to the HPMS HOS module, beginning in CY 2021.
Comment: A few commenters requested as much detail be made public
about the statistics for HOS as CMS publishes for CAHPS.
Response: While the timing and presentation of HOS and CAHPS
results differ, both surveys provide comprehensive information and
reports to each contract describing contract-specific findings and also
publish information about the methodology and case-mix adjustments. As
HOS is a longitudinal survey and CAHPS is an annual, cross-sectional
survey, there are differences in methodology and statistics. CMS
provides stakeholders and the public with similar levels of

[[Page 5921]]

transparency and detail on both surveys. HOS case-mix variables are
published in each contract's Performance Measurement Report and
coefficients are published on the HOS website and in Attachment A of
the Star Ratings Technical Notes each year. Contract-specific baseline
reports are currently distributed to plans in the spring of the year
following baseline data collection. Performance Measurement reports are
distributed in the summer of the year following follow-up data
collection. Star Ratings data and aggregate score analysis reports are
available in the HOS module in HPMS to allow easier data validation and
score comparisons at the contract, state, region, and national levels
for the core HOS physical and mental health outcome measures.
Additional information about HOS and its methodology can be found at
www.HOSonline.org. While there are differences, we believe that the
extent and scope of HOS data provided to organizations is more than
sufficient and comparable to the CAHPS data furnished to plans.
Comment: A commenter expressed some concern about the overlap of
existing measures with the measure proposed in the 2021 Advanced
Notice.
Response: In the 2021 Advance Notice, we stated that we planned to
post the longitudinal Physical Functioning Activities of Daily Living
(PFADL) change measure on the 2021 and 2022 display pages and that we
may consider that PFADL measure for the Star Ratings in the future,
pending rulemaking. Prior to potentially proposing this measure through
future rulemaking, CMS would submit this measure through the Measures
Under Consideration process to be reviewed by the Measure Applications
Partnership which is a multi-stakeholder partnership that provides
recommendations to HHS on the selection of quality and efficiency
measures for CMS programs, as required by Section 3014 of the
Affordable Care Act. The 2021 Advance Notice also stated that given the
complexities of the existing HOS measures, CMS is committed to
exploring alternative PROs to replace the existing HOS outcome
measures. We are particularly interested in replacements that would be
simpler and more direct for plans to use and to focus their quality
improvement efforts. If we propose to add the PFADL measure to the Star
Ratings in future rulemaking, we will consider using it to replace
existing measures.
Summary of Regulatory Changes
After consideration of the comments and for the reasons set forth
in the proposed rule and our responses to the related comments
summarized in this final rule, we are finalizing the proposed
specification changes for the Improving or Maintaining Physical Health
measure and Improving or Maintaining Mental Health measure but for
measurement year 2022 instead of 2021. These measures would be moved to
display for the 2024 and 2025 Star Ratings as the case-mix
specification change is substantive as described at Sec. 422.164(d)(2)
and returned to the Star Ratings program for the 2026 Star Ratings.
b. Proposed Measure Additions
As discussed in the April 2018 final rule (83 FR 16440), new
measures may be added to the Star Ratings through rulemaking and
Sec. Sec. 422.164(c)(3) and (4) and 423.184(c)(3) and (4) provide for
reporting new measures on the display page for a minimum of 2 years
before they are added to the Star Ratings program. In advance of
adopting new measures through rulemaking, CMS also solicits feedback
using the Advance Notice and Rate Announcement process. CMS is working
with the National Committee for Quality Assurance (NCQA) to expand
efforts to better evaluate a plan's success at effectively
transitioning care from a clinical setting to home. In the 2019 Call
Letter, CMS discussed these two potential new Part C measures and
finalized them in the 2020 Call Letter for the 2020 display page, which
used 2018 measurement year data. In the February 2020 NPRM, CMS
proposed to add the HEDIS Transitions of Care and the HEDIS Follow-up
after Emergency Department Visit for People with Multiple High-Risk
Chronic Conditions measures to the 2023 Star Ratings covering the
contract year 2021 performance period. We stated that we would have
these new Part C measures on the display page for 3 years, starting
with the 2020 display page, prior to adding them to the Star Ratings
program. In addition, we also discussed in the proposed rule how we
would follow the pre-rulemaking process that is used in other CMS
programs under section 1890A of the Social Security Act. Both of these
proposed measures were submitted and reviewed through that process.
(1) Transitions of Care (Part C)
The HEDIS Transitions of Care (TRC) measure is the percent of
discharges for members 18 years or older who have each of the four
indicators during the measurement year: (1) Notification of inpatient
admission and discharge; (2) receipt of discharge information; (3)
patient engagement after inpatient discharge; and (4) medication
reconciliation post-discharge. The TRC measure was first placed on the
2020 display page.
We explained in the proposed rule how NCQA, based on stakeholder
input, was exploring a few non-substantive measure specification
changes. The first change, for all measure indicators, is to broaden
the forms of communications from one outpatient medical record to other
forms of communication such as admission, discharge, and transfer
record feeds, health information exchanges, and shared electronic
medical records. The second is to change the notifications and receipts
from `on the day of admission or discharge or the following day' to `on
the day of admission or discharge or within the following two calendar
days.' A third is to change one of the six criteria of the Receipt of
Discharge Information indicator from `instructions to the primary care
providers or ongoing care provider for patient care' to `instructions
for patient care post-discharge.' We stated how these three changes are
considered non-substantive since they include additional tests that
would meet the numerator requirements as described at Sec.
422.164(d)(1)(iv)(A), add alternative data sources as described at
Sec. 422.164(d)(1)(v), and do not change the population covered by the
measure. Our proposal therefore was to adopt the TRC measure with or
without the updates NCQA was considering at the time the proposed rule
was issued. After publication of the NPRM, we also discussed this
measure in the CY 2021 Advance Notice and Rate Announcement,
reiterating how NCQA was considering these three non-substantive
updates to the measure that we currently have on display. The comments
CMS received to the CY 2021 Advance Notice and Rate Announcement were
similar to those being addressed here. These include requests for
clarifications and additional time to implement the measure, as well as
concerns about the coordination of information especially with out-of-
network providers.
The intent of this measure is to improve the quality of care
transitions from an inpatient setting to home, as effective
transitioning will help reduce hospital readmissions, costs, and
adverse events. The TRC measure excludes members in hospice and is
based on the number of discharges, not members. Currently the TRC
measure is on the display page and we proposed to

[[Page 5922]]

add this measure to the 2023 Star Ratings covering the contract year
2021 measurement period. On July 1, 2020, NCQA published the
HEDIS[supreg] Measurement Year 2020 & Measurement Year 2021 Volume 2:
Technical Specifications for Health Plans \30\ which included the
listed measure specification changes to be implemented for data
collected in 2021 covering the 2020 measurement period. Therefore, all
three non-substantive updates have been adopted by the measure steward.
---------------------------------------------------------------------------

\30\ http://store.ncqa.org/index.php/performance-measurement.html#vol2).
---------------------------------------------------------------------------

In this section of this rule, we summarize the comments we received
and provide our responses and final decisions.
Comment: Many commenters fully support the intent of this measure
which is to improve continuity of care for MA members as they
transition from inpatient to outpatient settings.
Response: CMS thanks commenters for the support of this measure.
The TRC measure has been on the display page since 2020 covering the
2018 measurement period and we believe it provides important
information about MA plan quality. Under this final rule, CMS will keep
this measure, with the updates NCQA finalized following the publication
of the proposed rule, which included these measure specification
changes to be implemented for data collected in 2021 covering the 2020
measurement period. The TRC measure will remain on the 2023 display
page (for the 2021 measurement year) in light of the timing of this
final rule, and will move off the display page for the 2022 measurement
period for use in calculating the 2024 Star Ratings.
Comment: Several commenters recommended that the measure indicators
should include all providers who can appropriately support a
beneficiary during a care transition, including providers other than
PCPs. A commenter suggested that pharmaceutical outreach activities be
included in the `patient engagement after discharge' category.
Response: The measure does allow for a variety of provider types
and care providers to take action to meet the intent of the TRC
indicators. However, the information that is used to meet the numerator
of each indicator must be documented in the outpatient record that is
accessible by the PCP or ongoing care provider. An ongoing care
provider is defined as ``the practitioner who assumes responsibility
for the member's care.'' This definition is provided in the measure
specifications and is intentionally broad because NCQA recognizes there
are a variety of provider types who might be coordinating patient care.
As proposed and adopted, the specifications for this measure do include
a variety of providers that may be taking over the responsibility of
managing the patient's care. The TRC measure is for the most part
focused on getting information into any outpatient record that is
accessible to the PCP or ongoing care provider. Pharmaceutical outreach
activities would be included in the `patient engagement after
discharge' category if they are included in the patient's outpatient
records. The Medication Reconciliation indicator is the only indicator
where a provider type is specified for who can take action since it
specifies that medications must be reconciled by a prescribing
practitioner, clinical pharmacist, or registered nurse.
Comment: A commenter argued that not only a patient's PCP but their
plan should be notified of an admission and a discharge. Another
commenter suggested that notifications of inpatient admissions and
discharges should prioritize alignment for dually eligible members
(that is, both the patient's Medicare and Medicaid providers should be
notified).
Response: CMS appreciates these comments and shared them with NCQA,
the measure steward. Currently, the measure only focuses on
notifications that go to the PCP or ongoing care provider. The measure
is specified for Medicare plans, so plans will determine the provider
that meets the intent of the measure (which may include Medicaid
providers treating dually eligible enrollees). Although the measure
only focuses on notifications that go to the PCP or ongoing care
provider, there is nothing in this measure that would prevent
notifications also going to the health plan, subject to otherwise
applicable laws on privacy and disclosure of health information.
Further, we still believe it is important to implement this measure
since transitions from the inpatient setting often result in poor care
coordination, including communication gaps between inpatient providers
and the PCP or ongoing care provider; unplanned medication changes;
incomplete diagnostic work-ups; and inadequate patient, caregiver, and
provider understanding of diagnoses, medication, and follow-up needs.
This measure will put more emphasis on these issues for both providers
and health plans.
Comment: Some commenters suggested that the original timeframe for
notifications is too short, especially for out-of-network facilities.
Response: In the proposed rule and in the 2021 Rate Announcement,
we stated how NCQA is considering a revision to the timeframe for the
Notification of Inpatient Admission and Receipt of Discharge
Information indicators for this measure to ``the day of admission or
discharge, or within the following two calendar days.'' This change
clarifies expectations for documentation related to admissions or
discharges that take place over the weekend. This change was approved
by NCQA's Committee on Performance Measurement following the release of
the proposed rule and is included in the HEDIS[supreg] Measurement Year
2020 & Measurement Year 2021 Volume 2: Technical Specifications for
Health Plans released on July 1, 2020, to be implemented for data
collected in 2021 covering the 2020 measurement period. Starting with
the 2022 Display measure, the TRC measure will include the expanded
timeframe for the receipt of discharge information.
Comment: Several commenters stated that the composite nature of the
measure may not appropriately account for variation of performance on
the different elements and may not allow for understanding of the
individual components. A number of commenters suggested that the four
components of the composite measure be reported as separate Star
Ratings measures.
Response: To minimize the number of new Star Rating measures to
lessen complexity in the Star Ratings program, CMS is planning to
average the four components into one composite measure for reporting in
the Star Ratings program. Currently, the four components and the
composite measure that combines the four components are reported on the
display page. The four components of this composite measure will
continue to be reported as separate measures on the display page so as
to be available to plans for use in their quality improvement projects
and to other stakeholders who want an additional breakdown of the data
even though only the composite measure will be used in the Star
Ratings. The composite measure will be displayed on Medicare Plan
Finder as one measure focused on TRC to simplify the information
publicly available on the website for consumers and so as not to
overwhelm them with too many measures. This approach allows CMS to
publicly report all included data, while directing audiences to the
most helpful level of complexity for the reported results.
Comment: Some commenters suggested the current Medication
Reconciliation Post-Discharge measure should remain as a separate Star
Ratings measure since they believe it drives

[[Page 5923]]

improved outcomes, while others recommended retiring the current
Medication Reconciliation measure after implementation of the TRC
measure. Ultimately, commenters requested to know what impact the
introduction of the TRC measure will have on the current Medication
Reconciliation measure. A commenter suggested that if the Medication
Reconciliation measure is to be incorporated into the TRC measure, NCQA
should continue to permit organizations to use the hybrid data
collection method.
Response: As noted in the proposed rule and the 2021 Rate
Announcement, NCQA was considering revisions to the TRC measure to the
requirement of using one medical record from a specific provider to,
instead, allow numerator information to be captured from ``the
outpatient medical record as well as other information accessible to
the primary care provider or ongoing care provider''. This change,
which is included in the HEDIS[supreg] Measurement Year 2020 &
Measurement Year 2021 Volume 2: Technical Specifications for Health
Plans released on July 1, 2020, will be implemented for the 2020
measurement year and enables the specification to capture additional
communication forms (for example, admissions, discharges, and transfers
feeds, shared electronic medical records) that occur regularly in the
field and meet the intent of the TRC measure. This change also ensures
that scores for the Medication Reconciliation Post-Discharge component
of the TRC measure and the scores for the standalone Medication
Reconciliation Post-Discharge measure currently in the Star Ratings
match exactly. As such, the additional stand-alone Medication
Reconciliation Post-Discharge measure would no longer need to be
separately reported by health plans. The hybrid option for reporting
the Medication Reconciliation component of the TRC measure will remain
for the foreseeable future.
Comment: Some commenters stated that the recent changes to the TRC
measure described in the proposed rule are substantive and so the
measure should remain on the display page.
Response: CMS believes that the updates to this measure are non-
substantive since they add additional tests that would meet the
numerator requirements as described at Sec. 422.164(d)(1)(iv)(A),
include alternative data sources as described at Sec.
422.164(d)(1)(v), and do not change the population covered by the
measure. As discussed in the April 2018 final rule, if additional codes
are added that increase the number of numerator hits for a measure
during or before the measurement period, such a change is not
considered substantive because the sponsoring organization generally
benefits from that change. In addition, the type of administrative
change made here has no impact on the current clinical practices of the
plan or its providers. However, CMS has decided to delay the
implementation of this measure to the 2022 measurement year for the
2024 Star Ratings year given the timing of this final rule and in
recognition of the challenges of implementing new measures during the
COVID-19 pandemic. This will provide an additional year for plans prior
to implementation in the Star Ratings program.
Comment: A few commenters recommended that the TRC measure not be
included in the Star Ratings until it is further improved. Other
commenters noted that processes are not always in place to provide
notifications to PCPs in a consistent or timely manner, especially for
out-of-network facilities. A commenter suggested that this measure is
primarily a measure of data interoperability and exchange capabilities
between providers, capabilities which are not under plans' control.
Several commenters mentioned the substantial amount of medical review
work entailed for this measure, especially for the notification of
admissions and discharges. Plans often require physicians to submit
records for abstraction which places a considerable burden on physician
practices. In other words, although this measure is a plan measure,
commenters pointed out that data collection is often the responsibility
of physician groups and plans do not have sufficient control or
involvement to achieve consistent high performance. Further, a
commenter expressed concern that the measure moves away from NCQA's
focus on moving towards more digital measures. Several commenters
requested further clarity on measure specifications such as how plans
should indicate the use of other acceptable communication forms for
this measure.
Response: The intent of the TRC measure is to ensure a seamless
transition from inpatient to outpatient settings for MA enrollees to
improve the delivery and coordination of care following an inpatient
stay. When a beneficiary moves from an inpatient to outpatient setting,
there is often poor coordination of care, communication lapses between
the inpatient and outpatient providers, inadvertent medication changes,
and a lack of understanding among patients, caregivers, and providers
about the follow-up and ongoing care needs following the
hospitalization. Given the critical importance of a seamless transition
from the inpatient to outpatient setting, CMS believes it is important
to adopt the current measure and for plans to make sure their providers
are ensuring that there is a seamless transition between the inpatient
to outpatient setting.
This measure is intended to address the very gaps in communication
and interoperability that are noted in the comments. Unfortunately, the
current state of standards and coding do not support a fully
administrative or digital specification at this time. NCQA is
continuing to work with standards developers on addressing this issue
and will assess the feasibility of converting this measure to a fully
administrative specification when the standards for information sharing
and coding are updated to support such an approach. The measure
assesses if the notification of admission or receipt of discharge
information was received and documented within the timeframe specified
in the measure and is agnostic about the form of communication for the
Notification of Admission and Receipt of Discharge Information
indicators. CMS shared these comments with NCQA, the measure steward,
for consideration as they make future updates to this measure.
Comment: Some commenters stated this measure focuses on
documentation of events rather than the substance of the transition
experience.
Response: CMS believes this measure does focus on the substance and
purpose of the transition experience, which is to improve health
outcomes. The measure is not simply about documentation but about
whether notification was made, discharge information was received,
patients were engaged, and medication was reconciled. Poor hospital
transitions are not only associated with poor health outcomes but also
increased health care utilization and cost, duplicative medical
services, medication errors, and increased emergency department visits
and readmissions. Incentivizing better transition experiences, where
these activities take place and are documented for a treating provider
who furnishes post-discharge care, is an important goal served by this
measure.
Comment: A commenter suggested that I-SNP members should be
excluded from the measure.
Response: I-SNP members should be receiving the same care
coordination as enrollees of other plan types so CMS believes it is
appropriate to use this measure for such plans as well. NCQA

[[Page 5924]]

has examined an exclusion for I-SNP members in the past and discussed
this exclusion with its advisory panels. The panels agreed that I-SNP
members should be included in the measure because this is a vulnerable
population that requires care coordination. We agree with that
conclusion and will use this measure for I-SNPs as well as other MA
plans.
Summary of Regulatory Changes
After consideration of the comments and for the reasons set forth
in the proposed rule and our responses to the related comments, we are
finalizing the addition of the Transitions of Care (Part C) measure in
the Star Ratings program with a delay of 1 year in light of the timing
of this final rule. That is, CMS will implement this measure using data
from the 2022 measurement year for the 2024 Star Ratings year. This
measure is currently on the display page with the current
specifications. The Transitions of Care measure with the updates
recently finalized by NCQA for the 2020 measurement year will be on the
display page for 2022 and 2023 before being used in the 2024 Star
Ratings. By delaying the addition of this measure to the Star Ratings
program until 2024 Star Ratings, this also allows plans more time in
recognition of the challenges of implementing new measures in the
program during the COVID-19 pandemic.
(2) Follow-Up After Emergency Department Visit for People With Multiple
High-Risk Chronic Conditions (Part C)
CMS proposed to add a new HEDIS measure assessing follow-up care
provided after an emergency department (ED) visit for people with
multiple high-risk chronic conditions. This measure is the percentage
of ED visits for members 18 years and older who have high-risk multiple
chronic conditions who had a follow-up service within 7 days of the ED
visit between January 1 and December 24 of the measurement year. The
measure is based on ED visits, not members. Eligible members whose ED
visits are used in the measure must have two or more of the following
chronic conditions: Chronic obstructive pulmonary disease (COPD) and
asthma; Alzheimer's disease and related disorders; chronic kidney
disease; depression; heart failure; acute myocardial infarction; atrial
fibrillation; and stroke and transient ischemic attack. The following
meet the criteria to qualify as a follow-up service for purposes of the
measure: An outpatient visit (with or without telehealth modifier); a
behavioral health visit; a telephone visit; transitional care
management services; case management visits; and complex care
management. Patients with multiple chronic conditions are more likely
to have complex care needs, and follow-up after an acute event, like an
ED visit, can help prevent the development of more severe
complications. We proposed to add this measure to the 2023 Star Ratings
covering the contract year 2021 measurement period.
In this section of this rule, we summarize the comments we received
and provide our responses and final decisions.
Comment: Many commenters fully support the intent of this measure
which is to provide continuity and coordination of care to persons with
multiple chronic conditions.
Response: CMS thanks commenters for the support of this measure.
Comment: Several commenters did not support the measure. Some
suggested that the 7-day time period for receipt of a follow-up service
is too short. Commenters argued that it can take more than 7 days for
an ED claim to be processed and submitted to a plan, actions which must
occur before a PCP is aware of a patient's ED visit. They stated this
situation is compounded by the fact that ED visits require no
preauthorization, so a PCP has no forewarning of a potential ED visit.
They stated that though there are many actions which define a follow-up
service--such as outpatient or telehealth physical or behavioral health
visits, phone visits, or care management services--the average time to
schedule a follow-up meeting with a PCP is typically longer than 7
days.
Response: CMS continues to believe that the measure is appropriate
for use in the Star Ratings. This measure is focused on a very
vulnerable population that should have prompt follow-up after a visit
to the ED. The 7-day timeframe was recommended by NCQA's advisory
panels and chosen for its potential to improve quality of care,
especially because patients with multiple chronic conditions who do not
receive follow-up after visiting the ED show increased rates of
hospital admissions and 30-day readmissions. In addition, the lack of
real-time data exchange is a critical system issue that the NCQA
advisory panels cited should be addressed by this measure.
The Medicare population includes a large number of individuals and
older adults with high-risk multiple chronic conditions who often
receive care from multiple providers and settings and, as a result, are
more likely to experience fragmented care and adverse healthcare
outcomes, including an increased likelihood of ED
visits.^{31 32} Medicare beneficiaries with multiple chronic
conditions require high levels of care coordination, particularly as
they transition from the ED to the community. During these transitions,
they often face communication lapses between ED and outpatient
providers and inadequate patient, caregiver and provider understanding
of diagnoses, medication and follow-up needs.^{33 34 35 36}
This poor care coordination results in an increased risk for medication
errors, repeat ED visits, hospitalizations, nursing home admissions,
and death.^{37 38} Medicare beneficiaries with multiple chronic
conditions not only experience poorer health outcomes, but also greater
health care utilization (for example, physician use, hospitalizations,
ED use, and medication use) and costs (for example, medication, out-of-
pocket, and total health care).\39\ Medicare beneficiaries with
multiple chronic conditions are some of the heaviest users of high-
cost, preventable services such as those

[[Page 5925]]

offered by the ED.^{40 41} An estimated 75 percent of health
care spending is on people with multiple chronic
conditions.^{42 43} Improving the timeliness of communications
about ED care, as required to perform well on these measures, should
not only improve care, but reduce costs as well. Because of this
context, we believe that collection and use of this measure in the Star
Ratings is important in order to incent contracts to provide the best
care possible for vulnerable enrollees.
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\31\ AHRQ. 2010. Multiple Chronic Conditions Chartbook. ``2010
Medical Expenditure Panel Survey Data.'' https://www.ahrq.gov/sites/default/files/wysiwyg/professionals/prevention-chronic-care/decision/mcc/mccchartbook.pdf (Accessed January 11, 2017).
\32\ Agency for Healthcare Quality and Research (AHRQ). 2012.
``Coordinating Care for Adults with Complex Care Needs in the
Patient-Centered Medical Home: Challenges and Solutions.'' https://pcmh.ahrq.gov/sites/default/files/attachments/coordinating-care-for-adults-with-complex-care-needs-white-paper.pdf.
\33\ Altman, R., J.S. Shapiro, T. Moore and G.J. Kuperman. 2012.
``Notifications of hospital events to outpatient clinicians using
health information exchange: A post-implementation survey.'' Journal
of Innovation in Health Informatics 20(4).
\34\ Coleman, E.A., R.A. Berenson. 2004. ``Lost in transition:
Challenges and opportunities for improving the quality of
transitional care.'' Annals of Internal Medicine 141(7).
\35\ Dunnion, M.E., and B. Kelly. 2005. ``From the emergency
department to home.'' Journal of Clinical Nursing 14(6), 776-85.
\36\ Rowland, K., A.K. Maitra, D.A. Richardson, K. Hudson and
K.W. Woodhouse. 1990. ``The discharge of elderly patients from an
accident and emergency department: Functional changes and risk of
readmission.'' Age Ageing 19(6), 415-18.
\37\ Hastings, S.N., E.Z. Oddone, G. Fillenbaum, R.J. Sloane and
K.E. Schmader. 2008. ``Frequency and predictors of adverse health
outcomes in older Medicare beneficiaries discharged from the
emergency department.'' Medical Care 46(8), 771-7.
\38\ Niedzwiecki, M., K. Baicker, M. Wilson, D.M. Cutler and Z.
Obermeyer. 2016. ``Short-term outcomes for Medicare beneficiaries
after low-acuity visits to emergency departments and clinics.''
Medical Care 54(5), 498-503.
\39\ Lehnert, T., D. Heider, H. Leicht, S. Heinrich, S.
Corrieri, M. Luppa, S. Riedel-Heller and H.H. Konig. 2011. ``Review:
health care utilization and costs of elderly persons with multiple
chronic conditions.'' Medical Care Research & Review 68(4), 387-420.
\40\ CMS. 2012. Chronic Conditions among Medicare Beneficiaries,
Chartbook, 2012 Edition. Baltimore, MD. https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/chronic-conditions/downloads/2012chartbook.pdf (Accessed July 19,
2016).
\41\ Lochner, K.A., and C.S. Cox. 2013. Prevalence of multiple
chronic conditions among Medicare beneficiaries, United States,
2010. https://www.cdc.gov/pcd/issues/2013/12_0137.htm (Accessed
January 11, 2017).
\42\ CDC. 2009. The power of prevention: Chronic disease . . .
the public health challenge of the 21st century. http://www.cdc.gov/chronicdisease/pdf/2009-power-of-prevention.pdf (Accessed January
24, 2017).
\43\ Care Innovations. 2013. ``Cost Control for Chronic
Conditions: An Imperative for MA Plans.'' The Business Case for
Remote Care Management (RCM). https://www.rmhpcommunity.org/sites/default/files/resource/The%20Business%20Case%20for%20RCM.pdf
(Accessed January 24, 2017).
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Comment: Some commenters noted that the measure judges plans for
actions that facilities must take. Plans stated they are not always
informed by facility providers of ED visits, especially by out-of-
network or out-of-area facilities. Plans claimed sending notifications
of an ED visit is under the sole influence of the facility. On the
other hand, facility providers argued the measure puts burden on them
to provide information to the plans on a very quick basis. Both plans
and facility providers stated that data sharing between plans and
facilities is difficult. A commenter suggested this measure might be
more suited as a facility quality measure.
Response: CMS recognizes the challenges inherent in quickly and
successfully communicating patient information among different types of
providers. CMS believes, however, that plans are in a critical position
to help coordinate the care of their members and help improve the
timeliness and quality of the communications that occur among EDs,
inpatient facilities, and outpatient providers. This is important
because the Medicare population includes a large number of individuals
and older adults with high-risk multiple chronic conditions (MCC) who
often receive care from multiple providers and settings and, as a
result, are more likely to experience fragmented care and adverse
healthcare outcomes, including an increased likelihood of ED visits.
NCQA's first year analysis results for this measure indicated that most
MA contracts (approximately 92 percent) were able to report a valid
rate for the measure the first year that the measure was implemented.
Comment: Some commenters wanted CMS to delay the inclusion of the
measure in the Star Ratings program and suggested that it will take
time to establish data sharing protocols among providers and
facilities, especially with out-of-network facilities. They stated data
sharing protocols are challenging.
Response: The Follow-up after Emergency Department Visit for People
with Multiple High-Risk Chronic Conditions measure was placed on the
2020 display page covering the 2018 measurement year. This measure was
slated to remain on the display page through 2022. This measure,
however, will remain an additional year on the display page since CMS
is now delaying the implementation of this measure to the 2022
measurement or performance year and the 2024 Star Ratings year given
the timing of this final rule. This gives plans more time to establish
data sharing protocols that allow them to facilitate timely follow-up
after ED visits.
Comment: Some commenters requested modifications of the measure
specifications. For example, some commenters wanted the list of
services categorized as follow-up services expanded to include
community resources, medication reconciliation, and services from long-
term care facilities. Also, commenters suggested excluding patients
released from the ED to skilled nursing facilities; not including
managed long-term services and supports plans since they already have
follow-up services in place; excluding inappropriate ED visits;
excluding observations stays as a follow-up service; and including
metabolic acidosis, cancer, and diabetes as chronic conditions.
Response: The purpose of this measure is to focus on the care
provided by MA plans. CMS is working to expand efforts to better
evaluate health plans' successes at effective care coordination, and we
believe the addition of this measure will both add to our understanding
of plan efforts to effectively coordinate care as well as encourage all
plans to further focus on improving care coordination for their
vulnerable enrollees. We have shared these comments with NCQA, the
measure developer, and they will consider additional exclusions and
inclusions for future updates to the measure, but we believe the
measure as currently specified gets at the direct efforts of MA plans
coordinating the care of Medicare enrollees with multiple high-risk
chronic conditions following an ED visit. Therefore, we are adopting
the measure for use in the Star Ratings program.
Comment: A few commenters mentioned that since psychiatric
diagnoses are always coded secondary to any physical diagnosis, there
are HIPAA and confidentiality concerns about disclosing information on
patients with secondary substance abuse or psychiatric diagnoses. Such
disclosures require patient consent. In addition, some commenters
stated that it can be difficult to accurately capture data to track
appropriate follow-up psychiatric care given confidentiality concerns.
Response: MA plans and providers must comply with applicable
privacy and information protection laws and CMS is not providing
guidance in this final rule on the specific assertions about
restrictions under applicable privacy and information protection laws,
such as HIPAA or 45 CFR part 2. However, the measure does not require a
plan or facility to violate applicable law. CMS and NCQA will continue
to monitor any issues that might arise due to patient confidentiality
or consent with regard to information sharing. NCQA, in its testing
protocols, has not observed this issue to cause any major barriers to
reporting this measure to date.
Comment: A couple of commenters recommended risk adjustment to
account for plans with large low socio-economic status, dual eligible
and homeless populations.
Response: We will include this measure as one of the candidate
measures for the calculation of the Categorical Adjustment Index (CAI).
As stated at Sec. Sec. 422.166(f)(2)(iii) and 423.186(f)(2)(iii), CAI
values are determined using all measures in the candidate measure set
after applying the following exclusions: The measure is already
adjusted for socio-economic status, the measure focuses on a plan or
provider-level issue, the measure is scheduled for retirement in the
Star Ratings year that the CAI is being applied, or the measure is a
SNP-only measure. It is also important to note that this measure
focuses on prompt follow-up for beneficiaries with multiple chronic
conditions which is a very vulnerable population. If additional risk
factors such as low socio-economic status further increase these
patients' levels of vulnerability, it is even more critical for this
population to have

[[Page 5926]]

prompt follow-up after visiting the ED. Further, this measure takes
into account a wide variety of follow-up services to count, including
telephone calls and telehealth visits, making it easier for the plan to
tailor the follow-up to the enrollee or to specific enrollee
populations. For example, if a beneficiary does not have transportation
to get to an appointment with a provider, the follow-up can happen
through a phone call with the provider.
Comment: A couple of comments stated that no new measures should be
introduced into the Star Ratings program this year given the COVID-19
pandemic.
Response: Under our proposal this measure was slated to remain on
the display page through 2022 Star Ratings and be used for the 2023
Star Ratings. This measure, however, will remain on the display page
through 2023 since CMS is now delaying the implementation of this
measure to the 2022 measurement year and the 2024 Star Ratings as a
result of the timing of this final rule. Additionally, this will give
plans an additional year to adjust to this new measure given any
challenges from the COVID-19 pandemic.
Summary of Regulatory Changes
After consideration of the comments and for the reasons set forth
in the proposed rule and our responses to the related comments
summarized earlier in this final rule, we are finalizing the addition
of the Follow-up after Emergency Department Visit for People with
Multiple High-Risk Chronic Conditions (Part C) measure in the Star
Ratings program beginning with the 2022 measurement year and the 2024
Star Ratings. This delay compared to our proposal addresses both the
timing of this final rule and the recognition that it is more
challenging to adapt to new measures during the COVID-19 pandemic.
The changes to the Star Ratings measures we are adopting in this
final rule are summarized in Table D1.

Table D1--New and Revised Individual Star Rating Measures for Performance Periods Beginning On or After January 1, 2022
[The measure descriptions listed in this table are high-level descriptions. The Star Ratings measure specifications supporting document, Medicare Part C & D Star Ratings Technical Notes,
provides detailed specifications for each measure. Detailed specifications include, where appropriate, more specific identification of a measure's: (1) Numerator, (2) denominator, (3)
calculation, (4) timeframe, (5) case-mix adjustment, and (6) exclusions. The Technical Notes document is updated annually, consistent with the applicable final rules adopting changes to the
Star Ratings system. In addition, where appropriate, the Data Source descriptions listed in this table reference the technical manuals of the measure stewards. The annual Star Ratings are
produced in the fall of the prior year. For example, Star Ratings for the year 2020 are produced in the fall of 2019. If a measurement period is listed as `the calendar year 2 years prior to
the Star Ratings year' and the Star Ratings year is 2020, the measurement period is referencing the 1/1/2018-12/31/2018 period.]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Statistical
Measure category Measurement method for Reporting
Measure Measure description Domain and weight Data source period NQF endorsement assigning star requirements by
ratings contract type
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Part C Measure
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Transitions of Care (TRC)....... Percentage of Managing Chronic Process Measure: HEDIS *......... The calendar year Not Available...... Clustering...... MA-PD and MA-only.
discharges for (Long Term) Weight of 1. 2 years prior to
members 18 years Conditions. the Star Ratings
of age and older year.
who had each of
the following: (1)
Notification of
admission and post-
discharge: (2)
receipt of
discharge
information, (3)
patient
engagement, and
(4) medication
reconciliation.
---------------------------------------------------------------------------------------------------------------------------------------------------------------
Follow-up after ED Visit for Percentage of Managing Chronic Process Measure: HEDIS *......... The calendar year Not Available...... Clustering...... MA-PD and MA-only.
People with Multiple High-Risk emergency (Long Term) Weight of 1. 2 years prior to
Chronic Conditions (FMC). department (ED) Conditions. the Star Ratings
visits for members year.
18 years and older
who have multiple
high-risk chronic
conditions who had
a follow-up
service within 7
days of the ED
visit. Eligible
members must have
two or more of the
following chronic
conditions: COPD
and asthma;
Alzheimer's
disease and
related disorders;
chronic kidney
disease;
depression; heart
failure; acute
myocardial
infarction; atrial
fibrillation; and
stroke and
transient ischemic
attack.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* NCQA HEDIS Measurement Year 2020 & Measurement Year 2021, Volume 2.

5. Extreme and Uncontrollable Circumstances (Sec. Sec. 422.166(i),
423.186(i))
We proposed to modify Sec. Sec. 422.166(i)(8) and 423.186(i)(6) to
clarify the rules for how the adjustment for extreme and uncontrollable
circumstances would apply where there are missing data, including data
missing because of a data integrity issue as defined at Sec. Sec.
422.164(g)(1) and 423.184(g)(1). In addition, we solicited comment in
the proposed rule on a previously adopted policy regarding application
of the adjustment for extreme and uncontrollable circumstances where a
contract's service area was affected by disaster(s) in successive
years, including whether additional changes were necessary.
We explained in the February 2020 proposed rule how we adopted the
current policy for treating contracts impacted by separate disasters
that occur in successive years taking into account concerns about
looking back too many years for contracts affected by disasters
multiple years in a row; we are also concerned about including too many
measurement periods in 1 year of Star Ratings. We explained that the
adjustment for extreme and uncontrollable circumstances also must
consider operational feasibility, because using different thresholds
for contracts affected by disasters in different ways would be very
complicated for administration and for providing the necessary
transparency to MA organizations, Part D plan sponsors, and
beneficiaries who use and rely on the Star Ratings. We reiterated that
we must balance concerns about using older data with concerns about
using data based on performance that has been impacted by

[[Page 5927]]

consecutive disasters. We explained as well how we believe that the
current regulation achieves an appropriate balance.
We finalized in the April 2019 final rule a policy effective for
the 2022 Star Ratings for contracts with at least 25 percent of
enrollees in FEMA-designated Individual Assistance areas that were
affected by different disasters for 2 consecutive years. Such multiple
year-affected contracts will receive the higher of the current year's
Star Rating or what the previous year's Star Rating would have been in
the absence of any adjustments that took into account the effects of
the previous year's disaster for each measure. For example, if a
multiple year-affected contract reverts to their 2021 Star Rating on a
given measure for the 2022 Star Ratings, the 2021 Star Rating is not
used in determining the 2023 Star Rating; rather, the 2023 Star Rating
is compared to what the contract's 2022 Star Rating would have been,
absent any disaster adjustments.
The rule for treatment of multiple year-affected contracts was
established to limit the age of data that will be carried forward into
the Star Ratings. We use the measure score associated with the year
with the higher measure Star Rating regardless of whether the score is
higher or lower that year. We finalized this policy to address when
contracts are affected by separate extreme and uncontrollable
circumstances that occur in successive years for the adjustments to
CAHPS, HOS, HEDIS, and other measures. The provisions at Sec. Sec.
422.166(i)(2)(v), (i)(3)(v), (i)(4)(vi), and (i)(6)(iv) and
423.186(i)(2)(v) and (i)(4)(iv) include this rule for how ratings for
these measures are adjusted in these circumstances. We solicited
comment on this policy and whether further adjustments are necessary.
In this section of this rule, we summarize the comments we received
and provide our responses and final decisions.
Comment: A commenter appreciated CMS's proposed amendment to add to
Sec. Sec. 422.166(i)(8) and 423.186(i)(6) to clarify that missing data
include situations where there is a data integrity issue as defined at
Sec. Sec. 422.164(g)(1) and 423.184(g)(1).
Response: We appreciate the support for the data integrity policy.
Sections 422.166(i)(8) and 423.186(i)(6) currently provide that for an
affected contract that has missing data in the current or previous
year, the final measure rating comes from the current year unless an
exemption described elsewhere in the regulation applies. We proposed a
clarification and are finalizing changes to state that the term
``missing data'' under the rule includes data where there is a data
integrity issue as defined in Sec. Sec. 422.164(g)(1) and
423.184(g)(1). Under the rules as finalized, when there is a data
integrity issue in the current or previous year, the final measure
rating comes from the current year.
Comment: A few commenters supported CMS's policy to adjust Star
Ratings for FEMA-designated Individual Assistance area disasters for
contracts that have been affected by consecutive year disasters and had
at least 25 percent of enrollees residing in those areas. A commenter
suggested CMS consider lowering this percentage if the situation
warrants, and another requested that CMS drop the threshold for relief
below the current 25 percent to determine the contracts impacted and
the current 60 percent to exclude contracts from the cut point
calculations for doubly-affected contracts or provide relief based on
the proportion of members likely impacted.
Response: We appreciate the support for the methodology for
multiple year-affected contracts codified at Sec. Sec.
422.166(i)(2)(v), (i)(3)(v), (i)(4)(vi), and (i)(6)(iv) and
423.186(i)(2)(v) and (i)(4)(iv). We continue to believe that the 25
percent threshold is appropriate in the vast majority of situations
where the adjustment for extreme and uncontrollable circumstances would
apply. The 25 percent threshold for measure star adjustments was
codified in the April 2019 final rule to ensure that disaster
adjustments are limited to contracts that we believe may have
experienced a real impact from extreme and uncontrollable circumstance
in terms of operations or ability to serve enrollees. We believe using
the same 25 percent threshold for multiple year-affected disaster
adjustments as for single year disaster adjustments is appropriate for
the same reasons and to ensure administrative efficiency and
transparency for applying this adjustment. We addressed similar
concerns about the 25 percent threshold being too high in the April
2019 final rule (84 FR 15773 through 15774). The 60 percent threshold
for excluding numeric values for affected contracts from cut points and
Reward Factor calculations was also codified in the April 2019 final
rule; that threshold is not relevant to the adjustment for multiple
year-affected contracts and we do not believe that it is necessary or
appropriate to change that threshold here. We explained that threshold
in the April 2019 final rule (84 FR 15771 through 15774).
Comment: A few commenters requested that CMS reconsider the current
policy for adjusting Star Ratings calculations in consecutive years of
extreme and uncontrollable circumstances and instead consider a multi-
year lookback period, which would include the most recent period not
impacted by extreme and uncontrollable circumstances. A commenter
suggested CMS could use the parent organization average or the industry
average instead.
Response: As we stated in the April 2019 final rule, we are
concerned about looking back too many years for contracts affected by
disasters multiple years in a row, as well as about including too many
measurement periods in 1 year of Star Ratings. This could result in
looking back different years for different contracts since we would
need to look back to the latest year with no disasters for each
contract. Carrying forward very old data into the Star Ratings for many
years, especially in situations where large numbers of contracts are
impacted by disasters in a given year or in areas that are more prone
to disasters, could erode incentives for plans to provide high quality
care for their beneficiaries even in the face of a disaster.
Further, using a multi-year lookback for contracts affected by
disasters would be operationally very complex since for each contract
we could be comparing to a different year of data that is unaffected,
in particular in areas that are prone to disasters, and could put CMS
at risk of not producing Star Ratings in time for open enrollment. It
would also make it difficult to provide transparency to plans and could
be misleading to consumers. CMS has an obligation to ensure that Star
Ratings data are useful for providing comparative plan information to
beneficiaries because part of the purpose and authority for the Star
Ratings is to provide comparative information to beneficiaries under
sections 1851(d) and 1869D-1(c) of the Act. We strive to provide as up-
to-date and accurate information on plan quality and performance as
possible to beneficiaries. For areas that are prone to disasters in
particular, beneficiaries deserve to have some indication if that means
that the plan they are considering does not perform well when a
disaster strikes or maintains high quality ratings despite those
challenges. We finalized the existing policy for contracts that are
affected by disasters in successive years in order to balance concerns
about either using older data or using data based on performance
impacted by consecutive disasters.

[[Page 5928]]

As to the suggestion to assign the parent organization average or
industry average for contracts that have been impacted by disasters for
multiple years, we do not believe this appropriately holds contracts
accountable for their performance or allows them to distinguish
themselves in disaster situations. We remind contracts that Sec. Sec.
422.504(o) and 423.505(p) require MA organizations and Part D sponsors
to develop, maintain, and implement a business continuity plan that
ensures restoration of operations following disruptions such as
disasters. Contracts are still responsible for providing care to their
beneficiaries during disasters, so it would not be fair or appropriate
to simply award them a rating that is based on the performance of other
plans. Further, the Star Ratings are used for payment purposes and
using the performance of other plans as the basis to award a quality
bonus increase or increased rebate percentage to a contract is
inconsistent with the purpose of those payment policies to reward MA
organizations that excel.
Comment: A commenter suggested CMS could consider a hold harmless
provision for plans with significant losses in Star Ratings across the
multi-year lookback period.
Response: The disaster policies already address how extreme and
uncontrollable circumstances may have a negative impact on the Star
Ratings of an MA or Part D plan. We do not believe additional hold
harmless provisions are needed for multiple year-affected contracts as
it could weaken plan accountability and incentives to provide high
quality care in disaster situations.
Comment: Several commenters suggested CMS expand the current rule
for contracts impacted by two different disasters in consecutive years
to include contracts impacted by a single disaster spanning multiple
years.
Response: The introductory language of paragraph (i) of both
Sec. Sec. 422.166 and 423.186 states that we use the incident start
date to determine which year of Star Ratings can be adjusted for a
particular disaster, regardless of whether the incident period lasts
until another calendar year. As we explained in the April 2019 final
rule (84 FR 15774), in some cases the incident period end date changes,
which would make it difficult operationally to determine which Star
Ratings year is impacted. We believe limiting adjustments for a single
disaster to 1 year is appropriate to avoid adversely impacting CMS's
operational timelines for analyzing data and calculating Star Ratings.
For example, if a disaster is extended into the next measurement year
we would potentially need to recalculate and reissue ratings. We also
want to limit the impact and effects on contracts that do meet the
definition of ``affected contract.'' We are concerned, for example,
about the integrity of the ratings and reliability of the comparisons
if cut points do not take into account the performance of an increasing
number of affected contracts or if cut points have to be recalculated
after they are released. We also want to preserve transparency of the
Star Ratings for consumers by not using data from many different
measurement years.
Comment: A couple commenters requested clarification about how CMS
handles situations where a contract is affected by multiple disasters
in the same year.
Response: We use the percent of enrollment impacted by qualifying
disasters to determine eligibility for disaster adjustments. That is,
contracts impacted by multiple qualifying disasters in the same year
are eligible for the disaster relief as long as a total of 25 percent
or more of their enrollees reside in Individual Assistance areas. CMS
rolls up the enrollment for each contract at the state/county level;
when more than one enrollment period applies (that is, because the
contract was affected by more than one disaster), an average of the
enrollments from each of corresponding enrollment periods where the
contract was affected is used to calculate the total percent of a
contract's enrollees in a FEMA-designated Individual Assistance area
during extreme and uncontrollable circumstances. This is described in
detail in the Medicare Part C & D Star Ratings Technical Notes
Attachment Q: Identification of Contracts Affected by Disasters
(https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovGenIn/PerformanceData, page 143 of 2020 Star Ratings
Technical Notes).
Comment: We received a number of comments about the impact of
COVID-19 on Star Ratings, for example asking whether and how CMS would
adjust for the impact of COVID-19 for 2021 Star Ratings and beyond.
Response: The public health emergency incident start date for
COVID-19 was in 2020, so adjustments under the extreme and
uncontrollable events policy at Sec. Sec. 422.166(i) and 423.186(i)
will apply to the 2022 Star Ratings. The March 31st COVID-19 IFC
addressed the immediate impact of the pandemic on the Part C and D Star
Ratings program and made additional modifications for the 2022 Star
Ratings, in recognition that the COVID-19 pandemic may impact
performance on the Star Ratings measures during the 2020 measurement
period. CMS will continue to monitor the impact of COVID-19 on the
healthcare system and Part C and D plans. The September 2nd COVID-19
IFC modifies the calculation of the 2022 Part C and D Star Ratings to
address the application of the extreme and uncontrollable circumstances
policy. We direct readers to our summary of those two interim final
rules with comment in section IV.D.1 of this final rule.
Comment: Several commenters requested that CMS expand the current
extreme and uncontrollable circumstance policy for single year
disasters, for example to include HHS-declared public health
emergencies, Fire Management Assistance Grant (FMAG) declarations,
governor declarations of a state of emergency, or state-level public
health emergencies that extend beyond a national emergency period. A
few stated if a contract gets the same Star Rating in both years, CMS
should take the higher of the 2 years' measure scores in order to
ensure that plans and beneficiaries are truly held harmless in the
event of a disaster. Several commenters suggested modifications to how
the improvement measures are handled when there are disasters. For
example, we received suggestions to hold contracts harmless in
improvement when there are disasters.
Response: The changes suggested by commenters for expanding the
adjustments for single year disasters are significant in scope and of
the type that would require analysis and consideration by CMS before
proposing changes to the current regulations. As we noted in the April
2019 final rule (84 FR 15773), we use the Star Rating for the measure-
level comparison because the measure stars are used to calculate the
overall Star Rating and the measure-level cut points can change each
year. We use the corresponding measure scores for improvement
calculations in order to maintain consistency in the years being
compared. We only revert to the previous year's measure Star Rating if
it is higher (Sec. Sec. 422.166(i)(2)(iv), 422.166(i)(3)(iv),
422.166(i)(4)(v), 422.166(i)(6)(i), 423.186(i)(2)(iv), and
423.186(i)(4)(i)).
Summary of Regulatory Changes
After consideration of the comments received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the addition of Sec. Sec. 422.166(i)(8) and 423.186(i)(6)
as proposed. These changes are applicable to the 2022 measurement year
and the 2024 Star Ratings. We do not believe additional

[[Page 5929]]

revisions to the rules for multiple year-affected contracts described
at Sec. Sec. 422.166(i)(2)(v), (i)(3)(v), (i)(4)(vi), and (i)(6)(iv)
and 423.186(i)(2)(v) and (i)(4)(iv) are necessary to address the
impacts of the PHE for the COVID-19 pandemic in light of the September
2nd COVID-19 IFC.
6. Quality Bonus Payment Rules (Sec. Sec. 422.162(b)(4) and
422.166(d)(2)(vi))
We proposed several amendments to Sec. Sec. 422.162(b)(4) and
422.166(d)(2)(vi) to codify our current policies for using the Star
Ratings to calculate quality bonus payment percentage increases (QBPs)
and determine beneficiary rebates for MA organizations.
The Affordable Care Act amended sections 1853(n) and 1853(o) of the
Act to require CMS to make QBPs to MA organizations that achieve at
least 4 stars in a 5-star Quality Rating system. The Affordable Care
Act also amended section 1854(b)(1)(C) of the Act to change the share
of savings available to MA organizations and that they must provide to
enrollees as the beneficiary rebate, mandating that the level of rebate
is tied to the level of an MA organization's QBP rating. As a result,
beginning in 2012, quality as measured by the 5-star Quality Rating
System directly affected the monthly payment amount MA organizations
receive from CMS. At the time the QBPs were implemented, CMS codified
at Sec. 422.260 an administrative review process available to MA
organizations for payment determinations based on the quality bonuses.
Historically, every November CMS has released the preliminary QBP
ratings for MA contracts to review their ratings and to submit an
appeal request under Sec. 422.260(c) if they believe there is a
calculation error or incorrect data are used.
In the April 2018 final rule, we codified at Sec. 422.160(b)(2)
that the ratings calculated and assigned under this subpart are used to
provide quality ratings on a 5-star rating system used in determining
QBPs and rebate retention allowances. Historically, the QBP rating
rules have been announced through the Advance Notice and Rate
Announcement since section 1853(b) of the Act authorizes an advance
notice and rate announcement to solicit comment for proposed changes
and announce changes to the MA payment methodology. The QBPs are used
as part of setting the MA benchmarks and capitation rates for counties
(and thus, MA service areas) each year. As we have codified in
regulation the methodology for the Star Ratings over the last couple of
years, we proposed in the February 2020 proposed rule to clarify the
rules around assigning QBP ratings, codify the rules around assigning
QBP ratings for new contracts under existing parent organizations, and
amend the definition of new MA plan that is codified at Sec. 422.252
by clarifying how we apply the definition. Our proposal was to codify
current policy (for how we have historically assigned QBP ratings) as
generally adopted and implemented through the section 1853(b) process,
without substantive changes.
Historically, for contracts that receive a numeric Star Rating, the
final QBP rating released in April for the following contract year
would be the contract's highest rating as defined at Sec. 422.162(a)
(that is, overall or summary rating). Section 422.260(a) states that
the QBP determinations are made based on the overall rating for MA-PDs
and the Part C summary rating for MA-only contracts. We proposed to add
language at Sec. 422.162(b)(4) stating that for contracts that receive
a numeric Star Rating, the final QBP rating is released in April of
each year for the following contract year and that the QBP rating is
the contract's highest rating, as that term is defined at Sec.
422.162(a). We also proposed to clarify in the regulation text that the
QBP rating is the contract's highest rating from the Star Ratings
published by CMS in October of the calendar year that is 2 years before
the contract year to which the QBP rating applies. For example, the
2020 QBPs were released in April 2019 and based on the Star Ratings
published in October 2018. For MA contracts that offer Part D, the QBP
rating would be the numeric overall Star Rating. For MA contracts that
do not offer Part D (MA-only, MSA, and some PFFS contracts), the QBP
rating would be the numeric Part C summary rating. We also proposed
adding language at Sec. 422.162(b)(4)(ii) clarifying that the contract
QBP rating is applied to each plan benefit package under the contract.
We explained in the February 2020 proposed rule that if a contract
does not have sufficient data to calculate and assign Star Ratings for
a given year because it is a new MA plan or low enrollment contract,
Sec. 422.166(d)(2)(v) provides the rules for assigning a QBP rating.
That regulation references the definitions at Sec. 422.252. We
proposed to amend the definition at Sec. 422.252 for new MA plans by
clarifying how we apply the definition. We address that proposal in
section IV.D.2 of this rule.
We also proposed to add rules at Sec. 422.166(d)(2)(vi) for
contracts that do not have sufficient data to calculate and assign
ratings and do not meet the definition of either low enrollment
contracts or new MA plans at Sec. 422.252. Our proposal was to codify
the policy that has been in place since the 2012 Rate Announcement: Any
new contract under an existing parent organization that has had MA
contract(s) with CMS in the previous 3 years receives an enrollment-
weighted average of the Star Ratings earned by the parent
organization's existing MA contracts. We also addressed that policy in
a proposed rule for CY 2012 that appeared in the Federal Register on
November 22, 2010 (``Medicare Program; Proposed Changes to the Medicare
Advantage and the Medicare Prescription Drug Benefit Programs for
Contract Year 2012 and Other Proposed Changes'') (75 FR 71190, 71219)
and the related final rule that appeared in the Federal Register on
April 15, 2011 (76 FR 21432, 21486 through 21490). We explained in the
February 2020 proposed rule that we intended for this policy to
continue uninterrupted so that the calculation of QBPs remains stable
and transparent to stakeholders. Codifying the policy explicitly, as
well as how it is applied, would serve this purpose.
We proposed to add at Sec. 422.166(d)(2)(vi)(A) that any new
contract under an existing parent organization that has other MA
contracts with numeric Star Ratings in November (when the preliminary
QBP ratings are calculated for the contract year that begins 14 months
later) would be assigned the enrollment-weighted average of the highest
Star Rating of all other MA contracts under the parent organization
that will be active as of April the following year. The Star Ratings
used in this calculation would be the whole or half Star Ratings that
are publicly displayed. For the 2021 QBPs, for any new contracts under
an existing parent organization, we explained how the policy would be
applied as follows:
(i) We identify the parent organization of the new contract in
November 2019.
(ii) We identify the MA contracts held by that parent organization
in November 2019, when the preliminary 2021 QBP ratings are posted for
review. For preliminary QBP ratings, we use the numeric Star Ratings
for those MA contracts that were held by the parent organization in
November 2019 that we anticipated to still be in existence and held by
that parent organization in April 2020.
(iii) Using the enrollment in those other MA contracts as of
November 2019, we calculated the enrollment-weighted average of the
highest Star Rating(s) of those MA contracts.
(iv) In April 2020, we update the enrollment-weighted average
rating based on any changes to the parent

[[Page 5930]]

organization of existing contracts, using the November 2019 enrollment
in the contracts. The enrollment-weighted average rating includes the
ratings of any contract(s) that the parent organization has acquired
since November 2019. This enrollment-weighted average is used as the
2021 QBP rating for the new MA contract under the parent organization
for payment in 2021. We release these QBP ratings in April of the year
before the payment year (for 2021 QBPs, in April of 2020).
Because our proposal was to codify existing and current policy
without change, we followed these steps to identify the QBP ratings for
new contracts of existing MA parent organizations for 2021 QBPs.
We proposed to add at Sec. 422.166(d)(2)(vi)(B) that if a new
contract is under a parent organization that does not have any other MA
contracts with numeric Star Ratings in November, CMS would look at the
MA Star Ratings for the previous 3 years. The QBP rating would be the
enrollment-weighted average of the MA contracts' highest-level Star
Ratings from the most recent year that had been rated for that parent
organization. We explained using an example: If in November 2019 there
were no other MA contracts under the parent organization with numeric
2020 Star Ratings, we would go back first to the 2019 Star Ratings and
then the 2018 Star Ratings. Under our existing policy, and thus under
the proposal, if there were MA contract(s) in the parent organization
with Star Ratings in any of the previous 3 years, the QBP rating was
the enrollment-weighted average of the MA contracts' highest Star
Ratings from the most recent year rated. Under our existing policy, and
thus under the proposal, the Star Ratings used in this calculation
would be the rounded Star Ratings (whole or half star) that are
publicly displayed on www.medicare.gov.
We explained in the February 2020 proposed rule how the policy
works by using another illustration for the 2021 QBPs. For a new
contract(s) under a parent organization that did not have any MA
contracts in November 2019:
(i) We identify the MA contracts held by that parent organization
in November 2018. If the parent organization had other MA contracts in
November 2018, we use the numeric Star Ratings issued in October 2018
for those MA contracts that were held by the parent organization in
November 2018.
(ii) Using the enrollment in those other MA contracts as of
November 2018, we calculate the enrollment-weighted average of the
highest Star Rating(s) of those MA contracts.
(iii) This enrollment-weighted average is used as the 2021 QBP
rating for the new MA contract for that parent organization, for
payment in 2021 and is released to the MA organization for the new
contract in April of 2020.
Because our proposal was to codify existing and current policy
without change, we followed these steps for the 2021 QBPs where
applicable. And for any new contract(s) under a parent organization
that did not have any MA contracts in November 2018 and 2019, we
provided an illustration (again for the 2021 QBPs) as follows:
(i) We identified the MA contracts held by that parent organization
in November 2017. If the parent organization had other MA contracts in
November 2017, we used the numeric Star Ratings for those MA contracts
that were held by the parent organization in November 2017.
(ii) Using the enrollment in those other MA contracts as of
November 2017, we calculated the enrollment-weighted average of the
highest Star Rating(s) of those MA contracts.
(iii) This is used as the 2021 QBP rating for the new MA contract
for payment in 2021 and is released to the MA organization for the new
contract in April 2020.
We explicitly explained how if there were no MA contract(s) in the
parent organization with numeric Star Ratings in the previous 3 years,
the contract is rated as a new MA plan in accordance with Sec. 422.258
(for QBP purposes) and Sec. 422.166(d)(2)(v) (for other purposes). Our
proposal was to codify existing and current policy without change, and
we followed these steps for the 2021 QBPs where applicable. Under this
final rule, we will follow the same steps for the 2022 QBPs.
We proposed the rules for calculating the enrollment-weighted
average and addressing changes in parent organizations in new
paragraphs (d)(2)(iv)(C) through (E) at Sec. 422.166. We proposed to
add at Sec. 422.166(d)(2)(vi)(C) that the enrollment used in the
enrollment-weighted calculations is the November enrollment in the year
the Star Ratings are released. The enrollment data are currently posted
publicly at: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/index.html.
We also proposed at Sec. 422.166(d)(2)(vi)(D) that the QBP ratings
would be updated for any changes in a contract's parent organization
prior to the release of the final QBP ratings in April of each year. We
explained that under our proposal, the same rules described at Sec.
422.166(d)(2)(vi)(A), (B), and (C) would be applied to the new contract
using the new parent organization information. We provided an example,
again using the 2021 QBPs: In April 2020 when the final QBP ratings
were released, the enrollment-weighted average rating would include the
ratings of any MA contract(s) that the parent organization had acquired
since November 2019. Thus, if a parent organization buys an existing
contract it would be included in the enrollment-weighted average. We
also proposed at Sec. 422.166(d)(2)(vi)(E) to codify our current
practice that once the QBP ratings are finalized in April of each year
for the following contract year, no additional parent organization
changes are possible for QBP purposes.
In this section of this rule, we summarize the comments we received
and provide our responses and final decisions.
Comment: Several commenters expressed support for codifying the QBP
rating policies in regulation and provided support for the existing
policies.
Response: CMS appreciates the support.
Comment: A commenter expressed concern that the QBP rating is based
on too many measures and should be based on a small set of measures
related to patient experience and outcomes at the geographic level.
Response: The regulation at Sec. 422.260(b), revised in the April
2018 final rule, provides that the QBP determination methodology is the
quality ratings system specified in subpart 166 of part 422 for
assigning quality ratings to provide comparative information about MA
plans and evaluating whether MA organizations qualify for a QBP. The
methodology for the quality ratings system was codified for the 2019
measurement year and 2021 Star Ratings in the April 2018 final rule.
Further, that amendment to Sec. 422.260(b) was merely codification of
a longstanding policy, discussed in the CY 2012 proposed rule (75 FR
71219, 71221) and the CY 2012 final rule (76 FR 21486 through 21490).
We did not propose to change that rule and do not believe it is
necessary or appropriate at this time.
In the April 2018 final rule, we stated that the Star Rating system
provides information in a summary fashion that is a true reflection of
the plan's quality and encompasses multiple dimensions of high quality
care and is based on a delicate balance of measuring numerous aspects
of quality and the need for a

[[Page 5931]]

small data set that minimizes reporting burden on the industry (83 FR
16520). Most commenters supported the principles underlying the Star
Ratings program as described in the April 2018 final rule and made
various suggestions for additional measure concepts to include. We do
not believe that a change to the ratings used for QBP purposes is
appropriate at this time and, even if we did, we believe that such a
significant change from current practice as suggested in the comment
should be subject to additional analysis and the opportunity for public
comment via the rulemaking process. Our current Part C and D Star
Ratings contractor, RAND Corporation, is currently soliciting input
from their Technical Expert Panel on suggested potential changes to the
mix and number of measures included in the Star Ratings program for
consideration in the future. For more information about the Technical
Expert Panels, please see https://www.rand.org/health-care/projects/star-ratings-analyses.html.
Comment: A couple of commenters suggested that all new contracts be
treated as qualifying contracts and received the 3.5 percentage
increase in the benchmark, regardless of whether the parent
organization has other MA contracts. A commenter focused on this being
fairer to new entrants, while another commenter focused on the
statutory provision at 1857(c)(4) of the Social Security Act that
guards against contracts leaving and then immediately re-entering the
MA program.
Response: Historically, we have followed the rules to assign QBP
ratings for a new contract under an existing parent organization that
were first adopted in the 2012 Advance Notice and Rate Announcement and
the April 2011 final rule that codified the definition of a new MA
plan. New contracts under existing parent organizations have
traditionally received the weighted average of the ratings of the
contracts under the parent organization to minimize the incentive to
create new contracts to qualify for a QBP. If the overall performance
of an organization is poor, that organization otherwise would have
incentives to game the system to be treated as a qualifying plan for
QBP purposes for 3 years. This would ignore information that CMS has
about the overall performance of the contracts under the parent
organization given at least some of the administrative systems are
shared across contracts within a parent organization. If there were no
MA contract(s) in the parent organization with numeric Star Ratings in
the previous 3 years, the contract is rated as a new MA plan in
accordance with Sec. 422.258 since CMS does not have recent experience
with the organization.
New contracts under existing parent organizations do not
necessarily qualify for a QBP; thus, this policy is not unfair to new
entrants. Additionally, new entrants where the parent organization does
not have recent experience as an MA contract are treated as qualifying
plans for 3 years until they have enough data to assess their
performance. For the 2021 QBP ratings, 47 percent of the new contracts
under existing parent organizations received 3.5 stars or less; thus,
these new contracts did not qualify for QBPs. We understand that
1857(c)(4) guards against contracts leaving and immediately entering
the MA program, but we believe it is still important to guard against
existing contracts opening up new contracts primarily to be treated as
qualifying contracts for QBP purposes.
Summary of Regulatory Changes
After consideration of the comments and for the reasons set forth
in the proposed rule and our responses to the related comments
summarized earlier in this final rule, we are finalizing the
methodology to calculate the QBP ratings as proposed at Sec. Sec.
422.162(b)(4) and 422.166(d)(2)(vi) with a slight revision of the text
to further clarify that the enrollment figures used in the enrollment-
weighted QBP rating calculations are the November enrollment in the
year the Star Ratings are released. Our proposal was to codify existing
and current policy without change, and under this final rule, we will
follow the same steps as prior years for calculating the 2022 QBPs.

E. Permitting a Second, ``Preferred,'' Specialty Tier in Part D
(Sec. Sec. 423.104, 423.560, and 423.578)

1. Overview and Summary
Section 1860D-2(b)(2) of the Act, which establishes the parameters
of the Part D program's Defined Standard benefit, allows for
alternative benefit designs that are actuarially equivalent to the
Defined Standard benefit, including the use of tiered formularies.
Although not required, Part D sponsors are permitted to include a
specialty tier in their plan designs. Use of a specialty tier provides
the opportunity for Part D sponsors to manage high-cost drugs apart
from tiers that have less expensive drugs. Our policy for the specialty
tier has aimed to strike the appropriate balance between plan
flexibility and Part D enrollee access to drugs, consistent with our
statutory authority.
Section 1860D-4(g)(2) of the Act requires Part D sponsors to have
an exceptions process under which a beneficiary who is enrolled in a
Part D plan offering a prescription drug benefit for Part D drugs
through the use of a tiered formulary may request an exception to the
plan's tiered cost-sharing structure. The statute provides that under
the exception, a non-preferred drug could be covered under the terms
applicable for preferred drugs if certain conditions are met. The
statute grants CMS authority to establish guidelines under which Part D
enrollees may request exceptions to tiered cost-sharing structures and
under which a determination with respect to such a request is made.
Under Sec. 423.578(a), we require each Part D sponsor that manages its
benefit through the use of a tiered formulary to establish and maintain
reasonable and complete exceptions procedures subject to our approval.
The Part D sponsor must grant an exception when it determines that the
requested non-preferred drug for treatment of the enrollee's condition
is medically necessary, consistent with the physician's or other
prescriber's statement that the preferred drug: (i) Would not be as
effective for the enrollee as the requested drug; (ii) would have
adverse effects for the enrollee; or (iii) both.
However, if Part D sponsors were to permit tiering exceptions to
allow Part D enrollees to obtain drugs on specialty tiers at a lower
cost sharing applicable to non-specialty tiers, they would also likely
increase Part D premiums as well as cost sharing for non-specialty
tiers. In other words, the ability to get lower cost sharing on
specialty-tier Part D drugs through tiering exceptions means that costs
would likely go up elsewhere--such as by increasing the cost sharing on
generic drug tiers--in order to keep the benefit design actuarially
equivalent to the Defined Standard. Consequently, in permitting Part D
sponsors to maintain a specialty tier, we also implemented a regulation
(most recently Sec. 423.578(a)(6)(iii)) that permits (but does not
require) Part D sponsors to exempt Part D drugs placed on the specialty
tier from their tiering exceptions processes.
Accordingly, to restrict the specialty tier to only the highest-
cost Part D drugs, beginning in 2007,^{44 45} we

[[Page 5932]]

developed a minimum dollar-per-month threshold amount to determine
which Part D drugs are eligible, based on relative high cost, for
inclusion on the specialty tier.\46\ Additionally, to prevent
discriminatory formulary structures, in particular to protect Part D
enrollees with certain disease types that are treated only by
specialty-tier eligible drugs, our guidance \47\ has set the maximum
allowable cost sharing for specialty-tier Part D drugs between 25 and
33 percent coinsurance (25/33 percent).
---------------------------------------------------------------------------

\44\ For 2007, we established the specialty-tier cost threshold
at a negotiated price of $500 per month. Please see Medicare
Modernization Act 2007 Final Guidelines--Formularies. https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/downloads/cy07formularyguidance.pdf.
\45\ The specialty-tier cost threshold was increased to $600 per
month in 2008, and remained at $600 per month from contract years
2008 through 2016. See https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2017.pdf and https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2017.pdf.
\46\ See, for instance, Draft 2020 Call Letter, pages 178-179
(available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2020Part2.pdf), and
Final 2020 Call Letter, page 208 (available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf).
\47\ See section 30.2.4 of Chapter 6 of the Medicare
Prescription Drug Benefit Manual, available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Benefits-Manual-Chapter-6.pdf and page 21 of the
2020 Bid Submission User Manual, Chapter 7: Plan Benefit Package Rx
Drugs Section. The Bid Submission User Manual for 2020 is available
at the following pathway after logging into the Health Plan
Management System (HPMS): Plan Bids > Bid Submission > Contract Year
2020 > View Documentation > Bid Submission User Manual.
---------------------------------------------------------------------------

We have not previously permitted Part D sponsors to structure their
plans with more than one specialty tier. Pointing to factors such as
the introduction of biosimilar biological products to the market \48\
and recent higher pricing of some generic drugs relative to brand drug
costs, some stakeholders requested that we reconsider this policy. They
posited, for instance, that creating an additional specialty tier could
improve the ability of Part D sponsors to negotiate with pharmaceutical
manufacturers to help lower the prices of high-cost Part D drugs.
Moreover, in its June 2016 Report to Congress (available at http://www.medpac.gov/docs/default-source/reports/june-2016-report-to-the-congress-medicare-and-the-health-care-delivery-system.pdf), the
Medicare Payment Advisory Commission (MedPAC) suggested that allowing
plans to maintain two specialty tiers with differential cost sharing
could potentially encourage the use of lower-cost biosimilar \49\
biological products and encourage competition among existing specialty
Part D drugs. More recently, some commenters on our Draft 2020 Call
Letter (available at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2020Part2.pdf) took the
opportunity to advocate for a second specialty tier.
---------------------------------------------------------------------------

\48\ See the April 2018 final rule for more background on
biosimilar biological products (83 FR 16610).
\49\ Unless our policy specifically distinguishes biosimilar
biological products from interchangeable biological products, we use
the term ``biosimilar biological product(s)'' in this preamble to
reference biosimilar or interchangeable (when such products become
available) biological products.
---------------------------------------------------------------------------

Improving Part D enrollee access to needed drugs and lowering drug
costs are central goals for CMS. Accordingly, in the hopes of providing
flexibility that will promote these goals, we proposed to allow (but
not require) Part D sponsors to establish up to two specialty tiers and
design an exceptions process that exempts Part D drugs on these tiers
from tiering exceptions to non-specialty tiers. Under this policy, Part
D sponsors would have the flexibility to determine which Part D drugs
are placed on either specialty tier, subject to the specialty-tier cost
threshold that would be established according to the methodology we
proposed and the requirements of our formulary review and approval
process under Sec. 423.120(b)(2). To maintain Part D enrollee
protections, we proposed to codify a maximum allowable cost sharing
that would apply to a single specialty tier, or, if a Part D sponsor
has a plan with two specialty tiers, to the higher cost-sharing,
specialty tier. Further, we proposed to require that if a Part D
sponsor has a plan with two specialty tiers, one must be a
``preferred'' tier that offers lower cost sharing than the higher cost-
sharing, specialty tier.
We note that we did not propose any revisions to Sec.
423.578(c)(3)(ii), which requires Part D sponsors to provide coverage
for a Part D drug for which a tiering exception was approved at the
cost sharing that applies to the preferred alternative. The exemption
from tiering exceptions for specialty-tier Part D drugs, at Sec.
423.578(a)(6)(iii), would apply only to tiering exceptions to non-
specialty tiers (meaning, when the tiering exception request is for the
specialty-tier Part D drug to be covered at a cost-sharing level that
applies to a non-specialty tier). Under our proposal, we would require
Part D sponsors to permit tiering exception requests for drugs on the
higher cost-sharing, specialty tier to the lower cost-sharing,
specialty tier.
To improve transparency, we proposed to codify current
methodologies for cost sharing and calculations relative to the
specialty tier, with some modifications. First, we proposed to codify a
maximum allowable cost sharing permitted for the specialty tiers of
between 25 percent and 33 percent, inclusive (that is, 25 percent <=
maximum allowable cost sharing <= 33 percent), depending on whether the
plan includes a deductible, as described further in section IV.E.4. of
this final rule.
We also proposed to determine the specialty-tier cost threshold--
meaning whether the drug has costs high enough to qualify for
specialty-tier placement--based on a 30-day equivalent supply.
Additionally, we proposed to base the determination of the specialty-
tier cost threshold on the ingredient cost reported on the PDE. This
would be a change from our current policy, which uses the negotiated
price reflected on the PDE. Under our proposal, the specialty-tier cost
threshold would apply to both specialty tiers.
To respond to comments on our Draft 2020 Call Letter requesting
that the specialty-tier cost threshold be increased regularly, we also
proposed to maintain a specialty-tier cost threshold that is set at a
level that, in general, reflects Part D drugs with monthly ingredient
costs that are in the top 1 percent of all monthly ingredient costs, as
described further in section IV.E.6. of this final rule. We proposed to
adjust the threshold, in an increment of not less than ten percent,
rounded to the nearest $10, when an annual analysis of PDEs shows that
recalibration of the specialty-tier cost threshold is necessary to
continue to reflect only Part D drugs with the top 1 percent of monthly
ingredient costs. We proposed to annually: (1) Determine whether the
adjustment would be triggered, and (2) announce the specialty-tier cost
threshold.
2. A Second, ``Preferred,'' Specialty Tier
Placement on the specialty tier can play an important role in
maintaining lower cost sharing on non-specialty tiers. The non-
specialty, non-preferred brand/drug tiers frequently have cost sharing
equal to as much as 50 percent coinsurance. This means that Part D
enrollees would pay considerably more after application of coinsurance
for a high-cost drug if it appeared on a non-specialty, non-preferred
brand/drug tier with, for instance, 50 percent cost sharing as opposed
to placement on the specialty tier, which has been subject to lower
cost-sharing requirements. For this reason, we reject the
recommendation of some commenters on our Draft 2020 Call Letter that we
eliminate the specialty tier altogether.
To the opposite effect, as discussed in section IV.E.1 of this
final rule, other

[[Page 5933]]

stakeholders, including MedPAC, have recommended that we permit Part D
sponsors to maintain a second specialty tier. Stakeholders favoring
this approach have posited that this change would: (1) Improve the
ability of Part D sponsors and pharmacy benefit managers (PBMs) to
negotiate better rebates \50\ with manufacturers by enabling them to
establish a preferred specialty tier that distinguishes between high-
cost drugs and effectively encourages the use of preferred specialty-
tier Part D drugs; (2) reduce costs for Part D enrollees, not only
through direct cost-sharing savings associated with a lower cost-
sharing, ``preferred'' specialty tier, but also indirectly, through the
lowered premiums for all Part D enrollees that could result from better
rebates on specialty-tier Part D drugs; and (3) reduce our costs
directly through lower drug costs because lower cost sharing would
delay a Part D enrollee's entry into the catastrophic phase of the
benefit in which the government is responsible for 80 percent of the
costs.
---------------------------------------------------------------------------

\50\ In this section of this final rule, by ``rebates,'' we are
broadly referring to either retrospective or point-of-sale (POS)
rebates or discounts.
---------------------------------------------------------------------------

Consistent with our ongoing efforts to implement new strategies
that can help lower drug prices and increase competition, we proposed
to permit Part D sponsors to have up to two specialty tiers by
permitting a new preferred specialty tier. However, driven by ongoing
concerns over actuarial equivalence and discriminatory benefit designs,
in order to strike the appropriate balance between plan flexibility and
Part D enrollee access, we also needed to carefully weigh the following
factors: (1) Tiering exceptions between the two specialty tiers or to
other, non-specialty tiers; (2) the maximum allowable cost sharing for
each specialty tier; and (3) tier composition (that is, the selection
of Part D drugs for each specialty tier). The regulatory text to allow
up to two specialty tiers (which reflects our consideration of these
factors) and other related proposals are discussed in the following
sections of this preamble.
We received 82 public comments concerning our proposal to permit
Part D sponsors to maintain up to two specialty tiers. Although there
was some overlap in stakeholder categories, 81 comments were from
groups representing Part D sponsors, beneficiary advocates,
manufacturers, providers, pharmacists and pharmacies, wholesale
distributors, policy institutes, and non-partisan Congressional
agencies. The remaining comment was from an individual beneficiary. A
summary of the comments and our responses follow.
Comment: Many commenters supported CMS's proposal.
Response: We thank the commenters for their support.
Comment: Some commenters advocated that CMS should abolish
specialty tiers altogether, finding them to be outdated and
discriminatory to the Part D enrollees whose conditions require they
take Part D drugs placed on the specialty tiers. Similarly, these
commenters suggested that specialty tiers are unique to prescription
drug benefits with no equivalent in the medical benefit and run counter
to the purpose of insurance altogether by effectively serving as what
the commenter termed ``reverse insurance,'' reasoning that the sickest
patients who need specialty-tier eligible drugs subsidize the benefit
to keep premiums and cost sharing on non-specialty tiers lower for the
rest of the benefit.
Response: We thank the commenters for this perspective. However,
the use of specialty tiers in the commercial market predates the Part D
program by several years, and there is widespread use of two specialty
tiers in employer-based plans, with some plans using two or more
specialty tiers since at least 2014.^{51 52 53 54 55 56 57}
Additionally, Part D enrollee cost sharing for the specialty tier(s) in
Part D, with a maximum allowable cost sharing of 25/33 percent
coinsurance is equal to, or, in the case of the preferred, specialty
tier that has cost sharing less than the 25/33 percent maximum, better
than cost sharing under the Defined Standard benefit. Because cost
sharing under the Defined Standard benefit is provided for by statute,
neither cost sharing under the Defined Standard benefit nor specialty-
tier cost sharing, which is better than the Defined Standard benefit,
is discriminatory. Moreover, a hallmark of Medicare Part D is that it
relies on market forces to provide prescription drug benefits to Part D
enrollees, and, as a public benefit that is administered by the private
insurance market, it is incumbent upon us to keep abreast of industry
standards for the provision of this benefit while also balancing Part D
enrollee access to prescription drugs. While the use of a specialty
tier may be counterintuitive, it is a tool widely used in the industry
to address a highly volatile market for high-cost Part D drugs.
Although there are distinctions between commercial plans and the
Medicare Part D program, we believe this particular option is worth
pursuing, not only because of the possibility that benefits could
ensue, but most centrally because we do not anticipate that permitting
a second, preferred specialty tier would lead to additional harms for
Part D enrollees given our proposed Part D enrollee protections, such
as retention of the 25/33 percent maximum allowable cost sharing.
---------------------------------------------------------------------------

\51\ The following link provides access to the Kaiser Family
Foundation's archives of the annual Employer Health Benefits Survey.
https://www.kff.org/health-costs/report/employer-health-benefits-annual-survey-archives/.
\52\ Kaiser Family Foundation 2014 Employer Health Benefits
Annual Survey, Pages 164 and 166, http://files.kff.org/attachment/2014-employer-health-benefits-survey-full-report.
\53\ Kaiser Family Foundation 2015 Employer Health Benefits
Annual Survey, Pages 160-162, http://files.kff.org/attachment/report-2015-employer-health-benefits-survey.
\54\ Kaiser Family Foundation 2016 Employer Health Benefits
Annual Survey, Pages 172-174, http://files.kff.org/attachment/Report-Employer-Health-Benefits-2016-Annual-Survey.
\55\ Kaiser Family Foundation 2017 Employer Health Benefits
Annual Survey, Page 156, http://files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2017.
\56\ Kaiser Family Foundation 2018 Employer Health Benefits
Annual Survey, Page 161, http://files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2018.
\57\ Kaiser Family Foundation 2019 Employer Health Benefits
Annual Survey, Page 161, http://files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2019.
---------------------------------------------------------------------------

We also disagree with the assertion that the specialty tier(s)
serve as a perverse, ``reverse insurance'' whereby the sickest patients
who need specialty-tier eligible drugs subsidize the benefit to keep
premiums and cost sharing on non-specialty tiers lower for the rest of
the benefit. We believe this reasoning is flawed because the specialty
tier is aligned with the Defined Standard benefit, and the Part D plan
bid requirements also necessitate that the benefit structure below the
specialty tier also be actuarially equivalent to the Defined Standard
benefit. Therefore, the use of specialty-tier eligible drugs has no
differential impact on lowering the premiums and cost sharing on non-
specialty tiers for the rest of the benefit.
Lastly, we believe that providing Part D sponsors the ability to
make business decisions regarding the distribution of insurance risk,
as permitted by the statute and while retaining central Part D enrollee
protections, reflects the goals of the Part D program, which aim to
provide flexibilities, when possible, that could enable Part D sponsors
to offer robust formularies with lower costs.
Comment: Some commenters expressed concern that, although CMS
proposed to permit Part D sponsors to maintain up to two specialty
tiers, CMS did not propose corresponding regulatory text to this
effect. Some commenters urged CMS to clarify that a second specialty
tier is voluntary, and other commenters urged CMS to clarify

[[Page 5934]]

that a second specialty tier would be in addition to the total number
of allowed drug tiers, rather than in place of an existing tier.
Response: We proposed to add a new paragraph at Sec.
423.104(d)(2)(iv)(D) to specify that a Part D plan may maintain up to
two specialty tiers; additionally, as discussed in section IV.E.3 of
this final rule, we also proposed to amend Sec. 423.578(a)(6)(iii) to
reflect the possibility of a second specialty tier. Maintaining one or
two specialty tier(s) is voluntary. Similarly, we also clarify that a
second specialty tier would be in addition to, not in lieu of, the six
existing tiers for actuarially equivalent benefit designs.
Comment: Some commenters suggested that this proposal would limit
access to specialty-tier Part D drugs, complicate an already
complicated benefit structure/process for Part D enrollees, and/or
would involve additional, burdensome utilization management for
prescribers. Some commenters urged CMS to do a demonstration or pilot
before finalizing the proposals to permit a second specialty tier,
while others urged CMS to monitor the uptake of the use of a second
specialty tier.
Response: We do not anticipate adverse effects to Part D enrollees'
access to specialty-tier Part D drugs by allowing Part D sponsors to
structure their benefits with a second, ``preferred'' specialty tier,
as we have proposed, either in terms of formulary access or Part D
enrollee cost sharing. This is due in large part to the other Part D
enrollee protections we proposed in conjunction with our proposal to
permit Part D sponsors to maintain a second specialty tier (notably,
tiering exceptions between the two specialty tiers and maximum
allowable cost sharing, as discussed in sections IV.E.3., and IV.E.4.,
respectively, of this final rule). As we do not anticipate that
permitting a second, preferred specialty tier would lead to harm for
any Part D enrollees, it seems reasonable to provide the requested
flexibility, as proposed, to Part D sponsors. We are mindful of the
need to minimize complexity and make our rules as transparent as
possible. However, we believe that the risk of confusion will be
outweighed by the potential for Part D sponsors to provide their
enrollees with improved access to specialty-tier Part D drugs because
improved competition for preferred specialty tier formulary placement
results in better negotiations for Part D sponsors, which could result
in lower cost sharing for Part D enrollees.
Many specialty-tier Part D drugs already require utilization
management, including prior authorization and/or step therapy to access
the drug, and then monitoring the enrollee once therapy has been
initiated. Utilization management requirements are subject to the
requirements of our annual formulary review and approval process under
Sec. 423.120(b)(2). (We detailed the components of our annual
formulary review and approval process in our May 2019 final rule (84 FR
23835).) As part of this review and approval process, we perform
multiple reviews related to the clinical appropriateness of both tier
composition and utilization management strategies. For additional
information, please also see section 30.2.7 of Chapter 6 of the
Medicare Prescription Drug Benefit Manual, available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Benefits-Manual-Chapter-6.pdf.) Additionally, the same specialty-tier cost threshold would
apply to both specialty tiers. In other words, there is no difference
in eligibility for specialty-tier placement between the two specialty
tiers, and therefore, specialty-tier eligible Part D drugs would be
divided between the two specialty tiers. Consequently, we do not
anticipate that allowing a second specialty tier would introduce
significant utilization management beyond what is already required or
increase the number of drugs placed on a specialty tier.
In finalizing our proposals to permit Part D sponsors to maintain
up to two specialty tiers, we intend to monitor the uptake of the use
of a second specialty tier. We are unclear about, generally, what the
commenters believe we would research in a demonstration or pilot, and
do not believe one is necessary given the Part D enrollee protections
we are finalizing as part of this final rule.
Comment: Some commenters suggested that CMS should not finalize the
proposals regarding permitting Part D to maintain up to two specialty
tiers for 2021 and that CMS should clarify that the bids for coverage
year 2021 will be based on existing rules. Some commenters mentioned
that CMS needs to issue new guidance regarding the Plan Bid Package
(PBP) Beta Software, which currently does not provide the functionality
to file a preferred specialty tier, and that to maintain compliance,
CMS needs to provide the specific filing requirements for the second
tier. Some commenters suggested that with these changes, CMS must
continue to improve written and online materials to provide clear,
unbiased, user-friendly language and graphics, and engage in public
campaigns to inform and educate Part D enrollees and their caregivers
about benefit designs and cost sharing obligations. Some commenters
suggested that if CMS finalizes our proposals to permit Part D sponsors
to maintain up to two specialty tiers, that CMS will need to
``recodify'' guidance in the ``Coverage Determination Manual.'' Some
commenters suggested that CMS should institute a generic/biosimilar
utilization Star ratings measure focused on specialty-tier drugs.
Response: The proposals regarding permitting Part D sponsors to
maintain up to two specialty tiers that are being finalized in this
rulemaking will be in effect for coverage year 2022. Additionally, we
intend to issue program instructions regarding the filing of two
specialty tiers in the Contract Year (CY) 2022 Part D Bidding
Instructions. In the May 22, 2020 HPMS memo titled, ``Updated Contract
Year (CY) 2021 Final Part D Bidding Instructions,'' we instructed that
bids for coverage year 2021 will be based on existing rules for the
specialty tier. We continue to regularly review our policies regarding
marketing and other communication materials and expect Part D sponsors
to follow the requirements that are being finalized elsewhere in this
final rule. Although we assume the commenters referring to the
``Coverage Determination Manual'' meant our Parts C&D Enrollee
Grievances, Organization/Coverage Determinations, and Appeals Guidance,
available at https://www.cms.gov/Medicare/Appeals-and-Grievances/MMCAG/Downloads/Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf, we are not clear on what the
commenters believe needs to be ``re''-codified, and welcome further
input on this matter. In our Announcement of Calendar Year (CY) 2021
Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment
Policies (available at https://www.cms.gov/files/document/2021-announcement.pdf), we discussed the potential to develop measures to
assess generic and biosimilar utilization in the Medicare Part D
program, and we continue to review feedback for a potential future
measure.
We are finalizing without modification our proposals to add a new
paragraph at Sec. 423.104(d)(2)(iv)(D) to specify that a Part D plan
may maintain up to two specialty tiers. The proposals regarding
permitting Part D sponsors to maintain up to two specialty tiers that
are being finalized in this rulemaking will apply for coverage year
2022.
To retain the policies in effect before coverage year 2022, we are
amending Sec. 423.578(a)(6)(iii) by adding paragraph

[[Page 5935]]

(A) to cross reference the definition of specialty tier which will be
in effect before coverage year 2022, and paragraph (B) to cross
reference placement of the definition of specialty tier at Sec.
423.104(d)(2)(iv) which will apply beginning coverage year 2022.
Additionally, paragraph (A) will remove the phrase ``and biological
products,'' and paragraph (B) will (1) reflect the possibility of a
second specialty tier, and (2) clarify that Part D sponsors may design
their exception processes so that Part D drugs on the specialty tier(s)
are not eligible for a tiering exception to non-specialty tiers.
3. Two Specialty Tiers and Tiering Exceptions
As discussed in section IV.E.1. of this final rule, section 1860D-
4(g)(2) of the Act specifies that a beneficiary enrolled in a Part D
plan offering a prescription drug benefit for Part D drugs through the
use of a tiered formulary may request an exception to the Part D
sponsor's tiered cost-sharing structure. Additionally, Part D sponsors
are required under this section of the statute to create an exceptions
process to handle such requests, consistent with guidelines we
established (see section 40.5.1 of Parts C & D Enrollee Grievances,
Organization/Coverage Determinations, and Appeals Guidance, available
at https://www.cms.gov/Medicare/Appeals-and-Grievances/MMCAG/Downloads/Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf). However, section 1860D-4(g)(2) of the Act
does not require tiering exceptions in every case, and rather,
indicates that tiering exceptions might not be covered in every
instance, by recognizing that non-preferred Part D drugs ``could'' be
covered at the cost sharing applicable to preferred Part D drugs.
As discussed in section IV.E.1. of this final rule, the requirement
that Part D plans be actuarially equivalent to the Defined Standard
benefit means that if Part D sponsors were required to permit Part D
enrollees to obtain Part D drugs on specialty tiers at non-specialty-
tier cost sharing, Part D sponsors might need to increase premiums,
cost sharing for non-specialty tiers, or both. To avoid such increased
costs, in the Medicare Program; Medicare Prescription Drug Benefit
Final Rule (hereinafter referred to as the January 2005 Part D final
rule, 70 FR 4193), we finalized Sec. 423.578(a)(7), which provided
that Part D sponsors with a tier for very high cost and unique items,
such as genomic and biotech products (in other words, a specialty
tier), could exempt such drugs from its tiering exception process (70
FR 4353). In our April 2018 final rule, we revised and redesignated
Sec. 423.578(a)(7) as Sec. 423.578(a)(6)(iii) to specify that if a
Part D sponsor maintains a specialty tier, the Part D sponsor may
design its exception process so that Part D drugs and biological
products on the specialty tier are not eligible for tiering exceptions.
While the current policy does not require that Part D sponsors use a
specialty tier, or exempt the drugs on such tier from tiering
exceptions, nearly all do use a specialty tier and also exempt the
drugs on such tier from tiering exceptions.
Section 1860D-4(g)(2) of the Act stipulates that under a tiering
exception, a non-preferred Part D drug could be covered under the terms
applicable for preferred Part D drugs if the prescriber determines that
the preferred Part D drug for treatment of the same condition would not
be as effective for the Part D enrollee, would have adverse effects for
the Part D enrollee, or both. Thus, the statutory basis for approval of
tiering exceptions requests is the presence of (a) clinically
appropriate, therapeutically alternative Part D drug(s) on a lower
cost-sharing tier of the plan's formulary, and a statement from the
prescriber indicating that the alternative drug(s) would not be as
effective for that enrollee or would cause adverse effects for the
enrollee, or both. Therefore, even if a Part D sponsor permitted
tiering exceptions for Part D drugs on the specialty tier to non-
specialty tiers, tiering exceptions requests would not be approvable if
the plan's formulary did not include any clinically appropriate,
therapeutically alternative Part D drugs on a lower cost-sharing tier.
For example, suppose that a biological product, ``Biologic A,'' and
another biological product that is indicated for the same condition,
``Biologic B,'' are both on the specialty tier with no clinically
appropriate, therapeutically alternative Part D drugs on a lower cost-
sharing tier. If the Part D enrollee's prescriber were to write a
prescription for Biologic A, and the prescriber were to request a
tiering exception, because Biologic B, the clinically appropriate
therapeutic alternative, is on the same tier as Biologic A, and not a
lower cost-sharing tier, the tiering exception request would be denied.
For further explanation of tiering exceptions requirements, please see
Sec. 423.578(a)(6).
Permitting Part D sponsors to exempt Part D drugs on a higher cost-
sharing, specialty tier from any tiering exceptions, even to a lower
cost-sharing, preferred specialty tier, could improve Part D sponsors'
ability to negotiate better rebates. Nevertheless, unlike our
justification for allowing Part D plans to exempt a specialty tier from
tiering exceptions to lower-cost, non-specialty tiers, granting tiering
exceptions from the higher cost-sharing, specialty tier to the
preferred specialty tier is less likely to lead to increased premiums
or cost sharing to meet actuarial requirements (than granting tiering
exceptions from a specialty tier to a non-specialty tier) because we
would apply the same specialty-tier cost threshold to both specialty
tiers. Our current belief is that improved negotiation alone is not
sufficient to justify permitting Part D sponsors to exempt drugs on the
higher cost-sharing, specialty tier from requests for tiering
exceptions to the preferred, specialty-tier cost sharing. We note that
we did not propose to require Part D sponsors to permit tiering
exceptions from either specialty tier to lower, non-specialty tiers,
and our policy would not change current regulations at Sec.
423.578(c)(3)(ii) that require Part D sponsors to cover drugs for which
a tiering exception was approved at the cost-sharing level that applies
to the preferred alternative(s). This means that Part D sponsors would
be required to grant tiering exceptions for Part D drugs from the
higher cost-sharing, specialty tier to the preferred specialty tier if
tiering exceptions requirements are met (for instance, when a Part D
enrollee cannot take an applicable therapeutic alternative on the
preferred specialty tier). Specifically, we proposed to amend Sec.
423.578(a)(6)(iii) (1) to reflect the possibility of two specialty
tiers and (2) by adding at the end the phrase ``to non-specialty
tiers'' to clarify that a Part D sponsor may design its tiering
exception process so that Part D drugs on the specialty tier(s) are not
eligible for tiering exceptions to non-specialty tiers. Consequently,
the existing policy at Sec. 423.578(c)(3)(ii) would require Part D
sponsors to permit tiering exceptions between their two specialty tiers
to provide coverage for the approved Part D drug on the higher cost-
sharing, specialty tier that applies to preferred alternative Part D
drugs on the lower cost-sharing, preferred specialty tier. While we
would not require Part D sponsors to permit tiering exceptions to non-
specialty tiers for Part D drugs on a specialty tier, nothing precludes
a Part D sponsor from doing so, insofar as their plan benefit design
remains actuarially equivalent to the Defined Standard benefit.
Alternatively, we considered permitting Part D sponsors to exempt
drugs on either specialty tier from all tiering exceptions, even
between the two specialty tiers, as is provided under

[[Page 5936]]

the existing regulations at Sec. 423.578(a)(6)(iii). We do not believe
maintaining the current exemption would be discriminatory in light of
our proposal, discussed in section IV.E.4 of this final rule, to set
the same maximum allowable cost sharing (that is, 25/33 percent)
currently applied for a single specialty to-the higher cost-sharing,
specialty tier and to also require the preferred specialty tier to have
cost sharing below that of the higher cost-sharing, specialty tier.
With the proposed maximum allowable cost sharing, Part D enrollees
would pay no more for a drug on either specialty tier than is the case
under our current policy. And, as noted previously, maintaining the
current exemption from all tiering exceptions for specialty-tier Part D
drugs could allow Part D sponsors to negotiate better rebates. On the
other hand, our proposal to require Part D sponsors with two specialty
tiers to permit tiering exceptions from the higher cost-sharing,
specialty tier to the lower-cost sharing, preferred specialty tier
would provide an important Part D enrollee protection when there is a
therapeutic alternative on the lower cost-sharing, preferred specialty
tier that the Part D enrollee is unable to take. Accordingly, we
invited comment on the benefits or drawbacks of maintaining the current
policy under Sec. 423.578(a)(6)(iii) that, if we were to finalize our
proposal to permit Part D sponsors to have up to two specialty tiers,
would apply to permit Part D sponsors to exempt drugs on a specialty
tier from the tiering exceptions process altogether.
We note that, as part of our proposed change at Sec.
423.578(a)(6)(iii), we also proposed a technical change to remove the
phrase ``and biological products.'' While the specialty tier usually
includes biological products, in the context of the Part D program,
biological products already are included in the definition of a Part D
drug at Sec. 423.100. Therefore, the phrase ``Part D drugs and
biological products'' is redundant and potentially misleading.
Consequently, we proposed to remove the phrase ``and biological
products.''
To summarize, we proposed to amend Sec. 423.578(a)(6)(iii) to: (1)
Reflect the possibility of a second specialty tier, (2) clarify that
Part D sponsors may design their exception processes so that Part D
drugs on the specialty tier(s) are not eligible for a tiering exception
to non-specialty tiers, and (3) remove the phrase ``and biological
products.'' Additionally, we proposed to maintain the existing policy
at Sec. 423.578(c)(3)(ii), thereby requiring Part D sponsors to permit
tiering exceptions between their two specialty tiers to provide
coverage for the approved Part D drug on the higher cost-sharing,
specialty tier that applies to preferred alternative Part D drugs on
the lower cost-sharing, preferred specialty tier. Additionally,
although contingent on finalizing our proposal to permit Part D
sponsors to maintain up to two specialty tiers, we solicited comment on
maintaining the existing policy at Sec. 423.578(a)(6)(iii), thereby
permitting Part D sponsors to exempt drugs on either specialty tier
from the tiering exceptions process altogether.
We received 35 public comments concerning our proposal to require
Part D sponsors to permit tiering exceptions between their two
specialty tiers to provide coverage (for the approved Part D drug on
the higher cost-sharing, specialty tier) at the cost-sharing level that
applies to the preferred alternative Part D drug on the lower cost-
sharing, preferred specialty tier, and 32 public comments concerning
our proposal that Part D sponsors can extend to both specialty tiers
their current ability to design their exceptions processes to exempt
Part D drugs on the specialty tier from tiering exceptions to non-
specialty tiers (while requiring tiering exceptions between the two
specialty tiers). We received 9 public comments concerning the
alternative on which we solicited comment to permit Part D sponsors to
design their exceptions processes to exempt drugs on either specialty
tier from the tiering exceptions process altogether.
We received no comments on our proposal to amend Sec.
423.578(a)(6)(iii) by removing the phrase ``and biological products''
and therefore are finalizing this provision without modification.
Although there was some overlap in stakeholder categories, all of
the comments were from groups representing Part D sponsors, beneficiary
advocates, manufacturers, providers, pharmacists and pharmacies,
wholesale distributors, policy institutes, and non-partisan
Congressional agencies. A summary of the comments and our responses
follow.
Comment: Many commenters supported CMS's proposals. However, some
commenters opposed CMS's proposal that Part D sponsors be permitted to
design their exceptions processes to exempt Part D drugs on the
specialty tiers(s) from tiering exceptions to non-specialty tiers
(while requiring tiering exceptions between the two specialty tiers)
and also opposed the alternative on which CMS solicited comment to
permit Part D sponsors to design their exceptions processes to exempt
drugs on either specialty tier from the tiering exceptions process
altogether. Some of these commenters, in advocating that CMS require
tiering exceptions from the specialty tiers to the non-specialty tiers,
found any exemption of the specialty tiers from tiering exceptions to
be both discriminatory and a violation of Part D enrollees' statutory
rights. Some commenters believed that CMS's proposals and the
alternative on which CMS solicited comment prohibited Part D sponsors
from offering tiering exceptions.
Response: We thank the commenters who supported our proposals for
their support. We disagree that permitting Part D sponsors to design
their exceptions processes to exempt Part D drugs on the specialty
tier(s) from tiering exceptions to the non-specialty tiers is
discriminatory or a violation of Part D enrollees' statutory rights.
Since the beginning of the Part D program, as reflected in our
January 2005 Part D final rule, it has been our policy to permit Part D
plans to exempt drugs on the specialty tier from tiering exceptions. We
did not propose to change this exemption, but rather to adapt it to the
possibility of a plan's having two specialty tiers. Historically, the
specialty tier has aligned with the Defined Standard benefit, which
does not have tiers, and therefore no tiering exceptions. The alignment
with the Defined Standard benefit meant that an enrollee's cost sharing
for a specialty tier drug would not exceed what would otherwise apply
under the Defined Standard benefit, and that tiering exceptions
similarly would not be available. We disagree with commenters that
exempting the specialty tier(s) from tiering exceptions to non-
specialty tiers is discriminatory precisely because of its alignment
with the Defined Standard benefit, which, as previously noted, has no
tiers, and therefore no tiering exceptions. Moreover, by the same
rationale, we do not believe that permitting Part D sponsors to design
their exceptions processes to exempt Part D drugs on the specialty
tier(s) from tiering exceptions to non-specialty tiers violates a Part
D enrollee's rights. As noted earlier, we believe section 1860D-4(g)(2)
of the Act does not require tiering exceptions in every case. The
addition of a second, preferred specialty tier does not change this
analysis, particularly in light of the parameters we are finalizing
(described elsewhere in this rule) that cap specialty tier cost sharing
at the level that remains aligned with the Defined Standard benefit.
In response to comments regarding whether Part D sponsors should be
required to permit tiering exceptions

[[Page 5937]]

request from the higher-cost specialty tier to the lower-cost specialty
tier, we are finalizing our proposal, and not adopting the alternative
we considered. We continue to believe that a Part D drug's placement on
a specialty tier can play an important role in maintaining lower cost
sharing on non-specialty tiers, and we must balance the ability to get
lower cost sharing on specialty-tier Part D drugs through tiering
exceptions with the requirement that plans be actuarially equivalent to
the Defined Standard benefit. Consequently, while we are not changing
our policy that permits Part D sponsors to exempt drugs from tiering
exceptions between the specialty and non-specialty tiers, as was
originally envisioned by Sec. 423.578(a)(6)(iii), we believe that
requiring Part D sponsors to design their tiering exceptions processes
to permit tiering exceptions between the two specialty tiers, as
provided at Sec. 423.578(c)(3)(ii), strikes the appropriate balance.
Finally, we wish to clarify that Part D sponsors are not required
to have a specialty tier at all, and under the provisions we are
finalizing, can choose one, two, or no specialty tier(s). Similarly,
Part D sponsors are not required to permit tiering exceptions from a
specialty tier to a non-specialty tier. However, Part D sponsors also
are permitted to design their tiering exceptions processes in such a
way as to permit these tiering exceptions from a specialty tier to a
non-specialty tier if they wish, so long as the plan's benefit design
remains actuarially equivalent to the Defined Standard benefit.
We are finalizing without modification our proposals to amend Sec.
423.578(a)(6)(iii) to: (1) Reflect the possibility of a second
specialty tier, and (2) clarify that Part D sponsors may design their
exception processes so that Part D drugs on the specialty tier(s) are
not eligible for a tiering exception to non-specialty tiers.
Additionally, the existing policy at Sec. 423.578(c)(3)(ii) applies as
to the two specialty tiers, meaning that Part D sponsors must permit
tiering exceptions between their two specialty tiers to provide
coverage for the approved Part D drug on the higher cost-sharing,
specialty tier at the cost sharing that applies to preferred
alternative Part D drugs on the lower cost-sharing, preferred specialty
tier. Additionally, we intend to monitor the uptake of the use of a
second specialty tier, and may revisit our decision to require plans to
allow tiering exceptions between the two specialty tiers in future
rulemaking.
Comment: Some commenters suggested that specialty tiers and tiering
exceptions have no clinical basis. They reasoned that, because of this,
CMS should define several terms (such as ``specialty drug.'' and
``specialty pharmacy'') and provide additional clinical guidance for
Part D sponsors when implementing a second specialty tier. Other
commenters added that CMS should delay implementation of CMS's
proposals to permit two specialty tiers in order to undertake further
rulemaking to refine CMS's proposal with additional details regarding
clinically based Part D enrollee protections.
Response: We acknowledge that we have based a Part D drug's
eligibility for placement on the specialty tier on whether such Part D
drug meets the dollar-per-month amount of the specialty-tier cost
threshold. However, our application of the tiering exceptions policy
has been, and remains, rooted in a clinical basis. To illustrate, while
the specialty tier in Part D is limited to the highest-cost Part D
drugs, these drugs are often relatively more structurally complicated,
and apply to complex conditions, including, but not limited to, cancer,
Hepatitis C, HIV/AIDS, Multiple Sclerosis, and Rheumatoid Arthritis.
Section 1860D-4(g)(2) of the Act specifies that under a tiering
exception, a non-preferred drug could be covered under the terms
applicable for preferred drugs if the prescriber determines that the
preferred drug (for treatment of the same condition) would not be as
effective for the individual, would have adverse effects for the
individual, or both. Therefore, tiering exceptions always have a
clinical basis, and requiring tiering exceptions between the two
specialty tiers reinforces the clinical deliberations Part D sponsors
must undertake when considering formulary inclusion and tier
composition with regard to specialty-tier Part D drugs. Because the
pharmacy practice landscape is changing so rapidly, and because the
considerations are so varied, we continue to believe that any attempt
by us to define ``specialty drug'' or ``specialty pharmacy'' is not
warranted at this time. Nonetheless, throughout this final rule, we
have opted to use the term ``specialty-tier drug'' instead of
``specialty drug'' in order to clarify that our discussion is limited
to drugs which meet specialty-tier cost threshold and are therefore
eligible for inclusion on a specialty tier in Part D.
Comment: Some commenters stated that the tiering exceptions process
is confusing for Part D enrollees, and suggested that CMS should
eliminate tiering exceptions altogether. Other commenters provided that
permitting tiering exceptions between the specialty tiers but not to
non-specialty tiers would be confusing to Part D enrollees. Some of
these commenters suggested that CMS should allow tiering exceptions
from the specialty to the non-specialty tiers, while others suggested
that CMS should require tiering exceptions from the specialty to the
non-specialty tiers.
Response: We are mindful of the need to minimize complexity and
make our rules as transparent as possible. We appreciate the
commenters' perspectives and welcome further detail on both the
difficulties that Part D enrollees encounter during the exceptions and
appeals process as well as any changes to our marketing and
communications materials that could better address these difficulties.
However, we believe that any additional complexity arising from
permitting a second specialty tier will be outweighed by the potential
to improve enrollee access to specialty-tier Part D drugs. We did not
propose to change our policy that permits Part D sponsors to exempt a
specialty tier from tier exceptions to a non-specialty tier. Section
1860D-4(g)(2) of the Act provides that Part D enrollees may request
exceptions from tiered cost-sharing structures. For this reason, we
decline to either eliminate tiering exceptions altogether or require
Part D sponsors to permit tiering exceptions from the specialty tiers
to the non-specialty tiers. Regarding the request that we should allow
tiering exceptions from the specialty to the non-specialty tiers, we
note that this is already permitted under Sec. 423.578(a)(6)(iii), and
Part D sponsors will continue to have this option under the finalized
version of this regulation.
Comment: Some commenters suggested that Part D enrollees who have
undergone step therapy, failed other therapies, won a coverage
determination or appeal, or a combination of the above, should have
non-specialty, preferred cost sharing.
Response: While we appreciate the commenters' perspectives, we did
not propose, and decline to adopt, these changes. For further
explanation of tiering exceptions requirements and the associated cost
sharing, please see Sec. 423.578(a)(6) and section 40.5.1 of the Parts
C & D Enrollee Grievances, Organization/Coverage Determinations, and
Appeals Guidance (available at https://www.cms.gov/Medicare/and-Grievances/MMCAG/Downloads/Parts-C-and-D-Enrollee-Grievances-Organization-Coverage-Determinations-and-Appeals-Guidance.pdf).
Additionally, section 40.5.2 of the Parts C & D Enrollee
Grievances,

[[Page 5938]]

Organization/Coverage Determinations, and Appeals Guidance discusses
the parameters for cost sharing under formulary exceptions. Unlike
under the tiering exceptions regulations, the regulations do not
specify what level of cost sharing applies when an exception is
approved under the formulary exceptions process. Rather, the
regulations at Sec. 423.578(b)(2)(iii) require that the plan's
formulary exceptions process must address the cost-sharing scheme that
will be applied when coverage is provided for a non-formulary drug.
Comment: Some commenters suggested CMS could use CMS's annual
formulary review and approval process to prevent discriminatory plan
benefit designs, although some commenters asserted CMS has not been
transparent about how it conducts the discrimination review. Some
commenters suggested that CMS should exempt the specialty tiers from
the discrimination review altogether, and some suggested that CMS's
formulary review and approval process should evaluate both tiers as a
whole instead of each tier independently. Finally, some commenters
asserted that additional discrimination reviews on higher specialty
tier will lead to more exception requests and thus additional
administrative burden for plan sponsors.
Response: As we discussed in our final rule, titled ``Modernizing
Part D and Medicare Advantage To Lower Drug Prices and Reduce Out-of-
Pocket Expenses,'' published in the Federal Register on May 23, 2019
(hereinafter referred to as our May 2019 final rule, 84 FR 23835), our
annual formulary review and approval process is designed to ensure that
Part D formularies do not substantially discourage enrollment by
certain beneficiaries and that the formularies include adequate
representation of all necessary Part D drug categories or classes for
the Medicare population. In other words, our annual formulary review
and approval process is designed to prevent discriminatory plan benefit
designs. As part of that review and approval process, we assess all
tiers both individually and together for the formulary as a whole, and
that approach will continue with respect to plans that choose to
establish two specialty tiers. Please see our May 2019 rule for
additional detail on the components of the annual formulary review and
approval process (84 FR 23835). Finally, although we do not understand
the commenters' assertion that additional discrimination reviews on the
higher cost-sharing, specialty tier will lead to more exception
requests and thus additional administrative burden, we welcome
additional detail on this issue for consideration in future rulemaking.
Comment: Some commenters suggested that CMS should review all
tiering exceptions requests after implementation. Some commenters
requested that CMS enforce the existing exceptions and appeals
processes.
Response: We monitor and enforce the requirements of our coverage
determinations and appeals processes, including tiering exceptions,
through the Complaints Tracking Module (CTM), regional CMS account
managers, Part D reporting requirements, and program audits. (See
https://www.cms.gov/files/document/cy2020part-d-reporting-requirements.pdf for more detail about reporting requirements.)
Additionally, in recent years, we have undertaken efforts to improve
our exceptions and appeals processes, including improving clarity of
the exceptions timeframes for Part D drugs. (See our final rule, titled
``Medicare and Medicaid Programs; Policy and Technical Changes to the
Medicare Advantage, Medicare Prescription Drug Benefit, Programs of
All-Inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service,
and Medicaid Managed Care Programs for years 2020 and 2021,'' published
in the Federal Register on April 16, 2019, hereinafter referred to as
our April 2019 rule, 84 FR 15777.) We appreciate the commenters'
perspectives and welcome further detail on both the difficulties that
Part D enrollees encounter during the exceptions and appeals processes
as well as any changes to our marketing and communications materials
that could better address these difficulties.
We are finalizing without modification our proposals to amend Sec.
423.578(a)(6)(iii) to: (1) Reflect the possibility of a second
specialty tier, (2) clarify that Part D sponsors may design their
exception processes so that Part D drugs on the specialty tier(s) are
not eligible for a tiering exception to non-specialty tiers, and (3)
remove the phrase ``and biological products.'' Additionally, we will
maintain the existing policy at Sec. 423.578(c)(3)(ii), thereby
requiring Part D sponsors to permit tiering exceptions between their
two specialty tiers to provide coverage for the approved Part D drug on
the higher cost-sharing, specialty tier that applies to preferred
alternative Part D drugs on the lower cost-sharing, preferred specialty
tier.
4. Two Specialty Tiers and Maximum Allowable Cost Sharing
At the start of the Part D program, although we provided Part D
sponsors the option to exempt specialty tiers from the tiering
exceptions process, we remained concerned that exempting the specialty
tier from tiering exceptions could potentially be discriminatory for
Part D enrollees with certain diseases only treated by specialty tier-
eligible drugs, and thus in conflict with the statutory directive under
section 1860D-11(e)(2)(D) of the Act that we disapprove any ``design of
the plan and its benefits (including any formulary and tiered-formulary
structure) that are likely to substantially discourage enrollment by
certain part D eligible individuals under the plan.'' Using this
authority, we aligned the cost-sharing limit for Part D drugs on the
specialty tier with the Defined Standard benefit at section 1860D-
2(b)(2)(A) of the Act. Consequently, we established a ``25/33 percent''
maximum allowable cost sharing for the specialty tier, meaning that we
would approve cost sharing for the specialty tier of no more than 25
percent coinsurance after the standard deductible and before the
initial coverage limit (ICL), or up to 33 percent coinsurance for plans
with decreased or no deductible under alternative prescription drug
coverage designs and before the ICL (that is, 25 percent <= maximum
allowable cost sharing <= 33 percent). In other words, under
actuarially equivalent alternative prescription drug coverage designs,
we allow the maximum allowable cost sharing for the specialty tier to
be between 25 and 33 percent coinsurance, inclusive, if the Part D plan
has a decreased deductible, such that the maximum allowable cost
sharing equates to 25 percent coinsurance plus the standard deductible.
We derived the maximum allowable cost sharing of 33 percent coinsurance
for plans with no deductible under alternative prescription drug
coverage by adding the allowable deductible to the 25 percent maximum
allowable cost sharing between the deductible and initial coverage
limit (ICL) and dividing the resultant value by the ICL. The following
calculations illustrate how we derived the maximum allowable cost
sharing for the specialty tier.
a. Derivation of 33 percent maximum allowable cost sharing for
plans with no deductible.
In 2006, under the Defined Standard benefit, the maximum deductible
was $250, and the ICL was $2,250. The maximum allowable cost sharing
between the deductible and the ICL was, as it is today, 25 percent
coinsurance. (This example uses contract year 2006 numbers for
simplicity, but the concepts presented still apply to current
guidance.)

[[Page 5939]]

$2,250 ICL-$250 deductible = $2,000 difference x 0.25 = $500
maximum allowable cost sharing after the deductible and before the ICL
for specialty-tier Part D drugs in plans with the standard deductible.
$500 maximum (previous calculation) + $250 deductible = $750
maximum for plans with no deductible.
Therefore, the maximum allowable coinsurance before the ICL for
specialty-tier Part D drugs in plans with no deductible is $750 divided
by the $2,250 ICL [ap] 0.33, or 33 percent coinsurance.
b. Derivation of maximum allowable cost sharing for plans with
deductible between $0 and the maximum deductible.
Plans with deductibles between $0 and $250 are permitted to have
maximum allowable cost sharing for specialty-tier Part D drugs between
the deductible and the ICL of between $500 and $750 (that is,
coinsurance between 25 and 33 percent, inclusive) provided that such
cost sharing added to the deductible is $750.
For example, using contract year 2006 numbers, if the deductible
was $100, the maximum coinsurance that the plan could charge for
specialty-tier Part D drugs between the deductible and the ICL would
have been approximately 30 percent:
$750-$100 deductible = $650 maximum allowable cost sharing (that
is, $650 + $100 = $750).

$2,250 ICL-$100 deductible = $2,150 difference
$650 divided by $2,150 [ap] 0.30, or 30 percent

Therefore, the maximum allowable coinsurance between the $100
deductible and the $2,250 ICL [ap] 0.30, or 30 percent coinsurance.
(This 30 percent represents mathematical rounding from the actual
calculated value.)
Because section 1860D-2(b)(2) of the Act requires that plan benefit
designs be actuarially equivalent to the Defined Standard benefit, the
cost sharing for high-cost drugs would likely increase without the use
of a specialty tier. This is because often the specialty tier has lower
cost sharing than the non-specialty, non-preferred brand/drug tiers,
which frequently have cost sharing as much as 50 percent coinsurance.
Additionally, many specialty tier-eligible Part D drugs, particularly
biological products, often do not have alternatives on lower-cost
tiers. Our proposal to codify a maximum allowable cost sharing for the
specialty tier equal to the cost sharing for the Defined Standard
benefit plus the cost of any deductible would ensure Part D enrollees
still pay no more than the Defined Standard cost sharing for high-cost
drugs placed on a specialty tier.
Although we proposed to allow Part D sponsors to have up to two
specialty tiers, we note that the currently available tier-model
structures already allow Part D sponsors to negotiate rebates and
distinguish their preferred, high-cost Part D drugs by placing them on
the preferred brand tier as opposed to the specialty tier, and placing
less preferred agents on the specialty tier. Such distinction could
potentially drive the same rebates as two specialty tiers; however,
Part D sponsors have told us they are reluctant to take such an
approach because of the availability of tiering exceptions for the non-
specialty tiers, which could increase costs in lower, non-specialty
tiers in order to achieve actuarial equivalence. We believe this
concern is addressed by our proposal (discussed in section IV.E.3. of
this final rule) to permit Part D sponsors to exempt Part D drugs on
either or both specialty tiers from tiering exceptions to non-specialty
tiers.
Additionally, while we are sensitive to and trying to be responsive
to the volatility of the specialty-tier drug market by proposing to
allow Part D sponsors to have up to two specialty tiers, we remain
concerned about whether our proposal will actually achieve the
potential benefits to the Part D program and Part D enrollees asserted
by stakeholders in support of two specialty tiers. As discussed in
section IV.E.2 of this final rule, those stakeholders posit that
permitting two specialty tiers will reduce Part D enrollee cost sharing
for specialty Part D drugs. However, this would be true only for Part D
drugs on the lower cost-sharing, preferred specialty tier, and only if
the lower cost-sharing, preferred, specialty-tier cost sharing were set
lower than 25/33 percent.
When requesting a second specialty tier, some Part D sponsors and
PBMs have told us they would need to charge more than 25/33 percent for
the higher cost-sharing, specialty tier. However, if we were to permit
Part D sponsors to charge more than 25/33 percent for the higher cost-
sharing, specialty tier, the cost sharing for drugs in the higher cost-
sharing, specialty tier would likely be higher than if there were only
one specialty tier. We appreciate that permitting Part D sponsors to
increase cost sharing over current limits might lead to negotiations
for better rebates, which could result in savings to Part D enrollees
offered through, for instance, lower costs on some Part D drugs in the
preferred specialty tier or lower premiums. However, in the absence of
evidence to the contrary, it appears to us that if we were to permit
Part D sponsors to charge higher percentages than is currently the
case, Part D enrollees who need Part D drugs on the higher cost-
sharing, specialty tier will pay more, and possibly significantly more,
than they currently do for those drugs given that specialty tiers, by
definition, consist of high-cost drugs. In other words, we remain
concerned about Part D enrollee protections and do not want improved
rebates on some Part D drugs to come at the expense of those Part D
enrollees who could already be paying, as proposed, as much as a 33
percent coinsurance on the highest-costing drugs. Moreover, because
Part D enrollees who use high-cost Part D drugs progress quickly
through the benefit, some Part D enrollees' entry into the catastrophic
phase of the benefit may be advanced faster if the higher cost-sharing,
specialty tier were to have a maximum allowable cost sharing that is
higher than 25/33 percent. Therefore, it is unclear to us, in the
aggregate, how much a second specialty tier would save the government
if the second specialty tier was allowed to have a higher cost sharing
than the current 25/33 percent.
In addition, while a second specialty tier might improve Part D
sponsors' ability to negotiate better rebates, we also have concerns
regarding discriminatory plan designs with a second, higher cost-
sharing, specialty tier with cost sharing higher than the 25/33 percent
that is currently permitted. If we were to allow a maximum allowable
cost sharing for the higher cost-sharing, specialty tier above the 25/
33 percent that is currently permitted, some Part D enrollees whose
Part D drugs are placed on the higher cost-sharing, specialty tier
could see their out-of-pocket (OOP) costs increase above the Defined
Standard cost-sharing amount. We are concerned that the
disproportionate impact on Part D enrollees who take Part D drugs on
the higher cost-sharing, specialty tier runs a greater risk of
discriminatory plan design. Additionally, while it is generally
allowable for plans to use tier placement to steer Part D enrollees
toward preferred agents, we would have to develop additional formulary
checks to prevent discrimination against those Part D enrollees who
require Part D drugs on the higher cost-sharing, specialty tier, and
those additional formulary checks would limit the ability of plans to
negotiate for tier placement between the two specialty tiers.
We proposed to set a maximum allowable cost sharing for a single
specialty tier or, in the case of a plan

[[Page 5940]]

with two specialty tiers, the higher cost-sharing, specialty tier as
follows: (1) For plans with the full deductible provided for in the
Defined Standard benefit, 25 percent coinsurance; (2) for plans with no
deductible, 33 percent coinsurance; and (3) for plans with a deductible
that is greater than $0 and less than the deductible provided for in
the Defined Standard benefit, a coinsurance percentage that is
determined by subtracting the plan's deductible from 33 percent of the
initial coverage limit (ICL) under section 1860D-2(b)(3) of the Act,
dividing that difference by the difference between the ICL and the
plan's deductible, and rounding to the nearest 1 percent. Shown
mathematically, that is:

((ICL x 0.33)-deductible)/(ICL-deductible)

We proposed to require that a plan's second specialty tier, if any,
must have a maximum allowable cost sharing that is less than the
maximum allowable cost sharing of the higher cost-sharing, specialty
tier. For example, if a Part D sponsor establishes a cost sharing of 25
percent on its higher cost-sharing, specialty tier, the Part D sponsor
would need to set the cost sharing for the preferred specialty tier at
any amount lower than 25 percent. Similarly, if a Part D sponsor
establishes a cost sharing of 33 percent on its higher specialty tier
(permitted if the plan has no deductible, as discussed earlier in this
section of this final rule), the Part D sponsor would need to set the
cost sharing for the preferred specialty tier at any amount lower than
33 percent. To encourage flexibility, and with the belief that we might
not be able to anticipate every variation Part D sponsors might plan,
we did not propose to require a minimum difference between the cost-
sharing levels of the higher cost-sharing, specialty tier and a lower
cost-sharing, preferred specialty tier that would apply to Part D
sponsors choosing to provide two specialty tiers. As we have generally
seen, for example, in relation to our policy recommending a threshold
of $20 for the generic tier and ``less than $20'' for the preferred
generic tier,\58\ we believe it would be unlikely that Part D sponsors
would take the trouble to create two different tiers and then establish
an inconsequential differential. With that, we would, of course,
reexamine this policy if we find after finalizing this provision that
not requiring a minimum difference between the cost-sharing levels of
the two specialty tiers has created problems. Additionally, we
solicited comment as to whether to set a numeric or other differential
in cost sharing between a specialty tier and any preferred specialty
tier, including suggestions on requiring a minimum difference between
the cost-sharing levels of the two specialty tiers that can provide
maximum flexibility and anticipate varied approaches that Part D
sponsors might take. Lastly, nothing in our proposal would prohibit
Part D sponsors from offering less than the maximum allowable cost
sharing on either tier as long as the preferred specialty tier has
lower cost sharing than the higher cost-sharing, specialty tier.
---------------------------------------------------------------------------

\58\ See page 212 of the Final 2020 Call Letter, available at
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2020.pdf.
---------------------------------------------------------------------------

As mentioned in section IV.E.3 of this final rule, we have ongoing
concerns that offering a lower cost-sharing, preferred specialty tier
below the current 25/33 percent maximum could, in theory, lead to
increased costs in lower, non-specialty tiers in order to achieve
actuarial equivalence. However, because these increases in costs would
be spread across the overall plan design, we believe the overall impact
on Part D enrollees, would be less than the increase on individual Part
D enrollee cost sharing were we to permit a maximum allowable cost
sharing for the specialty tier above what is currently permitted (25/33
percent). Although we are concerned about offsetting increases to
lower, non-specialty tiers, the 25/33 percent maximum allowable cost
sharing is based upon the Defined Standard benefit cost sharing and
therefore would provide an important Part D enrollee protection to
prevent discriminatory benefit structures. Consequently, we believe
this approach strikes the appropriate balance between Part D sponsor
flexibility and Part D enrollee access.
In summary, we proposed to add a new paragraph at Sec.
423.104(d)(2)(iv)(D) to specify that a Part D sponsor may maintain up
to two specialty tiers. Further, we proposed to set a maximum allowable
cost sharing for a single specialty tier, or, in the case of a plan
with two specialty tiers, the higher cost-sharing, specialty tier by
adding paragraphs (d)(2)(iv)(D)(1), (2), and (3) which provide: (1) 25
percent coinsurance for plans with the full deductible provided under
the Defined Standard benefit; (2) 33 percent coinsurance for plans with
no deductible; and (3) for plans with a deductible that is greater than
$0 and less than the deductible provided under the Defined Standard
benefit, a coinsurance percentage that is between 25 and 33 percent,
determined by subtracting the plan's deductible from 33 percent of the
initial coverage limit (ICL), dividing this difference by the
difference between the ICL and the plan's deductible, then rounding to
the nearest 1 percent.
We solicited comment on this approach. We were also interested in
and solicited comments on plan benefit designs with two specialty tiers
if we were to permit the higher cost-sharing, specialty tier to have a
higher coinsurance than what we have proposed. Specifically, we were
interested in comments that discuss whether permitting a coinsurance
higher than 25/33 percent would be discriminatory.
Additionally, we note that the deductible applies to all tiers, and
is not limited to, nor borne solely by, Part D enrollees taking Part D
drugs on the specialty tier. Therefore, it is unclear that we should
continue to differentiate the specialty tier from the other tiers on
the basis of the deductible. Accordingly, we also considered adopting a
maximum allowable cost sharing of 25 percent for any specialty tier,
regardless of whether the plan has a deductible. We solicited comment
on alternative approaches of using a maximum allowable cost sharing of
25 percent coinsurance regardless of whether there is a deductible.
To summarize, we proposed to add a new paragraph at Sec.
423.104(d)(2)(iv)(D) to: (1) Specify that a Part D plan may maintain up
to two specialty tiers; and (2) set a maximum allowable cost sharing of
25/33 percent for a single specialty tier, or, in the case of a plan
with two specialty tiers, the higher cost-sharing, specialty tier. We
also proposed to permit Part D sponsors to set the cost sharing for the
preferred specialty tier at any amount lower than that of the higher
cost-sharing, specialty tier. Additionally, we solicited comment on
actuarial equivalence and the potential for discriminatory effects plan
designs with two specialty tiers if we were to permit: (1) The higher
cost-sharing, specialty tier to have a higher coinsurance than the 25/
33 percent maximum allowable cost sharing we have proposed; or (2) a
maximum allowable cost sharing of 25 percent without regard to
deductible. Finally, we also solicited comment as to whether to set a
numeric or other differential in cost sharing between a specialty tier
and any preferred specialty tier.
We received 22 public comments concerning our proposal to set a
maximum allowable cost sharing of 25/33 percent for a single specialty
tier, or, in the case of a plan with two specialty tiers, the higher
cost-sharing, specialty tier. We received 23 public comments

[[Page 5941]]

concerning the alternative on which we solicited comment to permit the
higher cost-sharing, specialty tier to have a higher coinsurance than
the 25/33 percent maximum allowable cost sharing we have proposed. We
received 10 public comments concerning the alternative on which we
solicited comment to permit a maximum allowable cost sharing of 25
percent without regard to deductible. We received 18 public comments
concerning our proposal to permit Part D sponsors to set the cost
sharing for the preferred specialty tier at any amount lower than that
of the higher cost-sharing, specialty tier; and 18 public comments
concerning the alternative on which we solicited comment as to whether
to set a numeric or other differential in cost sharing between a
specialty tier and any preferred specialty tier.
Although there was some overlap in stakeholder categories, all of
the comments were from groups representing Part D sponsors, beneficiary
advocates, manufacturers, providers, pharmacists and pharmacies,
wholesale distributors, policy institutes, and non-partisan
Congressional agencies. A summary of the comments and our responses
follow.
Comment: Most commenters supported CMS's proposals to set a maximum
allowable cost sharing of 25/33 percent for a single specialty tier,
or, in the case of a plan with two specialty tiers, the higher cost-
sharing, specialty tier. A commenter asserted that under current
policy, coinsurance for specialty tiers can be as high as 50 percent.
Response: We thank the commenters for their support. We are not
clear on the commenters' assertion that coinsurance for the specialty
tiers can be as high as 50 percent; it has been our longstanding
policy--which we are codifying in this rule--that Part D sponsors may
not charge more than 25/33 percent coinsurance, depending on the plan's
deductible. We thank the commenter, and if the commenter has evidence
to the contrary, we welcome further input on this matter.
Comment: Some commenters opposed CMS's proposal and supported the
alternative on which CMS solicited comment to permit the higher cost-
sharing, specialty tier to have a higher coinsurance than the 25/33
percent maximum allowable cost sharing CMS proposed. Some commenters
suggested that CMS should keep the existing maximum allowable cost
sharing for the lower cost-sharing, preferred specialty tier at 25/33
percent and establish the maximum allowable cost sharing for the higher
cost-sharing, specialty tier with a range between 30 and 40 percent,
inclusive, depending on the deductible. Other commenters suggested
something of a hybrid approach between our proposal and the previous
approach in which CMS would permit Part D sponsors to set the cost
sharing for (1) the lower cost-sharing, preferred specialty tier at any
amount lower than that of the other specialty tier and (2) the higher
cost-sharing, specialty tier higher than the 25/33 percent maximum
allowable cost sharing as long as the cost sharing between the two
tiers averages, or is actuarially equivalent to, 25/33 percent. These
latter commenters further suggested that CMS could set a maximum
allowable cost sharing for the higher cost-sharing, specialty tier at
50 percent; however, they did not specify whether this 50 percent would
be applied with regard to the deductible.
Response: We are not persuaded by commenters recommending that we
permit Part D sponsors offering two specialty tiers to have coinsurance
for the higher-cost sharing specialty tier that exceeds the 25/33
percent maximum we proposed. We continue to have significant concerns
that allowing specialty-tier cost sharing to exceed 25/33 percent,
especially when an enrollee may not be able to receive a tiering
exception, could result in discriminatory plan designs, particularly
for enrollees who take high-cost drugs that meet the specialty-tier
cost threshold we are finalizing in this final rule. We remain
concerned that, given the high cost of drugs that meet such specialty-
tier cost threshold, increased cost-sharing could leave more Part D
enrollees unable to afford what could be life-saving drugs. Moreover,
as noted in section IV.E.2 of this final rule, our specialty-tier cost
sharing maximum has historically been based on the Defined Standard
benefit as a Part D enrollee protection, and the maximum allowable cost
sharing of 25/33 percent that we proposed is dependent upon the plan's
deductible. Commenters recommending higher cost sharing for the higher
cost-sharing specialty tier offered no analysis or approach that would
allow us to determine how the higher cost-sharing level would align
with the Defined Standard benefit. For this reason, we similarly
believe it is inappropriate to finalize a hybrid approach as some
commenters suggested, as we would need more information and analysis
before we could determine how such a hybrid approach would be
structured. We can consider such a policy for future rulemaking, if
warranted. We welcome further input from stakeholders, and we thank the
commenters.
Comment: Most commenters preferred that the maximum allowable cost
sharing for the specialty tiers continue to be expressed as a range,
with a specific value for each plan that is dependent upon the plan's
deductible. However, some commenters supported the alternative on which
CMS solicited comment to permit a maximum allowable cost sharing of 25
percent without regard to deductible. A commenter agreed with this, in
principle, but suggested that CMS should permit a maximum allowable
cost sharing of 33 percent without regard to the deductible, and, some
commenters suggested that plans should be permitted to establish the
cost sharing for the specialty tier(s) at coinsurance greater than 25
percent if there is no deductible.
Response: Although we also solicited comment on alternative
approaches of using a maximum allowable cost sharing of 25 percent
coinsurance regardless of whether there is a deductible, we did not
receive any examples of this. We thank the commenters who expressed
support or opposition to this alternative, but we were not persuaded to
adopt a maximum allowable cost sharing of 25 percent for any specialty
tier, regardless of whether the plan has a deductible. None of the
comments persuaded us that the current policy, which we proposed to
codify and are now adopting, is insufficient.
We note that under the current and proposed policies, Part D plans
are permitted to establish the cost sharing for the specialty tier
greater than 25 percent, up to and including 33 percent, if there is no
deductible. As detailed earlier in this section of this final rule, we
are concerned that, unlike our current maximum allowable cost sharing
of 25/33 percent, establishing a maximum allowable cost sharing of 33
percent without regard to the deductible could be discriminatory.
Comment: Some commenters suggested that CMS should contemplate
other changes to the non-preferred brand/drug tiers to address high
Part D enrollee cost sharing. For example, some commenters suggested
that a preliminary analysis indicates that, for plan benefit designs
with coinsurance for the non-preferred brand/drug tiers, 75 percent of
Part D enrollees receiving drugs on this tier pay more than, and some
significantly more than, the corresponding amount for such tier when
the plan uses copayments (for example, $100 for contract year 2021).
These commenters suggested that CMS

[[Page 5942]]

should monitor this, particularly if enacting any changes to the
specialty tiers.
Response: We thank the commenters for their comments, and welcome
additional detail on this to consider it for future rulemaking.
Comment: Some commenters supported CMS's proposal to permit Part D
sponsors to set the cost sharing for the preferred specialty tier at
any amount lower than that of the higher cost-sharing, specialty tier,
encouraging CMS to allow plans to innovate in this area. However, other
commenters preferred the alternative on which CMS solicited comment to
set a numeric or other differential in cost sharing between a specialty
tier and any preferred specialty tier. Some commenters suggested that
CMS establish a difference of 5 or 8 percent in cost sharing between
the two specialty tiers; some commenters suggested that CMS establish
the maximum allowable cost sharing for the lower cost-sharing,
specialty tier at 15, 17, or 20 percent while maintaining the maximum
allowable cost sharing of 25/33 percent for the higher cost-sharing,
specialty tier. Some commenters encouraged CMS to give Part D sponsors
the option set the cost sharing for their specialty tier(s) lower than
the maximum allowable cost sharing CMS has specified.
Finally, a commenter suggested that CMS should provide by
regulation that CMS will annually specify a minimum percentage
differential that CMS determines will be likely to substantially incent
utilization of the products on the preferred specialty tier over
utilization of the products on the higher cost-sharing, specialty tier,
and that minimum differential would be subtracted from the coinsurance
for the plan's higher cost-sharing, specialty tier (in other words,
between 25 and 33 percent, inclusive, depending on the plan's
deductible) to result in the maximum allowable cost sharing for the
lower cost-sharing, preferred specialty tier.
Response: While we appreciate the specific suggestions provided by
commenters, we decline to adopt these suggestions. None of the
commenters suggesting specific differentials provided any analysis to
support those thresholds or reasonable extrapolation from the Defined
Standard benefit (for example, the 25/33 percent).
Finally, while we are intrigued by the commenters' suggestion that
we specify a minimum percentage differential that we determine will be
likely to substantially incent utilization of the products on the
preferred specialty tier versus those on the higher cost-sharing,
specialty tier, we decline to adopt this approach. Because a Part D
sponsor's decision to place a Part D drug on one tier versus another is
multifactorial, it is unclear how we could determine a percentage that
is ``likely to substantially incent utilization'' of the products on
the preferred specialty tier versus those on the higher cost-sharing,
specialty tier. However, we welcome additional information on this
suggestion, and we thank the commenter.
After considering the comments, we are finalizing without
modification our proposals to: (1) Add new paragraphs Sec.
423.104(d)(2)(iv)(D)(1) through (3) to establish a maximum allowable
cost sharing of 25/33 percent for a single specialty tier, or, for
plans with two specialty tiers, the higher cost-sharing, specialty tier
and (2) permit Part D sponsors to set the cost sharing for the
preferred specialty tier at any amount lower than that of the other
specialty tier.
5. Two Specialty Tiers and Tier Composition
A few commenters on the Draft 2020 Call Letter suggested that we
should create a lower cost specialty tier for generic drugs and
biosimilar biological products, and that such a tier should be limited
to only such products. We declined to propose such a policy for this
rule. First, we wish to provide maximum flexibility to Part D sponsors
that might find, for instance, that a brand-name Part D drug costs less
with a rebate than a generic equivalent or corresponding biosimilar
biological product. Moreover, generic drugs and biosimilar biological
products that meet the specialty-tier cost threshold may not always be
the lowest-priced product. Second, nothing in our proposal would
prohibit Part D sponsors from setting up such parameters should they
choose (provided they meet all other requirements, including the
proposed maximum allowable cost sharing). Therefore, in order to
provide more flexibility for plans to generate potential savings
through benefit design and manufacturer negotiations, we did not
propose to prescribe which Part D drugs may go on either specialty
tier. However, such placement will be subject to the requirements of
our formulary review and approval process under Sec. 423.120(b)(2).
Additionally, consistent with our current policy, we will continue to
evaluate formulary change requests involving biosimilar biological
products on the specialty tiers on a case-by-case basis to ensure they
continue to meet the requirements of our formulary review and approval
process. (See Sec. 423.120(b)(5).)
We solicited comment on whether Part D sponsors should restrict the
lower cost-sharing, preferred specialty tier to only generic drugs and
biosimilar biological products while also placing them along with any
other Part D drugs meeting the specialty-tier cost threshold on the
higher cost-sharing, specialty tier. In other words, either brand or
generic drugs and biosimilar biological products would be placed on the
higher cost-sharing, specialty tier, but only generic drugs and
biosimilar biological products would be placed on the preferred
specialty tier. We stated that we were particularly interested in
comments that discuss what impact such a policy would have on non-
specialty tiers.
We received 30 public comments concerning our proposal to give Part
D sponsors the flexibility to determine which Part D drugs are placed
on either specialty tier, subject to the thresholds we proposed and the
requirements of the CMS formulary review and approval process under
Sec. 423.120(b)(2); and 30 public comments concerning the alternative
on which we solicited comment to require Part D sponsors to restrict
the preferred specialty tier to only generic drugs and biosimilar
biological products, while permitting Part D sponsors to have generic
drugs, biosimilar biological products, and reference/originator drugs
and biological products on the higher cost-sharing, specialty tier.
Although there was some overlap in stakeholder categories, all of
the comments were from groups representing Part D sponsors, beneficiary
advocates, manufacturers, providers, pharmacists and pharmacies,
wholesale distributors, think tanks, and non-partisan Congressional
agencies. A summary of the comments and our responses follow.
Comment: Most commenters supported CMS's proposal to give Part D
sponsors the flexibility to determine which Part D drugs are placed on
either specialty tier, subject to the thresholds CMS proposed and the
requirements of the CMS formulary review and approval process under
Sec. 423.120(b)(2) and opposed the alternative on which CMS solicited
comment to require Part D sponsors to restrict the preferred specialty
tier to only generic drugs and biosimilar biological products, while
permitting Part D sponsors to have generic drugs, biosimilar biological
products, and reference/originator drugs and biological products on the
higher cost-sharing, specialty tier.

[[Page 5943]]

Response: We thank the commenters for their support.
Comment: Several commenters opposed CMS's proposal. Some commenters
asserted that CMS should require Part D sponsors to use their second
specialty tier to encourage greater use of less-expensive biosimilar
biological products and greater price competition for specialty-tier
drugs, but did not provide suggestions on how to do so. Some commenters
suggested that current formulary and tiering practices discourage
utilization of generic specialty-tier drugs. Some commenters asserted
that CMS should only allow brand products on the higher cost-sharing,
specialty tier, and some commenters asserted that generic drugs and
biosimilar biological products should be exempt from specialty tier
placement altogether. Some commenters suggested permitting generic
drugs and biosimilar biological products on the higher cost-sharing,
non-specialty tier and/or the same tier as brand specialty-tier drugs
and biological products would discourage the use of generic drugs and
biosimilar biological products and hamper the research and development
pipeline of such products. Conversely, some commenters asserted that
current market incentives for generic drugs and biosimilar biological
products are sufficient.
Response: We continue to strive to encourage the use of generic
drugs and biosimilar biological products. However, we believe that our
proposal to give Part D sponsors the flexibility to determine which
Part D drugs are placed on either specialty tier, subject to the
thresholds we are proposing and the requirements of the CMS formulary
review and approval process under Sec. 423.120(b)(2) is appropriate
because restricting which types of products may be included on a
particular specialty tier may result in fewer generic and biosimilar
products being included on the formulary. Part D plans can frequently
negotiate lower net prices for brand drugs than generic drugs and
biosimilar biological products, and if we were to require preferred
placement of a product that has the potential to be more expensive,
Part D sponsors may elect not to include the generic drug or biosimilar
biological product on their formulary at all. (We note that there
currently are no interchangeable biological products on the market.)
Comment: Some commenters asserted that tier placement should have a
clinical basis. Additionally, some commenters asked CMS to ensure that
utilization management and prior authorization are not inappropriately
imposed to prefer brand products over generic drugs and biosimilar
biological products.
Response: We detailed the components of our annual formulary review
and approval process in our May 2019 final rule (84 FR 23835). As part
of this review and approval process, we perform multiple reviews
related to the clinical appropriateness of both tier composition and
utilization management strategies. For additional information, please
also see section 30.2.7 of Chapter 6 of the Medicare Prescription Drug
Benefit Manual, available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Benefits-Manual-Chapter-6.pdf.
Comment: Some commenters, in expressing their opposition to CMS's
proposal to permit Part D sponsors to maintain up to two specialty
tiers: (1) Agreed with CMS's assertion that the currently available
tier-model structures (which already allow Part D sponsors to negotiate
rebates and distinguish their preferred, high-cost Part D drugs by
placing them on the preferred brand tier as opposed to the specialty
tier, and placing less preferred agents on the specialty tier) could
potentially drive the same rebates as two specialty tiers; (2)
suggested that Part D sponsors could place preferred, high-cost Part D
drugs on the specialty tier and place less preferred agents on the non-
preferred brand/drug tiers; and (3) suggested that, before implementing
further changes to the specialty tiers, CMS needs to provide more
detail on why the use of either of the aforementioned options (that is,
(1) placing preferred, high-cost Part D drugs on the preferred brand
tier while placing less preferred agents on the specialty tier, or, (2)
placing preferred, high-cost Part D drugs on the specialty tier while
placing less preferred agents on the non-preferred brand/drug tiers) is
insufficient to achieve our stated policy goals for permitting Part D
sponsors to maintain up two specialty tiers.
Response: While these options certainly are available, we do not
foresee harm in finalizing our proposal to permit Part D sponsors to
maintain up to two specialty tiers under the parameters we have
established in this final rule while monitoring the uptake and outcomes
associated with the use of a second specialty tier as Part D sponsors
implement it. Conversely, as specialty-tier drugs play an increasingly
important role in the prescription drug marketplace, limiting Part D
sponsors to either of the aforementioned options could adversely impact
the Medicare Part D marketplace. Currently, only 8 percent of Part D
plans offer preferred brand tiers with coinsurance.
Limiting Part D sponsors to the option of placing preferred
specialty-tier drugs on the preferred brand tier could lead to more
plans adopting coinsurance for the preferred brand tier, which could
significantly decrease competition among plans in the Part D
marketplace as plan benefit designs become less varied and more like
the Defined Standard benefit. Conversely, if Part D sponsors were
limited to placing non-preferred, specialty-tier eligible drugs on the
non-preferred brand/drug tiers, Part D enrollees whose specialty-tier
eligible drugs are on this tier could face cost sharing of up to 50
percent coinsurance, which, given the high cost of specialty-tier
eligible drugs, is substantially more than they would pay if the drug
were on a specialty tier, with the maximum allowable cost sharing of
25/33 percent that we are finalizing in this final rule.
Comment: Some commenters believed that CMS's combined proposals
(which would (1) permit Part D sponsors to maintain up to two specialty
tiers and (2) give Part D sponsors the flexibility to determine which
Part D drugs are placed on either specialty tier, subject to the
thresholds CMS proposed and the requirements of the CMS formulary
review and approval process under Sec. 423.120(b)(2)) are inextricably
linked to problems concerning the role rebates play within Part D and,
due to the high cost of specialty-tier drugs, will exacerbate the
effect these problems have on costs incurred by Part D enrollees and
the government.
Response: Because we are setting a maximum cost sharing for the
higher cost-sharing, specialty tier at 25/33 percent, we do not believe
that any Part D enrollee or the government will be worse off than
today. Nonetheless, we intend to monitor the uptake of and outcomes
associated with the use of a second specialty tier. Finally, we decline
to adopt the recommendation that we require the preferred tier to
reflect clinically appropriate therapeutic alternatives with the lower
list price. Section 1860D-11(i) of the Act, otherwise known as the non-
interference clause, prohibits us from (1) interfering with the
negotiations between drug manufacturers and pharmacies and Part D
sponsors, and (2) requiring a particular formulary or instituting a
price structure for the reimbursement of covered Part D drugs. For
additional information regarding noninterference, please see our rule
titled, ``Medicare Program; Contract Year 2015 Policy and Technical
Changes to the Medicare Advantage and

[[Page 5944]]

the Medicare Prescription Drug Benefit Programs'' (79 FR 29843) at 79
FR 29844, and 79 FR 29874-5.
Comment: Some commenters asserted that transitioning between
biosimilar biological products, reference biological products, or both
can jeopardize patient safety due to immunogenicity.
Response: We would refer commenters to the FDA regarding the safety
and efficacy of biological products, including biosimilar biological
products.
After considering the comments, we are finalizing without
modification our proposal to give Part D sponsors the flexibility to
determine which Part D drugs are placed on either specialty tier,
subject to the cost threshold we are finalizing and the requirements of
the CMS formulary review and approval process under Sec.
423.120(b)(2).
6. Establishing and Increasing the Specialty-Tier Cost Threshold
To effectuate the specialty tier, it was necessary to determine
which Part D drugs could be placed on a specialty tier. Consequently,
we developed a minimum dollar-per-month threshold amount to determine
which Part D drugs are eligible, based on relative high cost, for
inclusion on the specialty tier. We have sought comment on both this
methodology used to establish the specialty-tier cost threshold and the
resultant value of the specialty-tier cost threshold when publishing
the annual Draft Call Letter. Most recently, commenters on the Draft
2020 Call Letter were largely supportive of having a methodology in
place to annually evaluate and adjust the specialty-tier cost
threshold, as appropriate. While some commenters wanted to maintain the
current level (and others wanted to eliminate the specialty tier or
reduce its cost sharing), there was broad support to regularly increase
the specialty-tier cost threshold. Some comments requested annual
increases, while others wanted us to tie increases to the specialty-
tier cost threshold to drug inflation, or benefit parameters. As we
detail later in this discussion, we proposed to codify, with some
modifications, the same outlier PDE analysis we have historically used.
Our proposed annual methodology would account for rising drug costs, as
well as any potential changes in utilization. By identifying the top 1
percent of 30-day equivalent PDEs, our proposal aims to create a
specialty-tier cost threshold that is representative of outlier claims
for the highest-cost drugs. By using PDEs, the proposed analysis would
also reflect the fact that the numbers of Part D enrollees filling
prescriptions for high-cost drugs as a percentage of all drug claims
may vary from year to year. Given the general support for regular
increases in the specialty-tier cost threshold, we proposed to make
adjustments to the specialty-tier cost threshold based on a specific
methodology, as discussed later in this section.
Beginning in 2007, we established the specialty-tier cost threshold
at $500 per month \59\ based on identifying outlier claims (that is,
the top 1 percent of claims having the highest negotiated prices as
reported on the PDE, adjusted, as described in this section of this
final rule, for 30-day equivalent supplies) and increased the threshold
to $600 beginning in contract year 2008. The specialty-tier cost
threshold remained at $600 per month from contract years 2008 through
2016.^{60 61} In the 2016 analysis for contract year 2017
(using contract year 2015 PDE data), the number of claims for 30 day-
equivalent supplies with negotiated prices meeting the existing $600
per-month cost threshold exceeded 1 percent. This, coupled with the
significant increase in the cost of Part D drugs since the last
adjustment (in 2008), supported an increase in the specialty-tier cost
threshold for contract year 2017. To adjust the specialty-tier cost
threshold, we applied the annual percentage increase used in the Part D
benefit parameter updates (that is, 11.75 percent for contract year
2017) to the $600 threshold. This increase in the specialty-tier cost
threshold (that is, $70.50), rounded to the nearest $10 increment (that
is, $70), was sufficient to reestablish the 1 percent outlier threshold
for PDEs having negotiated prices for 30-day equivalent supplies
greater than the threshold. Since contract year 2017, the specialty-
tier cost threshold has been $670 per month.
---------------------------------------------------------------------------

\59\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/
PrescriptionDrugCovContra/downloads/CY07FormularyGuidance.pdf.
\60\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Advance2017.pdf.
\61\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2017.pdf.
---------------------------------------------------------------------------

In our April 2018 final rule, we defined specialty tier in
regulation at Sec. 423.560 to mean a formulary cost-sharing tier
dedicated to very high-cost Part D drugs and biological products that
exceed a cost threshold established by the Secretary (83 FR 16509). To
improve transparency, we proposed to codify current methodologies for
calculations relative to the specialty tier, with some changes. As
noted in sections IV.E.3 and IV.E.4. of this final rule, it was
necessary to establish the composition of a specialty tier in order to
effectuate specialty tier exceptions and anti-discrimination policies.
Under Sec. 423.560, only very high-cost drugs and biological products
that meet or exceed a cost threshold established by the Secretary may
be placed on a plan's specialty tier (for example, a negotiated price
of or exceeding $670 per month for coverage year 2020). Current
guidance at section 30.2.4 of Chapter 6 of the Medicare Prescription
Drug Benefit Manual describes these high-cost drugs and biological
products as those having Part D sponsor-negotiated prices that exceed a
dollar-per-month amount we established in the annual Call Letter, which
has noted the historical use of a threshold under which approximately
99 percent of monthly PDEs adjusted for 30-day equivalent supplies have
been below the specialty-tier cost threshold.
In setting the specialty-tier cost threshold, we have historically
analyzed PDE data for the plan year that ended 12 months before the
applicable plan year (for example, we used contract year 2017 PDE data
to determine the cost threshold for contract year 2019). First, we have
calculated the number of 30-day equivalent supplies reported on each
PDE. We have considered a 30-day equivalent supply to be any days'
supply, as reported on each PDE, of less than or equal to 34 days.
Thus, a PDE with a 34-days' supply has been considered one 30-day
equivalent supply. (This reflects the fact that a full supply of
medication for a Part D enrollee could equal less than a month's
supply, or reflect manufacturer packaging. For instance, we did not
want to triple the cost of a 10-day course of antibiotics to determine
the 30-day equivalent supply because that would overstate the Part D
enrollee's cost for the full prescription). If the days' supply on the
PDE is greater than 34, the 30-day equivalent supply is equal to the
PDE's days' supply divided by 30. Thus, for example, a PDE with a 90-
day supply has been considered as three 30-day equivalent supplies.
Similarly, a PDE with a drug that has been dispensed in a package
containing a 45-days' supply has been considered as 1.5 30-day
equivalent supplies. This includes long-acting drugs, including, but
not limited to long-acting injections. For example, a single injection
that is considered to be a 90-days' supply has been considered as three
30-day equivalent supplies.
After determining the number of 30-day equivalent supplies for each
PDE, we have calculated the 30-day equivalent negotiated price for the
PDE by dividing the PDE's negotiated price

[[Page 5945]]

by the number of 30-day equivalent supplies reflected on the PDE. Thus,
for example, if the PDE is for a 90-days' supply and has a negotiated
price of $810, that PDE contains three 30-day equivalent supplies, and
the 30-day equivalent negotiated price is $270.
Next, taking into consideration the 30-day equivalent negotiated
prices for all Part D drugs for which PDE data are available, we have
identified the PDEs with 30-day equivalent negotiated prices that
reflect the top 1 percent of 30 day-equivalent negotiated prices, and
have maintained the specialty-tier cost threshold at an amount that
corresponds to the lowest 30-day equivalent negotiated price that is
within the top 1 percent of all 30-day equivalent negotiated prices.
We note that this process may result in dose specificity of
eligibility for placement on the specialty tier, such that one strength
of a Part D drug may be eligible but another strength may not. For
example, suppose that Part D drug X is available as tablets in
strengths of 10mg, 20mg, and 30mg taken once daily with 30-day
equivalent negotiated prices of $300, $600, and $900, respectively. The
30mg tablets, because their 30-day equivalent negotiated price exceeds
the specialty-tier cost threshold, are eligible for placement on the
specialty tier, but the 10mg and 20mg tablets are not, because their
30-day equivalent negotiated prices do not exceed the specialty-tier
cost threshold.
We believe our existing policy to set the specialty-tier cost
threshold such that only the top 1 percent of 30-day equivalent
negotiated prices would exceed it is consistent with the purpose of the
specialty tier--that is, that only the highest-cost Part D drugs are
eligible for placement on the specialty tier. For this reason, we
proposed to codify a similar process to adjust and rank PDE data as the
basis for determining the specialty-tier cost threshold, as described
in this section of this final rule. Specifically, instead of 30-day
equivalent negotiated prices, we proposed to determine the 30-day
equivalent ingredient cost to set the specialty tier-cost threshold in
the same manner as we have historically done, as described previously
in this section.
In addition, to maintain stability in the specialty-tier cost
threshold, we proposed to set the specialty-tier cost threshold for
contract year 2021 to reflect the top 1 percent of 30-day equivalent
ingredient costs, at an amount that corresponds to the lowest 30-day
equivalent ingredient cost that is within the top 1 percent of all 30-
day equivalent ingredient costs. We also proposed to undertake an
analysis of 30-day equivalent ingredient costs annually, and to
increase the specialty-tier cost threshold for a plan year only if we
determine that no less than a ten percent increase in the specialty-
tier cost threshold, before rounding to the nearest $10 increment, is
needed to reestablish the specialty-tier cost threshold that reflects
the top 1 percent of 30-day equivalent ingredient costs.
As a hypothetical example, suppose that, in 2020, when analyzing
contract year 2019 PDE data for contract year 2021, we find that more
than 1 percent of PDEs have 30-day equivalent ingredient costs that
exceed the contract year 2020 specialty-tier cost threshold of $670.
Further, suppose that we find that 1 percent of the PDEs have 30-day
equivalent ingredient costs that exceed $685. This $15 difference
represents a 2.24 percent increase over the $670 specialty-tier cost
threshold. Under our proposed methodology, we would not increase the
specialty-tier cost threshold for contract year 2021.
However, if we suppose that, instead of $685, we find that 1
percent of the PDEs have 30-day equivalent ingredient costs that exceed
$753, then in this scenario, the $83 change represents a 12.39 percent
increase over the $670 specialty-tier cost threshold. Under our
proposed methodology, because this would be a change of more than 10
percent, we would set the specialty-tier cost threshold for contract
year 2021 at $750 which is the nearest $10 increment to $753.
We solicited comment on this proposal. Because rounding down, as in
the previous example, would technically cause the new specialty-tier
cost threshold to account for very slightly more than 1 percent of 30
day-equivalent ingredient costs, we also considered the alternative
that we would always round up to the next $10 increment. Using the
previous example, we would have set the threshold for contract year
2021 at $760 instead of $750. This alternative would: (a) Better ensure
that the new specialty-tier cost threshold actually reflects the top 1
percent of claims adjusted for 30-day equivalent supplies, and (b)
provide more stability to the specialty-tier cost threshold, that is to
say, it will theoretically not need to be changed as frequently,
because rounding down will always result in a specialty-tier cost
threshold that would include more than the top 1 percent of 30-day
equivalent ingredient costs. We do not expect that this alternative
would significantly impact the number of Part D drugs that would meet
our proposed specialty-tier cost threshold. We solicited comment on
this alternative approach to rounding and stated that we could finalize
an amended version of our proposed language at Sec. 423.104(d)(2)(B)
to reflect such alternative. We proposed to annually determine whether
the adjustment would be triggered using the proposed methodology, and
if it is, we would apply the proposed methodology to determine the new
specialty-tier cost threshold, which we would announce via an HPMS
memorandum or a comparable guidance document. Finally, we proposed for
contract year 2021 that we would apply our proposed methodology to the
contract year 2020 specialty-tier cost threshold of $670, and if a
change to the methodology based on comments received on this final rule
would result in a change to that threshold, we stated that we will
announce the new specialty-tier cost threshold in this final rule.
We have concerns regarding the use of negotiated prices of drugs,
as the term is currently defined in Sec. 423.100, in the determination
of the specialty-tier cost threshold, because the negotiated prices
include all pharmacy payment adjustments except those contingent
amounts that cannot reasonably be determined at the point of sale. For
this reason, negotiated prices typically do not reflect any
performance-based pharmacy price concessions that lower the price a
Part D sponsor ultimately pays for a drug. Negotiated prices in the PDE
record are composed of ingredient cost, administration fee (when
applicable), dispensing fee, and sales tax (when applicable).
Administration fees, dispensing fees, and sales tax are highly
variable. Therefore, because the ingredient cost has fewer variables
than the negotiated price, the ingredient cost represents the most
transparent, least complex, and most predictable of all the components
of negotiated price upon which to base the determination of the
specialty-tier cost threshold. Consequently, as noted previously, we
proposed to use the ingredient costs associated with 30-day equivalent
supplies when we determine the specialty-tier cost threshold according
to the methodology proposed earlier in this preamble. We do not expect
that this change would significantly affect the number of Part D drugs
meeting the specialty-tier cost threshold because the ingredient cost
generally accounts for most of the negotiated price; however, this
change to use the ingredient cost ensures that we are using the most
predictable of all the components of the negotiated price upon which to
base the specialty-tier cost threshold.
Using the methodology in this final rule and contract year 2019 PDE
data that we have to date, the specialty-tier

[[Page 5946]]

cost threshold for contract year 2021 would be $780 as a 30-day
equivalent ingredient cost. To determine this threshold, we analyzed
2.2 billion PDEs, and determined the lowest 30-day equivalent
ingredient cost that is within the top 1 percent of all 30-day
equivalent ingredient costs to be $780, which did not require rounding.
Therefore, we would increase the specialty-tier cost threshold to $780
(as a 30-day equivalent ingredient cost) for contract year 2021 from
the previous $670 (as a 30-day equivalent negotiated price). While this
change will impact the specific dollar-threshold amount for specialty-
tier eligibility, the specialty-tier cost threshold still accounts for
the top 1 percent of all claims, as adjusted for 30-day equivalent
supplies. Due to the increased costs of prescription drugs since the
previous $670 specialty-tier cost threshold was set several years ago,
the top 1 percent of all claims, as adjusted for 30-day equivalent
supplies, cost more, on average. Moreover, we estimate that the change
from using negotiated price to using ingredient cost only will result
in fewer than 20 drugs not meeting the $780 30-day equivalent
ingredient cost specialty-tier cost threshold that would have if we
continued to use the 30-day equivalent negotiated price.
Additionally, consistent with current guidance in section 30.2.4 in
Chapter 6 of the Medicare Prescription Drug Benefit Manual, we consider
claims history in reviewing the placement of Part D drugs on Part D
sponsors' specialty tiers. Consequently, we proposed to codify current
guidance that a Part D drug will be eligible for placement on a
specialty tier if the majority of a Part D sponsor's claims for that
Part D drug, when adjusted for 30-day equivalent supplies, exceed the
specialty-tier cost threshold. However, for Part D drugs newly approved
by the FDA for which Part D sponsors would have little or no claims
data because such drugs have only recently become available on the
market, we proposed to permit Part D sponsors to estimate the 30-day
equivalent ingredient cost portion of their negotiated prices based on
the maximum dose specified in the FDA-approved labeling and taking into
account dose optimization, when applicable for products that are
available in multiple strengths. If, based on their estimated 30-day
equivalent ingredient cost, the newly FDA-approved Part D drug is
anticipated to exceed the specialty-tier cost threshold most of the
time (that is, more than 50 percent of the time), we would allow Part D
sponsors to place such drug on a specialty tier. Finally, such
placement would be subject to our review and approval as part of our
annual formulary review and approval process.
We proposed to add paragraphs (d)(2)(iv)(A), (B), and (C) to Sec.
423.104 and to cross reference this section in our revised definition
of specialty tiers, which we proposed to move to Sec. 423.104, as
described later in this section. Specifically, we proposed in paragraph
(d)(2)(iv)(A) to described in paragraphs (d)(2)(iv)(A)(1) through (4)
the manner by which we set the specialty-tier cost threshold, and
further, to describe in paragraph (d)(2)(iv)(A)(5) a Part D drug's
eligibility for placement on the specialty tier. In paragraph
(d)(2)(iv)(A)(1) we proposed to specify that we use PDE data, and
further, use the ingredient cost reflected on the PDE to determine the
ingredient costs in dollars for 30-day equivalent supplies of drugs. In
paragraph (d)(2)(iv)(A)(2) we proposed to specify how we determine 30-
day equivalent supplies from PDE data, such that if the days' supply
reported on a PDE is less than or equal to 34, the number of 30-day
equivalent supplies equals one, and if the days' supply reported on a
PDE is greater than 34, the number of 30-day equivalent supplies is
equal to the number of days' supply reported on the PDE divided by 30.
We proposed that paragraph (d)(2)(iv)(A)(3) would specify that we then
determine the amount that equals the lowest 30-day equivalent
ingredient cost that is within the top 1 percent of all 30-day
equivalent ingredient costs reflected in the PDE data. We proposed that
paragraph (d)(2)(iv)(A)(4) would specify that, except as provided in
paragraph (B), the amount determined in paragraph (d)(2)(iv)(A)(3) is
the specialty-tier cost threshold for the plan year. Further, we
proposed that paragraph (d)(2)(iv)(A)(5) would specify that, except for
newly FDA-approved Part D drugs only recently available on the market
for which Part D sponsors would have little or no claims data, we will
approve the placement of a Part D drug on a specialty tiers when that
Part D sponsor's claims data from the plan year that ended 12 months
prior to the applicable plan year demonstrate that greater than 50
percent of the Part D sponsor's PDEs for a given Part D drug, when
adjusted for 30-day equivalent supplies, have ingredient costs for 30-
day equivalent supplies that exceed the specialty-tier cost threshold.
We proposed in paragraph (d)(2)(iv)(B) to describe the methodology
we will use to increase the specialty-tier cost threshold.
Specifically, we proposed to increase the specialty-tier cost threshold
for a plan year only if the amount determined by paragraph
(d)(2)(iv)(A)(3) for a plan year is at least ten percent above the
specialty-tier cost threshold for the prior plan year. We proposed that
if an increase is made, we would round the amount determined in
proposed paragraph (d)(2)(iv)(A)(3) to the nearest $10. That amount
would be the specialty-tier cost threshold for the applicable plan
year.
Finally, we proposed paragraph (d)(2)(iv)(C) to specify that the
determination of the specialty-tier cost threshold for a plan year is
based on PDE data from the plan year that ended 12 months prior to the
beginning of the applicable plan year.
As mentioned in this section of this final rule, to align the
definition of specialty tier with our proposal to allow Part D sponsors
to have up to two specialty tiers, we first proposed to move the
definition of specialty tier from Sec. 423.560 to appear in Sec.
423.104(d)(2)(iv) as part of a proposed new section on specialty tiers
that also includes the methodology for determining the specialty-tier
cost thresholds and maximum allowable cost sharing. (We also proposed
to revise Sec. 423.560 and Sec. 423.578(a)(6)(iii) to cross reference
the placement of that definition in Sec. 423.104(d)(2)(iv).)
Additionally, we proposed to amend the definition of specialty tier to
reflect our proposal to allow Part D sponsors to have up to two
specialty tiers. With respect to the phrase ``and biological
products,'' for the reasons discussed in the section IV.E.3 of this
final rule, (specifically, that biological products are already are
included in the definition of a Part D drug at Sec. 423.100), we also
proposed a technical change to the definition of specialty tier to
remove the phrase ``and biological products.'' Therefore, we proposed
to define specialty tier at Sec. 423.104(d)(2)(iv) to mean a formulary
cost-sharing tier dedicated to high-cost Part D drugs with ingredient
costs for a 30-day equivalent supply (as described in Sec.
423.104(d)(2)(iv)(A)(2)) that are greater than the specialty-tier cost
threshold specified in Sec. 423.104(d)(2)(iv)(A).
To summarize, we proposed to: (1) Amend the definition of specialty
tier at Sec. 423.560 and move it to Sec. 423.104(d)(2)(iv); (2) amend
Sec. 423.578(a)(6)(iii) to cross reference placement of the definition
of specialty tier at Sec. 423.104(d)(2)(iv); (3) add new paragraph
(d)(2)(iv)(A) which describes, in (d)(2)(iv)(A)(1) through (4), the
methodology by which we set the specialty-tier cost threshold, and in
(d)(2)(iv)(A)(5), a Part D drug's eligibility for placement on the
specialty

[[Page 5947]]

tier; (4) add new paragraph (d)(2)(iv)(B), which describes the
methodology we will use to increase the specialty-tier cost threshold;
and (5) add new paragraph (d)(2)(iv)(C), which specifies that the
determination of the specialty-tier cost threshold for a plan year is
based on PDE data from the plan year that ended 12 months prior to the
beginning of the applicable plan year. We solicited comment on
specifying at the new Sec. 423.104(d)(2)(iv)(B) that we would round up
to the nearest $10 increment.
We received 8 public comments concerning our proposal to amend the
definition of specialty tier at Sec. 423.560 and move it to Sec.
423.104(d)(2)(iv); and 8 public comments concerning our proposal to
amend Sec. 423.578(a)(6)(iii) to cross reference placement of the
definition of specialty tier at Sec. 423.104(d)(2)(iv). We received 10
public comments concerning our proposal to add new paragraph
(d)(2)(iv)(A) which describes, in (d)(2)(iv)(A)(1) through (4), the
methodology by which we set the specialty-tier cost threshold, and in
(d)(2)(iv)(A)(5), a Part D drug's eligibility for placement on the
specialty tier. We received 12 public comments concerning our proposal
to add new paragraph (d)(2)(iv)(B), which describes the methodology we
will use to increase the specialty-tier cost threshold; and 6 public
comments concerning our proposal to add new paragraph (d)(2)(iv)(C),
which specifies that the determination of the specialty-tier cost
threshold for a plan year is based on PDE data from the plan year that
ended 12 months prior to the beginning of the applicable plan year. We
received 7 public comments concerning our proposal to increase the
specialty-tier cost threshold to $780 (as a 30-day equivalent
ingredient cost) for contract year 2021 from the previous $670 (as a
30-day equivalent negotiated price).
Although there was some overlap in stakeholder categories, all of
the comments were from groups representing Part D sponsors, beneficiary
advocates, manufacturers, providers, pharmacists and pharmacies,
wholesale distributors, think tanks, and non-partisan Congressional
agencies.
A summary of the comments on amending, moving, and cross-
referencing the definition of specialty tier and data used to determine
the specialty-tier cost threshold and our responses follow.
Comment: Most commenters supported CMS's proposals. We did not
receive any comments on the alternative on which we solicited comment
to specify at the new Sec. 423.104(d)(2)(iv)(B) that we would round up
to the nearest $10 increment. We received unanimous support of our
proposals to (1) amend the definition of specialty tier at Sec.
423.560 and move it to Sec. 423.104(d)(2)(iv); (2) amend Sec.
423.578(a)(6)(iii) to cross reference placement of the definition of
specialty tier at Sec. 423.104(d)(2)(iv); and (3) add new paragraph
(d)(2)(iv)(C), which specifies that the determination of the specialty-
tier cost threshold for a plan year is based on PDE data from the plan
year that ended 12 months prior to the beginning of the applicable plan
year.
Response: We thank the commenters for their support. We will not
finalize the alternative on which we solicited comment to specify that
we would round up to the nearest $10 increment at this time, but may
consider it for future rulemaking. We will finalize without
modification our proposal to add new paragraph (d)(2)(iv)(C), which
specifies that the determination of the specialty-tier cost threshold
for a plan year is based on PDE data from the plan year that ended 12
months prior to the beginning of the applicable plan year. This
provision will apply for coverage year 2022. We therefore are not
finalizing our proposal to specify a specialty-tier cost threshold of
$780 for 2021.
To retain the policies in effect before coverage year 2022, we are
amending the definition of specialty tier at Sec. 423.560 by adding
paragraph (i) to clarify that the existing definition will apply before
coverage year 2022, and paragraph (ii) to cross reference the
definition which appears in Sec. 423.104(d)(2)(iv), which will apply
beginning coverage year 2022. Additionally, as discussed in section
IV.E.2. of this final rule, we are amending Sec. 423.578(a)(6)(iii) by
adding paragraph (A) to cross reference the definition of specialty
tier which will apply before coverage year 2022, and paragraph (B) to
cross reference placement of the definition of specialty tier at Sec.
423.104(d)(2)(iv) which will apply beginning coverage year 2022.
Additionally, paragraph (A) will remove the phrase ``and biological
products.'' Additionally, paragraph (B) will (1) reflect the
possibility of a second specialty tier, and (2) clarify that Part D
sponsors may design their exception processes so that Part D drugs on
the specialty tier(s) are not eligible for a tiering exception to non-
specialty tiers.
A summary of the comments on the methodology to determine the
specialty-tier cost threshold and a Part D drug's eligibility for
placement on the specialty tier and our responses follow.
Comment: Some commenters supported CMS's methodology to establish
the specialty-tier cost threshold, but were opposed to the maximum dose
being used to determine the specialty-tier eligibility for newly-FDA-
approved drugs. Some commenters believed that: (1) The maximum dose
should not be used to evaluate newly-approved drugs for specialty-tier
eligibility; (2) for newly-FDA approved drugs, CMS should require Part
D plans to estimate the 30-day equivalent ingredient cost for each drug
product strength, package size, and formulation level, similar to how
it is already done for already FDA-approved Part D drugs; and (3) CMS
should also codify language at Sec. 423.104 regarding dose specificity
and dose optimization for all drugs.
Response: We thank the commenters for their perspective on the
process for newly FDA-approved drugs. We agree that we need to provide
more detail on what we meant in our preamble when we stated that we
proposed to permit Part D sponsors to estimate the 30-day equivalent
ingredient cost portion of newly-FDA-approved drugs ``based on the
maximum dose specified in the FDA-approved labeling and taking into
account dose optimization, when applicable for products that are
available in multiple strengths.''
We did not mean to suggest that only maximum doses would qualify
for the specialty tier. Rather, we would expect Part D sponsors to
estimate the 30-day equivalent ingredient cost of a drug, taking into
account dose optimization--which, based on the maximum FDA-approved
dose of a medication, consolidates the Part D enrollee's dose into the
fewest number of dose units (for example, tablets)--and dose
specificity--which is based on the price applied to the particular
strength and dosage form of the drug.
To illustrate that the process for determining a Part D drug's
specialty-tier eligibility should take into account dose optimization
and dose specificity for both already-FDA approved drugs (for which
Part D sponsors would have claims history) and newly-FDA approved drugs
(for which Part D sponsors would have little to no claims history), we
clarify the example earlier in this section (section IV.E.6) of this
final rule. We gave the example of ``Part D drug X'' that is available
as tablets in strengths of 10mg, 20mg, and 30mg taken once daily with
30-day equivalent negotiated prices of $300, $600, and $900,
respectively. Regarding dose specificity, the 30mg tablets, because
their 30-day equivalent negotiated price exceeds the specialty-tier
cost threshold,

[[Page 5948]]

are eligible for placement on the specialty tier, but the 10mg and 20mg
tablets are not, because their 30-day equivalent negotiated prices do
not exceed the specialty-tier cost threshold.
Regarding dose optimization, using the previous example, suppose
``Part D drug X'' is administered once daily, and the maximum dose is
30mg once daily. Suppose a Part D enrollee takes the maximum dose of
30mg once daily. The Part D enrollee could accomplish that by taking
three 10mg tablets, one and a half 20mg tablets, or one 30mg tablet.
However, because the 30mg tablets yield the fewest number of dose units
for the Part D enrollee to achieve the required dose, dispensing 30,
30mg tablets for a 30-day supply is indicated to be ``dose optimized''
relative to the other options. Although prescriptions for 30 30mg
tablets or 90 10mg tablets each cost $900, because the prescription for
90 10mg tablets is not dose optimized, it (still) does not qualify for
the specialty-tier cost threshold.
Because our proposed language at (d)(2)(iv)(A)(6) applied to Part D
drugs except those newly-approved by the FDA, in response to the
comments, we wish to clarify the process for newly-FDA approved drugs.
Therefore, we are also finalizing new paragraph (d)(2)(iv)(A)(6), which
describes the eligibility for placement on the specialty tier of newly-
FDA-approved Part D drug such that we will approve placement of a
newly-FDA-approved Part D drug on a specialty tier when that Part D
sponsor estimates that ingredient cost portion of their negotiated
price for a 30-day equivalent supply is anticipated to exceed the
specialty-tier cost threshold more than 50 percent of the time, subject
to our review and approval as part of our annual formulary review and
approval process.
While we appreciate the commenters' suggestion that we codify
language at Sec. 423.104 concerning dose specificity and dose
optimization, we do not believe that we could effectively do so, given
the myriad drugs, conditions, different doses for such conditions,
dosage forms, package sizes, etc., that factor into these
determinations, which can sometimes be quite complicated. We do not
want to inadvertently exclude nuanced, but clinically relevant dose
optimization strategies. Consequently, we will consider potential
language for future notice and comment rulemaking.
Comment: Some commenters suggested that moving from negotiated
price to ingredient cost may increase the number of drugs eligible for
the specialty tier since negotiated prices may be lower than average
wholesale price (AWP) and that CMS should ensure that the switch from
negotiated price to ingredient cost tracks the medications captured by
the current threshold. Some commenters suggested that if CMS finalizes
this provision with 30-day equivalent negotiated price (instead of 30-
day equivalent ingredient cost), CMS needs to clarify which definition
of negotiated price.
Response: We estimate that the change from using negotiated price
to using ingredient cost only would result in fewer than 20 drugs not
meeting the $780 30-day equivalent ingredient cost specialty-tier cost
threshold that would have met the threshold if we continued to use the
30-day equivalent negotiated price. In other words, in our preliminary
analysis, moving from negotiated price to ingredient cost decreased the
number of drugs eligible for the specialty tier. However, we will
continue to monitor the uptake and outcomes associated with these
proposals. We are finalizing the provision to establish a Part D drug's
eligibility for placement on the specialty tier using the ingredient
cost.
Comment: Some commenters requested clarity on why CMS is codifying
the existing methodology while at the same time proposing a substantive
change, and inquired why CMS does not simply propose the change. The
commenters added that in proposing to move away from the negotiated
price and use the ingredient cost that CMS has, in essence, removed the
dispensing fee from the determination of a Part D drug's eligibility
for specialty-tier placement, but that CMS has not specified if there
is a specific issue with dispensing fees that would warrant removing
them altogether from the calculation of the specialty tier cost
threshold. These commenters then inquired if CMS had another definition
for ingredient cost, and suggested that if so, CMS needs to spell this
out.
Response: We proposed to codify our longstanding policy with
certain changes to improve the transparency and consistency of the
specialty tier cost threshold.
We have concerns regarding the use of negotiated prices of drugs,
as the term is currently defined in Sec. 423.100, in the determination
of the specialty-tier cost threshold, because the negotiated prices
include all pharmacy payment adjustments except those contingent
amounts that cannot reasonably be determined at the point of sale. For
this reason, negotiated prices typically do not reflect any
performance-based pharmacy price concessions that lower the price a
Part D sponsor ultimately pays for a drug. Negotiated prices in the PDE
record are composed of ingredient cost, administration fee (when
applicable), dispensing fee, and sales tax (when applicable).
Administration fees, dispensing fees, and sales tax are highly
variable. Therefore, because the ingredient cost has fewer variables
than the negotiated price, the ingredient cost represents the most
transparent, least complex, and most predictable of all the components
of negotiated price upon which to base the determination of the
specialty-tier cost threshold. We do not expect that this change would
significantly affect the number of Part D drugs meeting the specialty-
tier cost threshold because the ingredient cost generally accounts for
most of the negotiated price.
Use of the ingredient cost in lieu of the negotiated price for
purposes of determining the specialty-tier cost threshold does not
remove the dispensing fee from the negotiated price. Rather, as
previously noted, we are merely using the most stable portion of the
negotiated price to determine the specialty tier cost threshold.
Finally, by ingredient cost, we mean the ingredient cost that is
reported on the PDE.
We are finalizing our proposal describing the methodology by which
we set the specialty-tier cost threshold, and a Part D drug's
eligibility for placement on the specialty tier with one modification.
In response to comments, we are also finalizing new paragraph
(d)(2)(iv)(A)(6), which describes the eligibility for placement on the
specialty tier of newly-FDA-approved Part D drugs.
A summary of the comments on the methodology to increase the
specialty-tier cost threshold and our responses follow.
Comment: Most commenters supported CMS's proposal describing the
methodology CMS will use to increase the specialty-tier cost threshold.
Response: We thank the commenters for their support.
Comment: Some commenters opposed CMS's proposed 10 percent
threshold for change for updating the specialty-tier cost threshold,
and suggested that drugs that no longer meet the threshold should be
removed from the specialty tier, regardless of the magnitude of the
threshold's change. Some commenters were concerned about products not
meeting the specialty-tier cost threshold from one year to the next,
and consequently moving in and out of the specialty tier from one year
to the next, which could cause Part D enrollee confusion. Some
commenters noted a tension between tiering exceptions, use of the
ingredient cost in lieu of the

[[Page 5949]]

negotiated price for purposes of determining the specialty-tier cost
threshold, and increases to the specialty-tier cost threshold, noting
that, as drugs no longer qualify for the specialty tier and are moved
to a non-specialty, non-preferred brand/drug tier, Part D enrollees
could potentially pay more for a preferred specialty tier drug than a
non-specialty, non-preferred drug, even though the non-specialty, non-
preferred drug is the less expensive product. Additionally, some
commenters suggested that CMS should clarify how our proposal to revise
the specialty-tier cost threshold could impact the distribution of
generic drugs and biosimilar biological products that are able to be
placed on the specialty tier. Finally, some commenters suggested that
CMS should address sudden increases, perhaps due to a sudden increase
in the utilization of specialty-tier drugs.
Response: We agree that the specialty tier should consist of only
the highest-cost drugs. However, as the commenters noted, to decrease
Part D enrollee confusion arising from year-to-year changes in the
specialty-tier cost threshold, we must balance the limitation of the
specialty tier to the highest-drugs with the need for stability in the
specialty-tier cost threshold. Nonetheless, we wish to clarify that,
even absent any increase in the specialty-tier cost threshold, if the
price of a drug changes, and it no longer meets the specialty-tier cost
threshold, it must be removed from the specialty tier at the beginning
of the next plan year.
While we acknowledge the commenters' concerns about the tension
between tiering exceptions, the specialty-tier cost threshold, tier
composition (that is, as Part D drugs no longer meet the specialty-tier
cost threshold and are potentially placed on other, non-specialty
tiers), and Part D enrollee cost sharing, this dynamic exists today and
our policy would not change this. We also note that if Part D drugs,
including generic drugs and biosimilar biological products, were no
longer eligible for specialty-tier placement and subsequently placed on
a non-specialty, non-preferred tier in the following plan year, an
enrollee could then request a tiering exception for that drug.
We also appreciate that the commenters' suggestion of sudden
increases comes at a time of unprecedented uncertainty regarding the
specialty tiers in light of COVID-19. However, we decline to adopt any
new policies to address sudden price changes. Consistent with our
guidance at section 30.3.3 of Chapter 6 of the Medicare Prescription
Drug Benefit Manual and subject to the requirements of Sec.
423.120(b)(5), we permit Part D sponsors to add drugs to and remove
drugs from the formulary during the plan year.
Comment: Some commenters suggested that CMS should increase the
specialty-tier cost threshold by the Annual Percentage Increase (API)
or medical inflation with a periodic rebalancing when the specialty-
tier cost threshold represents less than one percent of claims.
Response: We thank the commenters, but we decline to adopt this
recommendation because we proposed a methodology that would keep
specialty tier drugs at the top 1 percent.
We are finalizing without modification our proposed methodology to
increase the specialty-tier cost threshold.
A summary of the comments on increasing the specialty-tier cost
threshold to $780 (as a 30-day equivalent ingredient cost) for contract
year 2021 from the previous $670 (as a 30-day equivalent negotiated
price) and our responses follow.
Comment: Most commenters supported CMS's proposal to increase the
specialty-tier cost threshold to $780 (as a 30-day equivalent
ingredient cost) for contract year 2021 from the previous $670 (as a
30-day equivalent negotiated price). A commenter asked what the cost
threshold for higher cost-sharing, specialty tier would be, and if it
will be set by the plan.
Response: We thank the commenters for their support. We are not
finalizing this proposal. The specialty-tier cost threshold will apply
to both specialty tiers, and while Part D sponsors would not set the
threshold, Part D sponsors may choose which specialty-tier drugs go on
which tier, subject to our annual formulary review and approval
process. However, as we noted in our May 22, 2020 HPMS memorandum
entitled, ``Updated Contract Year (CY) 2021 Final Part D Bidding
Instructions,'' for coverage year 2021, we will maintain the specialty-
tier cost threshold at $670, as a 30-day equivalent negotiated price.
The methodology that is being finalized in this rulemaking will be in
effect for coverage year 2022.
Comment: Some commenters asked whether CMS considered the effect of
our proposal to increase the specialty-tier cost threshold in
combination with our proposal to permit Part D sponsors to maintain up
to two specialty tiers, overall, asserting that CMS may be reducing the
benefits that a second specialty tier could bring to plans and Part D
enrollees because a brand drug may continue to qualify for the
specialty tier(s) while its generic equivalent may not.
Response: As discussed earlier in this section (section IV.E.6) of
this final rule, we believe the specialty tier should consist of only
the highest-cost drugs and therefore, that we should apply a
methodology that takes into account rising drug costs and changes in
utilization over time. There is a chance that a drug--including a
generic drug--that no longer qualifies for placement on the specialty
tier may be placed on a non-specialty, non-preferred brand/drug tier,
which may have up to 50 percent coinsurance. We note however that this
scenario exists today, where drugs are no longer eligible for specialty
tier placement because they no longer meet the specialty-tier cost
threshold, and Part D sponsors can choose to place them on formulary in
a way that they deem best for their enrollees, provided they comply
with the requirements of our formulary review and approval process
under Sec. 423.120(b). The dynamics around formulary placement of
brand and generic drugs and the elements that drive those decisions are
central to the core structure and function of the Part D benefit. We
therefore do not believe this proposal exacerbates this issue. We also
acknowledge in section IX.E.5. of this final rule that conflicting
forces might limit the potential savings/benefits of this proposal.
Moreover, it is important to note that drugs on a non-specialty, non-
preferred brand/drug tier are subject to tiering exceptions.
Under the requirements of Sec. 423.578(a)(6) and consistent with
our guidance at section 40.5.1 of the Parts C & D Enrollee Grievances,
Organization/Coverage Determinations, and Appeals Guidance, non-
preferred generic drugs are eligible for tiering exceptions to the
lowest applicable cost sharing associated with alternatives that are
either brand or generic drugs when the medical necessity criteria are
met. This represents an important protection for Part D enrollees,
particularly when paired with our benefit parameters that we establish
on an annual basis. Under Sec. 423.104(d)(2)(iii), tiered cost sharing
for non-defined standard benefit designs (meaning, actuarially
equivalent standard, basic alternative, or enhanced alternative benefit
designs) may not exceed levels (or cost sharing thresholds) that we
annually determine to be discriminatory.
We are not finalizing our proposal to increase the specialty-tier
cost threshold to $780 (as a 30-day equivalent ingredient cost) for
contract year 2021 from the previous $670 (as a 30-day

[[Page 5950]]

equivalent negotiated price). For CY 2021, we will maintain the
specialty tier threshold at $670, as a 30-day equivalent negotiated
price. However, as previously described, we are finalizing our proposed
methodology to determine the specialty tier threshold each year,
beginning with CY 2022.
In summary, we are finalizing without modification our proposals
to:
Add a new paragraph at Sec. 423.104(d)(2)(iv)(D) to
specify that a Part D plan may maintain up to two specialty tiers;
Maintain the existing policy at Sec. 423.578(c)(3)(ii),
thereby requiring Part D sponsors to permit tiering exceptions between
their two specialty tiers to provide coverage for the approved Part D
drug on the higher cost-sharing, specialty tier that applies to
preferred alternative Part D drugs on the lower cost-sharing, preferred
specialty tier;
Add new paragraphs Sec. 423.104(d)(2)(iv)(D)(1) through
(3) to establish a maximum allowable cost sharing of 25/33 percent for
a single specialty tier, or, for plans with two specialty tiers, the
higher cost-sharing, specialty tier;
Permit Part D sponsors to set the cost sharing for the
preferred specialty tier at any amount lower than that of the other
specialty tier;
Give Part D sponsors the flexibility to determine which
Part D drugs are placed on either specialty tier, subject to the
thresholds we are proposing and the requirements of the CMS formulary
review and approval process under Sec. 423.120(b)(2);
Amend Sec. 423.578(a)(6)(iii) to cross reference
placement of the definition of specialty tier at Sec.
423.104(d)(2)(iv);
Add new paragraph (d)(2)(iv)(C), which specifies that the
determination of the specialty-tier cost threshold for a plan year is
based on PDE data from the plan year that ended 12 months prior to the
beginning of the applicable plan year;
Add new paragraph (d)(2)(iv)(A) which describes, in
(d)(2)(iv)(A)(1) through (4), the methodology by which we set the
specialty-tier cost threshold, and in (d)(2)(iv)(A)(5) a Part D drug's
eligibility for placement on the specialty tier; and
Add new paragraph (d)(2)(iv)(B), which describes the
methodology we will use to increase the specialty-tier cost threshold.
In response to comments, we are also finalizing new paragraph
(d)(2)(iv)(A)(6), which describes the eligibility for placement on the
specialty tier of newly-FDA-approved Part D drug.
These final policies will apply for coverage year 2022, and we will
announce the specialty-tier cost threshold for coverage year 2022 prior
to the contract year 2022 bidding deadline.
As discussed in section IV.E.2 and earlier in this section (section
IV.E.6) of this final rule, to retain the policies in effect before
coverage year 2022, we will:
Amend the definition of specialty tier at Sec. 423.560 by
adding paragraph (i) to clarify that the existing definition will apply
before coverage year 2022, and paragraph (ii) to cross reference the
definition which appears in Sec. 423.104(d)(2)(iv), which will apply
beginning coverage year 2022; and
Amend Sec. 423.578(a)(6)(iii) by adding paragraph (A) to
cross reference the definition of specialty tier which will apply
before coverage year 2022, and paragraph (B) to cross reference
placement of the definition of specialty tier at Sec.
423.104(d)(2)(iv), which will apply beginning coverage year 2022.
Additionally, paragraph (A) will remove the phrase ``and biological
products.'' Additionally, paragraph (B) will (1) reflect the
possibility of a second specialty tier, and (2) clarify that Part D
sponsors may design their exception processes so that Part D drugs on
the specialty tier(s) are not eligible for a tiering exception to non-
specialty tiers.

F. Beneficiary Real Time Benefit Tool (RTBT) (Sec. 423.128)

1. Overview and Summary
Section 101 of the MMA requires the adoption of Part D e-
prescribing (eRx) standards. Prescription Drug Plan (PDP) sponsors and
Medicare Advantage (MA) organizations offering Medicare Advantage
Prescription Drug Plans (MA-PD) are required to establish electronic
prescription drug programs that comply with the e-prescribing standards
that are adopted under this authority. Prescribers and dispensers who
electronically transmit and receive prescription and certain other
information for Part D-covered drugs prescribed for Medicare Part D-
eligible individuals, directly or through an intermediary, are required
to comply with any applicable standards that are in effect.
Section 119 of the Consolidated Appropriations Act requires that
Part D plan sponsors implement a prescriber RTBT capable of integrating
with clinicians' electronic prescribing and electronic health record
systems for the real-time transmission of formulary, benefit, clinical
alternative, cost sharing, and utilization management information
specific to Part D plan enrollees. This requirement is to take effect
once the Secretary names a prescriber RTBT standard, which has not yet
occurred.
For a further discussion of the statutory basis for this final rule
and the statutory requirements at section 1860D-4(e) of the Act, please
refer to section I. of the February 4, 2005, Medicare Program; E-
Prescribing and the Prescription Drug Program Proposed Rule (70 FR
6256).
In accordance with our regulations at Sec. 423.160(b)(1), (2), and
(5), CMS' Part D eRx program requires that Part D sponsors support the
use of the adopted standards when electronically conveying prescription
and formulary and benefit information regarding Part D-covered drugs
prescribed to Part D-eligible individuals between plans, prescribers,
and dispensers.
CMS utilized several rounds of rulemaking to update the Part D e-
prescribing program. Most recently, in the May 2019 final rule
Modernizing Part D and Medicare Advantage to Lower Drug Prices and
Reduce Out-of-Pocket Expenses Final Rule (84 FR 23832) (hereinafter
referred to as the May 2019 final rule), we required that Part D plans
support a prescriber electronic real-time benefit tool capable of
integrating with at least one e-prescribing or electronic health record
(EHR) system. The prescriber RTBT must provide its enrollees with
complete, accurate, timely, and clinically appropriate patient-specific
real-time formulary and benefit information (including enrollee cost
sharing information formulary alternatives and utilization management
requirements). This ``prescriber RTBT'' electronic transaction
requirement will become effective January 1, 2021, and is expected to
enhance medication adherence and lower overall drug costs by providing
Part D prescribers information in real time when lower-cost alternative
drugs are available.
The SCRIPT and the NCPDP Formulary and Benefits standards have
already become critical components of the Part D program, and CMS
believes that the recently finalized prescriber RTBT requirement at
Sec. 423.160(b)(7) will do the same by enhancing the electronic
communication of prescription-related information between plans and
prescribers under the Part D benefit program. In order to further
enhance this communication, CMS has been monitoring the development of
prescriber RTBT standards and will consider adoption of these standards
in future rulemaking. While these requirements will empower
prescribers, CMS also believes it is important to empower patients with

[[Page 5951]]

information like that which will be included in the prescriber RTBT and
give them the ability to access this information either at their
computer or using a mobile device.
In the February 2020 proposed rule, CMS proposed to adopt at Sec.
423.128(d)(1)(vi), (d)(4) and (d)(5) a requirement that Part D sponsors
implement a beneficiary RTBT that would allow enrollees to view
accurate, timely, and clinically appropriate patient-specific real-time
formulary and benefit information, effective January 1, 2022, so as to
allow both prescriber and patient to consider potential cost
differences when choosing a medication that best meets the patient's
medical and financial needs. CMS proposed to require that each system
response value would need to present real-time values for the patient's
cost-sharing information and clinically appropriate formulary
alternatives, where appropriate. This requirement would include the
formulary status of clinically appropriate formulary alternatives,
including any utilization management requirements, such as step
therapy, quantity limits, and prior authorization, applicable to each
alternative medication. CMS also proposed to require that plans make
this information available to enrollees via their customer service call
center.
CMS received the following comments related to our proposal, in
general. Our responses follow.
Comment: All commenters supported our proposal, citing the need to
provide beneficiaries with actionable information about their
prescription drug costs, so beneficiaries can make better informed
decisions about treatment options.
Response: CMS thanks commenters for their support. CMS agrees that
providing beneficiaries with information about prescription drug costs
is important and that the beneficiary RTBT will help provide this
information to Part D enrollees.
Comment: Some commenters requested that we delay the implementation
date until January 1, 2023 to allow more time for testing the tool.
Some of these commenters requested that we exercise enforcement
discretion, should we choose not to delay the implementation date.
Other commenters requested that we change the implementation date to
January 1, 2021 so that beneficiaries can access the benefits of the
tool more expeditiously.
Response: CMS understands both the desire to ensure that the tool
functions properly and that Part D enrollees have access to information
about prescription drug costs. However, in order to help ensure that
Part D sponsors have adequate time to implement the tool properly so
that beneficiaries can access accurate information as seamlessly as
possible, we have decided to delay the implementation date until
January 1, 2023.
Comment: A few commenters requested that CMS provide training tools
on beneficiary RTBTs to help ensure that Part D enrollees are able to
use the RTBTs properly. Other commenters requested that we provide the
Part D sponsors with standard language to use on their beneficiary
RTBTs to help ensure that Part D enrollees are able to understand the
information.
Response: CMS believes that helping ensure that Part D enrollees
can use the beneficiary RTBTs and understand the information within
them is of utmost importance. However, CMS wants to help ensure that
plans have sufficient flexibility when implementing this requirement,
since most Part D sponsors have computer applications or portals in
place and are more attuned to the needs of their enrollees. In
addition, the RTBTs may differ slightly by plan, so we believe that
Part D sponsors are better equipped to ensure that their enrollees
understand how to use the tool and the language within it.
In order to help ensure that beneficiaries understand how to use
this tool, CMS considered requiring that Part D sponsors provide
training to their enrollees. However, we believe this would limit our
strategy of maximal flexibility for Part D sponsors in implementing
this new requirement. Part D sponsors are in the best position to gauge
whether or not their enrollees would benefit from training about how to
use beneficiary RTBTs. Furthermore, we expect these RTBTs to be similar
to the computer applications or portals that most Part D sponsors
already have in place, so we do not believe that Part D enrollees will
require a training to use the new tool.
Comment: Commenters requested that we require Part D sponsors to
include additional information unrelated to beneficiary drug costs in
the beneficiary RTBT, such as beneficiary eligibility status, the
notification that beneficiaries have the right to an appeal, an
explanation of the difference between out of pocket costs and premiums,
and a message letting beneficiaries know that assistance programs are
available to beneficiaries to help them pay their out of pocket costs.
Response: Although CMS understands the importance of keeping
beneficiaries informed about these important topics, we decline to
adopt this suggestion. Beneficiaries can access this information from
several sources, including upon enrollment in Medicare Part D, through
the Medicare & You publication, and Medicare.gov. The purpose of the
beneficiary RTBT is to better inform beneficiaries about alternative
medications, rather than serve as a repository of information for Part
D enrollees. As previously stated, CMS seeks to allow Part D sponsors
flexibility in implementing this requirement. As a result, CMS is not
requiring sponsors to include information that is not directly
connected to the purpose of the RTBT. However, Part D sponsors can
include additional information, if they deem it helpful to their
enrollees.
2. Pricing Information for the Beneficiary RTBT
As previously noted, CMS proposed to require that Part D sponsors
include beneficiary-specific cost information in their beneficiary
RTBTs. We proposed this requirement since we believe that sharing this
information would yield greater medication adherence. In our proposed
rule, we cited evidence suggesting that reducing medication cost yields
benefits in increased patient medication adherence. Evidence supports
that increased medication out-of-pocket costs was associated with
adverse non-medication related outcomes such as additional medical
costs, office visits, hospitalizations, and other adverse events.\62\
Given that patient cost is such a determinant of adherence, including
the patient in such discussions should improve medication adherence.
Further, research shows that when patients play an active role in their
health care decisions the result is increased patient knowledge,
satisfaction, adherence with treatment and improved outcomes.\63\
Although not all patients will choose to actively participate in
treatment decisions, interactive discussions between patients and
physicians are correlated with improved patient satisfaction with their
health care provider.\64\
---------------------------------------------------------------------------

\62\ Impact of Type 2 Diabetes Medication Cost Sharing on
Patient Outcomes and Health Plan Costs (2016), Julia Thornton
Snider, Seth Seabury, et. Al.; The ``Cost'' of Medication
NonAdherence: Consequences We Cannot Afford to Accept (2011), Marie
A. Chisholm-Burns and Christina A. Spivey; Medication Non-adherence
is Associated with Increased Medical Health Care Costs (2007),
Sunanda Kane and Fadiya Shaya.
\63\ See https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1855272/.
\64\ See https://www.ncbi.nlm.nih.gov/pubmed/11021677/.
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We believe that bringing all of these benefits to Part D enrollees
is especially important, in light of the fact that the

[[Page 5952]]

Medicare population is becoming increasingly comfortable with
technology. According to a 2017 Pew Research Center study, some groups
of seniors report ``owning and using various technologies at rates
similar to adults under the age of 65'' \65\ and also characterized
``82% of 65- to 69-year-olds as internet users,'' and found that 40
percent of seniors now own smartphones, ``more than double the share
that did so in 2013.'' As more seniors use computers and smart phones
in their daily lives, it is likely that they will use electronic means
to research information about their prescription medications. CMS
believes that the Part D program must move to accommodate those
enrollees by enhancing the way that digital technologies are currently
used.
---------------------------------------------------------------------------

\65\ Report is accessible at https://www.pewinternet.org/2017/05/17/technology-use-among-seniors/.
---------------------------------------------------------------------------

We also stated that we would consider it a best practice for
beneficiary RTBTs to include cost-sharing amounts for medications if
purchased at a pharmacy selected by the beneficiary, provided the
pharmacy is in the plan's network. Sponsors would also be allowed to
provide cost data for alternative pharmacies in the plan's network.
However, due to concerns with enrollees being steered to different
pharmacies, we did not propose to require that beneficiary RTBTs
include pharmacy-specific cost sharing information.
In order to support maximum transparency, CMS also encouraged plans
to show each drug's negotiated price (as defined in Sec. 423.100) in
the beneficiary RTBTs in addition to the requirement to reflect the
beneficiary's out-of-pocket cost information at the beneficiary's
currently chosen pharmacy. Alternatively, if the beneficiary RTBT does
not show the negotiated price, we would encourage plans to provide
additional cost data comparing the beneficiary and plan cost
comparisons for each drug and its alternatives. For example, if Drug A
has beneficiary cost sharing of $10 and the plan pays $100, and Drug B
also has a beneficiary cost sharing of $10 but the plan only pays $90,
the beneficiary RTBT would reflect a difference of $0 for cost sharing
and -$10 in comparative plan cost for Drug B. Providing data such as
negotiated price or comparative plan costs would provide beneficiaries
with a better understanding of the price differences between
alternative drugs and could help provide beneficiaries with information
on potential clinically appropriate alternatives that could steer a
discussion with their clinician and provide the biggest savings to the
beneficiary and potentially lower Part D costs overall.
Although we encouraged the inclusion of the negotiated price and
other comparative information in the beneficiary RTBT, we did not
propose to require the inclusion of such information. We did not
propose to require this because we do not have research that shows
learning the payer's rate will affect beneficiary choice if there is no
effect on their payment amount. However, we solicited comment on this
issue.
CMS appreciates the feedback we received on our proposals. In the
sections that follow, which are arranged by topic area, we summarize
the comments we received on each proposal and provide our responses. In
the following pages, we summarize the comments received about the
pricing data to be included in the beneficiary RTBT.
Comment: Some commenters requested that CMS require the inclusion
of the negotiated and net prices of medications, which is the cost of
the medication after all rebates and fees are subtracted. Other
commenters requested that we refrain from even encouraging the
inclusion of the negotiated price, as we did in our proposed rule.
Response: CMS understands that it may be helpful for some
beneficiaries to see additional pricing information, including the
negotiated and net prices. However, as stated in our November 2020
Transparency in Coverage final rule (85 FR 72158), which implements
requirements for group health plans and health insurance issuers in the
individual and group market to share participant cost sharing
information and the negotiated price with the participant in the form
of machine readable files and paper (upon request by the participant),
CMS should aim to strike a balance between illuminating some of the
factors that drive drug costs and not overwhelming consumers with
information that is not directly relevant to their cost-sharing
liability. In the case of the beneficiary RTBT, we believe this balance
is best struck through alignment with the information in the prescriber
RTBT, which does not require inclusion of the negotiated or net prices.
Having the same information in both tools will not only help facilitate
conversations between enrollees and their providers about different
medications for the enrollee, but will give the prescriber the
opportunity to explain the information in the beneficiary RTBT to
enrollees. Providing enrollees information about the negotiated drug
prices could easily overwhelm consumers with information, since the
pricing information is updated in real time using test claims
transmitted to the pharmacy in order to adequately gauge what the drug
price is at the time the request is made.
By contrast, in our November 2020 final rule, the requirement for
group health plans and private issuers is to compile information for
consumers in a file outside of the prescriber RTBT. As a result, group
health plans and private issuers are only required to provide this
information once--through a machine-readable file or via paper.
However, if we were to require Part D sponsors to provide the
negotiated and net prices in the beneficiary RTBT, Part D sponsors
would be required to transmit two different claims in order to
facilitate these tools--one for the prescriber RTBT and one for the
beneficiary RTBT. We believe that the benefit these enrollees derive
from seeing the net and negotiated prices is outweighed by the burden
for plans to calculate this cost and program it into the beneficiary
RTBT.
Further, since most plans have similar beneficiary RTBTs in place,
we believe that plans are in the best position to gauge what
information is useful to their enrollees. We intend for our regulatory
requirements to be a starting point for the beneficiary RTBTs and that
plans will have the ability to add in additional information, if they
believe it will helpful for their enrollees. The sole purpose of our
regulatory requirements is to provide the minimum amount of information
that must be included in the beneficiary RTBT, and we do not believe
that including the net or negotiated prices is absolutely necessary in
the beneficiary RTBTs. This approach differs from the approach in our
November 2020 final rule, since Part D plans already have similar tools
in place, whereas the group health plans and issuers in the private and
group market do not.
Comment: Some commenters requested that CMS require Part D plans to
include pharmacy and provider-specific data, so that beneficiaries can
find the lowest possible price for their medications.
Response: CMS understands the importance of ensuring that
beneficiaries have the appropriate tools to find the lowest price
medications. However, CMS seeks to balance this desire with the desire
to ensure that beneficiaries are not improperly steered away from their
pharmacies and providers of choice. Since plans have

[[Page 5953]]

the most experience in working with enrollees, we seek to give plans
flexibility in implementing the beneficiary RTBT. As a result, we will
not prohibit plans from displaying pharmacy and provider-specific
pricing. However, we will not require plans to show this information.
Therefore, we decline to accept the suggestion that we mandate that
plans include this information. Instead we are finalizing our proposal
to require only that Part D sponsors include the enrollee cost sharing
amount, rather than the negotiated or net price.
3. Beneficiary RTBT Formulary Data
In order to fully empower enrollees to select the most appropriate
medications, we proposed to require Part D sponsors to review formulary
medications to determine which alternatives exist and whether those
alternatives may save their enrollees money through reduced cost
sharing. The sponsors would then import that information into the
beneficiary RTBT.
However, since we understand that most enrollees may not have the
clinical background required to accurately discern the clinical
appropriateness of all alternatives, we proposed a narrow exception to
this requirement, to include for example certain antibiotics which are
``drugs of last resort'' that are typically reserved for instances in
which the patient is found to have certain drug-resistant infections,
or instances in which side-effects are such that a given prescription
would not typically be selected in the absence of countervailing risks
that would justify risking such side-effects, or instances in which
there would be interactions with other drugs already used by the
beneficiary that would contra-indicate prescribing a given drug. In
these and other clinically appropriate instances, we stated that it may
be appropriate to omit certain drugs from what is presented to the user
of a beneficiary RTBT. Thus, in order to address these and other
clinically appropriate scenarios, we proposed that Part D sponsors
would be permitted to have their Pharmacy and Therapeutics (P & T)
committees evaluate whether certain medications should be excluded from
the beneficiary RTBT. In order to help ensure that this exception is
narrowly construed, we proposed to allow P & T committees to exclude
medications from the beneficiary RTBT only in the following situations
or instances: (1) The only formulary alternatives would have
significant negative side effects for most enrollees and the drug would
not typically be a practitioner's first choice for treating a given
condition due to those side effects, (2) for cases where medications
are considered to be ``drugs of last resort,'' (3) instances in which
there would be interactions with other drugs already used by the
beneficiary that would contra-indicate prescribing a given drug, or (4)
other clinically-appropriate instances.
We clarified that the data that we proposed to require be provided
in the beneficiary RTBT must be patient-specific, clinically
appropriate, timely, accurate, and devoid of commercial purposes that
would adversely impact the intended functionality of promoting cost-
effective beneficiary and prescriber selections of drugs. In the
following pages, we summarize the comments and provide our responses
and final decisions surrounding formulary data to be included in the
beneficiary RTBT.
Comment: A number of commenters recommended that CMS remove the
requirement for any formulary alternatives to be included on the
beneficiary RTBT. These commenters expressed concern that listing these
alternatives for Part D enrollees would lead to confusion among their
enrollees, since beneficiaries would not be able to appropriately
discern whether the medications are appropriate for them. Another
commenter suggested that CMS require Part D sponsors to include
alternatives that are not on plan formularies, in addition to the
formulary alternatives, so that enrollees have a greater array of
options.
Response: Part D sponsors are required to include medications on
their formulary that provide beneficiaries with a broad range of
medically appropriate drugs across an appropriate breadth of categories
and classes that cover all disease states, and meet other
classifications. CMS reviews these formularies annually to help ensure
compliance. As a result, we believe that the medications listed on the
Part D formularies should provide sufficient options for Part D
enrollees without requiring alternative options for enrollees outside
of the Part D formularies.
Although CMS shares commenters' concerns surrounding beneficiary
confusion, we believe that limiting beneficiaries' choices to
medications within their plan's formulary will help alleviate this
concern. CMS believes that allowing beneficiaries the opportunity to
choose from different medication alternatives within the plan's
formulary strikes the right balance between ensuring that beneficiaries
have adequate options for medications while not overwhelming
beneficiaries with too many choices that may not be available to them.
Although some enrollees may find these options overwhelming, we believe
that the benefit of giving beneficiaries different medication options
outweighs the risk that some beneficiaries may be overwhelmed by all
the medication choices.
Comment: The majority of commenters disagreed with our proposal to
allow plans to exclude formulary alternatives in clinically appropriate
instances, citing the possibility that plans could use this exclusion
as an opportunity to steer patients away from the most clinically
appropriate medications, give rise to undue confusion in cases where
the provider determines that an excluded drug is actually appropriate,
or cause plans to erroneously omit certain medications from the RTBT.
However, some commenters supported this exclusion, since they believed
that Part D sponsors could benefit from the additional flexibility.
Response: After considering the information provided by the
commenters, we are persuaded that the potential for misuse and
confusion emanating from this exclusion outweighs the benefit of
additional plan flexibility. CMS continues to believe that Part D
sponsors should be granted flexibility when implementing the
beneficiary RTBT. However, the harm that could be caused by the
potential exclusion of appropriate medications outweighs the limited
benefit of granting Part D sponsors this additional flexibility in this
case. Therefore, we are removing this exclusion and finalizing our
proposed requirement to include all formulary alternatives in the
beneficiary RTBT.
4. Rewards and Incentives for Beneficiary RTBT
In order to encourage enrollees to use the beneficiary RTBT, we
proposed to allow plans to offer rewards and incentives (RI) to their
enrollees who use the tool. We proposed to define use, for purposes of
permitted RI, to mean logging onto either the portal or application or
calling the plan's call center to ask for this information, without
regard to whether the enrollee engages in a discussion with his or her
prescriber or obtains or switches to any medication in response to such
use. In other words, we proposed that plans that choose to offer RI
must offer it to all plan enrollees who use the tool or seek to access
this information via phone and must not make RI contingent upon the
medical diagnosis or the type of medication a beneficiary is taking, or
upon the enrollee switching medications.

[[Page 5954]]

We proposed to prohibit any enrollee remuneration under the guise
of RI, which includes waivers of copayments and deductible amounts and
transfers of items or services for free. We also proposed to prohibit
plans from offering any cash or monetary donations, under the guise of
RI. However, we did propose to allow for the use of gift cards, as long
as they are not cash equivalents and do not encourage enrollees to
further patronize the plan or any of the plan's corporate affiliates.
For purposes of this proposal, CMS proposed that gift cards that can be
used like cash, for example, a VISA or Amazon gift card, to be a ``cash
equivalent.'' Cash equivalents also may include, for example,
instruments convertible to cash or widely accepted on the same basis as
cash, such as checks and debit cards. This means that gas cards or
restaurant gift cards would be permitted. However, a gift card that can
be used for goods or services purchased from the plan would be
prohibited, since that could incentivize enrollment in plans that could
provide gift cards that enrollees could use at pharmacies or retail
stores owned by their plan, rather than at a third-party establishment
owned by a different company.
We also proposed that the RI be of nominal value, which Office of
Inspector General (OIG) guidance specifies as no more than $15 per
login or $75 in the aggregate annually, in accordance with OIG
guidance.\66\ We also proposed that the member can receive a RI for no
more than one login per month. We also proposed that this expense would
have to be included as an administrative expense in the bids of Part D
sponsors, rather than it being considered a drug cost. We solicited
comments on these limitations and on how we can ensure that these RIs
will not be indirectly provided or funded by pharmaceutical
manufacturers. We also solicited comments on safeguards to mitigate
risks of fraud and abuse with respect to these incentives.
---------------------------------------------------------------------------

\66\ Office of Inspector General Policy Statement Regarding
Gifts of Nominal Value To Medicare and Medicaid Beneficiaries,
Office of Inspector General (2016).
---------------------------------------------------------------------------

MA-PDs are already permitted to offer rewards and incentives for
Part C benefits under our regulation at Sec. 422.134, which permits
plans to offer health-driven rewards and incentives that are designed
to encourage enrollees to participate in activities that focus on
promoting improved health, preventing injuries and illness, and
promoting efficient use of health care resources. We propose to adopt
Part C's ban at Sec. 422.134(b) on discrimination for Part D RI that
plans offer to encourage the use of the beneficiary RTBT. We therefore
proposed to require that if a Part D plan sponsor offers RI, it must be
available to all of the plan's enrollees that log into the plan's
portal or call the plan's call center, without discrimination based on
a prohibited basis; under applicable law, prohibited bases of
discrimination include the enrollee's proficiency in English, race,
color, national origin, sex, age, disability, chronic disease, health
status, or other basis prohibited by law.
We proposed to add this provision to our regulations at Sec.
423.128 by amending paragraph (d) to add paragraphs (4) and (5).
Paragraph (4) would address the beneficiary RTBT and paragraph (5)
would address the rewards and incentives for use of the beneficiary
RTBT.
Because of the safeguards included in the aforementioned proposals,
including requiring that the rewards and incentives be non-cash
equivalents, we believe the RI presents a low risk of fraud and abuse
and is unlikely to compromise the integrity of the program.
We received the following comments related to our proposal, and our
responses follow:
Comment: The majority of commenters supported the use of rewards
and incentives for this provision. However, some of these commenters
requested that CMS allow use of Amazon gift cards for the beneficiary
RTBT, since they are a popular incentive for beneficiaries. The
commenters disagreed with our classification of Amazon gift cards as
cash equivalents, since they can only be used when shopping on
Amazon.com or in Whole Foods.
Response: CMS continues to believe that Amazon gift cards fall
under the definition of cash equivalents. In their final rule entitled
``Medicare and State Health Care Programs: Fraud and Abuse; Revisions
to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary
Penalty Rules Regarding Beneficiary Inducements,'' published on
December 7, 2016, (81 FR 88393), the OIG states that items that can be
used like cash (such as a general purpose debit card) constitute cash
equivalents. In addition, we seek to help ensure consistency across CMS
rulemaking, and CMS has previously defined cash equivalents to include
Amazon gift cards. Please see final rule entitled ``Medicare Program;
Medicare Shared Savings Program; Accountable Care Organizations--
Pathways to Success and Extreme and Uncontrollable Circumstances
Policies for Performance Year 2017'' published on December 31, 2019.
Although we understand the desire to use incentives that enrich the
lives of beneficiaries, CMS must balance this desire against the
increased fraud and abuse risk that exists when cash equivalents, such
as a general purpose debit card or Amazon gift card are offered. As a
result, we prohibit the use of Amazon gift cards as an RI under the
beneficiary RTBT.
However, we seek to empower Part D sponsors to ensure that
beneficiaries are motivated to use the RTBT, especially given the
aforementioned potential benefits of the RTBT, including medication
adherence and improved patient satisfaction. As a result, we are not
finalizing our proposed requirement that the rewards and incentives be
nominal in value and thus be limited to $15/login and $75/year. Rather,
we defer to the judgment of Part D sponsors as to what they consider to
be a reasonable amount to offer their enrollees. As previously
mentioned, we seek to grant flexibility to Part D sponsors as they are
in the best position to judge the needs of their enrollees.
CMS understands that this standard differs from what is considered
appropriate under the Part C rewards and incentives program. The goal
of the Part C rewards and incentives program is to promote healthy
behaviors. By contrast, the goal of the rewards and incentives program
for the beneficiary RTBT is to promote use of the tool, which are
intended to lead to the aforementioned potential benefits of the RTBT,
including medication adherence and decreasing overall drug costs.
Because these goals differ and the value of use of the tool cannot be
easily quantified, the Part C limit on rewards and incentives, which
requires that the value of the reward and incentive not exceed the
value of the activity itself, is not appropriate in this context of the
Part D beneficiary RTBT. As a result, CMS is finalizing the limit for
the rewards and incentives to be the amount Part D sponsors believe to
be reasonable, rather than the Part C limit on rewards and incentives
or a nominal amount. The other aspects of the RTBT rewards and
incentives program are being finalized as proposed.
After considering the comments we received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing our proposed provisions at Sec. Sec. 423.128(d)(4) and (5)
with several modifications. First, we are adding a January 1, 2023
applicability date to the regulation text at paragraph (d)(4) to
reflect that this

[[Page 5955]]

provision will not apply until that date. Second, because we are
requiring that plans include all formulary medication alternatives,
rather than only the alternatives that are clinically appropriate, we
are modifying the language at Sec. 423.128(d)(4)(ii) to require all
formulary medication alternatives to be included. Since we will be
allowing plans to determine what they believe to be reasonable in
determining the dollar value of the rewards and incentives, we are
modifying the language at 423.128(d)(5)(i) to replace the word
``nominal'' with ``reasonable'' to clarify that the new limit for the
value of the rewards and incentives is what plans consider to be a
reasonable value, rather than an amount that OIG has interpreted to be
nominal. Because plans will be determining what they deem to be
reasonable, rather than an amount that OIG has interpreted to be
nominal, we are removing the limitation at Sec. 423.128(d)(5)(ii) on
offering rewards and incentives for only one login per month.

G. Establishing Pharmacy Performance Measure Reporting Requirements
(Sec. 423.514)

Section 1860D-12(b)(3)(D) of the Act provides broad authority for
the Secretary to add terms to the contracts CMS enters into with Part D
sponsors, including terms that require the sponsor to provide the
Secretary with information as the Secretary may find necessary and
appropriate. Pursuant to our statutory authority, we codified these
information collection requirements for Part D sponsors in regulation
at Sec. 423.514. We proposed to amend the regulatory language at Sec.
423.514(a) to establish a requirement for Part D sponsors to disclose
to CMS the pharmacy performance measures they use to evaluate pharmacy
performance, as established in their network pharmacy agreements.
Collecting pharmacy performance measures used to determine whether
a financial reward or penalty is incurred by a pharmacy after the
point-of-sale (POS) will enable CMS at a minimum to better understand
how the measures are applied, whether uniformly or specific to pharmacy
type. This effort may also explain if there is a pharmacy performance
problem, as pharmacy price concessions (financial penalties incurred)
after the POS have continued to grow annually. Knowledge of the
industry's pharmacy performance measures would also provide
transparency to the process and likely confirm or dispel the idea that
many of the measures may not provide appropriate metrics across all
types of pharmacies. Once collected, we stated that CMS would publish
the list of pharmacy performance measures reported to increase public
transparency.
We encouraged the industry to continue to work together on
developing a set of pharmacy performance measures through a consensus
process and Part D sponsors to adopt such measures to ensure
standardization, transparency and fairness. We also solicited comment
on the principles that Part D pharmacy performance measures should
adhere to, including potential burden or hardship of performance
measures on small, independent, and/or rural pharmacies, and
recommendations for instituting potential Part D Star Ratings metrics
related to these measures. Finally, we solicited comment on the data
elements, timeline, and method of submission for the reporting of
pharmacy performance measures.
We received the following comments and our response follows:
Comment: The vast majority of comments were supportive of the
proposal for CMS to establish a reporting requirement to collect
pharmacy performance measures used by Part D sponsors in their network
pharmacy contracts. Virtually all of the supportive comments shared the
opinion that the current pharmacy performance measures and processes
were either flawed, opaque or both. They believed the collection of
this information would spur transparency and reveal the need for
standardized measures via an industry driven consensus process
facilitated by an experienced and neutral third-party.
Response: We appreciate the support for the proposal to establish a
requirement for Part D sponsors to disclose pharmacy performance
measures to CMS. We agree that the information should provide
transparency and help industry stakeholders come to a consensus on
measures.
Comment: A number of commenters believed that if CMS made the
pharmacy performance measures used by Part D sponsors public it would
result in a loss of leverage and flexibility for sponsors in their
negotiations with network pharmacies. Other concerns were that it would
stifle innovation and be harmful to market competition. A commenter
requested that the measures only be shared with the involved parties.
Another added that, if universal performance thresholds are applied,
Part D sponsors would lose their ability to effectively negotiate
performance programs with network pharmacies when true differences in
performance may exist. Another believed the publication of performance
measures without context could mislead patients about the performance
of their pharmacies. A couple of commenters stated that the information
was sensitive and that making it public would be harmful to market
competition; believing it inappropriate to make sponsors' performance
measure thresholds public.
Response: We remind commenters that in the proposed rule we did not
propose universal performance thresholds, but rather proposed to
collect plans' pharmacy performance measures as an additional reporting
section of our Part D reporting requirements. Given the growing
magnitude of pharmacy price concessions based on performance measures
in Part D, we believe it is important to provide transparency to the
public regarding the measures in use. In addition, we believe that
publishing a list of currently used pharmacy performance measures will
promote the development of consensus-built standards by the industry
that are transparent and equitable across various pharmacy types and
patient populations, and support value-based care. Creating a ``level
playing field'' to measure pharmacy network performance should not pose
an obstacle to flexibility, innovation or competitiveness. Rather, a
fair, more accurate and transparent system of measuring the strengths
or weaknesses of a plan's network pharmacies should encourage both
plans and the pharmacies within their respective networks to be
innovative, flexible and competitive in how they use the data
collected. Accurately identifying poorly performing pharmacies and
well-performing pharmacies should encourage, when practical, a sharing
of top pharmacy best practices' throughout a plan's network that would
ideally enhance a plan's competitiveness in the marketplace.
Comment: The large majority of commenters agreed with the reporting
requirement proposal, but noted concerns related to industry burden,
need for more industry input, that any elements or criteria be subject
to rulemaking, and that a reasonable timeline for implementation be
given.
Response: As stated in the proposed rule, we are dedicated to the
involvement of the industry in the development of this requirement.
After publication of this final rule to establish the requirement that
sponsors disclose pharmacy performance measure information to CMS, any
new elements added to the Part D reporting

[[Page 5956]]

requirements (OMB 0938-0992) to implement this requirement would result
from industry feedback through 60- and 30-day public comment periods in
the Federal Register and approval through the Office of Management and
Budget (OMB) Paper Reduction Act (PRA) process. As with any new
elements added to the Part D reporting requirements, we believe the
opportunity to provide comment through the PRA process will allow
adequate input from the public and the industry. We also agree that to
implement this provision we need to ensure the timeline and burden are
reasonable for all parties involved. We will take into consideration
the feedback received in response to the proposed rule when putting
forth a timeline for implementation and potential elements for public
comment.
Comment: We received one comment that warned that implementing a
standard set of performance measures held the potential of narrowing
pharmacy networks, thereby impacting some pharmacies and the options
available to beneficiaries. Other commenters, while expressing support
for standardization of measures in principle, requested that sponsors
not be locked into only specific measures.
Response: We did not propose to implement a standard set of
performance measures nor did we make any proposals with respect to
requiring the use of any particular measures. Rather, in the proposed
rule, we encouraged industry to come to a consensus on a standard set
of pharmacy performance measures.
Comment: A few commenters, while supportive of the industry
standardizing pharmacy performance measures, cautioned against placing
too many exacting limits on the performance measures, and stated that
sponsors should retain the ability to use metrics beyond those decided
by a third-party facilitator such as, but not limited to, the Pharmacy
Quality Alliance (PQA), provided such measures are transparent to CMS
and pharmacies.
Response: We thank the commenters for their comments. We reiterate
that we did not propose to standardize pharmacy performance measures in
the proposed rule. We would expect that if through an industry
consensus a standard set of pharmacy performance measures is
established, it would be through a similar transparent and consensus
process that additional measures would be added. We note, however, that
transparency is of little consequence if the measures or the
corresponding thresholds for that measure are ill-suited for the type
of pharmacy or patient population that is being evaluated.
Comment: We received a few comments regarding our request for
feedback on recommendations on measures to consider for use in the Part
D Star Ratings related to the uptake or evaluation of pharmacy
performance measures. A commenter believed it premature to consider
specific metrics for a Star Ratings program, and another opposed the
idea, believing that the proposed use of Star Ratings for pharmacy
performance would not be meaningful to Medicare beneficiaries who judge
pharmacy performance on a highly personalized basis. Other commenters
strongly supported our proposal with one asking the agency to follow
its traditional approach when first introducing Star Ratings and report
the results on the display page. We received a comment that requested
that any future pharmacy performance measures be developed in a way
that directly ties to the Part D Star Ratings program.
Response: We appreciate the comments received and will consider
them for any potential future development of measures based on pharmacy
performance measure information. We note that we believe it is not
premature to discuss potential Star Ratings as there would be a natural
outgrowth to the development of standardized pharmacy measures. While
we agree with the commenter that the selection of a pharmacy by a
Medicare beneficiary is often a highly personalized choice, we believe
that creating a rating system that leverages this plan-reported data
could offer the beneficiaries additional information about the
performance of pharmacies in the sponsors' pharmacy network.
We agree with the commenter that requested we follow the regulatory
process for the introduction of new Star Ratings measures. CMS codified
the methodology for the Part C and D Star Ratings program in the CY
2019 Medicare Part C and D Final Rule (83 FR 16725 through 83 FR
16731), published in April 2018, for performance periods beginning with
2019; that final rule lays out the methodology for the 2021 Star
Ratings and beyond. CMS will continue to solicit feedback on new
measure concepts as well as updated measures through the process
described for changes in, and adoption of, payment and risk adjustment
policies in section 1853(b) of the Act. We will also continue to
provide advance notice regarding measures considered for implementation
as future Star Ratings measures. As specified at Sec. 422.164(c)(2)-
(4), Sec. 423.184(c)(2)-(4), Sec. 422.164(d)(2), and Sec.
423.184(d)(2), new measures and measures with substantive specification
changes must remain on the display page for at least 2 years prior to
becoming a Star Ratings measure. We appreciate the comment that we
develop any future pharmacy performance measures in a way that can be
directly tied to the Part D Star Ratings program.
Comment: A few commenters responded to our solicitation for
feedback regarding the principles that Part D pharmacy performance
measures should adhere to, including potential burden or hardship of
performance measures on small, independent and/or rural pharmacies.
Most comments suggested that smaller pharmacies be exempt entirely from
all performance measures or subject to a modified approach. A commenter
indicated that a voluntary set of measures, or a custom measurement set
that is more applicable and feasible for smaller pharmacies to report
(for example, patient counseling, medication therapy management) be
used.
Response: We thank the commenters for their recommendations and
will take them into consideration.
Comment: A commenter stated that pharmacies should have the ability
to appeal results of their performance measures.
Response: We appreciate the comment regarding appeal rights;
however, we did not propose to adopt any performance measures, and
therefore did not propose an appeals procedure.
Comment: In response to our solicitation for comments on the
proposed list of potential data elements there were two primary
objections made by commenters. Some commenters opposed the use of
retrospective data that could include success/failure thresholds, and
average scores or statistics that may reveal sensitive information
regarding contractual arrangements. There were no comments supportive
of the proposed rule specifically on the data elements.
Response: We appreciate the comments. In the proposed rule, we
recommend and encourage industry to continue, through a neutral third-
party facilitator, creating and testing potential pharmacy performance
measures based on industry consensus. If an industry-wide consensus is
reached on a set of standardized measures it follows that part of the
process of reaching consensus will be determining what should and
should not be reported retrospectively, and what would and would not be
deemed sensitive

[[Page 5957]]

contractual information between a sponsor and its pharmacy network.
Based on these comments, we are finalizing our proposal to amend
the regulatory language at Sec. 423.514(a) to establish a requirement
for Part D sponsors to disclose to CMS the pharmacy performance
measures they use to evaluate pharmacy performance, as established in
their network pharmacy agreements, with one modification to make the
provision applicable starting January 1, 2022.

H. Dismissal and Withdrawal of Medicare Part C Organization
Determination and Reconsideration and Part D Coverage Determination and
Redetermination Requests (Sec. Sec. 422.568, 422.570, 422.582,
422.584, 422.590, 422.592, 422.631, 422.633, 423.568, 423.570, 423.582,
423.584, and 423.600)

We proposed regulations for withdrawing or dismissing Part C
organization determination and reconsideration requests and Part D
coverage determination and redetermination requests. We also proposed
regulations for withdrawing or dismissing Part C and Part D independent
review entity (IRE) reconsiderations. We also proposed to apply these
provisions to requests for integrated organization determinations and
reconsiderations at Sec. Sec. 422.631 and 422.633. The proposals
specifically addressed under what circumstances it would be appropriate
to dismiss a coverage request or appeal at the plan or IRE level. We
also proposed rules for how a party may request to withdraw their
coverage request or appeal at the plan or IRE level. A withdrawal of a
request is when the party that initiated the request voluntarily
decides that a decision on their request is no longer needed, and the
party communicates that desire to the plan to stop consideration of the
request for determination (or reconsideration). A dismissal of a
request is when a plan decides to stop consideration of a request
before issuing a decision. The effect of both a withdrawal and a
dismissal is that the plan does not proceed with making a substantive
decision on the merits of the coverage request.
Specifically, we proposed that:
In new Sec. Sec. 422.568(g), 422.631(e), and 423.568(i),
we proposed to permit a plan to dismiss a request for the initial plan
level decision (that is, organization determination, integrated
organization determination or coverage determination) when any of the
following apply--
++ The individual or entity making the request is not permitted to
request an organization determination or coverage determination.
++ The plan determines that the individual or entity making the
request failed to make a valid request for an organization
determination or coverage determination.
++ The enrollee dies while the request is pending and the
enrollee's spouse or estate has no remaining financial interest in the
case and no other individual or entity with a financial interest in the
case wishes to pursue the organization determination or coverage
determination; we explained in the proposed rule that we interpret
having a financial interest in the case as having financial liability
for the item(s) or service(s) underlying the coverage request.
++ The individual or entity who requested the review submits a
timely written request for withdrawal of their request for an
organization determination or coverage determination with the plan.
In Sec. Sec. 422.570(g) and 423.570(f), we proposed to
permit a plan to dismiss an expedited organization determination or
coverage determination, consistent with the proposed requirements at
Sec. Sec. 422.568 and 423.568, respectively. Applicability of these
procedures to expedited integrated coverage determinations was proposed
at Sec. 422.631(e).
In Sec. Sec. 422.582(f), 422.633(h), and 423.582(e), we
proposed to permit a plan to dismiss (either entirely or as to any
stated issue) a request for the second plan level decision (that is,
reconsideration, integrated reconsideration or redetermination) when
any of the following apply --
++ The individual or entity making the request is not a proper
party to the reconsideration, integrated reconsideration, or
redetermination under the applicable regulation; we explained that this
proposal would authorize dismissal when the individual or entity making
the request is not permitted to request a reconsideration, integrated
reconsideration, or redetermination.
++ When the plan determines the party failed to make a valid
request for a reconsideration, an integrated reconsideration, or a
redetermination that substantially complies with the applicable
regulation for making a valid request for reconsideration or
redetermination.
++ When the party fails to file the reconsideration, integrated
reconsideration or redetermination request within the proper filing
time frame in accordance with the applicable regulation.
++ When the enrollee dies while the reconsideration or
redetermination is pending and the enrollee's spouse or estate has no
remaining financial interest in the case and no other individual or
entity with a financial interest in the case wishes to pursue the
reconsideration or redetermination. We explained in the proposed rule
that we interpret having a financial interest in the case as having
financial liability for the item(s) or service(s) underlying the
coverage request.
++ When the individual or entity submits a timely written request
to withdraw their request for a reconsideration or redetermination.
At new Sec. 422.584(g), we proposed to permit a plan to
dismiss an expedited reconsideration using virtually identical language
as for the proposed requirements at Sec. 422.582. At new Sec.
423.584(f), we proposed to permit a plan to dismiss an expedited
redetermination by cross referencing Sec. 423.582. Applicability of
these procedures to expedited integrated coverage determinations was
described in proposed Sec. 422.633(h).
At new Sec. Sec. 422.592(d) and 423.600(g), we proposed
to permit the Part C and Part D IRE to dismiss a request when any of
the following apply--
++ The individual or entity is not a proper party under Sec.
422.578 in the case of a Part C reconsideration or is not permitted to
request a reconsideration by the IRE under Sec. 423.600(a) in the case
of a Part D reconsideration.
++ The independent entity determines the party failed to make out a
valid request for a reconsideration that substantially complies with
the applicable regulation.
++ When the enrollee dies while the reconsideration request is
pending and the enrollee's spouse or estate has no remaining financial
interest in the case and no other individual or entity with a financial
interest in the case wishes to pursue the reconsideration. We explained
in the proposed rule that we interpret having a financial interest in
the case as having financial liability for the item(s) or service(s)
underlying the coverage.
++ When the individual or entity submits with the independent
review entity a timely written request for a withdrawal of the
reconsideration.
In Sec. Sec. 422.568(h), 422.582(g), 422.592(e),
422.631(f), 422.633(i), 423.568(j), 423.582(f), and 423.600(h) we
proposed that a written notice of the dismissal must be delivered to
the parties (either mailed or otherwise transmitted) to inform them of
the action; this would include the

[[Page 5958]]

individual or entity who made the request. The notice must include
certain information, as appropriate, including applicable appeal rights
(that is, request to vacate dismissal, review of the dismissal).
In Sec. Sec. 422.568(i), 422.582(h), 422.592(f),
422.631(g), 422.633(j), 423.568(k), 423.582(g), and 423.600(i), we
proposed that a dismissal may be vacated by the entity that issued the
dismissal (that is, MA organizations, applicable integrated plans, Part
D plan sponsors, and the IRE) if good cause for doing so is established
within 6 months of the date of the dismissal.
In Sec. Sec. 422.568(j), 422.631(h), and 423.568(l), we
proposed that the dismissal of the organization determination or
coverage determination is binding unless it is modified or reversed by
the MA organization, applicable integrated plan, or Part D plan
sponsor, as applicable, upon reconsideration or vacated under the
provisions we proposed for vacating dismissals.
At new Sec. Sec. 422.582(i), 422.633(k), and 423.582(h),
we proposed that the dismissal of the reconsideration or
redetermination is binding unless the enrollee or other valid party
requests review by the IRE or the dismissal is vacated under the
applicable regulation.
At new Sec. Sec. 422.592(g) and 423.600(j), we proposed
that a dismissal by the IRE is binding and not subject to further
review unless a party meets the amount in controversy threshold
requirements necessary for the right to a review by an administrative
law judge or attorney adjudicator and the party files a proper request
for review with the Office of Medicare Hearings and Appeals as outlined
in Sec. Sec. 422.600, 422.602, and 423.600(j), as applicable.
At new Sec. Sec. 422.568(k), 422.592(h), 422.631(i),
422.633(g), 423.568(m), and 423.600(f), we proposed that a party that
makes a request may withdraw its request at any time before the
decision is issued by filing a written request for withdrawal. Each
proposed regulation paragraph identifies the entity (that is, the MA
organization, the applicable integrated plan, or the Part D plan) with
which the request for withdrawal must be filed.
We also proposed a change that applies to Part C only, given that
the current rules do not include a process for an enrollee or other
party to request IRE review of an MA organization's reconsideration
(because review by the IRE of an adverse reconsidered determination is
automatic). Specifically, we proposed to add a new paragraph (i)
(mistakenly identified as a new paragraph (h) in the preamble of the
February 2020 proposed rule) to Sec. 422.590 that would give the
enrollee or another party to the reconsideration the right to request
review by the independent entity of an MA organization's dismissal of a
request for a reconsideration in accordance with Sec. Sec. 422.582(f)
and 422.584(g). In new paragraph (i) of Sec. 422.590 we proposed that
a request for review of such a dismissal must be filed in writing with
the independent entity within 60 calendar days from the date of the MA
organization's dismissal notice. Under existing rules at Sec.
422.590(a)(2), (b)(2), (c)(2), (d), (e)(5), and (g),\67\ if the MA
organization makes a reconsidered determination that affirms, in whole
or in part, its adverse organization determination or fails to meet the
timeframe for making a reconsidered determination, it must prepare a
written explanation and send the case file to the independent entity
contracted by CMS as expeditiously as the enrollee's health condition
requires, but no later than 30 calendar days from the date it receives
the request for a reconsideration (or no later than the expiration of
an applicable extension). These regulations that require a case to be
automatically sent to the independent entity do not apply in the case
of a dismissal of a request for a reconsideration because the MA
organization is not making a substantive decision on the merits of the
request.
---------------------------------------------------------------------------

\67\ We note that Sec. 422.590 was extensively amended by the
April 2019 final rule, effective January 1, 2020.
---------------------------------------------------------------------------

As a corollary to this proposal, we also proposed to revise
paragraph (a) of Sec. 422.592 to add that, consistent with proposed
Sec. 422.590(i), the independent entity is responsible for reviewing
MA organization dismissals of reconsideration requests. As noted
earlier in this section of the preamble, this new paragraph (i) to
Sec. 422.590 was mistakenly identified as new paragraph (h) in the
preamble of the February 2020 proposed rule; this incorrect citation at
Sec. 422.592(a) has been corrected in this final rule to correctly
refer to Sec. 422.590(i). Further, we proposed to add a new paragraph
(i) at Sec. 422.592 to state that the independent entity's decision
regarding an MA organization's dismissal, including a decision to deny
a request for review of a dismissal, is binding and not subject to
further review. In this final rule, we add a reference to Sec. 422.590
at Sec. 422.592(i) to state if the independent entity determines that
the MA organization's dismissal was in error, the independent entity
vacates the dismissal and remands the case to the plan for
reconsideration consistent with Sec. 422.590.
We also proposed a change applying to Part D only, given that the
current rules do not include a process for enrollees to request IRE
review of plan sponsor dismissals of redetermination requests. We
proposed to add a new paragraph (f) at Sec. 423.582 to establish in
regulation the right of enrollees and other parties to request review
by the independent entity of the Part D plan sponsor's dismissal of a
request for a redetermination. As a corollary to this proposal, we also
proposed to add paragraph (j) at Sec. 423.590 to state that,
consistent with proposed Sec. 423.584(f), an enrollee can request
review of a Part D plan sponsor's dismissal of a redetermination
request by the independent entity. Finally, we proposed to add a new
paragraph (k) at Sec. 423.600 to state that if the independent entity
determines that the Part D plan sponsor's dismissal was in error, the
independent entity would reverse the dismissal and remand the case to
the plan for a redetermination on the merits of the case.
We received the following comments on the proposals related to
dismissal and withdrawal of Medicare Part C organization determination
and reconsideration and Part D coverage determination and
redetermination requests.
Comment: Numerous commenters opposed the proposed language that
required a party to submit a written request in order to withdraw
requests for organization determinations, coverage determinations,
reconsiderations, and redeterminations. Commenters noted that this
language indicated that verbal withdrawal requests would not be
accepted. Commenters referenced CMS guidance that states, in the
``Parts C & D Enrollee Grievances, Organization/Coverage
Determinations, and Appeals Guidance'' (Effective January 2020), at
section 40.14, that a plan may accept verbal requests to withdraw a
request for an organization or coverage determination. Additionally,
commenters noted the same guidance states, in section 50.4, that a plan
may also accept verbal requests to withdraw a request for a
reconsideration, provided that the plan mails a written confirmation of
the withdrawal to the party within 3 calendar days from the date of the
verbal request. Commenters recommended removing the requirement for a
written request to withdraw appeal requests in order to maintain
consistency with the sub-regulatory guidance and current industry
practice, and to reduce burden

[[Page 5959]]

on enrollees and plans. Commenters supported the current practice of
requiring a written confirmation be mailed to the party within three
calendar days from the date of the verbal request.
Response: CMS thanks the commenters for their perspective and
feedback. The proposed provisions were intended to generally model the
current provisions regarding dismissal and withdrawal of requests for
appeal codified in 42 CFR part 405, subpart I (see Sec. Sec. 405.952
and 405.972) because under Sec. 422.562(d)(1), unless subpart M
provides otherwise, and subject to specific exclusions set forth in
paragraph (d)(2), the regulations in part 405 (concerning the
administrative review and hearing processes and representation of
parties under titles II and XVIII of the Act) apply to MA cases to the
extent they are appropriate. Part 405, subpart I states that a party
may withdraw a request by filing a written and signed request for
withdrawal (see, Sec. Sec. 405.952 and 405.972). Accordingly, we
proposed that a request for withdrawal be made in writing.
However, the primary goal of codifying dismissal and withdrawal
processes in regulation is to codify what we believe to be the current
practices related to dismissal and withdrawal of Part C organization
determination and reconsideration requests and Part D coverage
determination and reconsideration requests, including those applicable
to the Part C and Part D IRE. As commenters pointed out, current
guidance permits plans to accept a request for withdrawal that has been
made verbally. Accordingly, in response to these comments, we are
finalizing the regulation changes with revisions to permit verbal
requests to withdraw requests for organization determinations, coverage
determinations, reconsiderations, and redeterminations are permitted
under this final rule.
In response to the comments asking that verbal dismissal and
withdrawal requests not be prohibited by regulation, we are finalizing
the proposed changes, with modifications, to permit withdrawal requests
to be made verbally. Specifically, the word ``written'' is not being
finalized in the following provisions in this final rule: Sec. Sec.
422.568(g)(4), 422.568(k), 422.582(f)(5), 422.592(d)(4), 422.592(h),
422.631(e)(4), 422.631(i), 422.633(g), 422.633(h)(5), 423.568(i)(4),
423.568(m), 423.582(e)(5), 423.600(f), and 423.600(g)(5). Additionally,
in this final rule we are finalizing revisions to Sec. Sec. 422.582(e)
and 423.582(d) to remove the word ``written'' from the current
regulation text describing a withdrawal of a request for a
reconsideration. While this is a variance from the fee-for-service
rules at 42 CFR part 405, subpart I (see Sec. Sec. 405.952 and
405.972) upon which these final rules are generally modeled, this
approach is consistent with existing Parts C and D guidance on these
processes which allow for verbal withdrawal requests for organization
determinations, coverage determinations, reconsiderations, and
redeterminations.
Comment: We received a number of comments on the proposals to
require a plan to dismiss a request for organization determinations,
coverage determinations, reconsiderations, and redeterminations when
the individual or entity who requested the review submits a timely
written request for withdrawal. Specifically, commenters were concerned
about the requirements in Sec. Sec. 422.568(h), 422.582(g),
422.592(e), 422.631(f), 422.633(i), 423.568(j), 423.582(f), and
423.600(h) that would require plans to provide written notice to the
parties of a dismissal, including instances where a party asks to
withdraw their request for an organization determination, coverage
determination or appeal. Commenters also noted that by considering a
timely request for withdrawal as a circumstance under which a plan may
dismiss a request, CMS is causing confusion between and conflation of
withdrawals and dismissals. Commenters noted that the withdrawal
process is different from the dismissal process and recommended that
CMS exclude references to withdrawals in the list of circumstances
under which a plan or IRE may dismiss a request for an organization
determination, coverage determination or appeal under proposed
Sec. Sec. 422.568(g), 422.582(f), 422.592(d), 423.568(i), 423.582(e)
and 423.600(g).
Response: CMS thanks the commenters for their perspective and
feedback. The proposed provisions were intended to generally model the
current provisions regarding dismissal and withdrawal of requests for
appeal codified in part 405, subpart I (see Sec. Sec. 405.952 and
405.972) because under Sec. 422.562(d)(1), unless subpart M provides
otherwise and subject to specific exclusions set forth in paragraph
(d)(2), the regulations in part 405 (concerning the administrative
review and hearing processes and representation of parties under titles
II and XVIII of the Act) apply to MA cases to the extent they are
appropriate.
The reasoning behind adopting the proposed provisions at Sec. Sec.
422.568(h), 422.582(g), 422.592(e), 422.631(f), 422.633(i), 423.568(j),
423.582(f), and 423.600(h) related to providing written notice to the
parties of a dismissal, which are generally modeled on Sec. Sec.
405.952 and 405.972, is to preserve the rights of other proper parties
to the decision if one party submits a withdrawal request; other
parties may wish to pursue the appeal. For example, a physician may
file an organization determination request on behalf of the enrollee
and then later decide to withdraw the request because the physician
better understands the reason for denial after further research. The
plan would then dismiss the physician's request and issue a dismissal
notice to the physician and enrollee. The enrollee is still a party to
the request for an organization determination and may have an interest
in having that organization determination process continue so that the
plan issues a complete decision in accordance with Sec. Sec. 422.566
and 422.568 despite the physician's withdrawal of the physician's
request. Under our proposed provisions, the enrollee could then file a
request to review the dismissal at the next level and explain that he
or she wants a decision to be reached and issued. CMS regulations do
not require all parties to file a request for a determination or
reconsideration in order for them to remain parties to the appeal;
issuing a notice of dismissal to all parties when the dismissal is
based on the withdrawal request from the party that initially filed a
request acknowledges that involvement.
Commenters also stated that they believe the requirement to issue a
notice of dismissal when a party requests a withdrawal may cause
confusion from both a reporting standpoint and a notification
standpoint. CMS does not believe this proposal will cause confusion.
For reporting, purposes, withdrawals and dismissals will remain
distinct categories. Further, a notice of dismissal must contain the
reason for dismissal; accordingly, the reason for dismissal in such
cases would be the withdrawal of the request for the organization
determination, coverage determination, reconsideration, or
redetermination by a proper party to the request. Further operational
guidance will be issued by CMS, as necessary.
Comment: Several commenters noted that the circumstances for
dismissal of a request for an organization determination, coverage
determination, reconsideration, or redetermination listed in Sec. Sec.
422.568(g), 422.570(g), 422.582(f), 422.584(g), 422.592(d), 422.631(e),
422.633(h), 423.568(i), 423.570(f), 423.582(e), 423.548(f), and
423.600(g) are permissive rather than mandatory, in that the word
``may'' is

[[Page 5960]]

used. The commenters noted that all of the circumstances listed in the
regulation imply the party requesting the reconsideration is either not
a proper party or no longer has a financial interest in pursuing the
reconsideration. The commenters recommend that CMS make the dismissal
due to these circumstances mandatory and not permissive.
Response: It was not CMS' intent that the proposed regulatory
language related to dismissals for these reasons be permissive. In this
final rule, we are finalizing the provisions at Sec. Sec. 422.568(g),
422.570(g), 422.582(f), 422.584(g), 422.592(d), 422.631(e), 422.633(h),
423.568(i), 423.570(f), 423.582(e), 423.584(f), and 423.600(g) without
the word ``may'' to be clear on this point and to better align these
provisions with Sec. Sec. 405.952(b) and 405.972(b).
Comment: Several commenters noted that, under the proposed
provision, written notice of a dismissal must be delivered to the
parties (either mailed or otherwise transmitted) to inform them of the
action. The commenters requested further guidance from CMS regarding
applicable timeframes that would apply to this notice as well as the
template or information that must be included.
Response: With respect to the commenter's request for guidance
regarding the timeframes applicable to a notice of dismissal, the
existing regulatory timeframes for issuing a decision notice when a
substantive decision is made on a request will also apply if a request
is dismissed under these final rules. In other words, a decision to
dismiss a request is a determination, albeit a procedural one, on the
type of request that was made and is subject to the decision notice
timeframes at Sec. Sec. 422.568(b) and (c), 422.572(a), 422.590(a),
(b), (c), and (e), 422.631(d)(2), 422.633(f), 423.568(b) and (c),
423.590(a), (b), and (d) and 423.600(d). As an example, if an enrollee
requests a standard reconsideration for a medical item or service
pursuant to Sec. 422.582 and the plan dismisses the request under the
provisions at Sec. 422.582(f) set forth in this final rule, the
enrollee must be notified of the dismissal no later than 30 calendar
days from the date the plan receives the request for a standard
reconsideration under the provisions at Sec. 422.590(a). A model
Notice of Dismissal of Appeal Request can be found in section 50.9 of
the Parts C & D Enrollee Grievances, Organization/Coverage
Determinations, and Appeals Guidance (effective January 1, 2020). As
necessary, additional operational guidance related to dismissal
procedures will be issued by CMS. We note that the regulatory
provisions we are finalizing regarding dismissals include specific
provisions addressing the content of the notice of the dismissal (for
example, Sec. Sec. 422.568(h), 422.582(g), 422.592(e), 422.631(f),
422.633(i), 423.568(j), 423.582(f), and 423.600(h)); therefore, the
current regulations governing the content of notices of substantive
decisions on organization determinations, reconsiderations, integrated
organization determinations, integrated reconsiderations, coverage
determinations, and redeterminations and reconsiderations do not apply
to dismissal notices. We also note that the proposed provisions
addressing the content of the notice of dismissal for integrated
organization determinations at Sec. 422.631(f) were inadvertently
incomplete. In the final rule we have revised the proposed text of
Sec. 422.631(f) to align with the analogous provisions for non-
integrated organization determinations at Sec. 422.568(h).
Comment: A commenter noted that CMS proposed that an MA plan may
properly dismiss an organization determination if ``the individual or
entity making the request is not permitted to request an organization
determination under Sec. 422.566(c).'' The commenter believes the
referenced regulation, Sec. 422.566(c), is too vague and this
authority to dismiss a request on this basis will lead to beneficiaries
being denied fair organization determinations. Specifically, the
commenter noted that hospitals are often told by MA plans that a
rehabilitation physician seeking to admit a patient to an inpatient
rehabilitation hospital/unit cannot participate in organization
determinations with MA plans. The commenter believes that the
rehabilitation physicians that are precluded from participating are the
same rehabilitation physicians required to perform the de facto prior
authorization process required by Medicare. The commenter asked CMS to
consider clarifying Sec. 422.566(c) to allow any physician familiar
with the patient's care needs, like a rehabilitation physician, to
request an organization determination.
Response: CMS believes that the existing provisions at Sec.
422.566(c) are sufficiently clear regarding who may request an
organization determination, which include any provider that furnishes,
or intends to furnish, services to the enrollee. As such, under the
commenter's example, if a rehabilitation physician furnished or
intended to furnish a service to an enrollee, the physician is
permitted to request an organization determination pursuant to this
regulation under Sec. Sec. 422.568 and 422.570. Further, Sec. 422.578
provides that a physician who is providing treatment to an enrollee
may, upon providing notice to the enrollee, request a standard
reconsideration of a pre-service request for reconsideration on the
enrollee's behalf as described in Sec. 422.582; a physician acting on
behalf of an enrollee may also request an expedited reconsideration as
described in Sec. 422.584.
Comment: Several commenters requested that CMS structure the Part C
and Part D regulatory text the same way where possible, for clarity. A
commenter noted by example that in Sec. 422.584 (Expediting certain
reconsiderations) CMS repeats the rules from a different section while
Sec. 423.584 (Expediting certain redeterminations) cross refers to
them.
Response: CMS strives for clarity in the structure of the Part C
and Part D regulatory text. We are finalizing the amendment to Sec.
422.584 using a cross reference to rules in Sec. 422.582 as opposed to
repeating regulation text related to dismissals that is also applicable
to the dismissal of expedited requests. With this change, the structure
of the Part C and Part D regulation text will be in parity.
Comment: Several commenters expressed concern that the proposed
regulations allow dismissal or withdrawal of requests that are never
valid in the first place. The commenters believe that requests that are
invalid to begin with cannot be dismissed or withdrawn. The commenters
believe CMS should not continue with the plan allowances to dismiss a
case that should not have been started in the first place.
Response: CMS recognizes that there may be invalid requests.
However, whether a request is initially valid or not is a determination
a plan makes upon receiving and reviewing a request for an organization
determination. When a plan receives a request for an organization
determination that it believes to be invalid, the plan refuses to
approve, provide or pay for the requested services. Such refusal is an
action that is considered an organization determination under Sec.
422.566(b). Parties to an organization determination may request that
the determination be reviewed under Sec. 422.578 and Sec. 422.592.
The scope of the 42 CFR part 422, subpart M regulations is, in part, to
set forth the appeal process for MA enrollees with respect to
organization determinations. Removing appeal rights from enrollees who
receive an organization determination is antithetical to the purpose
and scope of

[[Page 5961]]

these regulations. The very purpose of these provisions is to provide a
process and procedure (that is, dismissal) for the plan to dispense
with invalid cases by issuing a procedural decision while also
preserving an enrollee's right of review to a plan decision.
Comment: Two commenters responded to our request for comments
regarding whether the proposed rules would create inconsistencies with
any state-specific Medicaid procedures pertaining to dismissals or
withdrawals. The commenter noted that Medicare determination and
coverage processes may be different than Medicaid, and therefore, if
medical care or services are not covered by Medicare, but are covered
by Medicaid, withdrawing the appeal is an effective way to minimize the
administrative burden of appeals in Medicare.
Response: CMS thanks the commenters for their feedback. We agree
that for non-integrated plans that operate separate Medicare and
Medicaid appeals processes, if an appeal concerns an item or service
that is only coverable by Medicaid, withdrawing a Medicare appeal can
reduce administrative burden. However, for applicable integrated plans
that will follow the unified process established in Sec. Sec. 422.629-
422.634, one single coverage determination and appeals process applies
to all requests for Medicare and Medicaid items and services covered by
the plan, making withdrawal or dismissal of an appeal of a coverage
denial inappropriate when there may be Medicaid coverage available from
the applicable integrated plan. Applicable integrated plans must take
into account both Medicare and Medicaid coverage available under the
plan when making an integrated organization determination or integrated
reconsideration.
Comment: Several commenters noted that proposed Sec. 422.590(i)
states ``the enrollee or other party has the right to request review of
the dismissal by the independent entity.'' The commenters suggested the
language be clarified to reflect it is the enrollee or other ``proper
party under Sec. 422.578'' so as to be consistent with Sec. 422.592,
which allows dismissals of requests for reconsideration if the
individual requesting the reconsideration is not a proper party.
Response: We are finalizing the amendment to Sec. 422.590(i) and
Sec. 423.590(j) with revised text to clarify that only proper parties
under Sec. 422.578 and Sec. 423.580, respectively, have the right to
request review of the dismissal by the independent entity.
Comment: Several commenters noted that CMS proposed to permit a
plan to dismiss a request for a coverage determination in four
specifically listed situations (that is, when any of the following
apply: The individual or entity making the request is not permitted to
request an organization determination or coverage determination, the
plan determines that the individual or entity making the request failed
to make a valid request for an organization determination or coverage
determination, the enrollee dies while the request is pending and the
enrollee's spouse or estate has no remaining financial interest in the
case and no other individual or entity with a financial interest in the
case wishes to pursue the organization determination or coverage
determination; or the individual or entity who requested the review
submits a timely written request for withdrawal of their request for an
organization determination or coverage determination with the plan).
The commenters requested clarification if this list is exhaustive or if
there may be other scenarios under which a plan may dismiss a case.
Response: As noted above, we are clarifying in this final rule that
a plan must dismiss a request for the reasons set forth at Sec. Sec.
422.568(g), 422.582(f), 422.592(d), 423.568(i), 423.582(e) and
423.600(g). As explained in the proposed rule, we believe that
codification of these procedures, including the scenarios in which a
plan issues a dismissal, will reduce confusion and promote consistent
and proper handling of withdrawals and dismissals. We do not believe
there are other scenarios where it would be appropriate to require that
a request be dismissed under these final rules. However, if program
experience once these rules have been implemented reveals other
appropriate scenarios for requiring that a request be dismissed, we
will take that into consideration for future rulemaking.
Comment: Several commenters noted these proposed regulations have
highlighted the confusing differences in terminology between the
initial levels of appeal for the Fee-For-Service Medicare Program, MA
organizations, and Part D plans appeals. The commenters recommended
that CMS align the appeal terminologies to avoid provider confusion and
burden. For example, the initial level of appeal should have the same
name for all programs, rather than redetermination for Fee-for-service
and Part D and reconsideration for MA appeals.
Response: CMS appreciates these comments. We note that the appeal
terminologies mirror the terms set by statute, specifically Social
Security Act section 1852(g)(2) for Part C appeals, Social Security Act
section 1860D-4(g) for Part D, and Social Security Act section
1869(a)(3) for Parts A and B. It is beyond the scope of this final rule
to revise terminology across the Fee-for-Service, Part C, and Part D
program regulations.
Comment: A commenter noted that under proposed Sec. 422.592(i), if
the IRE determines that the plan's dismissal was in error, the
dismissal would be vacated and remanded to the plan for
reconsideration. The commenter further noted that there is no timeframe
indicated by which the plan is required to issue a decision on the
remanded appeal. To ensure consistent deadlines CMS should specify that
the deadlines enumerated in Sec. 422.590 apply to remanded appeals.
Response: CMS appreciates the comment. We have modified the
regulation text at Sec. 422.592(i) to clarify that if the independent
entity vacates the dismissal and remands the case to the plan for
reconsideration, the reconsideration must be conducted by the plan
consistent with Sec. 422.590, which includes applicable adjudication
timeframes. Similarly, we have modified the regulation text at Sec.
423.600(k) to clarify that if the independent entity vacates the
dismissal and remands the case to the Part D plan sponsor, the
reconsideration must be conducted by the plan sponsor consistent with
Sec. 423.590.
Comment: A commenter noted that CMS proposed to permit a plan to
dismiss a request for the initial plan level decision (that is,
organization determination, integrated organization determination or
coverage determination) when the plan determines that the individual or
entity making the request failed to make a valid request for an
organization determination or coverage determination. The commenter
requested CMS clarify what is considered a `valid' request.
Response: The regulations define what constitutes a valid request.
For example, with respect to a request for a standard organization
determination, a valid request would be one that substantially complies
with Sec. 422.568(a); the regulation we are finalizing at Sec.
422.568(g)(2) cross references Sec. 422.568(a) as establishing the
standard for a request to be a valid one. Related guidance can be found
in the Parts C & D Enrollee Grievances, Organization/Coverage
Determinations, and Appeals Guidance (effective January 1, 2020).

[[Page 5962]]

Comment: A commenter noted that CMS proposed to permit a plan to
dismiss a request for the initial plan level decision (that is,
organization determination, integrated organization determination or
coverage determination) when the enrollee dies while the request is
pending and the enrollee's spouse or estate has no remaining financial
interest in the case and no other individual or entity with a financial
interest in the case wishes to pursue the organization determination or
coverage determination. The commenter believed this is stating that a
plan would dismiss a pre-service request if the enrollee dies, as it
would no longer be valid, and requested further clarification.
Response: We clarify that these rules apply to a post-service
request for payment as well as to pre-service requests for coverage.
CMS proposed to permit a plan to dismiss a request for the initial plan
level decision when the enrollee dies while the request is pending and
the enrollee's spouse or estate has no remaining financial interest in
the case and no other individual or entity with a financial interest in
the case wishes to pursue the organization determination or coverage
determination. The death of the enrollee alone is not sufficient to
dismiss a request. There must also be no remaining financial interest
of the enrollee's spouse or estate in the case and no other individual
or entity with a financial interest in the case that wishes to pursue
the organization determination or coverage determination.
Comment: A commenter noted CMS proposed to permit the Part C and
Part D IRE to dismiss a request when the independent entity determines
the party failed to make out a valid request for a reconsideration that
substantially complies with the applicable regulation. The commenter
requested CMS clarify who would be responsible for notification
requirements when the IRE makes this determination.
Response: When the IRE makes a decision regarding a
reconsideration, the IRE must comply with the notice requirements
outlined in Sec. 422.594 and Sec. 423.602. This includes notifying
the parties to the reconsideration of a dismissal.
Comment: A commenter noted that CMS proposed to add a new paragraph
to Sec. 422.590 to establish in regulation the right of enrollees and
other parties to request review by the independent entity of the MA
organization's dismissal of a request for a reconsideration made under
Sec. Sec. 422.582(f) and 422.584(g). The commenter noted that the
current process when a plan dismisses an appeal request is that the
member has the right to go to the IRE to determine if the dismissal was
correct. The commenter requested clarification on whether the proposed
rule is stating the plan would send the case file to the IRE for all
dismissals.
Response: This final rule codifies the current practice regarding
dismissals, that the enrollee or other party to the reconsideration may
file a request for review by the IRE of the plan's dismissal of a
request for reconsideration. We believe that Sec. 422.590(i), as
proposed and finalized, is clear in establishing the regulatory
authority for this request for IRE review in the MA context. We further
clarify that this provision does not require MA plans to forward the
case file to the IRE for all dismissals. MA plans and Part D plans must
only forward the case file for a dismissal to the IRE when a proper
party to the appeal requests IRE review of the dismissal under
Sec. Sec. 422.590(i) and 423.590(j). This is somewhat different than
the process for Part C appeals under Sec. Sec. 422.590 and 422.592,
where the MA organization must gather and forward the relevant
information to the IRE for an automatic review by the IRE of
reconsidered determinations (standard or expedited) that are not
completely favorable to the enrollee.
Comment: A commenter noted that in some sections of the proposal,
CMS indicated that it intends these dismissal determinations to be
binding, but also notes the plan must include information on available
appeal rights in the written notice of the dismissal. The commenter
questioned if this would prohibit the requesting party(s) from
resubmitting a claim with additional or new information. The commenter
would like CMS to ensure as part of the process that a request could be
resubmitted should new information come to light or was inadvertently
not included in the initial request.
Response: CMS only intends that dismissals be binding to the extent
outlined in these provisions. For example, Sec. 422.568(j) provides
for a dismissal of a request for an organization determination to be
binding unless it is modified or reversed by the MA organization upon
reconsideration or vacated under Sec. 422.568(i) of this section. So,
as applied to this example, new or additional information could be
submitted with a party's request for reconsideration of a dismissal
(which would be requested under Sec. Sec. 422.582 or 422.584) or
considered as part of the MA organization finding good cause to vacate
its dismissal of a request for an organization determination under the
provisions at Sec. 422.568(i). Note we have also added language to
what we proposed at Sec. 422.633(k) regarding vacating dismissals of
integrated reconsiderations. The additional language aligns with the
analogous provision for reconsiderations at Sec. 422.582(i).
Comment: A commenter questioned if CMS will modify the regulations
concerning the withdrawal or dismissal of Part C and Part D
determination requests, redetermination requests and IRE
reconsiderations to better align with the regulations concerning
limited English proficiency (LEP) communications.
Response: Entities that receive federal financial assistance,
including Medicare Part C and D plans, must take reasonable steps to
provide meaningful access to their programs by persons with limited
English proficiency, in accordance with title VI of the Civil Rights
Act of 1964 and section 1557 of the Affordable Care Act and
implementing regulations (title VI and section 1557 respectively).
Nothing in this final rule alters that requirement.
After consideration of the comments we received and for the reasons
outlined in our responses and in the proposed rule, we are finalizing
with modifications our proposed revisions to Sec. Sec. 422.568,
422.570, 422.582, 422.584, 422.590, 422.592, 422.631, 422.633, 423.568,
423.570, 423.582, 423.584, and 423.600 to address withdrawals and
dismissals by MA organizations, applicable integrated plans, and Part D
plans. In addition to minor clarifications that are not substantive
changes to our proposed regulations, we are also finalizing
modifications compared to our proposals to clarify that plans are
required to dismiss a request under the provisions of these final rules
and to permit verbal withdrawal of requests for organization
determinations, coverage determinations, reconsiderations, and
redeterminations.

I. Methodology for Increasing Civil Money Penalties (CMPs) (Sec. Sec.
422.760 and 423.760)

Sections 1857(g)(3)(A) and 1860D-12(b)(3)(E) of the Act provide CMS
with the ability to impose CMPs of up to $25,000 per determination
(determinations are those which could otherwise support contract
termination, pursuant to Sec. 422.509 or Sec. 423.510), as adjusted
annually under 45 CFR part 102, when the deficiency on which the
determination is based adversely affects or has the substantial
likelihood of adversely affecting an individual

[[Page 5963]]

covered under the organization's contract. The current regulations
mirror the statute with respect to the amount of the penalty that CMS
may impose for a per determination (contract level) penalty.
Additionally, as specified in Sec. Sec. 422.760(b)(2) and
423.760(b)(2) CMS is permitted to impose CMPs of up to $25,000, as
adjusted annually under 45 CFR part 102, for each enrollee directly
adversely affected or with a substantial likelihood of being adversely
affected by a deficiency. CMS has the authority to issue a CMP up to
the maximum amount permitted under regulation, as adjusted annually
\68\ for each affected enrollee or per determination, however CMS does
not necessarily apply the maximum penalty amount authorized by the
regulation.
---------------------------------------------------------------------------

\68\ Per the Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015, which amended the Federal Civil Penalties
Inflation Adjustment Act of 1990, the maximum monetary penalty
amount applicable to 42 CFR 422.760(b), 423.760(b), and 460.46(a)(4)
will be published annually in 45 CFR part 102. Pursuant to Sec.
417.500(c), the amounts of civil money penalties that can be imposed
for Medicare Cost Plans are governed by section 1876(i)(6)(B) and
(C) of the Act, not by the provisions in part 422. Section 1876
solely references per determination calculations for Medicare Cost
Plans. Therefore, the maximum monetary penalty amount applicable is
the same as Sec. 422.760(b)(1).
---------------------------------------------------------------------------

CMS proposed to codify the methodology we would use to calculate
the minimum penalty amounts that CMS would impose for certain types of
program non-compliance by adding a new paragraph (b)(3) to Sec. Sec.
422.760 and 423.760, and redesignating current paragraphs (b)(3) and
(4) as paragraphs (b)(4) and (5).
We proposed to update minimum penalty amounts no more often than
every 3 years. CMS also proposed to increase the penalty amounts by
including the increases that would have applied if CMS had multiplied
the minimum penalty amounts by the cost-of-living multiplier released
by the Office of Management and Budget (OMB) \69\ each year during the
preceding 3-year period. In addition, CMS proposed to track the yearly
accrual of the penalty amounts and announce them on an annual basis.
---------------------------------------------------------------------------

\69\ Per OMB Memoranda M-19-04, Implementation of Penalty
Inflation Adjustments for 2019, Pursuant to the Federal Civil
Penalties Inflation Adjustment Act Improvements Act of 2015,
published December 14, 2018, the cost of-living adjustment
multiplier for 2019 is 1.02522.
---------------------------------------------------------------------------

Comment: We received one comment that supported our proposals. The
commenter supported updating the minimum penalty amounts consistent
with the three-year Part C and D organization audit cycle, and urged
CMS to maintain the level of transparency afforded to the CMP
methodology and updates.
Response: We thank the commenter for the support.
Comment: We also received one comment encouraging CMS to codify the
process in which CMS notifies MA organizations and Part D sponsors of
enforcement action referrals, including the opportunity to submit
additional information before the final determination is made.
Response: We appreciate the comment, but it is beyond the scope of
the proposed changes. However, we will consider it for future
rulemaking. After consideration of the public comments received, we are
finalizing this provision as proposed.

V. Codifying Existing Part C and D Program Policy

A. Plan Crosswalks for Medicare Advantage (MA) Organizations and Cost
Plans (Sec. Sec. 417.496 and 422.530)

We proposed to codify the current process and conditions under
which MA organizations and 1876 cost plans can transfer their enrollees
into the same plan from year to year when no other election has been
made (this process is a ``plan crosswalk''), as well as when MA
organizations and cost plans can transfer their enrollees to other
plans offered by the same MA organization or cost plan (this is a
``crosswalk exception''). Our proposal was to define plan crosswalks,
codify rules that protect a beneficiary's right to choose a plan, and
specify the circumstances under which MA organizations and cost plans
may transfer beneficiaries into another plan of the same type offered
by the MA organization or, in the case of cost plans, transfer
enrollees from that cost plan benefit package to another plan benefit
package (PBP) under the same contract. In the proposed rule and this
final rule, we generally use the terms ``plan'' and ``PBP''
interchangeably to refer to a specific plan offered under a contract.
Specifically, the term PBP is used to describe the individual benefits
packages that may be offered under a singular contract. Section
1851(c)(3)(B) of the Act provides for evergreen elections which are
when an individual who has made an election is considered to have
continued to make the same election until the individual makes a change
to the election, or the MA plan is discontinued or no longer serves the
area in which the individual resides. In many cases, our crosswalk
policy is a mechanism for operationalizing these evergreen elections.
Section 1851 of the Act provides that Medicare beneficiaries who
are entitled to Part A and enrolled in Part B may elect to receive
benefits through enrollment in an MA plan of their choice and
authorizes CMS to adopt the process, form and manner for making and
changing enrollment elections. We proposed to codify existing policy
regarding crosswalks and crosswalk exceptions using this authority and
our authority under sections 1856(b)(1) and 1857(e)(1) of the Act to
adopt standards and contract terms for MA organizations. In furtherance
of the beneficiary's right to choose and implementing evergreen
elections, we proposed to codify existing policy in new regulations at
Sec. 417.496 and Sec. 422.530 to define plan crosswalks, implement
rules that protect a beneficiary's right to choose a plan, and describe
allowable circumstances under which MA organizations may transfer
beneficiaries from one of its MA plans into another of its MA plans or
a cost contract may transfer beneficiaries from one of its plans into
another of its cost plans. With respect to cost plans, we proposed to
codify existing enrollment policy related to the transfer of enrollees
from one of an entity's PBPs to another PBP, under the authority of
section 1876(i)(3)(D) of the Act, which requires that cost contracts
shall contain such other terms and conditions, not inconsistent with
the statute, as the Secretary may find necessary and appropriate. Our
proposal and this final rule do not include rules for deeming
enrollment from a cost plan to an MA plan under sections 1876(h)(5)(C)
and 1851(c)(4) of the Act because the statute does not permit deeming
of enrollees from cost plans to MA plans beyond contract year 2018.
We also proposed, at Sec. 422.530(d), to codify the procedures
that an MA organization must follow when submitting a crosswalk or a
crosswalk exception request. An MA organization must submit all
allowable crosswalks in writing through the bid submission process in
HPMS by the bid submission deadline announced by CMS. Through the bid
submission process, the MA organization may indicate if a crosswalk
exception request is needed at that time, but the MA organization must
request a crosswalk exception later through the crosswalk exception
functionality in HPMS by the deadline announced by CMS. CMS verifies
the exception request and notifies the requesting MA organization of
the approval or denial of the request after the crosswalk exception
deadline has expired. These exceptions must be submitted by the

[[Page 5964]]

MA organization to ensure that plan benefit package (PBP) enrollment is
allocated appropriately.
CMS has developed extensive guidance addressing the transfer of
enrollees from one PBP offered by an organization to another PBP
offered by that organization under the same contract.\70\ The guidance,
applicable to MA organizations and cost plans, was developed in light
of the ability of MA organizations and cost plans to revise their
benefit offerings and PBPs from year to year. The transfer of enrollees
from one PBP to another under these circumstances serves to facilitate
evergreen elections. MA organizations frequently make business
decisions resulting in changes to and in their MA plans offered for
enrollment in the following contract year. Each year, through the bid
process for plan design and an application process for service area
changes, MA organizations submit changes in coverage and cost sharing
design for their MA plans. In addition, MA organizations have the
ability to terminate existing plans and apply to offer new plans. While
cost plan organizations may not offer new cost plans, they also may
make changes in their benefit and cost sharing design and seek service
area changes through an annual process. CMS has issued annual sub-
regulatory guidance related to changes of this type for MA and cost
plans to address how MA organizations and cost plans may transition
enrollees from a plan that is terminating or changing its service area
to another plan offered by the same organization. These transitions are
useful to preserve beneficiary enrollment and are subject to a number
of beneficiary protections. We proposed to codify existing crosswalk
policy to clearly identify the basic rules for plan crosswalks,
including the parameters for allowable crosswalks, and formalize CMS's
crosswalk exception review process. Crosswalk exceptions are specific
circumstances where a crosswalk is not automatically authorized under
our policies but CMS may permit MA organizations and cost plans to
transfer beneficiaries into another plan of the same type offered by
the MA organization or cost plan after a review, provided that certain
requirements are met. The crosswalk exceptions process, as currently
conducted and as proposed, allows CMS to review and validate the
existence of an exception and then manually effectuate the transaction
in our system. Crosswalk exceptions are not part of the standard,
annual PBP renewal process. We proposed to codify these new regulations
at Sec. Sec. 417.496 and 422.530 to govern, respectively, cost plans
and MA organizations.
---------------------------------------------------------------------------

\70\ Chapter 16b of the Medicare Managed Care Manual and Process
for Requesting an HPMS Crosswalk Exception for Contract Year (CY)
2020 (released annually).
---------------------------------------------------------------------------

We proposed, at Sec. Sec. 417.496(a)(1) and 422.530(a)(1), to
define a plan crosswalk as the movement of enrollees from one PBP to
another PBP under the same contract between the MA or cost organization
and CMS. MA and cost organizations complete these crosswalk
transactions annually as part of the renewal process. Unlike MA plans,
however, cost plans do not include different plan types such as PPOs,
PFFS, and special needs plans, therefore proposed Sec. 417.496(a)(2)
did not specify that crosswalks from one plan type to another are
prohibited while proposed Sec. 422.530(a)(2) did.
In proposed Sec. 422.530(a)(5), we defined the types of MA plans
that are ``different plan types'' for purposes of crosswalk policy:
Health maintenance organizations, provider-sponsored organizations, and
regional and local preferred provider organizations coordinated care
plans are different plan types, even though they are all coordinated
care plans. Additionally, we noted that the segmented plans are not a
``type'' of plan in MA and that crosswalks are permitted between
segmented and non-segmented plans. We did not include in the proposed
cost plan crosswalk regulation provisions about contract transactions
related to plan types and policies such as segmentation and
continuation because they are specific to MA contract transactions. The
majority of crosswalks involve moving enrollees from one contract year
plan to the corresponding plan for the following contract year.
Therefore, under our current policy and the proposal, enrollees are not
required to make an enrollment election to remain enrolled in their
chosen plan. In Sec. 417.496(a)(2)(i), we proposed to codify the
general rule that crosswalks are prohibited between different cost
contracts, and in Sec. 417.496(a)(2)(ii), we proposed to codify that
crosswalks are prohibited between different cost plan IDs under a cost
contract unless the crosswalk qualifies for an exception to this
requirement. In Sec. 417.496(c)(1)(i) and (ii) we proposed to codify
the exception that cost contracts terminating PBPs with optional
supplemental benefits may transfer enrollees to another PBP with or
without optional benefits under the same cost contract as long as
enrollees who have Part A and B benefits only are not transferred to a
PBP that includes Part D. In Sec. 417.496(c)(1)(iii)(A), (B), and (C),
we proposed to codify the rule that an enrollee in a terminating PBP
that includes Part D may only be moved to a PBP that does not include
Part D if the enrollee is notified in writing that she/he is losing
Part D coverage, the options for obtaining Part D, and the implications
of not getting Part D through some other means. In Sec. 422.530(a)(2),
we proposed to codify the general rule that crosswalks are prohibited
between different MA contracts or different plan types (for example,
HMO to PPO), which means that crosswalks are only permitted between
plans of the same type under the same contract. However, proposed Sec.
422.530(c) specified the limited circumstances in which CMS would allow
a crosswalk transaction that does not comply with this general
prohibition on crosswalks to different contracts. We included in
proposed Sec. 422.530(a)(2) a reference to these ``exceptions''
permitted under paragraph (c). We explained that these exceptions in
Sec. 422.530(c) apply to MA plans only because they pertain to MA
policies; therefore, we did not propose similar regulation text in
Sec. 417.496.
As most plan crosswalks are related to contract renewals and non-
renewals, we proposed a general rule at Sec. 422.530(a)(3) that would
require MA organizations to comply with renewal and nonrenewal rules in
Sec. Sec. 422.505 and 422.506 in order to be eligible to complete plan
crosswalks. In Sec. 417.496(a)(3), we proposed that cost plan entities
must comply with the renewal and non-renewals rule per Sec. Sec.
417.490 and 417.492, in order to be eligible to complete plan
crosswalks. In Sec. 422.530(a)(4), we proposed that enrollees must be
eligible for enrollment under Sec. Sec. 422.50 through 422.54 in order
to be moved from one PBP to another PBP as part of a crosswalk.
In Sec. Sec. 422.530(b) and 417.496(b), we proposed to codify the
existing crosswalk policy by specifying the circumstances under which a
crosswalk is permitted so that an MA organization or cost plan may move
enrollees into, respectively, another MA plan or cost plan. For MA
plans, in paragraph (b)(1), we proposed permissible crosswalks for all
plan types and in paragraph (b)(2), we proposed crosswalks that are
permissible only for MA special needs plans (SNPs). We reminded readers
that the MA plan types are identified in Sec. 422.4; therefore, we
specified in proposed Sec. 422.530(a)(5) that the different types of
coordinated care plans are considered different ``plan types'' for
purposes of crosswalking policy. For cost plans, in proposed paragraph
(b), we addressed permissible crosswalks for

[[Page 5965]]

cost plans. Each of these proposals was consistent with current policy.
1. Cost Plans and All MA Plan Types
a. Renewal Plan
Under existing program rules, an MA or cost organization may
continue to offer, that is renew, a current PBP that retains all of the
same service area for the following year; the renewing plan must retain
the same PBP ID number as in the previous contract year. We proposed to
codify moving the enrollees in the existing PBP to the PBP with the
same ID number for the following year as a permissible crosswalk in
paragraph (b)(1)(i) for MA plans and Sec. 417.496(b)(1) for cost
plans. Under the proposal, as with current policy, current enrollees
are not required to make an enrollment election to remain enrolled in
the renewal PBP, and the MA or cost organization will not submit
enrollment transactions to CMS for current enrollees but will
transition all enrollees from the current PBP to the new PBP with the
same PBP ID number for the following year. New enrollees must complete
enrollment requests, and the MA or cost organization will submit
enrollment transactions to CMS for those new enrollees. Under
Sec. Sec. 422.111 and 417.427 current MA and cost enrollees of a
renewed PBP, respectively, must receive an Annual Notice of Change
(ANOC) notifying them of any changes to the renewing plan.
b. Consolidated Renewal Plan
Under existing program rules, MA and cost organizations may combine
two or more PBPs offered under the same contract in the current
contract year into a single renewal plan, as a plan consolidation. We
explained that when the consolidation includes two or more complete
PBPs being combined and no PBP being split among more than one PBP in
the next contract year, the MA or cost organization is permitted to
transition all enrollees in the combined plans under one PBP under that
contract, with the same benefits in the following contract year; the
resulting PBP must have the plan ID of one of the consolidated plans.
We proposed to codify this as a permissible crosswalk in Sec. Sec.
417.496(b)(2) and 422.530(b)(1)(ii) and explained that under the
proposal (as with current policy), current enrollees of a plan or plans
being consolidated into a single renewal plan will not be required to
take any enrollment action, and the MA or cost organization does not
submit enrollment transactions to CMS for those current enrollees. The
renewal PBP ID is used to transition current enrollees of the plans
being consolidated into the designated renewal plan. In
operationalizing this crosswalk, the MA or cost organization may need
to submit updated data to CMS for the enrollees affected by the
consolidation. New enrollees in the consolidated renewal plan must
complete enrollment forms and the MA or cost organization must submit
the enrollment transactions to CMS for those new enrollees. Under
Sec. Sec. 422.111 and 417.427 MA and cost plans, respectively, are
required to provide an ANOC to all current enrollees in the
consolidated renewal plan.
c. Renewal Plan With a Service Area Expansion (SAE)
Under existing program rules, an MA or cost organization may
continue to offer the same cost plan or local MA plan but expand the
service area to include one or more additional counties for the
following contract year. We explained that to expand the service area
of its plan(s), an MA or cost organization must submit a service area
expansion (SAE) application to CMS for review and approval; CMS treats
service area expansions as applications subject to the rules in part
422, subpart K, and Sec. 417.402. Under our current policy an MA or
cost organization renewing a plan with a SAE must retain the renewed
PBP's ID number in order for all current enrollees to remain enrolled
in that plan the following contract year; current enrollees of a PBP
that is renewed with a SAE are not required to take any enrollment
action, and the MA or cost organization does not submit enrollment
transactions to CMS for those current enrollees but can transition all
enrollees using a crosswalk from the current PBP to the new PBP with
the same PBP ID number for the following year. We proposed to codify
this as a permissible crosswalk in Sec. 422.530(b)(1)(iii) for MA
plans and Sec. 417.496(b)(3) for cost plans. New enrollees must
complete enrollment forms and the MA or cost organization must submit
the enrollment transactions to CMS for those new enrollees. Under
Sec. Sec. 422.111 and 417.427 MA and cost plans, respectively, are
required to provide an ANOC to all current enrollees of a renewed PBP
with a SAE.
d. Renewal Plan With a Service Area Reduction
Under existing program rules, an MA organization offering a local
MA plan may reduce the service area of a current contract year PBP;
similarly, a cost organization may reduce the service area of a cost
plan. We explained that this service area reduction (SAR) means that
enrollees who were in the part of the service area being reduced will
generally not be eligible to remain in the plan because of the
residence requirement in Sec. Sec. 417.422(b), 422.50(a)(3), and
422.54. We addressed crosswalks that may occur in connection with a
service area reduction in proposed Sec. Sec. 422.530(b)(1)(iv) and
417.496(b)(4). Under our proposal (as in current practice), when there
is a service area reduction for a plan, the MA organization or cost
plan may only crosswalk the enrollees who reside in the remaining
service area to the plan in the following contract year that links to a
current contract year plan but only retains a portion of the prior
service area. The following contract year plan must retain the same
plan ID as the current contract year plan. The crosswalk is limited to
the enrollees in the remaining service area. MA organizations may have
different options available to them in terms of notices and the ability
to offer a continuation of enrollment under Sec. 422.74(b)(3)(ii)
depending on the other MA plans in the service area at the time of the
service area reduction. We included regulation text in proposed Sec.
422.530(b)(1)(iv)(A) and (B) to address the different scenarios.
We proposed in Sec. 422.530(b)(1)(iv)(C), that enrollees that are
no longer in the service area of the MA or cost plan will be
disenrolled at the end of the contract year and will need to elect
another plan (or default to original Medicare). The MA or cost
organization must submit disenrollment transactions to CMS for these
enrollees. In addition, the MA or cost plan organization must send a
Medigap guaranteed issue rights to the affected enrollees and a non-
renewal notice to enrollees in the reduced portion of the service area
that includes notification of special election period (SEP). We
proposed to codify at Sec. 422.530(b)(1)(iv)(D) specific rules about
what information may be provided by the MA organization about its other
MA plan options in the area that will no longer be part of the service
area of the continued plan. Per the marketing and communication
regulations, at Sec. Sec. 422.2263(a) and 423.2263(a) and discussed
elsewhere in this final rule, marketing information about other MA plan
options offered by the MA organization for the prospective plan year
can begin October 1 of each year for the following contract year.
2. Special Needs Plans (SNPs)
Under our current crosswalk policies, MA Special Needs Plans (SNPs)
follow the general rules, which we proposed to

[[Page 5966]]

codify in Sec. 422.530(b)(1), and are permitted additional flexibility
for crosswalks in specific situations. We proposed regulation text to
identify the additional crosswalks permitted for SNPs in Sec.
422.530(b)(2), which vary based on the type of SNP. In the proposed
rule, we explained that MA organizations may not crosswalk enrollees
from one SNP type to a different SNP type, as that would constitute
crosswalking into a different type of plan, which is prohibited by
Sec. 422.530(a)(2). We clarify here as well that the rules in
paragraph (a) all apply to the crosswalk authority for SNPs described
in paragraph (b)(2) just as the rules in paragraph (a) apply to the
crosswalk authority in paragraph (b)(1).
a. Chronic Condition SNPs (C-SNPs)
We proposed to codify four permissible crosswalks specific to C-
SNPs at Sec. 422.530(b)(2)(i)(A) through (D). C-SNPs serve and are
limited to enrolling special needs individuals who have a severe or
disabling chronic condition(s) and would benefit from enrollment in a
specialized MA plan. The MA organization offering the C-SNP may target
one or more specific severe or disabling chronic conditions. When a C-
SNP targets more than one severe or disabling chronic condition, we
refer to that as a ``grouping'' and we have addressed groupings in
guidance in Chapter 16b of the Medicare Managed Care Manual. We
proposed that these permissible crosswalks reflect the limitations on
eligibility for C-SNPs, as different C-SNPs serve different populations
depending on the chronic condition(s) targeted for enrollment
restriction.
Renewing C-SNP with one chronic condition that transitions
eligible enrollees into another C-SNP with a grouping that contains
that same chronic condition.
Non-renewing C-SNP with one chronic condition that
transitions eligible enrollees into another C-SNP with a grouping that
contains that same chronic condition.
--Renewing C-SNP with a grouping that is transitioning eligible
enrollees into another C-SNP with one of the chronic conditions from
the grouping.
Non-renewing C-SNP in a grouping that is transitioning
eligible enrollees into a different grouping C-SNP if the new grouping
contains at least one condition that the prior plan contained.
b. Institutional-SNPs
We proposed to codify five permissible crosswalks specific to I-
SNPs at Sec. 422.530(b)(2)(iii)(A) through (E). I-SNPs are limited to
enrolling individuals who are institutionalized or institutionalized-
equivalent, as those terms are defined inSec. 422.2. I-SNPs may limit
their enrollment to either institutionalized or institutionalized-
equivalent individuals or may enroll both categories of individuals.
These permissible crosswalks reflect the enrollment limitations on I-
SNPs.
Renewing Institutional SNP that transitions enrollees to
an Institutional/Institutional Equivalent SNP.
Renewing Institutional Equivalent SNP that transitions
enrollees to an Institutional/Institutional Equivalent SNP.
Renewing Institutional/Institutional Equivalent SNP that
transitions eligible enrollees to an Institutional SNP.
Renewing Institutional/Institutional Equivalent SNP that
transitions eligible enrollees to an Institutional Equivalent SNP.
Non-renewing Institutional/Institutional Equivalent SNP
that transitions eligible enrollees to another Institutional/
Institutional Equivalent SNP.
c. Dual Eligible-SNPs (D-SNPs)
We did not propose to codify any permissible crosswalks specific to
D-SNPs, which is consistent with our current crosswalk policy (which
does not authorize additional crosswalk scenarios for D-SNPs outside of
the crosswalk exceptions).
d. Exceptions
In some instances, crosswalk actions must be manually reviewed and
entered by CMS staff. We call these crosswalk exceptions. We proposed
to codify at Sec. 422.530(c) when CMS will approve a request for a
crosswalk exception and permit crosswalks in situations that are not
specified in Sec. 422.530(b). These exceptions address certain unusual
circumstances involving specific types of plans or contract activities.
Under our proposal, only an exception specified in Sec. 422.530(c)
would be approved and recognized as an additional circumstance when a
crosswalk is permitted. We proposed to allow the following exceptions
to the limits on the crosswalk process:
When a non-network or partial network based private fee-
for-service (PFFS) plan is transitioning to either a partial network or
a full network PFFS plan, we would permit a crosswalk when CMS
determines it is in the interest of beneficiaries. CMS will consider
whether the risks to enrollees are such that they would be better
served by remaining in the plan, whether there are other suitable
managed care plans available, and whether the enrollees are
particularly medically vulnerable, such as institutionalized enrollees.
We anticipate that granting these exceptions would be extremely rare
since in the great majority of instances enrollees have choices of
multiple MA plans or Original Medicare and are able to exercise their
choice. We specifically proposed to restrict crosswalks between these
network and non-network PFFS plans because the way enrollees will
access health care services is significantly different in each of these
plans. Section 1852(d)(5) of the Act establishes that in areas that are
determined to be ``network areas'' PFFS plans can only operate by
having a network of providers that meets CMS current network adequacy
standards. The network based PFFS plan functions very much like a MA
PPO plan in that there is a network of contracted providers through
which enrollees can obtain Medicare covered services. In addition, an
enrollee in a network based PFFS plan has the option of also going out-
of-network for plan covered services though their cost sharing may be
higher. However, in areas of the country that have determined to be
non-network areas with respect to PFFS plans, the PFFS plan can operate
without a network and enrollees must seek care from any willing
provider under the non-network PFFS plan's terms and conditions of
payment. Because these two types of PFFS plans function very
differently for enrollees obtaining covered health care services, we do
not believe crosswalks should be generally permitted between these two
types of PFFS plans.
When MA plans offered by two different MA organizations
that share the same parent organization are consolidated such that the
MA plans under separate contracts consolidated under one surviving
contract, the enrollees from the consolidating plans may be moved to an
MA plan under the surviving plan. As a result of the consolidation of
contracts, enrollees from at least one of the PBPs are transitioned to
another contract; therefore, CMS limits approval of these crosswalks to
an exception because of the movement across different contracts. As
part of reviewing a request for this crosswalk exception, CMS reviews
the contract consolidation to ensure compliance with the change of
ownership regulations (Sec. Sec. 422.550 through 422.553).
When a renewing D-SNP in a multi-state service area is
reducing its service area to accommodate a state contract in part of
the service area, we would permit enrollees who are no

[[Page 5967]]

longer in the service area to be moved into one or more new or renewing
D-SNPs for which they are eligible, when CMS determines it is necessary
to accommodate changes to D-SNP state contracts. We proposed to codify
this crosswalk exception at Sec. 422.530(c)(3).
When an MA organization renews a D-SNP for the upcoming
contract year with changes in the D-SNP eligibility criteria, has
another available new or renewing D-SNP for the upcoming contract year,
and the two D-SNPs are offered to different populations, we would
permit a crosswalk exception if it is in the best interest to current
enrollees who are no longer eligible for their non-renewing D-SNP. We
proposed to codify this crosswalk exception at Sec. 422.530(c)(4). An
MA organization may change--or as part of state contracting, may be
required to change--a D-SNP's eligibility criteria for the upcoming
contract year. As a result, some current enrollees may no longer be
eligible for their current D-SNP. However, the MA organization may have
a new or renewing D-SNP in the same service area with eligibility
requirements that can accommodate the enrollees who are no longer
eligible for their current D-SNP.
When a renewing C-SNP with a grouping of multiple
conditions is transitioning eligible enrollees into another C-SNP with
one of the chronic conditions from that grouping. This crosswalk
exception, which we proposed to codify at Sec. 422.530(c)(5), differs
from the allowable crosswalk in proposed Sec. 422.530(b)(2)(i)(B)
because it is a renewing C-SNP and not a non-renewing C-SNP. A
crosswalk exception is required in order for CMS to identify which
enrollees are moving from the renewing plan C-SNP to the other C-SNP.
In a non-renewing C-SNP, all enrollees would be crosswalked to another
plan or disenrolled.
In the proposed rule, CMS explained that the crosswalk policies we
proposed to codify are designed to protect the rights of enrollees to
make a choice about the plan from which they wish to receive Medicare
benefits while facilitating how section 1851(c)(3)(B) of the Act
requires evergreen elections. We proposed to codify policies and
standards that CMS has implemented that allow MA and Cost organizations
the flexibility to make business decisions about the benefit and cost
sharing design of a plan while preserving the rights of beneficiaries
to make informed choices about their health care coverage. We summarize
the comments we received on these crosswalk proposals and our
responses.
Comment: CMS received a comment specific to the crosswalk
exceptions process for cost plans. The commenter expressed concern with
CMS having an exception permitting cost organizations to move enrollees
from one of its plans with Part D to a plan that does not have Part D.
The commenter stated that enrollees might not be aware of the
implications of losing Part D and, as a result, CMS should require that
enrollees actively ``opt out'' of Part D before being enrolled by the
cost organization into one of its non-Part D plans. The commenter
acknowledged that we proposed that the cost organization be required to
notify enrollees of the implications of losing Part D but expressed
concern that this information could become lost in the barrage of
advertising and other materials mailed during the annual enrollment
period.
Response: We believe that the notice requirements proposed and
finalized at Sec. 417.496(c)(1)(iii) offer robust protections for
enrollees. Cost enrollees with Part D may be crosswalked to a plan
without Part D because, unlike MA plans, Part D can only be an optional
supplemental benefit for cost enrollees. In addition to specific
information on plan benefits and costs for the new plan, affected
enrollees will receive information from the cost organization on the
implications of losing creditable Part D coverage and options for
acquiring Part D coverage. In addition, the enrollee will have the
annual coordinated election period to choose another Part D plan or to
elect coverage in another Medicare health plan that does offer Part D
coverage. We also believe that the provision as proposed strikes the
proper balance between protections for enrollees and flexibility for
cost organizations. CMS is therefore finalizing Sec. 417.496.
Comment: CMS received comments asking for a waiver of the
requirement to provide an Annual Notice of Change (ANOC) document to
enrollees who are crosswalked between SNP plans under the same legal
entity if there are no substantive changes in premiums, benefits, and
cost-sharing as a result of the transition.
Response: Under Sec. 422.111, MA organizations are required to
disclose key changes to coverage to all enrollees annually. This
crosswalk regulation was not proposed to, and as finalized does not,
supersede or circumvent those disclosure requirements. The ANOC
requires any and all changes to premiums, benefits, and cost-sharing to
be disclosed in the ANOC, not just substantive changes. In addition,
the ANOC requires these plans to make it clear that if a beneficiary
doesn't make a different choice, they will be automatically enrolled in
the new plan. This helps preserve the beneficiary's right to make an
informed choice about their health care coverage.
Comment: Commenters are seeking additional options to comply with
the D-SNP integration requirements set forth in the BBA of 2018 and the
implementing regulations. Several commenters suggested allowing D-SNP
crosswalk exceptions to permit a non-renewing D-SNP plan benefit
package (PBP) of one legal entity to crosswalk into a new or renewing
D-SNP PBP of another legal entity within the same parent organization
in cases where it would facilitate integration for dually eligible
individuals in Medicare and Medicaid.
Response: We thank commenters for their suggestion. In our recent
experience, contracting processes between D-SNPs and states to comply
with provisions of the BBA of 2018 are raising new questions and
challenges. In some cases, the current way a parent organization
structures its MA contracts using different subsidiaries (so that the
MA organizations on various contracts are different legal entities) may
raise an impediment to achieving higher levels of integration between
Medicare and Medicaid. Moving enrollees from one PBP to another PBP
operated by the same parent organization but under a different legal
entity, in some cases, could result in better experiences and outcomes
for enrollees but may not always be permitted as a crosswalk under our
proposal.
Under current rules, and without a crosswalk exception, there are
two mechanisms for moving D-SNP members into another D-SNP operated by
another MA organization under the same parent organization: (1)
Consolidating contracts consistent with the change of ownership
regulations (Sec. Sec. 422.550 through 422.553), then crosswalking
between plans in the next year; or (2) if approved by CMS, under the
passive enrollment provisions at Sec. 422.60(g). These mechanisms may
be appropriate in some instances, but they may be more burdensome than
we believe necessary in some types of within-parent-organization
scenarios posed by commenters. The passive enrollment provision is also
more narrowly targeted to enrollees already in an integrated D-SNP who
would move to a fully integrated or highly integrated D-SNP,
circumstances that would be most applicable when state Medicaid managed
care contracting results in disruption of a current integrated care
arrangement.

[[Page 5968]]

We proposed to permit two crosswalk exceptions for D-SNPs
specifically at Sec. 422.530(c)(3) and (c)(4). The first would allow
an MA organization renewing a D-SNP in a multi-state service area that
is reducing its service area to accommodate a state contract in part of
the service area to crosswalk enrollees who are no longer in the
service area to one or more new or renewing D-SNPs for which they are
eligible, when CMS determines it is necessary to accommodate changes to
D-SNP state contracts. The second would apply for an MA organization
renewing a D-SNP for the upcoming contract year with changes in the D-
SNP eligibility criteria, but which has another available new or
renewing D-SNP for the upcoming contract year, where the two D-SNPs are
offered to different populations. In this scenario, we proposed to
permit a crosswalk exception if it is in the best interest to current
enrollees who are no longer eligible for their D-SNP to allow such a
crosswalk exception.
We agree with commenters that--where necessary to accommodate
changes to D-SNP state contracts--we should permit crosswalk exceptions
in additional scenarios. We are finalizing Sec. 422.530(c)(3) in the
final rule with two significant changes compared to the proposed rule.
First, we are finalizing additional language applying this exception to
multi-state regional PPOs (RPPOs). Our original proposal focused on
service area reductions by multi-state D-SNPs. However, multi-state
RPPOs cannot eliminate states from their service areas while remaining
RPPOs. As finalized, Sec. 422.530(c)(3) also allows a non-renewing D-
SNP that is a MA regional plan (an RPPO) to crosswalk enrollees to D-
SNPs in state-specific local PPOs. Second, we are finalizing additional
language to allow crosswalking of members across D-SNPs within the same
parent organization but across legal entities in these scenarios. This
crosswalk exception in Sec. 422.530(c)(3) only applies for D-SNPs with
multi-state service areas, and we believe Sec. 422.530(c)(3) as
finalized with these changes will create additional opportunities to
comply with state D-SNP contracting while promoting continuity of care
for enrollees. We are declining, at this time, to extend this crosswalk
exception to D-SNPs without multi-state service areas to allow us
additional opportunity to assess the potential impacts of such a
change. The D-SNP crosswalk exception we proposed and are finalizing at
Sec. 422.530(c)(4) does not require that the D-SNP service areas
include multiple states and is not limited to accommodating changes to
the contracts between the state(s) and the D-SNP under Sec. 422.107;
this other crosswalk exception addresses changes in the eligibility
criteria for the current year D-SNP and permits moving enrollees to
another D-SNP offered by the same MA organization where CMS determines
it is the best interests of the enrollees to move to the other D-SNP
for the new contract year in order to promote access to and continuity
of care for the enrollees whose enrollment would be terminated from the
D-SNP based on the change in eligibility criteria. We are declining, at
this time, to extend this crosswalk exception at Sec. 422.530(c)(4) to
D-SNPs offered by different MA organizations, even if the parent
organization is the same, to allow us additional opportunity to assess
the potential impacts of such a change.
We will consider other potential crosswalk exceptions for future
rulemaking.
After consideration of the public comments we received and for the
reasons outlined in the responses to comments and the proposed rule, we
are finalizing our proposal with the following modifications:
Section 422.530(c)(1) is being finalized with additional
text from the preamble of the proposed rule (85 FR 9091) to identify
the factors considered by CMS in making a determination that moving
enrollees from a non-network or partial network PFFS plan to a partial
or full-network PFFS plan is in the interest of beneficiaries. The
factors CMS will take into consideration are whether enrollees would be
better served by being crosswalked to the new PFFS plan. Another
consideration is if there are no other MA plans available where the
enrollee resides (including whether there are a number of potentially
more suitable MA plans available for the enrollee to select) and
whether the enrollees are particularly medically vulnerable, such as
institutionalized enrollees. A PFFS plan requesting a crosswalk of
enrollees from a non-network PFFS plan to a partial or full-network
PFFS plan would need to include in their exception request an
explanation of why the crosswalk would be in the best interest of the
beneficiary (or beneficiaries) rather than the alternative of the
enrollee(s) making an selection among available MA plans or Original
Medicare during the Annual Election Period. This section also finalizes
the requirement that CMS will not permit crosswalks from network based
PFFS plans to non-network or partial network PFFS plans. As discussed
in the proposed rule, CMS is finalizing this requirement because
network based PFFS plans function very much like an MA PPO plan. In
consequence, an enrollee in a network based PFFS plan crosswalked to a
non-network or partial network PFFS plan would no longer have assured
access to a network of contracted providers. Such a change in how their
plan functions would be significant and potentially problematic for the
enrollee in accessing their health care services.
Section 422.530(c)(2) is being finalized with a slight
revision to clarify that MA contracts, rather than MA plans, are
consolidated. When MA contracts under two different MA organizations
that share a parent organization are consolidated, the MA plans under
the different contracts are then offered under the surviving MA
contract. Some of the MA plans may also be consolidated under the
surviving MA contract. The crosswalk exception permits the enrollees
from the consolidated contracts to be crosswalked to an MA plan under
the surviving contract.
Section 422.530(c)(3) is being finalized as proposed to
address multi-state D-SNPs and with additional text to address a
crosswalk exception for non-renewing D-SNPs in multi-state RPPOs. In
situations involving both types of D-SNPs, a crosswalk exception may be
permitted in cases CMS determines it is necessary to accommodate
changes to state contracts, as discussed in more detail in the response
to the public comment. Section 422.530(c)(3) is also being finalized
with additional text to clarify that the crosswalk exception permits
moving enrollees to a different contract,
Section 422.530(c)(4) is being finalized with additional
text to clarify that the receiving D-SNP must be offered by the same MA
organization and to specify that CMS would approve the crosswalk
exception if the enrollees are eligible for the receiving D-SNP and CMS
determines the crosswalk exception would be in the best interests of
enrollees in order to promote access to and continuity of care for
enrollees relative to the absence of a crosswalk exception.
The crosswalk proposed at Sec. 422.530(b)(2)(C) to permit
a renewing C-SNP with a grouping that is transitioning eligible
enrollees into another C-SNP with one of the chronic conditions from
that grouping is not being finalized because it was duplicative of
proposed Sec. 422.530(c)(5), which is being finalized. Under our
current policy, an exception is not automatically granted in this
situation. We believe that codifying our current

[[Page 5969]]

policy on this point is appropriate. What was proposed at Sec.
422.530(b)(2)(D) is being finalized as Sec. 422.530(b)(2)(C) instead.
Finally, we are finalizing the regulation text at Sec.
417.496(c)(1) and introductory text at Sec. 422.530(c) using ``may
permit'' instead of ``permits'' to clarify that CMS approval is not
automatic for the crosswalk exceptions.
As finalized, Sec. 422.530 also contains several non-substantive
grammatical and technical changes to improve the clarity and
readability of the regulation text.

B. Medicare Advantage (MA) Change of Ownership Limited to the Medicare
Book of Business (Sec. Sec. 422.550 and 423.551)

Section 1857 of the Act requires each MA organization to have a
contract with CMS in order to offer an MA plan. Section 1857(e)(1) of
the Act authorizes the adoption of additional contract terms that are
consistent with the statute and that the Secretary finds are necessary
and appropriate. Consistent with this authority, at the beginning of
the Part C program we implemented contracting regulations in Sec.
422.550 which provide for the novation of an MA contract in the event
of a change of ownership involving an MA organization. (63 FR 35106)
Under the regulations, codified at Sec. Sec. 422.550 through 422.553,
the execution of a novation agreement is required when an MA
organization is acquired or when it wants to transfer its ownership to
a different entity. When an MA organization is no longer able or
willing to participate in the MA program, a change of ownership can
provide both the holder of the contract and CMS with an opportunity to
transfer the ownership of the contract to a different entity with
little or no disruption to enrolled beneficiaries. In this instance,
CMS has an interest in agreeing to a novation of the existing MA
contract because it promotes the efficient and effective administration
of the MA program.
We proposed to revise Sec. 422.550 by adding a new paragraph at
Sec. 422.550(f) to restrict the situations in which CMS will agree to
an MA contract novation to those transfers involving the selling of the
organization's entire line of MA business, which would include all MA
contracts held by the legal entity that is identified as the MA
organization. It has been long-standing policy in the MA program that
CMS will only recognize the sale or transfer of a legal entity's entire
MA line, or book of business, consisting of all MA contracts held by
the MA organization because we believe that allowing the sale of just
one contract (when the MA organization has more than one MA contract)
or pieces of a single contract can have a negative impact on
beneficiary election rights. We explained that the change codifies
existing policy and also create more consistency in regulations between
the Part D program, which has an explicit regulation requiring the sale
of the entire book of Part D business at Sec. 423.551(g), and the MA
program.
In the proposed rule, we explained that this policy has not been
applied in cases where contracts are transferred among subsidiaries of
the same parent organization and we do not wish to interfere with an MA
organization's (or parent organization's) ability to decide its
corporate structure or contractual arrangements with its subsidiaries.
Therefore, we also proposed, at Sec. 422.550(f)(1), an exception to
the proposed limit for changes of ownership to only when the entire MA
book of business is being transferred; that exception would be when the
sale or transfer is of a full contract between wholly owned
subsidiaries of the same parent organization.
We proposed to codify explicitly in Sec. 422.550(f)(2) that CMS
will not recognize or allow a sale or transfer that consists solely of
the sale or transfer of individual beneficiaries, groups of
beneficiaries enrolled in a plan benefit package, or one MA contract if
the organization holds more than one MA contract. We stated that
allowing the sale of just one contract (when the MA organization has
more than one MA contract) or pieces of a single contract can have a
negative impact on beneficiary election rights as our primary rationale
for this proposal.
We thank commenters for their input to help inform our final rule
on changes of ownership. We received the following comments on this
proposal, and our responses follow:
Comment: Some commenters were supportive of CMS's proposal and
agreed that allowing a sale or transfer that consists solely of the
sale or transfer of a cohort of beneficiaries/contracts, if the
organization holds more than one MA contract, can have a negative
impact on beneficiary election rights. Additionally, we received
support on the exception to allow the sale or transfer of a full
contract between wholly owned subsidiaries of the same parent
organization.
Response: We thank commenters for their support of our proposal.
Comment: A commenter suggested that CMS's proposal would remove a
viable option for an organization to transfer a contract with minimal
disruption to enrollees because the enrollee would move with the
contract and the move would be invisible to the enrollee. They
explained that this limitation would require an organization to retain
a contract that is not working and force them to exit the MA market
entirely in order to close an underperforming contract.
Response: Section 1851 of the Act provides that Medicare
beneficiaries who are entitled to Part A and enrolled in Part B may
elect to receive benefits through enrollment in an MA plan of their
choice and authorizes CMS to adopt the process, form and manner for
making and changing enrollment elections. Additionally, section
1851(c)(3)(B)(ii) of the Act provides for evergreen elections, which
are when an individual who has made an election is considered to have
continued to make the same election until the individual makes a change
to the election or the MA plan is discontinued or no longer serves the
area in which the individual resides. Both of these statutes protect an
enrollee's right to choose and remain in an MA plan of their choosing.
We believe that allowing the sale or transfer of contracts, without the
entire line of business, does not support the enrollee's right to
choose their MA plan under the statute because a plan offered and
administered by a specific MA organization is necessarily different
than a plan, even with the same benefits coverage and cost sharing,
offered and administered by a different organization. A different
parent organization is likely to have different administrative policies
and processes, such as appeals processing, medical necessity policies,
or customer service functions, which an enrollee should be able to
consider before electing to enroll in a plan. An individual that has
elected coverage in a plan offered by one entity is necessarily
choosing not to be in a plan offered by a different entity; the sale of
a single contract frustrates those choices. We distinguish this from
the sale or transfer of the entire line of business to another MA
organization, where the seller/transferor is choosing to leave the
market entirely and the buyer/transferee is taking on all
responsibilities and obligations to continue providing benefits to all
enrollees without interruption. Also, we disagree that this limitation
would require a plan to retain a contract that is not working and force
them to exit the MA market entirely in order to close an
underperforming contract. MA organizations retain the right to non-
renew a contract for any reason, provided it meets the timeframes for

[[Page 5970]]

doing so at Sec. 422.506, and may continue to operate other existing
MA contracts without interruption.
Comment: A commenter requested that CMS clarify whether the
divestiture of an MA organization's business would allow the blending
of contracts by virtue of a novation.
Response: By ``blending'' we understand the commenter to be
referring to combination of transferring a contract to a new MA
organization and consolidating the contracts at the same time. The
divestiture of an MA organization's entire line of business does not
allow those transferred contracts to be consolidated with the acquiring
MA organization's existing contracts in the same year. In other words,
the plans in the acquired contract must continue to operate under their
given contract number. After the acquisition is complete and during the
next bidding cycle, the MA organization may follow crosswalk rules
finalized at Sec. 422.530 in order to consolidate contracts into a
single contract.
Comment: Two commenters recommended that CMS allow flexibilities to
transfer or sell plans or contracts under certain, additional
conditions through specific exceptions to the ``entire line of
business'' rule. One commenter recommended that we create an exception
based on certain geographies or markets. Another commenter recommended
an exception based on special circumstances, such as one involving the
sale of an I-SNP. The commenter suggested that the sale of an I-SNP
would benefit the Medicare program and beneficiaries because the
acquiring MA organization could better serve that population and would
likely be a better solution to maintain appropriate coverage for the
impacted beneficiaries over terminating the contract.
Response: It has been long-standing policy in the MA program that
CMS will only recognize the sale or transfer of a legal entity's entire
MA line of business, or book of business, consisting of all MA
contracts held by the MA organization because we believe that allowing
the sale of just one contract (when the MA organization has more than
one MA contract) or pieces of a single contract can have a negative
impact on beneficiary election rights, particularly where an exception
is based on a decision that a specific plan or MA organization is
``better for'' enrollees. The same policy is in place in the Part D
program, in Sec. 423.551(g). We do not believe that allowing an
exception based on ``special circumstances'', either because of a
product type (for example, I-SNP) or characteristics of a region or
marketplace, outweighs the importance of upholding an enrollee's right
to elect a plan of their choosing. Additionally, commenters did not
provide specific information about which markets or geographic regions
would benefit from this type of exception and why an exception for
specific areas is necessary for us to evaluate in more detail. We may
monitor issues like this and consider specific exceptions to this
policy in future rulemaking.
Comment: A commenter recommended that we consider special
circumstances permitting an MA organization to transfer one PBP to
another legal entity within the same parent organization in cases where
it would facilitate D-SNP integration. The commenter explained that an
MA organization may need to shift a D-SNP PBP to an H-contract
affiliated with a different legal entity to meet federal requirements
that FIDE plans be on the same legal entity as the corresponding
Medicaid product.
Response: We do not agree that adding explicit regulatory text to
permit an organization to transfer one PBP in a contract to another
legal entity (even if limited to transfers within the same parent
organization) in cases where it would facilitate D-SNP integration is
necessary. The regulatory text, as proposed and finalized, permits the
sale or transfer of a single contract (that is not the full book of
business) where both MA organizations (the seller and the buyer) are
wholly owned subsidiaries of the same parent organization, regardless
of the plan types under the contract. Additionally, MA organizations
will be able to use crosswalk exceptions discussed in section V.A of
this final rule to facilitate D-SNP integration with Sec. 422.107. As
we discuss in Section V.A of this final rule, we are permitting, at
Sec. 422.530(c)(3), an MA organization to crosswalk enrollees from one
PBP to a PBP of another legal entity within the same parent
organization in certain cases where it is necessary to accommodate
changes to the D-SNP state contracts required under Sec. 422.107. We
believe these crosswalk exceptions, as finalized, will provide MA
organizations with any additional flexibility needed to accommodate D-
SNP integration.
Comment: One commenter recommended that we consider special
circumstances allowing an MA organization to buy or sell a single PBP
when the intent is to promote integration for dual eligible
beneficiaries. The commenter explained that the ability to sell a D-SNP
PBP to an existing, incoming, or re-procured Medicaid organization will
prevent disruption that otherwise would occur when a D-SNP must exit a
market (unless authority for Medicare passive enrollment is expanded).
Response: We do not agree that adding explicit regulation text to
permit an organization to buy or sell one PBP to another legal entity
to facilitate D-SNP integration is necessary. The regulation text, as
proposed and finalized, permits the sale or transfer of a single
contract (that is not the full book of business) where both MA
organizations (the seller and the buyer) are wholly owned subsidiaries
of the same parent organization, regardless of the plan types under the
contract. In accordance with Sec. 422.552(a)(3)(iii), which has been
in place for several years, the successor organization must meet the
requirements to qualify as an MA organization under part 422, subpart
K; this means that all of the requirements to offer a SNP must also be
met if the contract includes PBPs that are SNPs. We do not believe
carving out a specific PBP from a contract, even if that PBP is a D-
SNP, to sell the PBP would serve MA program purposes and goals. In
addition, we do not believe that an expansion of the passive enrollment
authority for the MA program is within the scope of this rulemaking.
Comment: One commenter recommended that the last part of the
sentence in Sec. 422.550(f)(2)--``or one contract if the organization
holds more than one MA contract''--be removed because it contradicts
Sec. 422.550(f)(1) which explicitly allows an exception for one
contract when it is owned within the same parent organization. They
also recommended that the corresponding language in the Part D
regulation at Sec. 423.551(g)(2)) be revised.
Response: We agree with the commenter and believe the removal of
``or one contract if the organization holds more than one MA contract''
would reduce potential confusion. We also agree that the same change
should be made to the Part D regulation at Sec. 423.551(g)(2), since
the proposed language at Sec. 422.550(f)(2) was meant to mirror the
language in Sec. 423.551(g)(2). Therefore, we are modifying the
regulation at Sec. 422.550(f)(2) and Sec. 423.551(g)(2) to remove
``or one contract if the organization holds more than one MA
contract.'' We emphasize that the prohibition on transfers or sales of
single contracts, is prohibited under the first sentence of Sec.
422.550(f)(1) and 423.551(g)(1): CMS will not recognize the sale of
anything less than an MA organization or PDP sponsor's book of business
except for the limited situation

[[Page 5971]]

where the sale or transfer of a full contract is between wholly owned
subsidiaries of the same parent organization. Further, CMS will not
recognize or allow a sale or transfer that consists solely of the sale
or transfer of individual beneficiaries or groups of beneficiaries
enrolled in a plan benefit package.
After careful consideration of all comments received, and for the
reasons set forth in the proposed rule and in our responses to the
comments, we are finalizing the proposed changes to Sec. 422.550(f)
without the phrase ``or one contract if the organization holds more
than one MA contract'' in Sec. 422.522(f)(2). We are also finalizing a
change to Sec. 423.551(g)(2) to remove ``or one contract if the
organization holds more than one MA contract.''

C. Supplemental Benefit Requirements (Sec. Sec. 422.100)

CMS has released guidance on supplemental benefits several times
since April 2, 2018, including the 2019 Call Letter \71\ and a
subsequent HPMS memo,\72\ concerning the definition of `primarily
health related' with respect to supplemental benefits. Under a
longstanding interpretation of the MA statute and regulations, CMS
defines a mandatory or optional supplemental health care benefit as an
item or service (1) not covered by original Medicare, (2) that is
primarily health related, and (3) for which the plan must incur a non-
zero direct medical cost. Only an item or service that meets all three
conditions could be proposed and covered as a supplemental benefit in a
plan's PBP. We proposed to codify this policy at Sec.
422.100(c)(2)(ii) by setting forth these criteria as requirements that
supplemental benefits must meet.
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\71\ https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2019.pdf.
\72\ https://hpms.cms.gov/hpms/upload_area/NewsArchive_MassEmail/000011202/HPMS%20Memo%20Primarily%20Health%20Related%204-27-18.pdf.
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The current regulation text at Sec. 422.100(c)(2) focuses on
distinguishing between mandatory supplemental benefits and optional
supplemental benefits. We proposed to re-designate the substance of
that current regulation text as new paragraphs (c)(2)(i)(A) and (B). We
proposed to codify our longstanding definition of supplemental benefits
as three requirements that must be met by a supplemental benefit at
paragraph (c)(2)(ii). In paragraph (c)(2)(ii)(A), we proposed to codify
that a supplemental benefit must be primarily health related, using a
standard discussed in more detail in this section of this final rule
and with specific text to address SSBCI. In paragraph (c)(2)(ii)(B), we
proposed to codify that a MA organization must incur a non-zero direct
medical cost in furnishing or covering the supplemental benefit to
verify that the benefit is medically related, with specific text to
address special supplemental benefits for the chronically ill (SSBCI),
discussed in more detail in section II.A of the proposed rule and
section II.A of the final rule titled ``Medicare Program; Contract Year
2021 Policy and Technical Changes to the Medicare Advantage Program,
Medicare Prescription Drug Benefit Program, and Medicare Cost Plan
Program,'' which appeared in the Federal Register on June 2, 2020
(``June 2020 Final Rule'') (85 FR 33796, 33800 through 33805). Finally,
in paragraph (c)(2)(ii)(C), we proposed to codify the requirement that
the supplemental benefit is not covered by Medicare. The portion of a
benefit where coverage is more generous or greater coverage of a
Medicare Part A or Part B benefit--such as coverage of more inpatient
days or coverage with lower cost sharing compared to Medicare--is a
supplemental benefit. However, an MA plan may not cover a Part D drug
or reduce Part D cost sharing as an MA supplemental benefit. Under
Sec. 422.500, an MA plan that covers any Part D benefit must comply
with the Part D regulations in part 423 and, therefore, must be a Part
D sponsor of a Part D plan. In addition, Sec. 422.266(b)(1) provides
that an MA plan may use its rebates to buy down a Part D premium,
including the premium for supplemental drug coverage described at Sec.
423.104(f)(1)(ii).
1. Primarily Health Related
We explained in the proposed rule that, as discussed in the 2019
Call Letter and an April 2018 HPMS memo, CMS currently interprets
``primarily health related'' as meaning that the item or service is
used to diagnose, compensate for physical impairments, acts to
ameliorate the functional/psychological impact of injuries or health
conditions, or reduces avoidable emergency and healthcare utilization.
We are clarifying in this final rule that the current interpretation is
that in order for a service or item to be ``primarily health related'',
it must diagnose, prevent, or treat an illness or injury, compensate
for physical impairments, act to ameliorate the functional/
psychological impact of injuries or health conditions, or reduce
avoidable emergency and healthcare utilization; these key words
(``diagnose, prevent, or treat an illness or injury'') were
inadvertently left out of the proposed rule. Using this interpretation,
CMS has provided MA plans with flexibility in designing and offering
supplemental benefits that may enhance beneficiaries' quality of life
and improve health outcomes. We proposed to codify that supplemental
benefits must be primarily health related, with this definition, at
Sec. 422.100(c)(2)(ii)(A).
Examples of supplemental benefits include: Dental, vision, adult
day health services, home-based palliative care, in-home support
services, support for caregivers of enrollees, stand-alone memory
fitness, expanded home and bathroom safety devices and modifications,
wearable items such as compression garments and fitness trackers, over-
the-counter items, and expanded transportation for medical purposes. A
supplemental benefit is not primarily health related under this
definition if it is an item or service that is solely, or primarily
used for cosmetic, comfort, general use, or social determinant
purposes. Also, to be primarily health related, the benefit must focus
directly on an enrollee's health care needs and should be recommended
by a licensed medical professional as part of a care plan, if not
directly provided by one. Enrollees are not currently required to get
physician orders for supplemental benefits (for example, OTC items),
and requiring it now would impose new restrictions on MA plans and
potentially cause large administrative burden and interruptions in
care. Therefore, our proposal included continued use of the
``recommended'' standard as part of interpreting and applying this
component of the definition of supplemental benefit. We note that
supplemental benefits must also be medically appropriate to be
primarily health related; if a service or item is not medically
appropriate, it is not primarily health related. This is consistent as
well with our longstanding guidance in Chapter 4, section 30.2, of the
Medicare Managed Care Manual that supplemental benefits must be
medically necessary. We will continue our current interpretations and
guidance in codifying existing policy on this issue.
We noted in the proposed rule that the BBA of 2018 amended section
1852(a)(3) of the Act to permit MA plans to offer additional
supplemental benefits that are not primarily health related for
chronically ill enrollees, beginning January 1, 2020. In section II.A
of the proposed rule, we proposed a regulation, to be codified at Sec.
422.102(f), to set standards for special supplemental benefits for
chronically ill enrollees (SSBCI); we finalized that

[[Page 5972]]

regulation largely as proposed in the June 2020 Final Rule. We
explained that the expansion of supplemental benefits for chronically
ill enrollees would not affect our proposed definition of ``primarily
health related'' and how it applied to traditional supplemental
benefits under our proposal at Sec. 422.100(c)(2)(ii), but we proposed
to exclude SSBCI from compliance with the requirement that supplemental
benefits be primarily health related at Sec. 422.100(c)(2)(ii)(A). We
also explained that the standard that supplemental benefits be
primarily health related was a higher standard than the requirement
that have reasonable expectation of improving overall health.
2. Uniformity Requirements
We also proposed to codify an existing policy regarding the
requirement that benefits covered by an MA plan be uniform for all
enrollees in the plan. There are several MA regulations that address
uniformity, including the definition of MA plan at Sec. 422.2, the
requirement at Sec. 422.100(d), and the bidding and premium
requirements at Sec. Sec. 422.254(b) and 422.262(c). As explained in
the final rule, published in April 2018, titled ``Medicare Program;
Contract Year 2019 Policy and Technical Changes to the Medicare
Advantage, Medicare Cost Plan, Medicare Fee-for-Service, the Medicare
Prescription Drug Benefit Programs, and the PACE Program, (``April 2018
final rule'') (83 FR 16440, 16480-85), CMS has determined that
providing access to supplemental benefits that are tied to health
status or disease state in a manner that ensures that similarly
situated individuals are treated uniformly is consistent with the
uniformity requirement in the MA program. We solicited comments on this
reinterpretation and finalized it in that prior rulemaking. In response
to those comments and based on our further consideration of this issue,
we provided guidance to MA organizations in both the April 2018 final
rule and a subsequent HPMS memo \73\ released April 27, 2018. We
proposed to codify this reinterpretation specifically in regulation
text at Sec. 422.100(d)(2).
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\73\ https://hpms.cms.gov/hpms/upload_area/NewsArchive_MassEmail/000011207/HPMS%20Memo%20Uniformity%20Requirements%204-27-18.pdf.
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The regulations on MA uniform benefits implement both section
1852(d) of the Act, which requires that benefits under the MA plan are
available and accessible to each enrollee in the plan, and section
1854(c) of the Act, which requires uniform premiums for each enrollee
in the plan. Previously, we required MA plans to offer all enrollees
access to the same benefits at the same level of cost sharing. In 2018,
in issuing a final rule and guidance for contract year 2019, we
determined that these statutory provisions and the regulation at Sec.
422.100(d) meant that we had the authority to permit MA organizations
the ability to reduce cost sharing for certain covered benefits,
including lower deductibles, and offer specific tailored supplemental
benefits for enrollees that meet specific medical criteria, provided
that similarly situated enrollees (that is, all enrollees who meet the
medical criteria identified by the MA plan for the benefits) are
treated the same. We explained this in the proposed rule and that our
interpretation means that there must be some nexus between the health
status or disease state and the specific benefit package designed for
enrollees meeting that health status or disease state. We proposed to
redesignate paragraph (d)(2) as (d)(2)(i) and add new paragraph
(d)(2)(ii) to specifically state that MA organizations may reduce cost
sharing for certain covered benefits, including lower deductibles, and
offer specific tailored supplemental benefits for enrollees that meet
specific medical criteria, provided that similarly situated enrollees
are treated the same and that there is some nexus between the health
status or disease state and the tailored benefits. We explained in the
proposed rule that we review MA benefit designs to make sure that the
overall impact is non-discriminatory and that higher acuity, higher
cost enrollees are not being excluded in favor of healthier
populations; this review applies various standards in addition to the
uniformity requirements.
We thank commenters for helping inform CMS' policy on supplement
benefit requirements. We received approximately 27 comments on this
proposal; we summarize them and our responses follow:
Comment: Many commenters supported this proposal.
Response: We thank commenters for their feedback.
Comment: A few commenters requested CMS provide greater detail on
allowable supplemental benefits and confirm examples. Additionally,
commenters requested that CMS update the Medicare Managed Care Manual
to include these new policies.
Response: We believe that our discussion in the proposed rule
explaining the proposal we are finalizing provides sufficient guidance
for MA organizations on this topic in this context. The proposal was to
codify existing guidance. In addition to the CY2019 Call Letter
(specifically about the expanded definition of ``primarily health
related'') and the April 2018 HPMS memo on the Reinterpretation of
``Primarily Health Related'' for Supplemental Benefits, Chapter 4 of
the Medicare Managed Care Manual provides extensive guidance about
basic benefits and supplemental benefits offered by MA plans.
Specifically, section 30 of Chapter 4 discusses a number of examples.
Additionally, CMS will consider additional subregulatory guidance,
including manual updates, as necessary in implementing and
administering the legal standards for MA benefits.
Comment: Some commenters stated concern that recent changes to the
Medicare Communications and Marketing Guidelines (MCMG) could also
increase confusion about supplemental benefits among enrollees.
Response: As stated in the April 2018 HPMS memo on primarily health
related supplemental benefits, MA plans are responsible for clearly
identifying what will and will not be covered in the plan's Evidence of
Coverage (EOC). Any limitations on coverage should be clearly noted in
the EOC. Organizations are encouraged to provide explanations to
establish how a supplemental benefit, particularly a new or novel
benefit, is primarily health related or how coverage of an item or
service will be limited to when it is primarily health related.
Activities and materials that mention benefits are considered marketing
(as defined under Sec. Sec. 422.2260 and 423.2260) and are subject to
the requirements at Sec. Sec. 422.2263 and 423.2263 (General marketing
requirements). Please refer to section V.E. of this final rule, where
we address proposals to codify our current policies for marketing and
communications by MA and Part D plans. We believe that our requirements
for how MA plans market their benefits and how the scope and rules for
coverage must be disclosed annually to enrollees ensure that confusion
is minimized for enrollees. As we monitor the MA program and complaints
(submitted to 1-800-Medicare and otherwise), we will consider if
additional guidance or rulemaking is necessary to address unforeseen
confusion among beneficiaries.
Comment: Some commenters expressed concern that original Medicare
beneficiaries do not have access to supplemental benefits. One
commenter stated that MA plan premiums for supplemental benefits may
pose a barrier to the receipt of supplemental benefits. One commenter

[[Page 5973]]

suggested CMS introduce models that allow original Medicare
beneficiaries access to supplemental benefits.
Response: Comments regarding Original Medicare beneficiaries'
access to MA plans supplemental benefits are out of scope for this
regulation. As to the comment about MA premiums, sections 1853 and 1854
of the Act address how MA plan premiums are defined and charged.
Further, section 1852 of the Act explicitly authorizes MA organizations
to offer supplemental benefits to their enrollees and section 1854 of
the Act addresses how MA plans that bid below the payment benchmark for
their service area may use a portion of the amount by which the
benchmark exceeds the bid to pay the premiums for supplemental
benefits. Information about premiums and supplemental benefits is
available during the annual coordinated election period for
beneficiaries to use in making enrollment decisions.
Comment: A commenter suggested CMS allow MA plans the ability to
offer supplemental benefits at a county level within a multi-county
service area plan.
Response: Plans segments are county-level portions of a plan's
overall service area. As discussed in the April 2018 Final Rule (83 FR
16486), Sec. 422.262(c)(2) permits MA plans to vary supplemental
benefits, in addition to premium and cost sharing, by segment so long
as the supplemental benefits, premium, and cost sharing are uniform
within each segment of an MA plan's service area. MA plan segments
currently may be composed of one or more counties within the service
area.
Comment: A few commenters expressed concern that supplemental
benefits are not visible in the MPF.
Response: We will take this recommendation under consideration as
we continue to refine the MPF tool.
Comment: A commenter expressed concern about the lack of community-
based providers available to provide supplemental benefits.
Response: CMS is prohibited from requiring MA plans to contract
with specific providers under section 1854(a)(6)(B)(iii) of the Act and
Sec. 422.256(a)(2)(i), but so long as they comply with the standards
established for provider contracting in part 422, subpart E, MA
organizations may contract with community-based providers. Further,
Sec. 422.112(b)(3) provides for coordinated care MA plans to include
community-based services in their plans for coordination and continuity
of care for enrollees. In addition, Sec. 422.112(b)(3) specifically
states that MA coordinated care plans are required to ``coordinate MA
benefits with community and social services generally available in the
area served by the MA plan.'' MA plans may contract with community-
based organizations to provide supplemental benefits that are compliant
with the statutory and regulatory requirements. For example, an MA plan
could elect to offer a meals or food/produce supplemental benefit (so
long as the benefit is primarily health related and the plan incurs a
non-zero direct medical cost consistent with Sec. 422.100(c)(2)) and
pay a community-based organization for furnishing the covered benefit.
We understand that in some areas there may be a limited number of
community-based providers and hope that the increased supplemental
benefit flexibilities discussed in this rule encourage increased
opportunities for community provider participation.
Comment: A commenter requested CMS provide additional guidance on
how plans can make sure that supplemental benefits meet the ``primarily
health related'' requirement.
Response: We suggest plans review the April 27, 2018 memo titled
``Reinterpretation of ``Primarily Health Related'' for Supplemental
Benefits''. In addition, Chapter 4 of the Medicare Managed Care Manual
contains guidance on permissible supplemental benefits, which gives MA
organizations and the public an understanding of which benefits we have
previously determined to meet this standard. The standard we are
finalizing at Sec. 422.100(c)(2)(ii)(A) provides that to be primarily
health related, a benefit must--as a primary matter--diagnose, prevent,
or treat an illness or injury; compensate for physical impairments; act
to ameliorate the functional/psychological impact of injuries or health
conditions; or reduce avoidable emergency and health care utilization.
A supplemental health benefit proposed by an MA organization must be
reasonably and rationally encompassed by this standard and may not have
a primary purpose that is outside of this standard. The primary purpose
of an item or service is determined by national typical usages of most
people using the item or service and by community patterns of care. To
be considered healthcare benefits, supplemental benefits must focus
directly on an enrollee's healthcare needs and be medically appropriate
for the enrollee. While we do not require that the physician or health
care professional prescribe or order an item or service for it to be
considered primarily health care, we believe that recommendation by a
licensed provider as part of a care plan is an important sign that an
item or service meets this standard. We cannot provide an exhaustive
list of items and services that potentially are primarily health
related. We consider this sufficient general guidance for plans to make
sure that supplemental benefits meet the ``primarily health related''
requirement.
Comment: In light of COVID-19, one commenter suggested CMS provide
additional flexibility to provide supplemental benefits for high-risk
populations that must remain in their homes. This commenter suggested
CMS allow plans to provide home delivered meals, grocery, produce, and
non-medical transportation for this population.
Response: We are not finalizing a change to the proposed standards
for defining supplemental benefits to specifically address the COVID-19
public health emergency. Earlier in 2020, CMS issued guidance \74\ to
MA plans, in response to the unique circumstances resulting from the
outbreak of COVID-19. CMS exercised its enforcement discretion to adopt
a temporary policy of relaxed enforcement in connection with the
prohibition on mid-year benefit enhancements that was adopted in a 2008
final rule (73 FR 43628); CMS allowed MA plans to implement additional
or expanded benefits that address medical needs and access to
healthcare raised by the COVID-19 outbreak, such as covering meal
delivery or medical transportation services to accommodate the efforts
to promote social distancing during the COVID-19 public health
emergency. For CY2021, CMS issued additional guidance on December 28,
2020 titled ``Contract Year 2021 Coronavirus Disease 2019 (COVID-19)
Permissive Actions FAQ'' stating that we will continue this use of
enforcement discretion in connection with the prohibition on mid-year
benefit enhancements.
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\74\ https://www.cms.gov/files/document/updated-guidance-ma-and-part-d-plan-sponsors-42120.pdf.
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Comment: A commenter requested that CMS provide additional clarity
around what is intended by CMS's statement in the preamble and
referenced guidance that a primarily health related benefit should be
recommended by a licensed medical professional as part of a care plan
and to clarify what is acceptable when the supplemental benefit is not
directly provided by a licensed medical professional and the enrollee
does not receive case management services and an individual care plan.

[[Page 5974]]

Response: A medical professional does not have to be the individual
or entity furnishing the supplemental item or service. We recognize
that there are scenarios in which a medical professional would not be
furnishing a service (for example, meals). However, the item or service
must still meet the regulatory criteria for a supplemental benefit at
Sec. 422.100(c)(2)(ii)(A) being finalized here, that is to be
primarily health related, a benefit must benefits diagnose, prevent, or
treat an illness or injury; compensate for physical impairments; act to
ameliorate the functional/psychological impact of injuries or health.
Recommendation by a medical professional, even if not part of a formal
care management or care coordination plan, is an important indicator
that a particular item or service is being furnished for primarily
health-related purposes but is not necessarily the only indication. The
primary purpose of an item or service is determined by national typical
usages of most people using the item or service and by community
patterns of care and/or by established research or medical compendia
and journals about such item or service. To be considered healthcare
benefits, supplemental benefits must focus directly on an enrollee's
healthcare needs and must be medically appropriate for the enrollee. We
expect MA plans to have procedures and processes in place to ensure a
reasonable determination is made that the covered benefit is medically
appropriate for the enrollee in the event that it is not practical for
a medical professional to make a specific recommendation or evaluation.
After consideration of the comments received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing, substantively as proposed but with clarifications, the
proposed amendments to Sec. 422.100(c) to restructure the regulation
text and add the three requirements for an item or benefit to be a
supplemental benefit and to Sec. 422.100(d)(2) to restructure the
regulation text and add a provision explicitly addressing how
supplemental benefits that are tied to disease state or health status
may meet the uniformity requirement and be offered as supplemental
benefits. Although we are finalizing this provision as applicable
beginning January 1, 2022 (2022 calendar/contract year), it effectively
applies to 2022 bids and all plan materials and activities affecting or
in furtherance of facilitating enrollment for the 2022 contract year.
Therefore, the final rule will govern most plan communication and
marketing activities and materials during the second half of 2021.
Furthermore, it codifies current policies so we encourage MA
organizations to take this final rule into account immediately.
In addition, we are finalizing Sec. 422.100(c)(2)(ii)(A) with
clarifying changes. First, we are adding the phrase ``prevent, or treat
an illness or injury,'' which was mistakenly left out of the proposed
rule but is part of the current policy we are codifying. Second, we are
finalizing the regulation text in this paragraph with semi-colons
between each phrase to make it clear that fulfilling one of the listed
functions as the primary function is sufficient for an item or service
to be considered primarily health related under this final rule. Third,
we are adding text to clarity that supplemental benefits must not be
items and services covered by Parts A, B or D; to further clarify this
point, we added the words ``Parts A, B, and D'' in parenthesis next to
the word Medicare in paragraph (c)(2)(ii)(C). The proposal was to
codify already existing guidance and practices and we stated that it is
not expected to have additional impact above current operating
expenses; this final rule is the same on this point.

D. Rewards and Incentives Program Regulations for Part C Enrollees
(Sec. 422.134 and Subpart V)

As noted in the February 2020 proposed rule, based on CMS'
authority under sections 1856(b)(1) and 1857(e)(1) of the Act, CMS, in
2014, authorized MA organizations, including those offering a Medicare
Medical Savings Account (MSA) plan option, to offer rewards and
incentives (R&I) programs (79 FR 29956, May 23, 2014). We adopted this
regulation that authorized Part C R&I programs for a number of reasons.
In some cases, MA organizations wished to extend rewards and incentives
already offered to their commercial members to their Medicare
enrollees. Many MA organizations wished to sustain their current R&I
programs as well as stay competitive with other MA organizations with
comparable offerings. Additionally, there is evidence suggesting that
health-driven reward and incentive programs may lead to meaningful and
sustained improvement in enrollee health behaviors and outcomes.
Our experience has shown that most R&I programs offered by MA plans
fall into the following four areas:
(i) Specified use of plan benefits such as rewards provided for
obtaining preventive benefits at specified intervals;
(ii) Following a specified program that promotes exercise and/or
good nutrition;
(iii) Participating in specified programs that educate on health
matters and/or self-management of nutrition and exercise;
(iv) Specified utilization of plan resources such as hotlines,
patient portals, and similar items that facilitate promotion of health.
In the February 2020 proposed rule, CMS proposed to amend Sec.
422.134 to codify the guidance we have given since adopting the
regulation in 2014, unify principles governing MA rewards and incentive
programs, clarify the requirements of the regulation, and clarify
flexibilities available to MA organizations under the regulation.
Readers are directed to the proposed rule for a detailed discussion of
the proposal (85 FR 9204 through 9108) as we are not fully repeating
our proposal here.
In this final rule, CMS is re-organizing the regulation at 42 CFR
422.134 to clarify and codify existing guidance that reflects how we
have addressed inquiries about the R&I program over the past 5 years.
The reorganization of 42 CFR 422.134 is outlined as follows: (a)
Definitions, (b) the option for an MA plan to offer an R&I program
subject to the requirements of this section, (c) the requirements and
prohibitions for target activities, (d) requirements and prohibitions
on the offering of reward items, (e) marketing requirements, (f)
disclosure requirements, and (g) miscellaneous requirements, for
example, bids, sanctions, and grievances. As finalized, Sec. 422.134
is substantially reorganized compared to the current regulation. The
finalized policy presented here differs from the NPRM in the following
areas: We have:
(i) Further clarified the definition of qualifying individual at
paragraph (a),
(ii) Moved the requirements of uniformity of the target activity
and provision of accommodations from paragraphs (c)(2)(iii)(A) and (B)
to paragraphs (c)(1)(iv) and (v),
(iii) Modified the requirement of providing accommodations (moved
from paragraph (c)(2)(iii)(B) to paragraph (c)(1)((v)) to respond to
commenter concerns,
(iv) Reworded the requirement of uniformity in the reward item at
paragraph (d)(1)(i),
(v) Removed the prohibition of midyear changes at paragraph (g)(iv)
and,
(vi) Although not changing the regulatory text, clarified in the
preamble the requirements at paragraph (d)(1)(iii).

[[Page 5975]]

The details of these changes including comments and responses and
the rationale for the changes are provided in their respective
discussions below.
We are not specifically addressing here those aspects of our
proposal that were merely moving a provision currently in Sec. 422.134
to a different paragraph and on which we did not receive substantive
comments. See Table E6 for a comparison of the current regulation text
with the regulation text we are finalizing in this rule.
We now discuss the new requirements proposed in the February 2020
proposed rule, the comments received, and our decision about
finalization.
Definitions. We proposed to codify various definitions at Sec.
422.134(a), including ``target activity,'' ``reward item,'' ``incentive
item,'' and ``reward and incentive program.'' Along with a proposed
definition, we also introduced the term ``qualifying individual'' as a
way to refer to the individual who could be eligible for or earn a
reward; we proposed that a qualifying individual, in the context of a
plan-covered health benefit, means any plan enrollee who would qualify
for coverage of the benefit and satisfies the plan criteria to
participate in the target activity; in the context of a non-plan-
covered health benefit, a qualifying individual means any plan enrollee
who satisfies the plan criteria to participate in the target activity.
As we considered the proposed rule, we believe that the definition
of ``qualifying individual'' can and should be refined even though no
commenter specifically raised the issue. To avoid any confusion about
the limitations plans may set regarding who may participate in target
activities, we are finalizing the definition with modifications from
the proposal. In the context of a plan-covered health benefit (whether
an Original Medicare benefit, an SSBCI, or other supplemental benefit),
qualifying individual refers to any individual meeting coverage
criteria. We introduced this definition to communicate how MA plans
should offer reward uniformly and without discrimination to all
enrollees and to avoid problems with uniformity discussed in detail
below. For example, it is not a violation of uniformity if a plan
offers rewards and incentives for any qualifying individual who gets a
mammogram. While it is true that many men and some women do not qualify
for mammograms, the plan is not violating uniformity in this example
since we now define uniformity as requiring plans offer R&I to ``all
qualifying individuals'' which in the case of plan-covered benefits is
different than ``all enrollees.'' CMS' intention in the proposed rule
was to codify current CMS reward and incentive policy, not to add new
criteria for program participants to qualify for participation in an
R&I program or to earn a reward. The proposed definition, by including
references to satisfying the MA plan's criteria for participating in
the activity, suggested that MA plans could limit participation in R&I
programs in a broader manner than we intended.
We received no comments on the proposed definitions in paragraph
(a) itself and are finalizing paragraph (a) substantially as proposed
for the reasons provided in the proposed rule. We also are finalizing
edits in the definition of qualifying individual so that it is clearer
in setting forth how enrollees are to be offered access to reward
programs: Qualifying individual in the context of a plan-covered health
benefit means any plan enrollee who would qualify for coverage of the
benefit. In the context of a non-plan-covered health benefit,
qualifying individual means any plan enrollee.
Direct involvement of enrollee. At Sec. 422.134(c)(1)(i), we
proposed to codify our existing guidance requiring that target
activities must directly involve the qualifying individual and
performance by the qualifying individual. Under our proposal, the
completion of activities by caregivers would not qualify for a reward
item.
We received no comments on this provision and are finalizing it as
proposed for the reasons provided in the proposed rule.
Level of completion requirements. At Sec. 422.134(c)(1)(ii), we
proposed to clarify that target activities must be specified (by the MA
organization) in detail as to the level of completion needed in order
to qualify for a reward item. We explained in the proposed rule how
this was based on current Sec. 422.134(c)(1)(i), which requires a
reward to be offered in connection with an entire service or activity,
and our current guidance, which provided flexibility for MA
organizations to identify ``an entire service or activity.'' Our
proposal was essentially to codify our current guidance, which
permitted MA organizations to offer and furnish rewards for completion
of components of a multi-part activity so long as the MA organization
reasonably defined the scope of the entire activity. For example, an MA
organization may offer an eight-session weight management class; under
this example, the MA organization may offer and provide a reward for
either completion of all eight sessions of this eight-session weight
management class or for attendance at each individual session of the
weight loss class that the enrollee attends. Both of these scenarios
are permissible as long as the plan (or R&I program) defines the target
activity that will be rewarded.
Comment: A few commenters requested that CMS allow provision of the
entire incentive upfront, rather than after the incentivized benefit
has been utilized, to capitalize on humans' innate tendency toward loss
aversion.
Response: We thank the commenters for their interest in
incentivizing enrollees. We however are not adopting the recommended
change. The R&I program, although not a benefit, is an expense to the
Medicare Advantage program. Certain safeguards, such as a requirement
of actual completion of activities to receive the reward, therefore,
are necessary to avoid inappropriate use of Medicare dollars. In
addition, we are mindful of how section 1851(h)(4) of the Act requires
the adoption of standards that prohibit MA organizations from providing
for cash, gifts, prizes, or other monetary rebates as an inducement for
enrollment or otherwise; providing the reward in advance of the
performance of the health related activity could create the appearance
that MA plans are providing items of value as a prohibited inducement.
We are finalizing this provision as proposed for the reasons
provided in the proposed rule and indicated in the response to
comments.
Health related activity requirements. At Sec. 422.134(c)(1)(iii),
we proposed to move the standard stated in the current regulations that
R&I programs reward enrollees ``in connection with participation in
activities that focus on promoting improved health, preventing injuries
and illness, and promoting efficient use of health care resources.'' We
proposed to move this requirement to Sec. 422.134(c)(1)(iii) to more
clearly outline that target activities must be health-related by doing
at least one of the following: promoting improved health, preventing
injuries and illness, or promoting the efficient use of health care
resources.
Comment: Some commenters praised the clarity in the enumeration at
Sec. 422.134(c)(1)(iii).
Response: We thank the commenters for their support. We take this
opportunity to clarify that we interpret the reference to the efficient
use of health care resources in the final regulatory text as capable of
being determined from either the perspective of the plan or the
beneficiary. We are finalizing this provision as proposed.

[[Page 5976]]

Uniformity: To achieve greater clarity and to address issues raised
by commenters, we are finalizing Sec. 422.134(c) with several changes
from the NPRM in connection with uniformity and non-discrimination
requirements.
The requirements of uniformity and provision of accommodations
(that is, that rewards must be offered uniformly to all qualifying
individuals and that accommodations must be provided to otherwise
qualifying individuals who are unable to perform the target activity in
a manner that satisfies the intended goal of the target activity. for
target activities) were proposed to be codified at Sec.
422.134(c)(2)(ii) as standards to ensure that anti-discrimination
requirements were met. We are finalizing these concepts as part of the
standards for target activities, at Sec. 422.134(c)(1)(iv) and (v).
Upon reflection and based on the comments requesting clarification
related to these concepts, we believe that uniformity and provision of
accommodations are positive statements and best classified as
requirements for target activities at Sec. 422.134(c)(1) rather than
as part of demonstrating compliance with a prohibition against
discrimination. We believe these standards serve purposes in addition
to anti-discrimination, such as encouraging participation in health
related activities in the broadest way possible even if limiting access
to a reward would not necessarily be based on a prohibited basis like
health status, race or sex. This reorganization of how these standards
apply provides greater clarity and transparency for the application of
Sec. 422.134.
We now discuss each of these requirements separately by presenting
the comments we received on them.
Uniformity: We are finalizing the requirement that a target
activity must uniformly offer any qualifying individual the opportunity
to participate in the target activity at Sec. 422.134(c)(1)(iv). This
means that target activities must be designed so that they are
uniformly offered to all qualifying individuals, as that term is
defined in paragraph (a). For example, regarding an R&I program that
provides a reward for obtaining a mammogram, providing rewards only to
those enrollees who have never before obtained a mammogram would
violate the uniformity requirement as it would leave out members who
have previously obtained a mammogram but are otherwise qualifying
individuals. We believe that this uniformity requirement is key to
preventing discrimination against different groups of enrollees and
consistent with our current guidance in section 100 of Chapter 4 of the
Medicare Managed Care Manual. This requirement ensures that reward
programs encourage all enrollees to be actively engaged in their health
care and activities that ultimately improve and sustain their overall
health and well-being.
The purpose of CMS implementing the R&I program requirements this
way is to incentivize all individuals to engage in target activities
that will meet one of three health-related goals. Enrollees who have
previously taken steps to care for their health should be incentivized
to continue to do so as much as individuals who are taking such steps
for the first time.
Comment: Some commenters suggested we allow R&I programs to target
a beneficiary's clinical status, for example, those who would most
benefit from the incentivized intervention or those who are not using a
benefit. Another commenter wanted to reward women who had not had
mammograms in three years with a higher reward to encourage them to get
mammograms more regularly by providing a higher reward. These
commenters noted that recent legislative and regulatory activities have
permitted Medicare Advantage plans to tailor health benefits to
targeted populations, ensuring they meet the unique needs of specified
groups of beneficiaries based on diagnosed conditions or diseases. The
commenters indicated that, in the same way, CMS should explore
permitting Medicare Advantage plans to tailor R&I programs for
beneficiaries to meet the needs of clearly defined groups of
beneficiaries. The commenters believed this could improve participation
in care and improve outcomes by incentivizing compliance in clinical
recommendations such as attending office visits or participating in
wellness programs tailored to their needs.
Response: We thank the commenters for raising these issues. In
response to the suggestion that we allow R&I programs to target those
who are not using a benefit, we note that this would not be allowed
because it would not be offered uniformly to all qualifying individuals
and, as explained above, goes against the goal of R&I programs. In
response to the suggestion that CMS allow an R&I program to reward
women who had not had mammograms in three years with a higher reward,
we note that, as worded by the commenter, this violates the general
non-discrimination provision at 42 CFR 422.134(g)(1) because the reward
would only go to women. If the target activity had instead been
formulated by the commenter as targeting any qualifying individual who
has not had a mammogram in three years, this would still not be allowed
since it does not offer the target activity uniformly to all qualifying
individuals but only to those individuals who have not had a mammogram
in three years. Providing different rewards to those completing a
mammogram based on their past history of mammogram services would
violate the uniformity of reward requirement at 42 CFR
422.134(d)(1)(i), which is discussed further below.
We believe the reference to recent legislative and regulatory
activity refers to Special Supplemental Benefits for the Chronically
Ill (SSBCI) recently codified in CMS-4190-F1. We are not persuaded that
the same approach is necessary for R&I programs because SSBCI is a
benefit but rewards and incentives are not benefits. In the case of
SSBCI, these special types of benefits are allowed to be targeted to
enrollees who specifically need them while enrollees who do not need
SSBCI are not allowed these items; contrastively, R&I is beneficial for
all enrollees irrespective of their past since both those who are
currently using benefits as well as those who are not currently using
benefits can be incentivized to either start using the benefit or
continue using the benefit. CMS believes the intent of R&I programs to
incentivize all enrollees to engage in healthy behaviors to improve
health outcomes applies universally. Maximizing access to R&I programs
by enrollees will result in broader benefits and broader engagement in
health related activities. Further, ensuring broad access by any
qualifying enrollee to the target activity (and therefore access to
earning the reward) ensures that a beneficiary will not be persuaded to
enroll in a particular plan based on the reward program and
subsequently learn that he or she is not able to participate in the
reward program because the target activity is limited to enrollees who
have never engaged in it.
However, an MA plan may design an R&I program that could
effectively target enrollees with a specific condition or disease state
and for those who would benefit most from the incentivized
interventions (as suggested by commenters) without violating the non-
discrimination or uniformity requirements being finalized in Sec.
422.134. Plans may do this by rewarding qualifying individuals for
participating in target activities that are covered benefit items and
services as these benefits must be medically necessary, or for SSBCI
have a reasonable expectation of improving or maintaining the health or
overall function of the chronically ill enrollee,

[[Page 5977]]

for an individual to obtain. As finalized, Sec. 422.134 does not
require a plan to cover an item or service when it is not medically
necessary, even if getting that particular covered benefit is the
target activity for an R&I program. Therefore, these types of target
activities are already tailored to the qualifying individual's needs
based on a specific condition or disease state and would be available
to those who would benefit most from the incentivized intervention. For
example, an R&I program designed to offer rewards to any qualifying
individual for using glucose test strips would likely help an MA plan
reach their diabetic enrollee population, as glucose test strips are
generally only considered medically necessary if an enrollee is
diabetic, while also allowing other members, in rare instances, who may
need glucose test strips an opportunity to be rewarded for engaging in
the healthy behavior as well.
We are finalizing the uniformity requirement for target activities
at paragraph (c)(1)(iv) as proposed (with the move from paragraph
(c)(2)(iii)(A) to paragraph (c)(1)(iv) discussed above) for the reasons
provided in the proposed rule and our discussion in this final rule.
Accommodations: We next discuss the requirement of providing
accommodations at Sec. 422.134(c)(1)(v) (moved from Sec.
422.134(c)(2)(iii)(B)) and comments received on this requirement.
Proposed paragraph (c)(1)((v) stated a requirement for an MA
organization to provide accommodations to otherwise qualifying
individuals who are unable to perform the target activity in a manner
that satisfies the intended goal of the target activity.
Comment: Comments on our proposal that MA organizations provide
accommodations to qualifying individuals were generally supportive. The
commenters generally stated that providing accommodations to those who
wish to participate, but are without the means to do so, will allow the
benefits of these R&I programs to positively impact the health of a
broader population of members. However, a commenter pointed out that an
accommodation should not be permitted if such an accommodation would
contradict the purpose of the target activity. This commenter agreed
that as a general matter plans should accommodate members without
internet access wherever possible to offer an alternative offline
activity consistent with the purpose of the target activity. For
example, a plan that rewards members who report their exercise online
can accommodate a member without internet access by allowing that
member to verbally report their exercise to a call center. In this
example, rewarding the alternative activity serves the purpose of the
original target health activity. However, where the target activity is
intended to promote the efficient use of resources, such as agreeing to
electronic delivery of documents, the commenter statutes that it would
not reasonable to require plans to offer an offline alternative, as an
offline activity would not promote the efficient use of resources and
would be directly contrary to the reward's purpose.
Response: We appreciate the support for the requirement that MA
organizations provide accommodations. As stated previously, we believe
that this requirement will ensure that R&I programs are broadly based
and encourage enrollees to be actively engaged in their health care
and, ultimately, improve and sustain their overall health and well-
being. We agree with the commenter's concern and are therefore
finalizing the requirement for accommodations with additional text to
provide that the required accommodation be consistent with the goal of
the target activity. We encourage MA organizations to take into account
the resources, abilities, and characteristics of its enrolled
population in devising R&I programs and in identifying target
activities. As noted above, we believe moving the accommodation
requirements from paragraph (c)(2)(iii)(B) to paragraph (c)(1)(v)
provides greater clarity and transparency in imposing this as an
affirmative standard for all target activities. It also removes any
implied limitation that accommodations are only necessary to ensure
that a prohibited basis for discrimination (such as race, ethnicity,
sex or health status) is not being used. As illustrated in our example
in the proposed rule and our current guidance in section 100.2 of
Chapter 4 of the Medicare Managed Care Manual, the requirement for
accommodations is broadly interpreted in order to ensure access for all
qualifying individuals.
Part D target activities. We proposed, at Sec. 422.134(c)(2)(i),
to prohibit target activities that are related to Part D benefits
because the provisions in Part 422 pertain to Medicare Advantage Part C
and not to Part D. This is consistent with our subregulatory guidance
in Chapter 4 of the Managed Care Manual as well as with responses to
comments in the 2014 rule which initially authorized MA plans to use
R&I programs (79 FR 29917). Should a Part D R&I program be developed,
it will be a separate provision from this one, with regulatory language
added to Part 423. We note that in section IV.F of this final rule, we
are finalizing a narrow reward program provision for Part D plans.
Comment: We received several comments from stakeholders urging CMS
to allow Part D sponsors to offer rewards for target activities related
to Part D benefits, such as beneficiary adherence to a medication
regimen(s). Commenters generally believed that such an allowance could
benefit enrollees by improving compliance. One commenter noted that the
specific application of R&I for healthy prescription drug behaviors of
enrollees of MA-PD plans is being tested by CMMI in the MA VBID model.
An initial evaluation based on the first year of experience found that
plans were able to drive more appropriate use of medical services by
providing rewards and incentives. Beginning in plan year 2019, plan
sponsors were able to include R&I for prescription drugs as well;
however, these programs have not yet been evaluated. Commenters
recommended allowing Part D R&I programs for both MA-PD plans as well
as stand-alone prescription drug plans.
Response: We thank the commenters for their recommendations and the
citations of similar programs offered elsewhere. CMS regularly reviews
the various models being tested by the Center for Medicare and Medicaid
Services Innovation Center to ascertain what works and what can be
incorporated into our general programs. An example of CMS's commitment
to new ideas may be found in Section IV.F of this final rule which
creates a limited R&I program for the real time benefit tool. We note
that Section IIIC of this final rule presents a comment similar to the
comment just cited, requesting that R&I be used to incentivize return
of unused opioids. However, as noted in Section IIIC and as noted
above, it is out of scope of Sec. 422.134 to allow a Part D R&I
program. CMS did not propose a regulation to authorize general Part D
reward and incentive programs and therefore is not finalizing such a
new regulation.
We are therefore finalizing Sec. 422.134(c)(2)(i) as proposed and
reiterate that it does not authorize rewards or incentives tied to Part
D benefits, either by MA organizations that offer MA-PD plans or by
other Part D sponsors that offer stand-alone Part D plans.
Non-Discrimination and Health Status. R&I programs must not be
discriminatory; there is a general prohibition about that proposed and
finalized at Sec. 422.134(g)(1). At Sec. 422.134(c)(2)(ii), we
proposed to revise

[[Page 5978]]

and clarify the non-discrimination requirements in the current
regulation and codify our current guidance on those requirements.
Proposed at paragraph Sec. 422.134(c)(2)(ii)(C) and finalized at Sec.
422.134(c)(2)(ii), this regulation generally prohibits target
activities from discriminating against enrollees and requires
specifically that MA organizations comply with Sec. 422.134(g)(1) and
not design a reward program that is based on the achievement of a
health status measurement. Current sub-regulatory guidance provides
that non-discrimination, which is part of the current regulation at
Sec. 422.134(c)(1)(ii), requires in part that a target activity not
consist of the achievement of a specific health status or measurement
or outcome as this would be discrimination based on health status. For
example, an MA organization would be prohibited from creating a target
activity that stipulates achieving a certain weight, or achieving a
certain Body Mass Index (BMI) score. However, a target activity could
consist of some combination or all of the following: Maintaining an
exercise program, eating nutritious meals (with ``nutritious'' being
further defined by the plan), and taking weight measurements at
periodic intervals. Similarly, an MA organization would be prohibited
from creating a target activity that stipulates achieving a blood
pressure reading in a certain range but a permissible target activity
could consist of taking blood pressure measurements at periodic
intervals.
We did not receive any comments that specifically discussed this
part of the proposed rule. We are finalizing the provisions at Sec.
422.134(c)(2)(ii) as proposed for the reasons provided in the proposed
rule.
Offered Uniformly. We proposed at new paragraph (d)(1)(i) to
require reward items to be offered uniformly to any qualifying
individual who performs the target activity. In the proposed rule, we
explained that this would codify our current subregulatory guidance,
which ties the standard to the non-discrimination requirement in the
current version of Sec. 422.134(b)(2) that reward programs must be
designed so that all enrollees are able to earn rewards.
We did not receive any comments specific to the proposed
requirement proposed in paragraph (d)(1)(i) that reward items be
offered uniformly to qualifying individuals. However, in order to avoid
conflating this requirement with the uniformity requirement we are
finalizing at paragraph (c)(1)(iv) regarding target activities, we are
finalizing paragraph (d)(1)(i) as a requirement that reward items must
be offered identically to any qualifying individual who performs the
target activity. This requirement is to ensure that each enrollee has
access to the same reward items (or same choice among reward items if
applicable). While related to the uniformity requirement for target
activities, it is designed to address the potential that some enrollees
would receive different, potentially more valuable, reward items
compared to other enrollees. This requirement is a reflection of the
non-discrimination principles underlying several other requirements
being finalized in Sec. 422.134. We believe that this additional
standard is necessary to ensure that R&I programs are operated in an
equitable way and that the use of different reward items does not
result in more incentive being offered by the MA plan to certain
enrollees. As discussed previously, R&I programs should be broadly
based and operated for the benefit of all enrollees or as many
enrollees as possible; using identical rewards for each qualifying
individual who performs the same target activity contributes to that
goal.
Note that throughout Sec. 422.134 we use the term ``perform'' or
``performance.'' However at paragraph (c)(1)(ii) we refer to the
``level of completion needed in order to qualify for the reward.'' We
therefore clarify that our use of ``perform'' refers to the performance
of the entire health related activity. At paragraph (c)(1)(ii) we refer
to the ``level of completion needed'' because rewards must be earned by
completing an entire service or activity (or combination of services/
activities), as established by the MA plan, and may not be offered for
completion of less than any/all required component(s) of the eligible
service or activity. This requirement allows CMS and MA plans to
interpret the value of a reward or incentive in relation to the service
or activity for which it is being offered. Plans are expected to
reasonably define the scope of a health related service or activity
within their RI Program design and assign a value of the reward
accordingly. For example, a plan may decide to offer rewards and/or
incentives for participation in a smoking cessation program. The plan
may decide to give smaller rewards for each class or counseling session
attended or may offer a single, larger reward for completing a pre-
determined number of classes or counseling sessions.
We did not receive any comments that specifically discussed this
part of the proposed rule. We are finalizing the provisions at Sec.
422.134(d)(2) as proposed for the reasons provided in the proposed rule
and.
Direct and Tangible. At Sec. 422.134(d)(1)(ii), we proposed,
consistent with current guidance, to require that reward items be
direct and tangible. For example, a reward item cannot consist of a
charitable donation.
We received no comments on this provision and are finalizing it as
proposed for the reasons provided in the proposed rule.
Transfer of ownership. At Sec. 422.134(d)(1)(iii), we proposed to
require that the reward item must be provided, such as through transfer
of ownership or delivery, to the enrollee in the contract year in which
the activity is completed, regardless if the enrollee is likely to use
the reward item after the contract year.
Comment: Several commenters pointed out that this provision may
pose operational concerns. For example, in late December an enrollee
may complete a target activity that the plan finds out about at the
beginning of the next plan year, which is outside of the time the
enrollee could claim the reward as the guidance currently states.
Response: We agree with the commenters' concerns. We believe the
language in the NPRM did not adequately communicate our intent that the
R&I program be based on activities completed during the contract year.
As stated in the NPRM, we believe that MA plans should not be able
erase a gift card provided as a reward or invalidate the reward in the
next contract year after the enrollee has completed the target
activity. We believe that this is an important beneficiary protection
to ensure that rewards are timely provided to the enrollee and that the
enrollee retain the rights to use the reward whenever he or she wants.
(85 FR 9107) While we acknowledge that the preamble explanation
introduced the idea of ``timely provision to the enrollee,'' that was
not part of the proposed regulation text. Our regulatory text was
intended to require that the reward item be provided to the enrollee,
such as through transfer of ownership or delivery, for a target
activity completed in the contract year during which this R&I program
was offered, regardless if the enrollee is likely to use the reward
item after the contract year. The intended criterion was that the
reward-item be delivered based on a target activity completed in the
contract year during which this R&I program was offered.
We are finalizing paragraph (d)(2)(ii) with modifications such that
the regulation requires delivery based on the completion of the target
activity during the contract year. Under this final rule, delivery of
the reward item in

[[Page 5979]]

the next contract year, such as after administrative activities
associated with the reward program are performed, is permissible.
However, the qualifying individual cannot be required to continue
activities into the next contract year to retain or gain the reward
earned during a prior contract year.
Reward Items. At Sec. 422.134(d)(2)(i), we proposed to reorganize
existing provisions and codify existing guidance to set forth clearer
regulation text about what items could not be offered as rewards.
Currently, Sec. 422.134(c)(2) prohibits rewards from being offered in
the form of cash or monetary rebates and our subregulatory guidance
explains that this includes reductions in cost sharing or premiums and
gift cards that are redeemable for cash. We proposed regulation text
explicitly to prohibit reward items from being offered in the form of
cash, cash equivalent or other monetary rebates (including reduced cost
sharing or premiums). We also proposed regulation text to set forth
that an item is considered cash or cash equivalent if it: (A) Is
convertible to cash (such as a check); or (B) Can be used like cash
(such as a general purpose debit card). In addition, the proposed rule
prohibited reward items that involve elements of chance or have a value
that exceeds the value of the target activity itself.
We also proposed, at paragraph (d)(3), to list examples of
permissible reward items for a target activity, specifically that
reward items may: (i) Consist of ``points'' or ``tokens'' that can be
used to acquire tangible items; and (ii) be offered in the form of a
gift card that can be redeemed only at specific retailers or retail
chains or for a specific category of items or services. Like the
prohibition on using items that involve an element of chance, the
examples of permissible reward items were based on our guidance and
responses to questions since Sec. 422.134 was first adopted.
Comment: We received many comments on these provisions. Commenters
advocated for authority to use general debit cards as a reward item,
specifically arguing that targeted gift cards can be burdensome and
confusing. A commenter advocated for the provision of incentives in the
form of monetary credits toward monthly premiums or cost sharing
requirements.
Response: Section 1851(h)(4) and 1854(d)(1) of the Act both
prohibit an MA organization from giving enrollees cash or monetary
rebates as an inducement for enrollment or otherwise. Since the statute
prohibits cash or monetary rebates, we proposed, consistent with the
statute, to prohibit reductions in cost-sharing from being used as a
reward. Since the statute prohibits cash, we proposed to prohibit
giving a reward for anything that can be used as cash or cash
equivalent such as checks or general debit cards. In arriving at this
conclusion, we saw the primary attribute of cash as its universal use
to purchase. For this reason, we proposed to prohibit general debit
cards which can be used universally but to allow, at paragraph
(d)(3)(ii), a gift card that can be redeemed only at specific retailers
or retail chains or for a specific category of items or services. We
similarly prohibited checks which are easily converted to cash and then
can be used universally.
As to the suggestion that using that targeted gift cards can be
burdensome and confusing and therefore CMS should permit the use of
general debit cards as rewards, we note that the use of any gift card
as a reward item is optional. If a plan finds that beneficiaries are
confused or burdened by targeted gift cards, the MA plan may choose to
use another form of reward. As explained above, we view general debit
cards as the equivalent of cash and believe that Sec. 422.134 must be
consistent with the statutory prohibition on MA organizations providing
cash as an inducement. Our experience with the program suggests that
many stakeholders implement R&I with multiple gift cards. While it
would be more convenient to have just one gift card, we do not believe
it correct to say that multiple gift cards are burdensome and
cumbersome since in practice plans are already using this vehicle for
rewards, implying that their enrollees find the benefits of multiple
gift cards outweigh the burdensomeness. As to the minor inconvenience
of multiple gift cards, minor inconvenience is not a sufficient reason
to override a statutory prohibition. Further, we note that providing a
choice among equal value gift cards, so long as all qualifying
individuals are offered the identical choice consistent with Sec.
422.134(d)(1)(i) as finalized here, is also permitted.
We are finalizing these provisions as proposed for the reasons
outlined in the proposed rule and our responses to comments.
Marketing. As part of the reorganization of Sec. 422.134, we
proposed at paragraph (e) a provision requiring compliance with all
marketing and communications requirements in Part 422, Subpart V rather
than specifically adopting marketing and communication requirements for
reward programs in Sec. 422.134. Section VI.H of the proposed rule and
section V.E of this final rule discuss the marketing and communications
requirements for MA organizations, including provisions specific to
reward programs.
Comment: Commenters expressed concern that while CMS has proposed
that R&I programs be subject to the marketing requirements, they are
only communications and not subject to marketing requirements.
Response: As proposed (and finalized) in Sec. 422.134(g)(3), and
as indicated in CMS' subregulatory guidance in Chapter 4, R&I are
classified as non-benefits. Consequently, R&I are not subject to
inclusion in the Annual Notice of Change (ANOC) or Evidence of Coverage
(EOC). Nevertheless, CMS believes treating materials about R&I programs
offered by MA plans as subject to the marketing and communications
requirements and standards in Part 422, Subpart V is appropriate. As
proposed and finalized in Section V.E of this final rule, the
definition of marketing (Sec. Sec. 422.2260 and 423.2260) includes
content regarding rewards and incentives; we believe that this is
appropriate because the availability of R&I programs and rewards may
influence the decision of a beneficiary to enroll or stay enrolled in a
particular MA plan. The beneficiary protections, review standards and
prohibitions that apply to marketing materials and activities (as well
as those that apply to communications) will apply to materials and
activities about rewards and incentives when those materials and
activities are intended to (i) draw a beneficiary's attention to an MA
plan or plans or (ii) influence a beneficiary's enrollment decision(s).
We also direct readers to section V.E of this final rule for additional
discussion of the definition of marketing and the standards and
requirements that apply to marketing and communications materials.
We are finalizing paragraph (e) as proposed for the reasons
outlined in the proposed rule and our responses to comments.
Reporting requirements. At Sec. 422.134(f), we proposed regulation
text to require an MA organization to make information available to CMS
upon request about the form and manner of any rewards and incentives
programs it offers and any evaluations of the effectiveness of such
programs.
Comment: We received comments on this proposal. A commenter
supported a reporting requirement to ensure that plans are implementing
any reward programs fairly and without discrimination. Another
commenter believed it sufficient for the purpose of monitoring and
oversight that MAOs provide information upon request

[[Page 5980]]

without the additional burden of a specific reporting format.
Response: We thank the commenters for their interest in oversight
and fairness and support for a reporting requirement. Currently, Sec.
422.134(c)(3) includes a reporting requirement in connection with R&I
programs and our proposal carried over that provision verbatim to the
proposed revision at 422.134(f). The policy itself was not originally
proposed in this rulemaking; what is finalized in this rule is the
change of location from paragraph (c)(3) to paragraph (f). Based on the
current regulation, CMS has had for several years annual reporting
requirements for R&I programs. These reporting requirements are
accessible at https://www.cms.gov/files/document/cy2020-part-c-reporting-requirements04222020.pdf. Thus far, CMS has found these
reporting requirements sufficient for its oversight needs.
Miscellaneous. At Sec. 422.134(g)(2), we proposed regulation text
to clarify that plan failure to comply with R&I program requirements
may result in a violation of one or more of the bases for imposing
sanctions at Sec. 422.752(a). At Sec. 422.134(g)(3), we proposed
regulation text to codify existing guidance that the reward and
incentive program is classified as a non-benefit expense in the plan
bid and that disputes on rewards and incentives must be treated as a
grievance under 422.564.
Comment: A few commenters supported our codification at paragraph
(g)(3) that R&I programs are classified as a non-benefit expense.
Response: We thank the commenters for their supportive comments.
We received no other comments on these provisions and are
finalizing as proposed for the reasons provided in the proposed rule.
Midyear changes. At Sec. 422.134(g)(4), we proposed regulation
text to prohibit mid-year changes to reward and incentive programs. We
explained in the proposed rule that this new provision was based on how
the reward and incentive program must be included in the plan bid each
year and that we considered it an important beneficiary protection.
Comment: We received numerous comments with diverse perspectives on
our proposal to prohibit mid-year changes in R&I programs. Some
commenters were supportive: They were aware of the issue of the
integrity of the bid and also believed that mid-year R&I program
changes would be confusing to enrollees. By contrast, some commenters
wanted the flexibility to respond mid-year to low utilization of plan
resources and benefits by designing rewards targeted to those
populations. Other commenters suggested a compromise: Allow additions
of R&I mid-year (positive changes) but prohibit negative changes
(removal of R&I).
Response: We thank all commenters for their insights. In reviewing
these comments, we also considered that reward and incentives are not
classified as benefits and therefore are not subject to the same
prohibition on mid-year changes in benefits that we adopted in 2008 (73
FR 43628). Historically, we have permitted changes in administrative
rules or policies for other things that are not benefits; non-benefit
changes midyear are governed by the requirements relating to mid-year
plan rule changes presented at 42 CFR 422.111(d), which ensures that
enrollees are notified of the changes at least 30 days before the
effective date of the change. We believe that these considerations
resolve the concerns underlying our proposal to prohibit mid-year
changes in reward and incentive programs. Consequently, we are not
finalizing the proposed regulatory change to prohibit midyear changes
to R&I.
After consideration of the comments we received on proposed Sec.
422.134 and for the reasons outlined in the proposed rule and our
responses to comments, we are finalizing the proposed regulation with
some limited changes from the proposal. Specifically, we are finalizing
minor technical and grammatical changes throughout the regulation and
several substantive changes. The substantive changes include: (1)
Changes in the codification and application of the uniformity and
accommodation policies finalized in paragraphs (c)(1)(iv) and (v) but
that were proposed in paragraphs (c)(2)(ii)(A) and (B); (2) clarifying
changes in paragraph (d)(1)(i) regarding how all qualifying individuals
must be offered the same rewards for the particular target activity;
(3) clarifying changes in the definition of qualifying individual; and
(4) clarifying changes in paragraph (d)(1)(iii) to address delivery of
a reward. In addition, we are not finalizing paragraph (g)(4). Because
Sec. 422.134 as finalized here substantially reorganizes the existing
regulation while maintaining most of the current requirements, Table E6
summarizes where existing provisions have been moved and where we are
codifying existing guidance.

Table E6--Comparison of Finalized CFR Regulations With Current CFR
Regulations
------------------------------------------------------------------------
Sec. 422.134, CMS-4190-F2
(as finalized) Brief summary Current provision
------------------------------------------------------------------------
(a) Definitions............. Provide definitions Codifies terms and
of R&I, reward concepts used in
item, target the regulation
activity etc. consistent with
current guidance.
(b) Offering an R&I program. Plans may offer an Current 422.134(a).
R&I Program.
(c) Target Activities....... One comprehensive Requirements and
list of all prohibitions are
requirements and currently scattered
prohibitions throughout current
(Details are Sec. 422.134 and
provided in the codifies existing
following rows). guidance.
(c)(1)...................... Requires that the Requirements and
level of completion prohibitions are
of the target currently scattered
activity be throughout current
specified. Sec. 422.134 and
codifies existing
guidance.
(c)(1)(i)................... Specifies that the Codifies existing
target activity guidance.
must directly
involve the
qualifying
individual.
(c)(1)(ii).................. The target activity Clarification and
must be specified, restatement of
in detail, as to current Sec.
the level of 422.134(c)(1)(i)
completion needed and codifies
in order to qualify existing guidance.
for the reward item.
(c)(1)(iii)................. The target activity Currently Sec.
must be health 422.134(a) and in
related. existing guidance.
(c)(1)(iv).................. The target activity Current Sec.
is required to be 422.134(b)(2).
uniformly offered
to all qualifying
enrollees.
(c ) (1) (v)................ Accommodations are Codifies existing
required for those guidance related to
unable to do the the non-
target activity but discrimination
otherwise qualify. requirement in
current Sec.
422.134(1)(1)(ii).

[[Page 5981]]

(c)(2)...................... Prohibitions on Requirements and
target activities. prohibitions are
currently scattered
throughout current
Sec. 422.134 and
codifies existing
guidance.
(c)(2)(i)................... The target activity Codifies existing
shall not be guidance and the
related to Part D interpretation
benefits. adopted in the 2014
final rule.
(c)(2)(ii).................. The target activity Current Sec.
shall not be 422.134(b)(1)
discriminatory. prohibits
discrimination in
the R&I program
generally.
(c)(2)(ii)(A)............... Not reward a health Codifies existing
status measurement. guidance related to
the non-
discrimination
requirement in
current Sec.
422.134(1)(1)(ii).
(d) Reward items............ List of Requirements and
requirements, prohibitions are
prohibitions, and currently scattered
permissions. throughout current
Sec. 422.134 and
codifies existing
guidance.
(d)(1)...................... Requirements that Requirements and
must be met for prohibitions are
reward items. currently scattered
throughout current
Sec. 422.134 and
codifies existing
guidance.
(d)(1)(i)................... Reward items must be Current Sec.
identically offered 422.134(b)(2) and
to all qualifying codifies current
enrollees guidance.
completing the
target activity.
(d)(1)(ii).................. Reward is direct and Codifies existing
tangible. guidance.
(d)(1)(iii)................. Ownership transfer Codifies and
of reward items for clarifies existing
target activities guidance.
completed within
the contract year
during which this
R&I program was
offered.
(d)(2)...................... Prohibitions on Requirements and
reward items. prohibitions are
currently scattered
throughout current
Sec. 422.134 and
codifies existing
guidance.
(d)(2)(i)................... Prohibition of cash Current Sec.
and monetary 422.134(c)(2)(i).
rebates.
(d)(2)(i)(A) and (B)........ Definition of cash, New provision to
cash equivalents or clarify terms.
other monetary
rebates.
(d)(2)(ii).................. Value of reward item Current Sec.
does not exceed 422.14(c)(1)(iii).
value of target
activity.
(d)(3)...................... Reward not based on Codifies existing
elements of chance. guidance.
(d)(3)...................... Allowance of i) Codifies existing
tokens and ii) guidance.
specified gift
cards.
(e) Marketing Requirements.. Makes marketing Current Sec.
requirements as 422.134(c)(2)(ii)
found in Subpart V prohibits targeting
of 42 CFR 422 new enrollees;
applicable to this marketing
section 422.134. requirements are
otherwise not in
current Sec.
422.134.
(f) R&I Disclosure.......... Disclose information Current Sec.
and provide reports 422.134(c)(3).
on request to CMS.
(g) Miscellaneous........... Items not directly Requirements and
about requirements prohibitions are
of reward item, currently scattered
target activity, throughout current
marketing, or Sec. 422.134 and
disclosure. codifies existing
guidance.
(g)(1)...................... Compliance with Current Sec.
other laws (anti- 422.134 (c)(1)(iv).
kickback, fraud,
etc.).
(g)(2)...................... Possible sanctions Current Sec.
for violation. 422.134(b)(3).
(g)(3)...................... Non-benefit expense Codifies current
in bid. guidance about
application of
bidding regulations
at Sec. Sec.
422.254 and
422.256.
------------------------------------------------------------------------

E. Requirements for Medicare Communications and Marketing (Sec. Sec.
422.2260-422.2274; 423.2260-423.2274)

Sections 1851(h) and (j) of the Act provide a structural framework
for how Medicare Advantage (MA) organizations may market to
beneficiaries and direct CMS to adopt standards related to the review
of marketing materials and limitations on marketing activities. Section
1860D-1(b)(1)(B)(vi) of the Act directs that the Secretary use rules
similar to and coordinated with the MA rules at section 1851(h) for
approval of marketing material and application forms for Part D plan
sponsors. Section 1860D-4(l) of the Act applies certain prohibitions
under section 1851(h) to Part D sponsors in the same manner as such
provisions apply to MA organizations. CMS has adopted regulations
related to marketing and mandatory disclosures by MA organizations and
Part D sponsors in Sec. 422.111; 42 CFR part 422, subpart V; Sec.
423.128; and 42 CFR part 423, subpart V; these regulations include the
specific standards and prohibitions in the statute as well as standards
and prohibitions promulgated under the statutory authority granted to
the agency. Additionally, under Sec. 417.428, most marketing
requirements in Subpart V of part 422 apply also to section 1876 cost
plans. CMS has long provided further interpretation and guidance for
these regulations in the form of a marketing manual titled the Medicare
Communications & Marketing Guidelines (MCMG), previously known as the
Medicare Marketing Guidelines. Because the proposal and this final rule
are applicable to MA organizations, Part D plan sponsors, and cost
plans, we refer to each of these regulated entities as a ``plan.''
In the February 2020 proposed rule, CMS proposed to codify guidance
contained in the MCMG by integrating it with the existing regulations.
To incorporate the guidance, we proposed to reorganize and redesignate
the existing and proposed provisions according to the topics included
in the MCMG; we explained that this order and organization was familiar
to the Medicare Advantage, cost, and Part D plans that are subject to
the rules. As a result, the proposed regulatory provisions reflected
some changes to the current regulations, even though CMS did not
propose to substantively change much of the policy. To be clear, the
policies we proposed to codify are not new; they are in the MCMG and
were

[[Page 5982]]

developed over time in concurrence with stakeholder feedback to
implement and administer the current regulations.
The first of the policies that CMS proposed to codify, in
Sec. Sec. 422.2260 and 423.2260, is the guidance related to the
definitions of ``marketing'' and ``communications,'' as well as
additional definitions from the MCMG. As explained in the February 2020
proposed rule, CMS has amended the marketing regulations for both the
MA and the Part D programs at 42 CFR parts 422 and 423, subparts V,
respectively, since their original implementation, and provided sub-
regulatory guidance in the MCMG each time to ensure beneficiaries
receive the necessary information to make informed choices. Recently,
in the April 2018 final rule, we established new definitions for
communications materials and activities and marketing materials and
activities in 42 CFR 422.2260 and 423.2260, which set out the scope of
materials and activities subject to the regulations. In the 2019 MCMG,
we clarified these definitions based on our interpretation of the
regulatory terms ``intent'' and ``content'' as the deciding factors for
when a communication activity or material is marketing.
We proposed to codify the MCMG guidance and revise the regulation
text at Sec. Sec. 422.2260 and 423.2260 to align more closely with the
interpretation explained in our guidance. Specifically, we proposed
that ``marketing'' means communications materials and activities that
meet certain standards for intent and content that were enumerated in
the proposed regulation text. For the intent standard, we proposed the
same intent language that is in the current regulation, with a
technical change to separately list out two different intent standards
(paragraphs (1)(i)(B) and (C) in the proposed definition of marketing)
that are in one paragraph (paragraph (3)) in the current definition of
marketing at Sec. Sec. 422.2260 and 423.2260. We note that a
typographical error appeared in the description of this technical
change in the preamble to the February 2020 proposed rule, which
incorrectly stated that the two separate intent standards described
here appeared at paragraphs (1)(ii) and (iii) of the proposed rule's
definition of marketing (whereas this text actually appeared in
paragraphs (1)(i)(B) and (C) of the proposed rule), and that these
standards appear in one paragraph (paragraph (3)) of the current
definition of marketing materials at Sec. Sec. 422.2260 and 423.2260
(whereas these standards currently appear in paragraph (3) of the
current definition of marketing in the same regulations). We explained
in the February 2020 proposed rule that, when evaluating the intent of
an activity or material, we intended, consistent with our current
practice and guidance, to consider objective and contextual information
(for example, audience, timing, etc.) in applying the proposed
definition. Under our proposal, CMS would not be limited by the plan's
statements about its intent.
In the content standard, we proposed that the regulation state
affirmatively what must be included for a communications activity or
material to be a marketing activity or material, rather than stating
what is excluded (as the current regulation does). We explained that
the first two types of content listed (paragraphs (2)(i) and (ii)) in
the proposed definition of marketing are derived from the current
regulation (although we explained that ``premiums'' was also included,
consistent with the MCMG). We proposed to codify a third type of
content in the definition (information on rewards and incentives
programs), as we wanted to be clear that while rewards and incentives
themselves are not a benefit, they are used as a means of prompting a
beneficiary to use a specific benefit, and therefore our policy has
been that information on rewards and incentives fall within the
definition of marketing. We explained that our proposal would avoid any
confusion and ensure that plans continue to be aware that when
providing any information on rewards and incentives, they must follow
the same requirements as for other marketing. We also proposed to
streamline the definitions by removing the list in the current
regulation of examples of materials (for example, brochures or posters)
and explained that we did not believe this list of examples is
necessary, as we evaluate whether a material is marketing based on
intent and content rather than its particular form. Additionally, we
proposed to combine the definitions for ``communications'' and
``communications materials,'' as well as ``marketing'' and ``marketing
materials'' to streamline the definitions section. We also explained
that this would be consistent with how we have interpreted the current
regulations that both activities and materials are subject to the same
intent and content standards. We also proposed that the regulatory
definition of ``communications'' state that communications activities
and use of materials are those ``created or administered by the MA
organization or any downstream entity.''
Finally, we proposed to codify at Sec. Sec. 422.2260 and 423.2260
additional definitions that apply to plan marketing. Specifically, we
proposed to add definitions of ``advertisement (ad),'' ``alternate
format,'' ``banner,'' ``banner-like advertisements,'' and ``Outdoor
Advertising (ODA).'' We explained that these familiar terms have been
defined and used throughout the MCMG. Our proposed definitions of these
terms included some technical and clean-up edits but were substantively
consistent with current policy and guidance. We explained that in
codifying much of the MCMG, we believed it was paramount that we codify
these definitions which are used throughout the MCMG and in our
proposed regulations.
We next proposed to codify, at Sec. Sec. 422.2261 and 423.2261,
requirements for plans to submit certain materials to CMS for review,
the process for CMS review, and the standards by which CMS will perform
the review. These requirements are currently found in Sec. Sec.
422.2262, 422.2264, 423.2622, and 423.2264, as well as in section 90 of
the MCMG, which builds upon those sections and includes detailed
operational instructions to plans regarding submission, review, and
distribution of marketing materials (including election forms). In
particular, we proposed at Sec. Sec. 422.2261(a)(1) and 423.2261(a)(1)
that the Health Plan Management System (HPMS) would be the primary
system of record and the mechanism by which CMS would collect and store
submitted plan materials for review and evaluation. Additionally, we
proposed to codify, at Sec. Sec. 422.2261(a)(2) and 423.2261(a)(2),
our current policy that only plans can submit materials to CMS for
review and approval for use and to specify that this policy prohibits
third parties/downstream entities from submitting materials directly to
CMS. Additionally, in new Sec. Sec. 422.2261(d) and 423.2261(d), we
proposed to codify that CMS would review submitted materials for
compliance with all applicable requirements in Sec. Sec. 422.2260
through 422.2267 and Sec. Sec. 423.2260 through 423.2267 and that the
benefit and cost information accurately reflects the plan's bid. We
explained the proposed standards are consistent with our current policy
and how we review marketing materials.
We next proposed to codify general standards for plan
communications, including requirements related to product endorsements
and testimonials and standardization of certain materials
(specifically, certain telephone numbers and material IDs) at
Sec. Sec. 422.2262 and 423.2262. These standards are currently found
in Sec. Sec. 422.2268(a) and 423.2268(a), which also include examples
of what plans may not do.

[[Page 5983]]

While the proposed regulations included the current general standards
prohibiting MA plans from misleading, confusing, or providing
inaccurate information to current or potential enrollees, we proposed
to include additional examples of what plans may not do (in paragraph
(a)(1)) and to incorporate examples of what plans may do (in paragraph
(a)(2)), consistent with section 30 of the MCMG.
We also proposed to codify, at Sec. Sec. 422.2262(b)(2) and
423.2262(b)(2), requirements regarding endorsements and testimonials
that are in the policy currently found in section 30.8 of the MCMG. We
proposed in Sec. Sec. 422.2262(b)(1) and 423.2262(b)(1) that,
consistent with our current policy, product endorsements and
testimonials may take different forms. We also proposed to codify at
Sec. Sec. 422.2262(c) and 423.2262(c) requirements currently found in
section 30 of the MCMG related to including telephone numbers
(specifically, customer service numbers and 1-800-MEDICARE) in
materials. We explained that these additional parameters for how
telephone numbers are communicated in communications and marketing
ensure that beneficiaries get useful and accurate information. Finally,
we proposed to codify at Sec. Sec. 422.2262(d) and 423.2262(d)
requirements related to standardized material identification, currently
found in section 90.1 of the MCMG.
We proposed to codify at Sec. Sec. 422.2263 and 423.2263
requirements related to how plans may conduct marketing, which is
specified as a subset of communications and therefore also subject to
the requirements proposed in Sec. Sec. 422.2262 and 423.2262. First,
we proposed to clarify, at Sec. Sec. 422.2263(a) and 423.2263(a), that
October 1 is the date plans may begin marketing for the upcoming plan
year. This is consistent with longstanding guidance, but the current
rule lacks specificity and context. We also proposed to codify at
Sec. Sec. 422.2263(b) and 423.2263(b) examples of what plans may not
do in marketing. As explained in the February 2020 proposed rule, this
list reflects current policy in existing Sec. Sec. 422.2268(b),
423.2268(b) and section 40.1 of the MCMG, with some technical edits. As
our proposal was to codify all current requirements and guidance on
marketing and communications, we explained that a number of the
prohibitions that are currently stated in Sec. Sec. 422.2268(b) and
423.2268(b) would be codified elsewhere in our proposed regulations,
where the provisions would topically belong under the new regulatory
structure. Although not discussed in the preamble to the February 2020
proposed rule, Sec. Sec. 422.2263(b)(2) and 423.2263(b)(2) included a
provision specific to the prohibition on providing gifts unless they
are of a nominal value; the proposed regulation provided that we would
defer to guidance from the HHS Office of the Inspector General (OIG) to
determine what dollar threshold to use to determine if a gift is of
nominal value. Under current CMS guidance in the MCMG, section 40.4
applies the current regulation prohibiting gifts other than nominal
gifts to set a cost threshold of $15 per gift and $75 aggregated, per
person per year, which are the amounts that the HHS OIG identified as
nominal amounts in its current applicable guidance, dated December 7,
2016 and available on-line here: https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/2006053221-hi-oigpolicystatementgiftsofnominalvalue.pdf. Proposed Sec. Sec.
422.2263(b)(2) and 423.2263(b)(2) provided that a determination of
nominal value would be governed by guidance published by the HHS OIG in
order for Sec. Sec. 422.2263(b)(2) and 423.2263(b)(2) to remain in
alignment with OIG guidance and policy about nominal gifts going
forward. We note here that achieving alignment on this issue provides
clearer and more consistent direction from the government to regulated
plans and provider greater consistency in overall monitoring and
enforcement. Finally, at Sec. 422.2263(c), we proposed to codify
requirements related to marketing of Star Ratings currently located in
section 40.6 of the MCMG.
We next proposed to codify, at 42 CFR 422.2264 and 423.2264,
requirements related to plan contact with Medicare beneficiaries and a
beneficiary's caregivers. Our proposed regulation text used the term
``beneficiary contact'' to include all outreach activities to a
beneficiary or a beneficiary's caregivers by the plan or its agents and
brokers. First, in 42 CFR 422.2264(a)(1) and 423.2264(a)(1), we
proposed to codify the policy for when unsolicited contact is
permitted, including direct mail and email which are currently found in
the MCMG. Under 42 CFR 422.2264(a)(2) and 423.2264(a)(2), we proposed
to codify the rules for when unsolicited direct contact with
beneficiaries is and is not permitted. Currently, Sec. Sec.
422.2268(b)(13) and 423.2268(b)(13) explicitly prohibit plans from
soliciting door-to-door or engaging in other unsolicited contact and
our guidance in section 40.2 of the MCMG applies and interprets this
prohibition in specific contexts, with additional detail about
activities we consider (and do not consider) unsolicited contact.
Additionally, under 42 CFR 422.2264(a)(2) and 423.2264(a)(2), we also
proposed to codify the current policy that unsolicited direct messages
from social media platforms are also prohibited, as currently addressed
in section 30.6 of the MCMG. We also proposed to clarify that plans may
contact their current members (including those individuals enrolled in
commercial plans who are becoming eligible for Medicare) regarding plan
business, which is consistent with our current policy in the MCMG in
section 40.3. Finally, in Sec. Sec. 422.2264(c) and 423.2264(c), we
proposed to codify requirements regarding events (such as meetings)
with beneficiaries, currently found in section 50 of the MCMG. As
explained in the February 2020 proposed rule, the proposed regulation
text included specific provisions that are consistent with our current
policies of what plans may do. Our proposed revisions to Sec. Sec.
422.2267 and 423.2267 would incorporate the policy currently in
Sec. Sec. 422.2264 and 423.2264, ``Guidelines for CMS Review,'' with
more detail. We explained that whereas the current Sec. Sec. 422.2264
and 423.2264 provide general guidance on important information that
plans must provide to a beneficiary interested in enrolling, proposed
Sec. Sec. 422.2267 and 423.2267 would include more detailed standards
and requirements on the specific materials or content that a plan must
produce. The proposed rule explained that, collectively, the required
materials and content outlined in proposed Sec. Sec. 422.2267 and
423.2267 account for the requirements in the current Sec. Sec.
422.2264 and 423.2264.
We next proposed to codify requirements for plan websites at new
Sec. Sec. 422.2265 and 423.2265. As explained in the February 2020
proposed rule, the current regulations at Sec. Sec. 422.111(h)(2) and
423.128(d)(2) establish the requirement for Part C and Part D plans to
have an internet website and include requirements regarding content
that must be posted on the website and the MCMG has historically
provided additional detail on required website content, including the
dates by which plan content was required to be posted annually.
Proposed Sec. Sec. 422.2265 and 423.2265 would restate the requirement
to have a website and codify the additional requirements and guidance
currently in section 70 of the MCMG.
We next proposed to codify at Sec. Sec. 422.2266 and 423.2266
requirements plans must follow for activities in a healthcare setting,
including requirements for provider-initiated

[[Page 5984]]

activities, plan-initiated provider activities, and plan activities. We
explained that proposed Sec. Sec. 422.2266 and 423.2266 would include
requirements currently located in Sec. Sec. 422.2268(b)(7) and
423.2268(b)(7) and codify policies interpreting those requirements in
section 60 of the MCMG.
We next proposed to codify, at new Sec. Sec. 422.2267 and
423.2267, instructions for how plans should submit required materials
to CMS for review. Specifically, we proposed to codify the guidance for
standardizing and monitoring the production of required documents,
including a listing of these required documents, currently found in
section 100 and Appendices 2, 3, 4, and 5 of the MCMG. As we explained
in the February 2020 proposed rule, some of these required materials
are addressed in current regulations (for example, the Annual Notice of
Change (ANOC) and the Evidence of Coverage (EOC)) while others are only
described in the MCMG (for example, the Summary of Benefits (SB)).
Therefore, we proposed to specify all of the required materials and
content in Sec. Sec. 422.2267(e) and 423.2267(e). In doing so, we
refer to current established regulatory authority when relevant. We did
not propose any changes to Sec. Sec. 422.2272 and 423.2272, which
address licensure of marketing representatives and confirmation of
marketing resources.
Finally, we proposed to consolidate, at Sec. Sec. 422.2274 and
423.2274, requirements related to plan compensation to agents, brokers
and other third parties currently found at Sec. Sec. 422.2272,
422.2274, 423.2272, and 423.2274, and section 110 of the MCMG. We
explained in the February 2020 proposed rule how our proposed revised
and consolidated text generally would not change the policies currently
laid out in the existing regulations and guidance, but that significant
technical and organizational edits were used to improve clarity and
reduce duplication in the proposed regulation text. We proposed to
codify our method for calculating fair market value for agent/broker
compensation, as current regulations limit compensation to fair market
value but do not further define it or provide the methodology CMS uses
for calculating it. As we explained in the February 2020 proposed rule,
CMS first developed the Fair Market Value (FMV) calculation used for
regulating plan compensation paid to agents and brokers for contract
year 2009 and published these rates in an HPMS memo on December 24,
2008. To develop the FMV, we requested that plans submit the fees they
paid in 2006 and 2007, as well those planned for 2009; plans submitted
approximately 19,000 records that we analyzed based on geographic
location and organization type. Following this analysis, we developed
the FMV for MA plans, 1876 cost plans and Part D plans. The MA FMV
rates for enrolling a single beneficiary were established at a national
rate of $400, with exceptions for Connecticut, Pennsylvania, and DC
($450), and California and New Jersey ($500), based on higher rates
being reported in those geographic areas. The PDP rate was set at $50
for a single enrollment nationally. For years after contract year 2009,
we calculated the FMV based on the National Per Capita MA Growth Rate
for aged and disabled beneficiaries for Part C and 1876 Cost plans and
the Annual Percentage Increase for Part D, using the following formula:
Current Year FMV + (Current Year FMV * National Per Capita MA Growth
Rate for aged and disabled beneficiaries) for MA and 1876 cost plans
and Current Year FMV + (Current Year FMV * Annual Percentage Increase
for Part D) for PDP plans. Our proposal for Sec. Sec. 422.2274 and
423.2274 would codify a definition of FMV with this formula. Based on
this formula, the FMV for 2022 would be the FMV for CY 2021 + (CY2021
FMV * National Per Capita Growth Rate for aged and disabled
beneficiaries). We issued an HPMS memo on May 29, 2020 with the FMV
amounts for 2021. For CY2021, the FMV rates for MA and 1876 Cost Plans
are: National FMV is $539, FMV for Connecticut, Pennsylvania, and the
District of Columbia is $607, FMV for California and New Jersey is $672
and the FMV for U.S. Virgin Islands and Puerto Rico is $370. For
CY2021, the FMV rate for all Prescription Drug Plans is $81.
Additionally, we noted that section 110.7.1 of the MCMG currently
clarifies when the regulations at Sec. Sec. 422.2274(b)(2) and
423.2274(b)(2), which require recovery of agent compensation when a
newly-enrolled individual disenrolls within the first 3 months of
enrollment (rapid disenrollment), do not apply. We proposed to codify
that guidance at Sec. Sec. 422.2274 and 423.2274; although the
preamble of the February 2020 proposed rule identified this policy as
being codified in proposed paragraph (g)(2)(ii)(C), our proposed
regulation text addressed exceptions to the requirement for plans to
recover agent compensation at paragraph (d)(5)(iii). In addition, we
refer readers to section IV.C. of this final rule, which addresses our
proposal regarding referral and finder's fees for agents and brokers.
In summary, our proposal was for new and revised regulatory
sections in Subpart V as follows:
Sections 422.2260 and 423.2260 revise and streamline the
current definitions of ``communications'' and ``marketing,'' and codify
definitions for additional key terms from the MCMG used throughout the
proposed regulations.
Sections 422.2261 and 423.2261 contain requirements for
plans to submit certain materials to CMS for review, the process for
CMS review and the standards by which CMS will perform the review,
taken from current Sec. Sec. 422.2262, 422.2264, 423.2622, and
423.2264 and section 90 of the MCMG.
Sections 422.2262 and 423.2262 specify the general
standards for plan communications materials and activities, including
endorsements and testimonials, and examples of what plans may and may
not do. These sections also contain requirements related to
standardization of certain key elements of communications materials
(specifically, telephone numbers and material IDs). These sections
include policies currently articulated in current Sec. Sec. 422.2268
and 423.2268, as well as sections 30 and 90.1 of the MCMG.
Sections 422.2263 and 423.2263 contain requirements for
how plans must conduct marketing. These sections will incorporate
requirements currently in Sec. Sec. 422.2268 and 423.2268, as well as
additional guidance from section 40 of the MCMG.
Sections 422.2264 and 423.2264 address the rules for plan
contact with Medicare beneficiaries. These sections include
requirements and standards currently in Sec. Sec. 422.2268 and
423.2268, and further expanded upon in sections 40 and 50 of the MCMG.
Sections 422.2265 and 423.2265 explain the requirements
for plans to have a website as well as what must, may, and must not be
on the website. These sections include material currently in section 70
of the MCMG.
Sections 422.2266 and 423.2266 contain the requirements
plans must follow for activities in a healthcare setting. These
sections include material from current Sec. Sec. 422.2268 and
423.2268, and from section 60 of the MCMG.
Sections 422.2267 and 423.2267 provide instructions on
materials and content that CMS requires plans to deliver or make
available to beneficiaries, including required disclaimers. These
sections include material from section 100 and Appendices 2, 3, 4, and
5 of the MCMG.
Sections 422.2274 and 423.2274 consolidate requirements
from Sec. Sec. 422.2272, 422.2274, 423.2272, and

[[Page 5985]]

423.2274, and section 110 of the MCMG regarding agents, brokers, and
compensation to third parties.
Finally, we requested comment on how CMS should implement
prohibitions related to plan marketing during the open enrollment
period (OEP). Section 1851(e)(2)(G)(iv) of the Act, as added by section
17005 of the Cures Act, prohibits marketing during the open enrollment
period (OEP). The current regulations implementing the statutory
prohibition on plan marketing during the OEP are at Sec. Sec.
422.2268(b)(10) and 423.2268(b)(10). We explained in the February 2020
proposed rule that the MCMG includes additional guidance about what
activities fall within this prohibition including, specifically, that
plans are prohibited from sending unsolicited materials that call out
the opportunity afforded by the OEP, using mailing lists or other
anecdotal information to target individuals who made enrollment
requests during the annual coordinated enrollment period (AEP), and
leveraging agent/broker activities that target the OEP as a way to make
further sales.
We received the following comments on our proposal and our
responses follow:
Comment: Several commenters expressed support for CMS codifying the
various requirements traditionally found in the MCMG. Many of these
commenters questioned if CMS still intended to produce an MCMG after
these regulations are adopted as final. Similarly, other commenters
specifically requested that CMS continue to produce the MCMG in tandem
with the requirements found in the final rule.
Response: CMS appreciates the favorable response to the
codification of the many requirements typically found in the MCMG.
While the agency believes it would be duplicative to continue to
produce the MCMG in its current form, we do intend to continue
producing sub-regulatory guidance to provide operational instruction to
plans. We believe that the regulations we are finalizing in parts 422
and 423, subparts V are clear and succinct.
Comment: A commenter expressed concern that beneficiaries could be
negatively impacted by CMS's decision to stop collecting co-branded
relationship data in the Health Plan Management System (HPMS).
Response: CMS notes that the decision to no longer collect this
data through the HPMS Marketing Module predates this rulemaking.
Although CMS no longer collects co-branding information through the
HPMS Marketing Module, the co-branding relationship data is collected
elsewhere in HPMS, making the need to collect it twice in one system
duplicative. In addition, plans continue to be responsible for all
materials and activities, including those that they create or carry out
in conjunction with any co-branded entities. All regulatory
requirements pertaining to communications and marketing still apply to
co-branded materials, including the requirement to submit all marketing
materials to CMS. As a result, we do not believe that the negative
impact on beneficiaries as contemplated by the commenter is likely.
Comment: A commenter suggested that CMS eliminate the requirement
that plans and sponsors prorate agent/broker commissions. The commenter
noted the amount of work to enroll an individual does not change if the
enrollment takes place in November or in January, so the requirements
related to prorating payments do not make sense and are unfair to
Medicare-certified health insurance agents.
Response: CMS thanks the commenter for their input. Prorated
payments of agent/broker commissions are a necessary component of the
compensation requirements finalized in this rule because we believe
that providing a full year payment to an agent, rather than a prorated
amount, might incentivize agents and brokers to encourage beneficiaries
to switch plans during the coverage year in order for the agent or
broker to receive a full year of compensation, thus resulting in the
unnecessary churning of beneficiaries from one plan to another. Section
1851(j)(2)(D) of the Act specifically directs the Secretary to
establish limitations on compensation for agents and brokers to ensure
payments create incentives for agents and brokers to enroll
beneficiaries into the plan that best meets the beneficiary's needs.
Providing a prorated amount incentivizes the agent or broker to find
the plan that is the best fit for the beneficiary so that the
beneficiary will remain enrolled throughout the year, rather than
changing plans due to dissatisfaction with the coverage or feeling as
though they were misled. The prorated compensation also provides an
incentive for the agent or broker to continue to service the
beneficiary's needs after the sale.
Comment: A commenter was in favor of CMS codifying the rules for
agent/broker compensation, noting that the transparency is helpful for
plans as well as agents and brokers.
Response: CMS appreciates the comment.
Comment: A few comments suggested that CMS provide more examples of
specific materials that would fall under the definition of
communication or marketing in Sec. Sec. 422.2260 and 423.2260 of the
regulation.
Response: CMS understands that examples can aid plans in better
understanding the definitions of communications and marketing, but we
do not believe that including examples in the regulation text are the
best manner in which to achieve this objective. Given the more static
structure of regulations as compared to the dynamic nature of
communications and marketing, we believe that sub-regulatory guidance
and training is the more appropriate manner by which to apply the
regulatory definitions and standards to particular facts in order to
identify and convey our requirements. With the finalization of the
proposed amendments to Sec. Sec. 422.2260 and 423.2260, CMS will gauge
need for examples and provide them as required. With that said, we note
the definitions codified in this final rule are consistent with our
current practice and the current regulations, as we discussed in the
February 2020 proposed rule; therefore the examples in section 20.1 of
the MCMG dated September 5, 2018, and available online here: https://www.cms.gov/Medicare/Health-Plans/ManagedCareMarketing/Downloads/CY2019-Medicare-Communications-and-Marketing-Guidelines_Updated-090518.pdf, remain applicable. In addition, we note that the extensive
list of standardized and model materials in Sec. Sec. 422.2267(e) and
423.2267(e) generally specifies which materials are communication
materials and which are marketing materials.
Comment: A commenter suggested that definitions in Sec. Sec.
422.2260 and 423.2260 such as ``alternate format,'' ``banner,''
``banner-like advertisements,'' and ``outdoor advertising'' should be
considered marketing activities because these types of materials are
also evaluated on intent and content and not on their particular form.
Response: We agree that ``alternate format,'' ``banner,'' ``banner-
like advertisements,'' and ``outdoor advertising'' are evaluated based
on their intent and content. We clarify, however, that such materials
are not automatically considered marketing under the definitions we
proposed and are finalizing here at Sec. Sec. 422.2260 and 423.2260,
as specific materials in these formats could meet either the definition
of communications or of marketing based on their intent and content.
For example, a billboard (outdoor advertising) that says ``Super
Medicare Advantage--a new choice in Medicare for 2022'' is not
marketing as it does not

[[Page 5986]]

include or address the content outlined in paragraph (2) of the
definition of ``marketing'' under Sec. Sec. 422.2260 and 423.2260.
Based on the possibility of these items being communications or
marketing depending on the particular facts or circumstances, CMS is
not changing the definitions.
Comment: A commenter suggested that CMS should consider
establishing a separate pre-release review process for communications,
given their importance for beneficiaries. The commenter specifically
cited CMS required materials that are communications. The commenter
strongly urged that in cases where CMS identifies inaccuracies or
misleading information through a post-release review, CMS allow
affected beneficiaries to have a special enrollment period, in order to
mitigate consequences of decisions based on inaccurate or misleading
information.
Response: We agree that appropriate oversight of communication
materials is an important beneficiary protection. We believe that our
current oversight processes ensure the appropriate level of beneficiary
protection. CMS currently collects certain CMS required materials, such
as the Evidence of Coverage making them subject to retrospective
reviews. In addition, CMS reviews the accuracy of CMS required
materials outside of the formal material submission process, for
example provider directory reviews have been conducted outside of the
formal HPMS material submission process for several years.
In this final rule, CMS is also maintaining authority (currently in
Sec. Sec. 422.2262(d) and 423.2262(d) and codified here at Sec. Sec.
422.2261(c)(1) and 423.2261(c)(1)) to collect, prior to use by plans,
certain designated communications materials that are critical to
beneficiaries and plan enrollees understanding plan options or
accessing their benefits; the final regulation text provides an example
of a communications material that meets this standard: The Evidence of
Coverage (EOC). CMS may also retrospectively collect any communications
materials for subsequent review under Sec. Sec. 422.504(f)(2)(vii) and
423.505(f)(2)(viii). In addition, CMS can collect data on
communications materials through beneficiary complaints, and
communication and marketing surveillance activities. In this final
rule, we have included Sec. Sec. 422.2261(c)(2) and 423.2261(c)(2) to
ensure that CMS has the authority to require additional communications
materials be submitted, or submitted and reviewed, prior to use based
identified as a concern based on errors identified through the methods
outlined above.
These regulatory authorities allow CMS to focus more closely on
those materials that have the potential to have the greatest impact on
beneficiary enrollment decision-making, without the need for a more
burdensome process of collecting and reviewing all communication
materials that have little impact on beneficiary choice.
In addition, in the proposed rule under Sec. Sec. 422.2262(c) and
423.2262(c), we said that ``CMS does not generally require submission
and approval of communications materials prior to use . . .'', which
unintentionally did not accurately depict the current processes for
material collection through the HPMS Marketing Module. In general,
there are two ways that designated materials are submitted to CMS
through the HPMS Marketing Module. The ``path'' a material takes is
predetermined by CMS. One submission path includes when plans submit
materials to HPMS, but these materials are not reviewed prospectively
by CMS, but are subject to a retrospective review. An example of a
material that would fall under this pathway is the EOC. A second
submission pathway includes when plans submit materials to HPMS that
CMS must review and approve prospectively and prior to their
distribution. To clarify these requirements regarding the submission of
materials, in this final rule we are editing Sec. Sec. 422.2262(c) and
423.2262(c) to say that CMS does not generally require submission, or
submission and approval, of communications materials prior to use.
With regard to the comment that CMS grant a special enrollment
period based on receipt of inaccurate or misleading information, CMS
has the ability to grant SEPs under Sec. Sec. 422.62(b)(3)(ii) and
423.38(c)(8)(iii) when a plan or its agent, representative, or plan
provider materially misrepresented the plan's provisions in
communications as outlined in Subpart V of this part. Such actions are
made on a case-by-case basis.
Comment: A commenter offered support of the codification of
``intent'' and ``content'' standards currently in the Medicare
Communications and Marketing Guidelines. Specifically, the commenter
supported CMS' proposal to provide a list of what must be included for
a communication material or activity to be considered marketing,
believing it eases the interpretation of the previous definition under
Sec. Sec. 422.2260 and 423.2260.
Response: We thank the commenter for their support.
Comment: A commenter voiced concern regarding the use of the word
``address'' as part of the definition of marketing under Sec. Sec.
422.2260(2) and 423.2260(2). The commenter stated that the term was too
expansive and vague and overly broadens the definition of marketing.
Response: CMS believes that since we changed the definition of
marketing in the final rule ``Medicare Program; Contract Year 2019
Policy and Technical Changes to the Medicare Advantage, Medicare Cost
Plan, Medicare Fee-for-Service, the Medicare Prescription Drug Benefit
Programs, and the PACE Program'' published in the Federal Register on
April 16, 2018 (the April 2018 final rule), we have gained valuable
experience through two ``marketing cycles'' applying and using the new
definition. During this time, we have observed plans using marketing
tactics that skirted the definition of marketing by addressing
marketing content, such as benefits, premiums, or plan comparisons,
without explicitly including the content that are specified in the
definition of ``marketing'' that we proposed and are finalizing in
Sec. Sec. 422.2260 and 423.2260. For example, a plan advertisement
that says ``Plan X monthly premiums are lower than your current
Medicare Advantage plan'' would be marketing under our new definition
but is not clearly within the scope of marketing materials in the
current regulatory definition and guidance. While the advertisement
doesn't list the premium or a specific ranking standard, it addresses
both of these concepts and is clearly designed to draw a beneficiary's
attention to a plan and to influence the beneficiary's enrollment
decision. By using the term ``address'' in the definition we have
proposed and are finalizing, we ensure our review of materials such as
this example would be marketing under the revised definition adopted in
this final rule. The revised definition that we are finalizing provides
an important safeguard for Medicare beneficiaries.
Comment: A commenter expressed displeasure with the ``benefits
disclaimer'' not being included in Sec. Sec. 422.2267 and 423.2267 of
the regulation. Prior to August 6, 2019, the MCMG required plans to
include on marketing materials that list ten or more benefits the
following disclaimer: ``this is not a complete description of benefits.
Call [insert customer service phone number/TTY] for more information.''
Response: We proposed to codify our current policy as the decision
to no longer require this specific benefits disclaimer predates this
rulemaking. As plans must provide a Summary of

[[Page 5987]]

Benefits (SB) and the Pre-Enrollment Checklist (PECL) with an
enrollment form, we believe the benefits disclaimer is no longer
necessary. The SB outlines key benefits, and also provides information
on how to access the Evidence of Coverage (EOC) for a comprehensive
list of all benefits. The PECL prompts the beneficiary to review
important information before making an enrollment decision, including
reviewing the EOC. We believe these documents adequately put
beneficiaries on notice that the EOC is the complete list of benefits
and that the other documents are merely summaries. Therefore, we did
not propose and are not finalizing a requirement to use the benefits
disclaimer used in the past.
Comment: One commenter noted an error in Sec. 422.2266(b). The
commenter pointed out that the sentence should be fixed to say ``. . .
including but not limited to,'' rather than ``. . . including, are not
limited to . . .''
Response: We agree with the commenter and are correcting the
sentence by replacing ``including, are not limited to'' with
``including'' in Sec. 422.2266(b). However, we are not inserting the
remainder of the text suggested by the commenter (``but not limited
to''), as it is an accepted practice to interpret ``including'' as
meaning ``including but not limited to.'' For consistency, we will
apply these changes to Sec. 423.2266(b).
Comment: A commenter expressed concern that we did not include the
requirement that Plans/Part D Sponsors may only advertise in their
defined service area, unless unavoidable.
Response: We note the decision to no longer restrict marketing
outside of a plan's designated service area predates this rulemaking.
This decision was made because it is self-policing, as CMS believes
that MA Plans and Part D sponsors have little incentive to advertise
outside of their service area since beneficiaries must live in the
service area to be enrolled in the plan. In addition, CMS believes that
there is no negative outcome should a beneficiary view marketing for a
specific plan that is not available in their service area, with the
exception of marketing about Star Ratings; with Star Ratings, a
beneficiary might be misled of confused about the rating of specific
plan availing in one area that is offered by a company with a higher
rated plan in a different service area. We are finalizing, in 42 CFR
422.2263(c)(5) and 423.2263(c)(5), the current prohibition on marketing
Star Ratings outside of a service area that is discussed in the MCMG,
section 40.6 (applying the prohibition on misleading marketing and
communications) unless the marketing is conveying overall the
organization's performance. If the Star Ratings are used in marketing
that is distributed outside of the specific service area, the plan must
do so in a way that is not confusing or misleading. CMS's current
policy is to limit Star Rating marketing to the service area in which
the rating is applicable. This policy is to ensure that beneficiaries
are not mislead into believing that a Star Rating earned by ``Plan A''
applies to ``Plan B's'' service area. However, we recognize that
organizations that are expanding into new service areas would not
necessarily have received Star Ratings. We believe that an organization
entering a new area should be able to demonstrate the quality of their
plan when marketing, provided it is not misleading or confusing.
Therefore, we are modifying our current policy to permit the marketing
of Star Ratings outside of the service area if done in a way to convey
overall organization performance without being misleading or confusing.
This is consistent with the overall policy of permitting marketing to
occur outside of a plan's service area.
Comment: A few commenters requested that we expand the Annual
Notice of Change (ANOC) to include notice to enrollees when providers
seen by that enrollee during the past year are no longer in the plan's
network (focusing on Primary Care Providers and specialists).
Response: The ANOC is a document geared for mass distribution to
all enrollees. Adding specific beneficiary information of this type to
the ANOC would not be feasible or advisable given the limitations of
current technology, the effort such an addition would require, and the
possibility of inaccurate data being provided to enrollees given the
fluid nature of provider networks and contracting. Moreover, adding
this information to the ANOC would duplicate an existing requirement at
42 CFR 422.111(e) that plans notify their enrollees when a provider the
enrollee regularly sees will no longer be in the plan's network.
Comment: A commenter stated that the prohibition on robocalling is
implied in Sec. Sec. 422.2264 and 423.2264. The commenter requested
that CMS list robocalling as a prohibited activity.
Response: We appreciate the comment and agree that the prohibition
on unsolicited telephone calls includes robocalling. We are finalizing
the regulation text at Sec. Sec. 422.2264(a)(2)(iv) and
423.2264(a)(2)(iv) with the addition of robocalls to the list of
prohibited activities to eliminate any chance of ambiguity when it
comes to robocalls being considered an unsolicited telephone call. We
note as well that any other type of telephone solicitation would be
prohibited even if not specifically listed because the regulation
prohibits all unsolicited telephone solicitation, not merely calls from
a live person.
Comment: A commenter requested that CMS prohibit MA plans and Part
D sponsors from contacting enrollees based on plan business if the
enrollee has an external agent of record. The commenter expressed
concern that plans could reach out to a member who was enrolled by an
agent, and through a process such as upselling, enroll the member into
a different plan, which could result in the agent no longer receiving
renewal compensation.
Response: We understand the concern, but believe that this concern
-- regarding changes in enrollment directly solicited by the plan that
lead to changes in agent compensation -- is a matter that should be
addressed in the contract between plans and brokers. We reiterate that
cost plans, in addition to MA organizations and Part D sponsors, must
comply with the marketing and communications standards that we are
finalizing here based on existing Sec. 417.428, which requires cost
plans to comply with part 422, subpart V, with the exception of Sec.
422.2276. In applying those provisions, references to MA organizations
should be read as references to HMOs and CMPs, that is cost plans in
part 417.
Comment: A commenter noted differences in the wording between the
February 2020 proposed rule in Sec. Sec. 422.2264(a)(4) and
423.2264(a)(4) (``MA organizations are responsible for ensuring sales
staff, including agents and brokers, abide by Federal and state laws
related to consumer protection, including, but not limited to, do not
call requirements,'') and section 110.3 of the MCMG (Plan/Part D
sponsor Oversight) (``Plans/Part D sponsors must oversee downstream
entities to ensure agents/brokers abide by all applicable state and
federal laws, regulations, and requirements.''). The commenter
expressed concern that the wording might result in states requiring
that MA plans and Part D sponsors be subject to a multiplicity of state
laws that are expressly preempted by federal law.
Response: Existing regulations at Sec. Sec. 422.504(i) and
423.505(i) regulate the relationship between plans and their first
tier, downstream, and related entities and require plans to maintain
oversight and monitoring of these entities and that the related entity,
contractor, or subcontractor must comply with all applicable Medicare

[[Page 5988]]

laws, regulations, and CMS instruction. Therefore, we believe that
there are adequate standards in place to ensure that the beneficiary
protections and marketing and communications rules we are adopting here
will apply to related entities, contractors and subcontractors that
market on a plan's behalf. In addition, section 1851(h)(7)(A) provides
that agents and brokers must be licensed and appointed for the states
where they sell and we believe the regulation is consistent with that
statutory requirement. Based on this, CMS is not including the
provision in proposed Sec. Sec. 422.2264(a)(4) and 423.2264(a)(4) in
the final rule.
Comment: A commenter requested CMS expand the requirement at
Sec. Sec. 422.2274(c)(8) and 423.2274(c)(8) to state that plans must
oversee first tier, downstream, and related entities to ensure agents
and brokers do not charge beneficiaries a marketing fee.
Response: CMS shares the commenter's concern about charging
beneficiaries marketing fees. This final rule governs MA organizations,
Part D sponsors, and their first tier, downstream, and related entities
(including agents and brokers). As required under Sec. Sec. 422.504(i)
and 423.505(i), MA organizations and Part D sponsors are ultimately
responsible for their downstream entities. Therefore, CMS could take
compliance action against the MA organization or Part D sponsor for the
individual's behavior if they are affiliated with, or acting on behalf
of the organization, plan, or sponsor. To clarify this point further,
we are finalizing Sec. Sec. 422.2274(c)(8) and 423.2274(c)(8) with
revisions to prohibit marketing consulting fees from being charged when
a beneficiary is considering enrollment in a plan. The marketing and
communications regulations finalized here also apply to cost plans
based on Sec. 417.428; although there are no explicit regulatory
provisions in Part 417 regarding the downstream entities and
subcontractors of cost plans, cost plans must comply with the
requirement that the plan ensure that beneficiaries are not charged
marketing consulting fees; we therefore expect that cost plans will
instruct and contract with their subcontractors accordingly to ensure
that beneficiaries are not charged these fees.
Comment: Several commenters suggested that CMS do more to protect
dually eligible beneficiaries from misleading marketing practices. The
commenters suggested that CMS require when an agent/broker disenrolls a
beneficiary from an integrated product that the agent/broker provide
the beneficiary a clear explanation of the product from which the
beneficiary is disenrolling, including explaining how the beneficiary's
disenrollment from an integrated product to a non-integrated product
might impact their health care service delivery. Commenters also
suggested that outbound enrollment verification calls by plans and
sponsors include similar information. Commenters also suggested that
CMS should require actual contact with the beneficiary during these
verification calls.
Response: CMS believes the requirements under Sec.
422.2262(a)(1)(xv), (xvi), (xvii), and (xviii) (and the parallel
provisions in Part 423 applicable to Part D plans) function to protect
dually eligible beneficiaries from misleading marketing practices.
Before additional requirements are considered, CMS will continue to
monitor how MA plans and Part D sponsors market to dually eligible
beneficiaries to determine if additional requirements are needed. CMS
believes that the general requirements set forth in Subpart V of this
rule establish the framework necessary for the agency to pursue
additional oversight activities to apply the standards in this final
rule to specific factual circumstances without further rulemaking. We
will also explore changes to agent/broker training and testing to
address this.
Regarding outbound enrollment verification, as reflected in the
requirement in current Sec. Sec. 422.2272(b) and 423.2272(b) (which
are not being amended in this final rule), plans are no longer limited
to verifying enrollment by only phone calls. We now permit plans to
confirm enrollment by letter through the mail because our experience
has demonstrated that it is virtually impossible for plans to guarantee
actual beneficiary contact by phone. Moreover, a hardcopy letter gives
the beneficiary a detailed record that can be saved and provided to
others, including the State Health Insurance Assistance Program (SHIP),
for help and guidance, if needed.
Comment: Several commenters offered support for the requirement at
Sec. Sec. 422.2262(a)(1)(xv)-(xviii) and 423.2262(a)(1)(xiv)-(xvii)
prohibiting MA plans marketing non-D-SNPs as if they were designed for
dually eligible beneficiaries or claiming that they have a relationship
with the state Medicaid agency.
Response: We thank the commenters for their support.
Comment: A commenter voiced concern that the language found in
Sec. Sec. 422.2262(a)(1)(xvi), stating that plans may not market a
non-dual eligible special needs plan as if it were a dual eligible
special needs plan, was too vague and ambiguous. The commenter noted
that the language goes beyond the language found in the current MCMG
and that existing objective limitations are already incorporated in the
other subparagraphs under Sec. 422.2262(a)(1).
Response: We disagree with the commenter that the language is vague
and ambiguous. Through our experience of investigating complaints
concerning D-SNP look-alikes, we have found many examples of plans
mimicking the look and language used by D-SNPs in a manner that is
confusing or misleading to the beneficiary. While we agree that other
provisions in this rule, for example Sec. 422.2262(a)(1)(i), generally
protect against misleading materials, given the vulnerability of the
dually eligible population, we believe that the requirements as written
are warranted and are finalizing these prohibitions as proposed.
Comment: A commenter noted that the guidance regarding dual look-
alike plans in the MCMG prohibits ``targeting marketing efforts
exclusively to dual eligible individuals . . .'', whereas, the
requirement in the February 2020 proposed rule prohibits ``targeting
marketing efforts primarily to dual eligible individuals . . . .'' The
commenter suggested that the final rule use the ``exclusively''
standard from the MCMG.
Response: We respectfully disagree. In our experience investigating
complaints concerning the marketing of D-SNP look-alikes, the current
MCMG language of ``exclusively'' has allowed look-alike plan materials
to include content that is targeted almost exclusively towards dually
eligible beneficiaries with the exception of one or a few sentences
noting that the plan was open to all Medicare eligible individuals.
Based on this experience, combined with the vulnerability of the dually
eligible population, we believe it is important to bolster the language
to include those materials that are primarily focused at the dually
eligible individuals. As such, we will finalize the language under
Sec. 422.2262(a)(1)(xvii) as proposed.
Comment: A commenter was concerned that the language proposed in
Sec. Sec. 422.2264(c)(2)(i) and 423.2264(c)(2)(i) was too vague. The
proposal requires the agent/broker to provide an opportunity for the
beneficiary to determine if they want to continue to a marketing event
directly following an educational event. The commenter stated this was
too vague, resulting in the agent/broker determining if the beneficiary
has given consent.
Response: We agree with this concern in part and have strengthened
the language at Sec. Sec. 422.2264(c)(2)(i) and

[[Page 5989]]

423.2264(c)(2)(i) that requires agents and brokers make the beneficiary
aware of a change in meeting type from educational to marketing and to
provide the opportunity for beneficiaries to leave prior to the start
of the marketing event. With this change from the proposed rule, we do
not believe that the regulation text is vague or requires the agent,
broker or other plan representative to guess whether a beneficiary
wishes to remain for the marketing event. We also note that agents and
brokers, as downstream entities of plans, must abide by the
requirements in Subpart V of this rule, including Sec. Sec.
422.2262(a)(1)(iii) and 423.2262(a)(1)(iii), which prohibits them from
engaging in activities that could mislead or confuse Medicare
beneficiaries.
Comment: A commenter expressed concern that the revisions found in
Sec. Sec. 422.2264(c)(1)(ii) and 423.2264(c)(1)(ii) of the February
2020 proposed rule will allow agents or brokers to set up marketing
appointments directly following educational events. The commenter
stated that ``it appears that an agent or broker could immediately step
out of the room, so to speak, and conduct a sales event.'' Similarly,
another commenter questioned why a previous sub-regulatory requirement
regarding separation of the time and place of marketing and educational
events was not included in the February 2020 proposed rule.
Response: The policy decision to allow marketing and educational
events to occur in a close physical and time proximity predates this
rulemaking, as reflected in CMS's August 6, 2019 Medicare
Communications and Marketing Guidelines Update Memorandum (https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/HPMS/HPMS-Memos-Archive-Weekly). We made this change because it
can be burdensome for beneficiaries to travel to events. If the
beneficiary attends an educational event and wants to hear more plan
specific information via a sales event, we believe it should be allowed
to happen around the same time, rather than requiring the beneficiary
to return on a different day or to a different venue. We, however,
share the concern regarding the meeting type switching without the
beneficiary being aware. As such, we are further strengthening the
language proposed at Sec. Sec. 422.2264(c)(2)(i) and
423.2264(c)(2)(i), to require that a beneficiary be made aware of a
change from educational event to marketing event and given the
opportunity to leave prior to the event beginning.
In addition, if a beneficiary is attending a personal marketing
appointment with a plan representative, the representative would need
to have the beneficiary complete a scope of appointment (SOA) form
prior to any discussion as required under Sec. Sec. 422.2274(b)(3) and
423.2274(b)(3). Finally, current beneficiary protections, such as the
requirements under Sec. Sec. 422.2262 and 423.2262 that plans may not
engage in activities that could mislead or confuse Medicare
beneficiaries or misrepresent the plan (or the entity offering the
plan, such as the MA organization, cost plans, or Part D sponsor),
remain in place under the regulations we are finalizing here.
Comment: Several commenters noted that in an HPMS memo released on
August 6, 2019 titled ``Medicare Communications and Marketing
Guidelines,'' CMS deleted the requirement to include the hours of
operations from the MCMG (section 30.4 of the 2019 MCMG) when listing
the customer service telephone number from materials.
Response: CMS thanks the commenters for identifying this issue. Our
intention in the HPMS memo was to eliminate the listing of the hours of
operation for telesales telephone numbers and not to eliminate the need
for including the customer service hours of operation when the customer
service call center is mentioned. CMS inadvertently removed section
30.4 entirely. We believe enrollees (or prospective enrollees) should
know when they can reach their plan. As proposed and finalized, the
substance of Sec. Sec. 422.2262(c)(1)(i) and 423.2262(c)(1)(i) remains
largely the same: when a plan includes its customer service number, the
hours of operation for the call center must be prominently included at
least once. However, we are finalizing changes from the proposed
regulation text (which addressed the first time the customer service
number appears) to focus on ensuring that the information is provided
in a useful way to beneficiaries by finalizing a requirement that the
hours of operation be prominently included at least once. In addition,
we note that we are finalizing a similar change in Sec. Sec.
422.2262(c)(1)(iii) and 423.2262(c)(1)(iii) regarding inclusion of the
hours of operation for 1-800-MEDICARE; we proposed that the hours of
operation be included each time the 1-800-MEDICARE telephone number or
Medicare TTY appears but are finalizing a requirement that the hours of
operation be prominently included at least once on the material that
includes the 1-800-MEDICARE telephone number or Medicare TTY. These
provisions will ensure that beneficiaries have sufficient information
to know how and when to reach the customer service call center.
Comment: A commenter requested that CMS consider updating
Sec. Sec. 422.2262(c)(1)(i) and 423.2262(c)(1)(i) to say that the
hours of operation must be listed ``at least once'' instead of ``the
first time'' as it was in the February 2020 proposed rule. The
commenter stated that changing the requirement would provide
flexibility regarding where the hours of operation are placed on
materials, resulting in a more beneficiary-friendly location.
Response: We agree that allowing flexibility in where the hours of
operation for the customer service call center is listed could result
in more beneficiary-friendly materials. We are, however, concerned that
updating the requirement to say ``listed at least once'' may allow the
hours of operation to be placed in a way that would obscure this
information from beneficiary view or make it difficult for
beneficiaries to find how to contact the plan call center. To address
this concern, we are finalizing Sec. Sec. 422.2262(c)(1)(i) and
423.2262(c)(1)(i) with the standard that the plan must prominently
include the hours of operation at least once when including its
customer service number.
Comment: Two commenters suggested that CMS should not include
rewards and incentives (R&I) as a part of the content that is
considered marketing in paragraph (2)(iii) of the marketing definition
in proposed Sec. 422.2260(2)(iii). The commenters claimed that the
inclusion of reward and incentive (R&I) would consider this to be
programmatic content and more appropriately treated as Communications,
not subject to the same submission and review requirements. In
addition, one commenter said that are two kinds of R&I related content
that are communicated to beneficiaries. The commenter referred to them
as promotional and programmatic. The commenter said that information
plans may include in their open enrollment materials regarding R&I is
intended to influence a beneficiary's decision-making process when
making a MA plan selection and would be promotional, and rightly
characterized as marketing and subject to submission and review
requirements. The commenter went on to make the distinction that R&I
program content that does not discuss or mention benefits, does discuss
and mention healthcare services, but it does not promote or communicate
cost-sharing,

[[Page 5990]]

available network providers, or other benefit details should not be
considered marketing. The commenters also noted that a blanket
classification of R&I materials as marketing materials, subject to
regulatory requirements, would create additional administrative burden
and could lead to member confusion.
Response: We respectfully disagree with these comments. For
marketing purposes, we view such information as analogous to benefits
in the beneficiary's view even though R&I are not benefits per se. We
believe marketing of rewards and incentives or R&I programs could
influence a beneficiary's decision making process when making a plan
selection. As such, we believe that its inclusion in the content part
of the definition of marketing fits with the overall definition of
marketing. We note to the commenter that, for an activity or material
to be considered marketing, it must meet both intent and content. To
that point, an activity or material that includes or addresses content
about R&I, but does not meet the intent standard specified in the
definition at Sec. 422.2260 would not be considered marketing under
this final rule. Instead, this activity or material would be considered
communications and generally not require submission to CMS. For
example, a plan sending R&I information to a current member as a means
of influencing the member to get a flu shot would not be considered
marketing because the information does not meet the intentions provided
under paragraph (1) of the definition of ``marketing'' under Sec. Sec.
422.2260 and 423.2260. Conversely, a plan marketing to a prospective
member with an advertisement stating ``Members of Plan X receive a $15
coupon book by simply getting their flu shot'' would be considered
marketing as the clearly communicated intent is to use the R&I as a
means of influencing the beneficiary's decision-making process when
making a plan selection. CMS considers information about Rewards &
Incentives to be marketing content and therefore, if the intent
standard in the new definition is met, is subject to all the review and
requirements applied to communications and marketing content.
Comment: A commenter expressed concern that CMS did not include
specific reward and incentives (R&I) communication and marketing
requirements as was done in section 40.8 of the MCMG. The commenter
noted this means plans can market such programs independently, without
context of overall plan benefits to allow individuals to do cost-
benefit analyses regarding whether such incentives are worth it.
Response: The decision to remove certain marketing requirements
directly targeting to R&I programs from CMS marketing and communication
oversight predates this rulemaking. In the MCMG prior to August 6,
2019, plans were directed to provide R&I information in conjunction
with information about plan benefits and include information about all
R&I programs offered by the MA Plan. We determined that these
requirements were overly prescriptive. For example, if a beneficiary
requested information about a specific reward or incentive, we
determined it unnecessary for a plan to include information about all
rewards and incentives. The additional requirements previously
addressed in the MCMG, specifically that the rewards not be used in
exchange for enrollment and be provided to all potential enrollees
without discrimination, are duplicative of other requirements found in
this final rule. We direct readers to section D. Rewards and Incentives
Program Regulations for Part C Enrollees (Sec. 422.134 and Subpart V)
of this final rule for discussion of requirements for R&I programs. We
proposed, and are finalizing, inclusion of information about R&I as
part of the content measure for the definition of marketing under Sec.
422.2260. This means that the marketing of R&I (and materials that
discuss R&I) must comply with all, in some cases more stringent,
marketing requirements set forth in Subpart V, except where otherwise
noted.
Comment: A commenter expressed concern that CMS removed the
language used in the 2019 MCMG that required plans to support any
comparisons with other plans ``by studies or statistical data.'' The
commenter acknowledged that the February 2020 proposed rule, at
Sec. Sec. 422.2263(b)(5) and 423.2263(b)(5), includes the requirement
that such comparisons be not misleading, which was also in the MCMG.
Response: CMS believes the final rule addresses the commenter's
concerns. Under Sec. Sec. 422.2263(b)(5) and 423.2263(b)(5), as
proposed and finalized, plans may not make plan comparisons unless the
information is accurate, is not misleading, and can be supported by the
plan making the comparison. By using the term ``accurate'', CMS expects
that any plan comparison can be substantiated, including by the use of
studies or statistical data or other information. In addition, the
paragraph (2)(ii) of the definition of marketing, at Sec. Sec.
422.2260 and 423.2260, again as proposed and finalized, makes it clear
that plan comparisons are content that is considered marketing, and
thus resulting in a greater level of oversight.
Comment: A commenter recommended that CMS develop marketing
materials for beneficiaries and providers to educate them on the
different types of integrated products and benefits of being in an
integrated product. The commenter also stated that CMS should consider
requiring agents and brokers that use CMS developed materials to
educate all dually-eligible individuals on the availability of highly
integrated products in their market and to use beneficiary education
materials that include a description of the benefits of integrated
product offerings.
Response: We appreciate the comment, but do not believe that
additional actions are needed at this time. Extensive information about
plan options is available to beneficiaries through Medicare.gov, the
Medicare & You booklet and Medicare Plan Finder website. To date, CMS,
in partnership with states, has developed standardized, state-specific
model materials for MMPs that factually describe the benefits received
from Medicare and Medicaid in one plan. In addition, SHIPs play a non-
biased educational role in providing information to beneficiaries about
their Medicare choices as well. We also note that states play a role in
educating beneficiaries regarding integrated products, such as Health
Care Options (https://www.healthcareoptions.dhcs.ca.gov/need-help-choosing-program) which is a beneficiary-focused website sponsored by
the state of California. We will continue to evaluate the need for
additional communications. Finally, we note that plans may continue to
market how their plan benefits structure and organization are
beneficial to enrollees, including providing information about access
to integrated Medicare and Medicaid benefits. We do not believe that
additional action by CMS is necessary at this time.
Comment: A commenter requested that the requirement under
Sec. Sec. 422.2262(a)(1)(x) and 423.2262(a)(1)(x) to include the plan
type at the end of the plan name should not be required every time the
plan name is mentioned. The commenter noted that such a requirement is
not reader-friendly to beneficiaries and seemed unnecessary.
Response: We agree with this comment and are finalizing the
regulation at Sec. Sec. 422.2262(a)(1)(x) and 423.2262(a)(1)(x) with
additional text to clarify that plans are not required to repeat the
plan type when the plan

[[Page 5991]]

name is used multiple times in a material.
Comment: A commenter requested that CMS add the word ``materially''
in front of ``inaccurate'' in Sec. Sec. 422.2262 and 423.2262 so it
would read ``MA organizations may not mislead, confuse or provide
materially inaccurate information to current or potential enrollees.''
The commenter noted that doing so would mirror current guidance
standards (presumably 30.7 of the MCMG and Sec. 422.2264 of the
current regulation).
Response: As explained in the February 2020 proposed rule, our
intent with the revisions to Sec. Sec. 422.2262 and 423.2262 was to
redesignate and reorganize requirements in the current regulations and
to codify existing guidance. As current Sec. Sec. 422.2264(d) and
423.2264(d) and section 30.7 of the MCMG use ``materially'' in setting
forth the requirement, we agree that the revisions finalized here for
Sec. Sec. 422.2262 and 423.2262 should preserve that standard. We are
finalizing Sec. Sec. 422.2262 and 423.2262 to prohibit plans from
misleading, confusing or providing materially-inaccurate information to
current or potential enrollees.
Comment: In addition to the ``mail by'' dates provided for various
required materials and content under Sec. Sec. 422.2267(e) and
423.2267(e), one commenter suggested that CMS also codify the earliest
date health plans may release this information. The commenter suggested
that doing so would simplify the process and allow health plans to
prepare for the mailing.
Response: We agree with this comment and that setting earliest date
that a plan may begin sending materials for a plan year will help
minimize potential confusion for beneficiaries. Therefore, we are
finalizing Sec. Sec. 422.2267(e) and 423.2267(e) with additional text
to permit plans to send required materials once a fully executed
contract is in place but no later than the due dates listed in
Sec. Sec. 422.2267(e) and 423.2267(e) for each material. Use of the
date that the contract is executed for a particular year ensures that
enrollees and potential enrollees are not furnished materials for an
upcoming plan year before both the plan and CMS have committed to the
plan being offered. We note that only required materials that do not
meet the definition of marketing may be sent once a fully executed
contract is in place. Any material that meets the definition of
marketing, unless otherwise noted or instructed by CMS, may not be
distributed until October 1 of each year as required under Sec. Sec.
422.2263(a) and 423.2263(a).
Comment: A commenter pointed out a typo in Sec. Sec. 422.2267(e)
and 423.2267(e) with the words ``or perspective.''
Response: We appreciate the commenter catching the typographical
error. We are finalizing Sec. Sec. 422.2267(e) and 423.2267(e) with
corrections, to read, ``. . . must be provided to current and
prospective enrollees. . . .''
Comment: A commenter requested that CMS also exclude envelopes, ID
cards, and call scripts from the requirement to provide the Federal
Contracting Statement under Sec. Sec. 422.2267(e)(30)(ii) and
423.2267(e)(32)(ii). The commenter noted that these materials were
excluded from requiring the Federal Contracting Statement in Appendix 2
of the MCMG.
Response: We agree with the commenter in part because, as explained
in the February 2020 proposed rule, our intent, with a few exceptions,
with the revisions to Subpart V was to redesignate and reorganize
requirements in the current regulations and to codify existing
guidance. We are finalizing Sec. Sec. 422.2267(e)(30)(ii) and
423.2267(e)(32)(ii) with an additional exclusion for envelopes. We are
not finalizing an exclusion of this required statement from ID cards or
call scripts related to sales and enrollment. Sections 1851(d) and
1860D-1(c) of the Act require CMS to provide for activities to disclose
the potential for termination of MA and Part D plans to promote
informed choice by enrollees; requiring plans to include the Federal
Contracting Statement is consistent with the statute. First, ID cards
are issued after a beneficiary had made an informed choice and are
already excluded from the Federal Contracting Statement requirement.
Second, while appendix 2 of the MCMG did exclude disclaimers (including
the Federal Contracting Statement) from call scripts, the Federal
Contracting Statement is only required to be a part of materials and
information furnished to beneficiaries in connection with information
promoting informed choice regarding enrollment into a plan. Consistent
with this, we are requiring that any call scripts which meet the
definition of marketing, such as sales scripts and enrollment scripts,
include this statement. Under this final rule, the Federal Contracting
Statement must be verbally conveyed along with the other content of the
script.
Comment: A commenter requested that the exceptions that apply to
Sec. Sec. 422.2267(e)(30)(ii) and 423.2267(e)(32)(ii), the Federal
Contracting Statement, apply to all disclaimers specified in Sec. Sec.
422.2267(e) and 423.2267(e).
Response: We respectfully disagree with this comment. Unlike the
Federal Contracting Statement that, with few exceptions, is required on
all marketing materials, the other disclaimers listed in Sec. Sec.
422.2267(e) and 423.2267(e), by design, are limited by their
application (for example, when inviting beneficiaries to an event), or
are triggered based on specific material content (for example, the Star
Ratings disclaimer). Therefore, we do not believe that the general
exclusions in Sec. Sec. 422.2267(e)(30)(ii) and 423.2267(e)(32)(ii)
are appropriate for the other required disclaimers and notices.
Comment: A commenter asked if CMS intentionally omitted the
requirements found in 60.4.1 of the MCMG (Special Guidance for
Institutional Special Needs Plans (I-SNPs) Serving Long-Term Care
Facility Residents). The commenter noted that the additional
flexibility afforded to I-SNPs is important and should either be added
to the final rule or incorporated into sub-regulatory guidance.
Response: We appreciate the feedback. As explained in the February
2020 proposed rule, we intended to redesignate and reorganize
requirements in the current regulations in Subpart V and to codify
existing guidance; that included an intent to incorporate 60.4.1 of the
MCMG into the codified requirements. CMS inadvertently excluded the
marketing restrictions for I-SNPs from the proposed regulation text;
the preamble of the proposed rule, 85 FR 9110-9111, however, did make
clear that we intended to include all of the policies regarding
marketing in a health care setting in section 60 of the MCMG in these
updated regulations. We agree with the commenter that this guidance is
important to plans, beneficiaries, and caregivers. We are finalizing
Sec. 422.2266 with an additional paragraph (f) to codify the current
policy addressing how I-SNPs may market in the context of a long term
care facility. We note that the requirements in Sec. 422.2266(f) apply
to I-SNPs that are contracted with long term care (LTC) facilities as
well as those I-SNPs that have an ownership stake in the LTC facility.
This new regulation text, combined with the other requirements proposed
and finalized in Sec. 422.2266, includes the substance of our existing
I-SNP guidance for MA plans. We note that 42 CFR part 423 regulates the
marketing of Part D and we are not finalizing similar regulation text
for Part D sponsors. Part D only plans should not be marketing I-SNPs
because Part D

[[Page 5992]]

plans do not provide the medical services and thus would not have
contracts with I-SNPs; further, while I-SNPs must be MA-PDs (see Sec.
422.2 definition of specialized MA plans for special needs
individuals), compliance with the marketing and communications
requirements in Sec. 422.2266(f) will necessarily include materials
and activities related to the I-SNP's Part D coverage.
In addition, we also finalizing an additional provision at
Sec. Sec. 422.2264(c)(3)(iv) and 423.2264(c)(3)(iv), to provide that
plans may schedule appointments with residents of long-term care
facilities (for example, nursing homes, assisted living facilities,
board and care homes) upon a resident's request. If a resident did not
request an appointment, any visit by an agent/broker is considered
unsolicited door-to-door marketing and therefore prohibited.
Comment: A commenter expressed strong support of CMS's proposal to
prohibit marketing activities and distribution of marketing materials
in dialysis facilities.
Response: We thank the commenter for the support. Stemming from
section 1851(j)(1)(D)(i) of the Act, CMS has had a longstanding policy
and requirements that limit marketing in healthcare settings. We would
like to clarify that our rules have always allowed for marketing
activities in common areas. We clarify that the prohibition on
marketing activities and the provision of materials in treatment areas,
where patients interact with a provider or the clinical team, does not
include a prohibition of marketing activities or the provision of
marketing materials in common areas. We are including an edit in
sections 422.2266(a)(3) and 423.2266(a)(3) to clarify that, to the
extent that dialysis facilities actually do have such common areas,
that the same limitations would apply to them as to other healthcare
settings. It is not our intent to prohibit marketing for every single
area in a facility/health care provider's location and this change in
policy for dialysis facilities would mirror the policy as it has been
applied previously for all other provider locations.
Comment: A commenter urged CMS to not include the prohibition on
providers being compensated for marketing or enrollment activities in
the final rule. The commenter noted that, the section 70.5.1 of the
Medicare Marketing Guidelines (MMG) issued on 7/20/17 (available here
online: https://www.cms.gov/Medicare/Health-Plans/ManagedCareMarketing/Downloads/CY-2018-Medicare-Marketing-Guidelines_Final072017.pdf), only
restricted compensation based on enrollment activities. The commenter
stated that the language could be read to prohibit plans and providers
from sharing the costs of otherwise permissible provider affiliation
activities and advertising.
Response: We respectfully disagree with this comment. The steps
taken by CMS to restrict compensation to providers for marketing
activities are rooted in ensuring the provider is a neutral party who
is offering guidance to patients based solely on what is best for the
patient. We note that the decision to preclude plans from compensating
providers for marketing activities predates this rulemaking and has
been in section 60.2 of the MCMG since it was first released on July
20, 2018. Additionally, the MMG issued in July 2017, under section
70.5.1, still precluded providers from mailing marketing materials on
behalf of Plans/Part D sponsors. Under our current policies,
affiliation announcements (a provider announcing that they are now [or
continue to be in] a plan's network) are communications if limited to
that information, and thus would be allowed. However, if a plan is
using such an announcement as a veiled means of provider-based
marketing, it would be precluded by this rule, as it would under the
MCMG since the July 2018 version. For example, an affiliation
announcement that says Dr. Smith is now accepting Medicare Advantage X,
then goes on to say that Medicare Advantage X offers $0 copays, and $0
monthly premiums, and that Dr. Smith thinks Medicare Advantage X is the
greatest Medicare Advantage Plan would be prohibited by this rule, as
well as the current rule, as interpreted in the MCMG.
Comment: Several commenters urged CMS to add specific provisions in
the marketing and communications regulations regarding MA special
supplemental benefits for the chronically ill (SSBCI) and how plans may
market them.
Response: In general, CMS respectfully disagrees that additional
regulatory requirements specific to communications and marketing
related to SSBCI are necessary. The requirements in Subpart V establish
standards and requirements to address a wide range of issues and
contexts, rather than having standards for individual benefits, items,
issues, and services. This allows CMS to be more dynamic with regard to
the ever changing communications and marketing environment. The
regulations that we proposed and finalized are as applicable to SSBCI
as they are to other benefits covered and offered by an MA plan.
However, we recognize that beneficiaries should be aware that SSBCI are
not available to all plan enrollees and that the eligibility for these
benefits is limited by section 1852(a)(3)(D) of the Act and Sec.
422.102(f); ensuring a clear statement of these limitations guards
against beneficiary confusion or misunderstanding the scope of these
new benefits. To that end, a new requirement for a disclaimer to be
used when SSBCIs are mentioned is being finalized at Sec.
422.2267(e)(32).
Comment: A few commenters expressed concern that marketing SSBCI
would lead to inappropriate steering or targeting of beneficiaries.
Similar to other comments, the commenters urged CMS to implement
specific requirements under Subpart V of the regulation to guard
against such predatory sales tactics. A commenter feared that brokers
may ask individuals about their health status and use that information
to steer them toward specific plans in violation of anti-discrimination
rules.
Response: CMS respectfully disagrees that additional requirements
for communications and marketing related to SSBCI should be placed
under Subpart V. The requirements, as written in this rule, allow CMS
to pursue any marketing or sales tactics that are misleading or
confusing to the beneficiary, regardless of whether the violation is
tied to specific benefits (like SSBCI). In addition, although CMS
understands the concern expressed about agents and brokers asking
individuals about their health status, when done appropriately, such
activities can be an important part to identifying the best plan for a
beneficiary and addressing eligibility for SNPs that serve individuals
with severe or disabling chronic conditions. CMS has requirements in
place in this rule to ensure plans (including agents and brokers, as
downstream entities of plans) act appropriately when it comes to health
status, namely Sec. Sec. 422.2262(a)(1)(vi) and
422.2264(c)(2)(iii)(B).
Comment: Several commenters requested that CMS provide more
examples pertaining to the restrictions of marketing during the OEP in
Sec. Sec. 422.2263(b)(7) and 423.2263(b)(7).
Response: We agree that providing more examples and illustrations
of how the regulatory standards apply in specific factual situations
can be helpful. However, we believe that sub-regulatory guidance is the
best location for providing additional examples.
Comment: Another commenter also expressed the need for examples.

[[Page 5993]]

However, the commenter also cited the need for CMS to more closely
monitor marketing activities during the OEP. The commenter noted that
if the consequences of marketing during the OEP are not explicit or
consistent, it defeats the purpose of prohibiting plans to market
during this time.
Response: We agree with the commenter that appropriate oversight is
necessary for effective regulatory guidance. The Medicare Advantage OEP
was added to section 1851(e)(2)(G) of the Act by the 21st Century Cures
Act with a prohibition on unsolicited marketing or marketing materials
being sent to Medicare beneficiaries during the OEP and, in the April
2018 final rule, we adopted the specific prohibition in current
Sec. Sec. 422.2268(b)(10) and 423.2268(b)(10) that is being
redesignated with additional provisions at Sec. Sec. 422.2263(b)(7)
and 423.2263(b)(7) in this final rule. Since the April 2018 final rule,
CMS has fielded several questions from plans concerning what can and
cannot be done during the OEP. In addition, CMS has also investigated
complaints received concerning plans the complainant felt were not in
compliance with the prohibitions of marketing during the OEP. CMS has
used this experience to shape the requirements in this final rule,
which includes specific provisions regarding prohibited conduct (such
as sending unsolicited materials that advertise the availability of
this enrollment period and calling former enrollees to solicit
reenrollments) and permitted conduct (such as responding to beneficiary
requests for sales meetings) in addition to the general prohibition on
knowingly targeting or sending unsolicited materials during the OEP.
CMS will continue to monitor compliance with the prohibition of
knowingly marketing to beneficiaries during the opportunity afforded by
the OEP, and take appropriate compliance or enforcement action when
necessary. CMS encourages beneficiaries to report any abusive,
confusing or misleading marketing practices by plans, agents and
brokers by contacting contact 1-800-Medicare. In addition, we encourage
reports of potential violations of this requirement.
Comment: A commenter requested that CMS consider lifting the
restriction on marketing to beneficiaries during the OEP. The commenter
believed information about the OEP should be shared proactively with
beneficiaries so that they are aware of the option to switch MA plans
if the enrollee's MA plan is not a good fit. The commenter noted that
beneficiaries may be losing out on an enrollment opportunity and forced
to stay with their existing plan until the next AEP to make a change
because CMS prohibits plans from proactively marketing information
about the OEP.
Response: The prohibition of marketing during the OEP is
statutorily required so we do not have authority to eliminate it.
Further, CMS believes that the intent of Congress was to allow
beneficiaries to make an enrollment decision during the OEP, without
creating a second opportunity for plans to proactively persuade or
attempt to persuade beneficiaries to switch MA plans. Neither the
statute nor regulation restricts a plan from providing educational
materials or marketing materials if and when the beneficiary
proactively reaches out looking for help during or regarding the OEP.
Comment: A commenter agreed with CMS that marketing and
advertisements should be restricted during the MA OEP. The commenter
noted that during the MA OEP, excessive marketing can be confusing to
seniors and leads people to unnecessarily believe that they need to
make a plan change. The commenter additionally stated that the OEP
should be a time to help seniors process necessary changes that are
based on real issues; not those who have been influenced by excessive
marketing.
Response: We agree with the commenter and believe the requirements
proposed and finalized at Sec. Sec. 422.2263(b)(7) and 423.2263(b)(7)
implement the statutory prohibition and provide the appropriate
beneficiary protections.
Comment: A commenter requested that CMS include language in
Sec. Sec. 422.2263(b)(7) and 423.2263(b)(7)(i) to allow general
information on websites, as currently permitted in section 40.7 of the
MCMG.
Response: We agree with this comment. We are finalizing the
Sec. Sec. 422.2263(b)(7)(i) and 423.2263(b)(7)(i) with an additional
paragraph (E) that permits plans to include educational information,
excluding marketing, on the plan's website about the existence of the
OEP.
Comment: A commenter stated that the language at Sec. Sec.
422.2263(b)(7)(ii)(C) and 423.2263(b)(7)(ii)(C) stating plans ``must
not engage in or promote agent/broker activities that intend to target
the OEP as an opportunity to make further sales . . .'' was vague and
overbroad, as it suggests the intent of the activity alone may
determine whether it is compliant.
Response: We respectfully disagree with the comment. Our goal, as
when the prohibition on marketing during the OEP was originally
codified in the April 2018 final rule, is to implement the statute in a
manner that protects beneficiaries without creating undue burden on
plans. To accomplish this, we consider the intent of marketing
materials or activities. If CMS focused only on the content of
materials or activities, bad actors would be able to evade oversight by
simply excluding certain words, while using materials or conducting
activities with the same overall focus and intended outcome. We also
believe that plans are well equipped to determine if materials or
activities are intended to be used or are being used to target
beneficiaries during the OEP.
Comment: A commenter requested that CMS revise the regulatory text
pertaining to non-renewal notices at Sec. 422.2267(e)(10) to address
the earliest date that health plans may release this information. The
commenter noted that section 100.4 of the MCMG states information about
non-renewals or service area reductions may not be released to the
public, including current enrollees, until notice is received from CMS.
Response: CMS agrees with this comment. Section 100.4 of the MCMG
provides that information about non-renewals or service area reductions
may not be released to the public, including current enrollees, until
notice is received from CMS. As explained in the February 2020 proposed
rule, we intended to redesignate and reorganize requirements in the
current regulations in Subpart V and to codify existing guidance. As
such, we are finalizing Sec. Sec. 422.2267(e)(10)(i) and
423.2267(e)(13)(i) with additional text to permit release of non-
renewal notices after CMS provides notification to the plan. We note
that Sec. Sec. 422.506(a)(2)(ii) and 423.507(a)(2)(ii) state the
beneficiary must receive notice by mail at least 90 calendar days
before the date on which the nonrenewal is effective; we are not
changing or limiting that timeframe in this final rule.
Comment: A commenter suggested that CMS reclassify payments to
third parties, addressed in Sec. Sec. 422.2274(e) and 423.2274(e), as
``payments other than compensation.'' The commenter explained that the
change would not only account for payments to third parties, but also
for payments to agents/brokers that are not considered compensation.
The commenter gave the example that payment to an agent for completion
of health risk assessments is a payment other than compensation because
the payment is not for the sale or renewal of a policy.
Response: CMS agrees with the commenter that additional
clarification

[[Page 5994]]

is necessary. We are finalizing Sec. Sec. 422.2274(e) and 423.2274(e)
as a provision identifying payments that are not compensation but are
administrative payments. We are finalizing the scope of these payments
as proposed, meaning payments for services other than enrollment of
beneficiaries (for example, training, customer service, agent
recruitment, operational overhead, assistance with completion of health
risk assessments), but without the limitation that the payments be made
to a third party. As proposed and finalized, all payments of this type
must not exceed the value of those services in the marketplace. This
standard is intended to ensure that plans do not use these
administrative payments as a means to circumvent the limits on
compensation to agents and brokers. Plans must limit these payments to
the amounts that would be fairly negotiated on the open market for the
administrative services being performed and should be able to
demonstrate that the administrative payments were made for actual
performance when necessary. We are finalizing paragraph (e)(2) as
proposed but without limiting the provision to payments to third
parties.
Comment: A commenter voiced the concern that permitting plans to
contact beneficiaries in another line of business could lead to an
onslaught of unsolicited marketing. The commenter was especially
concerned about unsolicited marketing to dually eligible beneficiaries.
The commenter urged CMS to limit plan outreach/marketing to once a
quarter, a limitation that corresponds with the LIS special enrollment
periods.
Response: CMS understands the commenter's concern. However, CMS
does not believe that outreach for plan business has harmed
beneficiaries. CMS uses the Complaints Tracking Module to log concerns
from beneficiaries and others who call 1-800-Meducare. We have not
received complaints related to inappropriate outreach to enrollees
regarding plan business. In addition, Sec. Sec. 422.564 and 423.564
provide beneficiaries who feel they are being overly bothered by such
calls the option of filing a grievance with the plan under the part C
and D grievance rules. The intent of allowing contact for plan business
is to ensure CMS's rules are not a barrier to a beneficiary gaining
access to helpful plan information, rather than exposing the enrollee
to unsolicited burdensome contact. We do not agree with adopting the
remedy suggested by commenters of limiting contact to once per quarter
because doing so may unintentionally limit what could be wanted or
needed communication for the enrollee. Instead, we are finalizing a
requirement that the plan offer an opt-out when contacting a
beneficiary for plan business at Sec. Sec. 422.2264(b)(2) and
423.2264(b)(2). As a result, plans must respect requests from enrollees
to cease calls to enrollees about plan business. We encourage plans to
develop opt-out procedures and policies that provide the enrollees the
ability to limit calls to particular topics or timeframes as well as
opting out of all future calls. We believe this remedy, as opposed to
an arbitrary cap on calls, provides enrollees with the means to stop
calls should they wish.
Comment: A commenter offered support to CMS's bifurcation of
provider activities under Sec. Sec. 422.2266(c)-(d) and 423.2266(c)-
(d). The commenter noted that Sec. Sec. 422.2266(c) and 423.2266(c)
allowed providers to provide fact-based guidance to their patients on
MA plans.
Response: CMS thanks the commenter for the support.
Comment: A commenter expressed concern that the language used for
the review of communications materials under Sec. Sec. 422.2261(c) and
423.2261(c) implies that the EOC would require filing, as well as CMS
review and approval, before it could be used. The commenter stated that
it was not feasible for plans to get an EOC completed after annual bid
approval, printed for member requests by 10/15 and accessibility-
processed for website availability by 10/15, if plans have to wait for
CMS to review and approve the EOC. The commenter also noted that
currently CMS requires plans to file the EOC, but it gets ``NM'' status
and is available for use immediately after filing in HPMS.
Response: CMS is not changing the process for the submission and
review of the EOC. The EOC is a standardized material, meaning plans
must use the language provided by CMS with no modification. As such,
the potential for a beneficiary to be misled by an EOC is low, and
therefore, the EOC is not prospectively reviewed. Plans are required to
submit the EOC to CMS for retrospective review, and plans must provide
CMS with ready access to the EOC should CMS receive a beneficiary
complaint about the EOC.
Comment: A commenter requested that the CMS final rule include the
qualification under section 30.7 of the MCMG that unsubstantiated
absolute and/or qualified superlatives may be used in logos and
taglines.
Response: CMS agrees with this comment. As explained in the
February 2020 proposed rule, we intended to redesignate and reorganize
requirements in the current regulations in Subpart V and to codify
existing guidance; that included an intent to incorporate 30.7 of the
MCMG into the codified requirements. This exception to the
unsubstantiated statement requirement was unintentionally not included
in the proposed rule. We are finalizing additional text at Sec. Sec.
422.2262(a)(1)(ii) and 423.2262(a)(1)(ii) to allow unsubstantiated
statements, which could be in the form of superlatives or pejoratives,
in logos or taglines. We note that plans are permitted to use
unsubstantiated statements only in taglines and logos, which means that
plans may not include unsubstantiated statements in larger or longer
marketing materials. We further note that it may be possible for some
superlatives or pejoratives to qualify as substantiated statements.
Comment: A commenter, citing proposed Sec. Sec. 422.2267(d)(2)(i)
and 423.2267(d)(2)(i), requested that CMS provide specific guidance in
one place on the requirements in the notice for electronic delivery of
materials and requested clarification whether plans would be permitted
to create their own notice.
Response: Paragraphs (D) and (E) of Sec. Sec. 422.2267(d)(2)(i)
and 423.2267(d)(2)(i) outline the content requirements for the notice.
In addition, paragraphs (A), (B), (C), and (F) provide additional
requirements for a plan to use the flexibility of notice of electronic
access to the EOC, Provider and Pharmacy Directories and Formulary
without prior authorization from the enrollee. Provided the
requirements under Sec. Sec. 422.2267(d)(2)(i) and 423.2267(d)(2)(i)
are followed, plans are permitted to create their own notice.
Comment: A commenter expressed concern that listing the SB as a
model material in Sec. Sec. 422.2267(e)(5) and 423.2267(e)(4) of the
February 2020 proposed rule was going to result in the required use of
a model. The commenter expressed concern that doing so would impact a
plan's freedom to design the SB and explain benefits as they currently
can under Appendix 5 of the MCMG.
Response: As proposed and finalized, the requirements for the SB
are consistent with the current policy in the MCMG, including Appendix
5 of the MCMG. We clarify here that the term standardized materials,
which are specified in Sec. Sec. 422.2267(b) and 423.2267(b) must be
used in the form and manner provided by CMS. Model materials, which are
specified in Sec. Sec. 422.2267(c) and 423.2267(c) are created by CMS
is an example of how to convey beneficiary information. As with current
policy and practice, plans

[[Page 5995]]

may customize the SB so long as all required content is included and
are not required to use the CMS model SB without customization.
Comment: A commenter noted that the MCMG requires the PECL to be
included with the SB, whereas Sec. Sec. 422.2267(e)(4) and
423.2267(e)(3) of the February 2020 proposed rule would require the
PECL be included with the SB and the enrollment form. The commenter
explained that while typically the SB and an enrollment form are
provided together in a pre-enrollment packet, if a prospective enrollee
elects to access plan marketing materials on the plan's website, the
individual will access the SB and enrollment form separately. The
commenter recommended that CMS allow the checklist to continue to only
be included with the SB as required in current guidance.
Response: We agree with this comment in part. We agree that it is
unnecessary to require the PECL be included with the SB and the
enrollment form. However, the PECL was originally developed as a tool
to help beneficiaries consider important questions about their needs
and coverage choices and we have always intended it to be reviewed
prior to making an enrollment decision. As such, we believe it best to
require the PECL with the enrollment form as opposed to the SB. Plans
may include the PECL with other materials, if they choose. We are
finalizing Sec. Sec. 422.2267(e)(4) and 423.2267(e)(3) to require that
the PECL be provided with the enrollment form. As finalized, these
regulations do not require the PECL to be included with the SB but we
encourage plans to do so when it is appropriate and helpful to
potential enrollees.
Comment: A commenter pointed out an error to the requirement for
mailing statements at Sec. 423.2267(e)(36)(i).
Response: CMS appreciates the commenter bringing this error to its
attention. CMS is finalizing Sec. 423.2267(e)(35)(i) (proposed Sec.
423.2267(e)(36)(i)) with a correction to include the same language as
proposed and finalized at Sec. 422.2267(e)(34)(i). These regulations
require MA plans, cost plans and Part D plans to include the following
statement when mailing information about the enrollee's current plan:
``Important [Insert Plan Name] information.''
Comment: A commenter requested that CMS clarify that, consistent
with current policy, the ``Important plan information'' mailing
statement would only be required for current member mailings, as
indicated in Appendix 2 of the MCMG.
Response: CMS confirms that the commenter is correct. Under
Sec. Sec. 422.2267(e)(34)(i) and 423.2267(e)(35)(i), as finalized,
plans must include the statement when mailing information about the
``enrollee's'' current plan, which is synonymous with ``current
member.''
Comment: A commenter requested that CMS re-evaluate the HPMS timing
and submission of the Star Ratings Document to remove the 5-day waiting
period. The commenter stated that, because the document is
automatically generated from HPMS, there is no value in requiring plans
to resubmit the Star Ratings Document back into HPMS as a file and use
material, which requires a 5-day waiting period before the document can
be used. The commenter requested that CMS apply the same guidance to
the Star Ratings document as the Annual Notice of Change (ANOC).
Response: Based on the regulatory definition of marketing under
Sec. Sec. 422.2260 and 423.2260, CMS has determined the Star Ratings
Document is a marketing material. Because the collection of marketing
materials is required under section 1851(h)(1) of the Act, the Star
Ratings Document, as a marketing material, must continue to be
submitted via the HPMS Marketing Module under the defined process. CMS
is finalizing the requirement that the Star Ratings documents are
subject to the 5-day waiting period. This period will provide an
opportunity for CMS to ensure that organizations do not alter the
document as that document is a key piece required with an enrollment
form.
Comment: Two commenters requested that CMS remove the requirement
for the Availability of Non-English Translations disclaimer under
proposed Sec. Sec. 422.2267(e)(32) and 423.2267(e)(34). Both
commenters referenced the requirement tied to section 1557 of the
Affordable Care Act (ACA) as having duplicative requirements. The
commenters stated that the Availability of a Non-English Translations
disclaimer would result in beneficiaries receiving the disclaimer
language multiple times within the same mailing.
Response: CMS understands the concern with duplication. As of this
final regulation, the Office for Civil Rights (OCR) finalized the
regulations implementing section 1557 of the ACA without requiring
disclaimers. Acknowledging OCR's finalized regulations did not include
language-based disclaimers, CMS will not finalize the proposed
Availability of Non-English Translation disclaimer, proposed Sec. Sec.
422.2267(e)(32) and 423.2267(e)(34), in this final rule. To clarify,
there would be no requirement in this regulation for the Availability
of Non-English Translation disclaimer; however, plans must still abide
by OCR's current or future requirements on this topic as they have the
authority to impose such requirements. As such, CMS believes future
rulemaking regarding non-English disclaimers, if appropriate, is best
addressed by OCR, as those requirements would be HHS-wide instead of
limited to CMS. In addition, we note that the other paragraphs in
Sec. Sec. 422.2267(e) and 423.2267(e) will be renumbered as compared
to the proposed rule as a result.
Comment: Several commenters provided support for CMS including non-
English language disclaimers in the proposed regulation.
Response: CMS appreciates the support but has made the decision not
to finalize proposed at Sec. Sec. 422.2267(e)(32) and 423.2267(e)(34)
in this final rule and to defer to OCR for possible future rulemaking.
CMS has determined that deferring to OCR's oversight and management of
any requirements related to non-English disclaimers is in the best
interest of the Medicare program.
Comment: Several commenters requested that CMS remind plans about
their obligations to comply with section 1557 notice requirements,
including ``taglines'' or disclaimers in the top 15 languages and to
conduct enforcement and oversight when appropriate.
Response: We appreciate the comments. We believe it is important
for plans to be cognizant of obligations as they relate to applicable
rules and regulations that require interpreter services, translation of
materials, and associated notices or disclaimers and have included the
requirement in this final rule under Sec. Sec. 422.2267(a)(3) and
423.2267(a)(3).
Comment: Two commenters urged CMS to take this opportunity to
revisit Sec. Sec. 422.2267(a)(2) and 423.2267(a)(2) and require using
a threshold of five percent or 1,000 people in the service area,
whichever is lower, of a population speaking a language other than
English to trigger translations for vital documents.
Response: CMS respectfully disagrees with this comment. CMS
previously considered a similar standard when translation requirements
were first added to Sec. Sec. 422.2264 and 423.2264 in the final rule,
``Medicare Program; Changes to the Medicare Advantage and the Medicare
Prescription Drug Benefit Programs for Contract Year 2012 and

[[Page 5996]]

Other Changes,'' published in the Federal Register on April 15, 2011.
(73 FR 21423, 21512 through 21514) At that time, CMS stated that use of
a standard of the lesser of 5 percent or 500 people would result in all
PDPs and nearly all MAOs providing translated materials in all
languages captured in the ACS data, which would result in a significant
increase in the number of plans required to translate and the number of
languages required for translation. Absent definitive evidence to
support the sharp increase, this would result in insupportable costs
and burden. Although the commenter was suggesting a five percent or
1,000 people in the service area, CMS believes the reasons identified
by final rule cited above still apply and that raising the alternative
minimum standard to 1,000 people from 500 would not significantly
reduce the potential burden. As such, CMS will is finalizing as
proposed the provision at Sec. Sec. 422.2267(a)(2) and 423.2267(a)(c)
setting the translation standard at five percent of the individuals in
a plan benefit package (PBP) service area.
Comment: A commenter requested that CMS allow the Scope of
Appointment (SOA) provision found at Sec. Sec. 422.2264(c)(3)(i) and
423.2264(c)(3)(i) to be satisfied by a simple question on the coverage
application, with additional paperwork only required if the appointment
topic shifts beyond the scope of Medicare.
Response: Section 1851(j)(2)(A) of the Act requires the Secretary
to establish limitations to require advance agreement with a
prospective enrollee on the scope of the marketing appointment and
documentation of such agreement, which must be in writing if the
marketing appointment is in person; section 1860D-4(l) imposes the same
requirements in the Part D program. The regulations proposed, and
finalized, at Sec. Sec. 422.2264(c)(3)(i) and 423.2264(c)(3)(i),
implement these statutory requirements. We believe that using the
enrollment form, typically a document that is used at the end of a
personal marketing appointment, would not be consistent with the
statute. Therefore, we are finalizing these provisions.
Comment: A commenter requested that CMS clarify what is meant by
``use of a previous post'' as stated in Sec. Sec. 422.2262(b)(1)(iv)
and 423.2262(b)(1)(iv). The commenter stated that it is unclear what
types of social media ads would be considered product endorsements or
testimonials.
Response: The phrase ``previous post'' refers to a social media
post that had been made in the past or prior to its use, sharing, or
posting by a different user. For example, a plan enrollee tweets that
they were able to quit smoking thanks to a smoking cessation program
offered by Super Duper Medicare; if Super Duper Medicare shares (by
retweeting or otherwise) that tweet with their followers, it would be
considered a use of a previous post. Under Sec. Sec.
422.2262(b)(1)(iv) and 423.2262(b)(1)(iv), as proposed and finalized,
this use of the previous post is a product endorsement or testimonial.
We will provide additional examples as necessary through sub-regulatory
guidance and training.
Comment: A commenter requested that CMS consider changing the
training and testing standards at Sec. Sec. 422.2274(b)(2) and
423.2274(b)(2) to relax the requirements for more seasoned (5 years or
longer) agents and brokers. The commenter stated doing so would
encourage longevity and stability among private Medicare agents and
brokers.
Response: CMS appreciates the comment and will consider this in
future rulemaking, but believes further analysis and consideration is
necessary before adopting such a policy. This policy would potentially
increase the complexity of agent and broker oversight. Further, we
believe we should analyze the cost implications, including potential
additional costs (or savings) of implementing a tiered approach to
agent and broker training and testing.
Comment: A commenter requested CMS clarify that ``applicable
disclaimers,'' as used in Sec. Sec. 422.2265(a)(1)(iii) and
423.2265(a)(1)(iii), are those disclaimers required by CMS.
Response: Sections 422.2265(a)(1)(iii) and 423.2265(a)(1)(iii)
refer to notices, statements, disclosures, and disclaimers required for
plan use under other statutes or regulations, such as (but not
necessarily limited to) the disclaimers required under Sec. Sec.
422.2267(e) and 423.2267(e). To clarify this point, we have updated the
language at 422.2265(a)(1)(iii) and 423.2265(a)(1)(iii) to include
notices, statements, disclosures in addition to disclaimers.
Comment: A commenter requested that CMS limit the requirement at
Sec. 422.2265(a)(1)(iv) regarding the need to update websites with the
most current information within 30 days to only updates to the website
that are material changes.
Response: CMS agrees with this comment as it would be overly
burdensome to require plans to update non-material changes, such as a
new company mascot, within 30 days. Moreover, non-materials changes are
not impactful to a beneficiary's ability to have access to the
information needed to make an educated enrollment decision. CMS is
finalizing Sec. Sec. 422.2265(a)(1)(iv) and 423.2265(a)(1)(iv) with
revisions to limit the requirement to update the website to material
changes. CMS is finalizing the remaining substance of the regulation as
proposed.
Comment: One commenter requested that CMS complete a thorough
review of the website requirements to ensure consistency with current
guidance as well as inclusion of any requirements outside of the MCMG.
The commenter provided two examples. They noted that the Final Rule
published on February 12, 2015 (CMS-4159) required plans to post their
disaster and emergency policy annually on the website and the CY 2014
Final Call Letter required plans to have a dedicated Medication Therapy
Management MTM program linked from their plan website and it be
accessible by clicking through a maximum of two links.
Response: We agree with this commenter and confirm the two
requirements noted. We are finalizing Sec. 422.2265(b) with a
modification to include a requirement to post disaster and emergency
policy annually as outlined under Sec. 422.100(m)(5)(iii). We are
finalizing Sec. 423.2265(b) with a modification to include the most
recent MTM program website requirements. While CMS strives to list all
website requirements under Sec. Sec. 422.2265 and 423.2265, we note
that the lack of a requirement in these sections does not remove plan
responsibility for compliance if requirements are adopted elsewhere.
Comment: A commenter recommended CMS align Provider Directory PDF
web posting requirements with MCMG section 70.2 (Searchable Formularies
and Directories), which indicates that a searchable tool (for example,
search engine/database) may be a substitute for downloadable PDF
directories as long as all instructions and template information are
provided.
Response: CMS respectfully disagrees with this comment. Currently,
the regulation at Sec. 422.111(h)(2)(ii) requires the MA plan's
website to have information (names, addresses, phone numbers, and
specialty) about network providers. Our current guidance, in MCMG
section 70.2, provides that organizations that have a searchable
directory on their website are not required to have a downloadable
directory on their website. However, regulations at Sec. Sec.
422.111(h)(2)(ii) and 423.128(d)(3) still require organizations

[[Page 5997]]

to provide materials in hard copy when requested. Therefore, the
provision of hard copies of provider and pharmacy directories is
currently a requirement for plans. In addition, now that a greater
number of materials may be made available electronically under
Sec. Sec. 422.2267(d)(2) and 423.2267(d)(2), we believe that it is
even more important for beneficiaries to have access to a PDF of the
compete directory or formulary; this is especially true for the
provider directories because prior consent from the enrollee is not
required for a plan to use electronic delivery instead of mailing hard
copies for provider directories. Our electronic delivery regulations
permit organizations to notify individuals that certain materials can
be accessed via a website or other method. These materials, unless
requested by the beneficiary, will not be mailed in hard copy. As
proposed and finalized, Sec. Sec. 422.2265(b)(3) and 423.2265(b)(3)
require plans to post a pdf or copy of a printable version of their
provider and pharmacy directories on their website. Even though there
is great value in making available on the website a tool or
functionality that allows the beneficiary to search for a specific
provider or drug based on set criteria, searchable formularies or
directories do not allow a beneficiary the ability to view or download
the directory or formulary as they would if it had been mailed. For
that reason, we believe searchable directories and downloadable PDF
documents are distinctly different and are not equivalent in their
utility to a beneficiary.
Comment: A commenter inquired about the elimination of the
requirement that plans use CMS standard icons when marketing a plan's
Star Rating. The commenter noted that, previously, plans were not
permitted to create their own gold star icon or any other icon of
distinction, however, under the revision of the MCMG, plans could
create their own gold star icon (or any other icon of distinction) so
long as the icon is not misleading or confusing to beneficiaries. The
commenter then stated that it was unclear to them how CMS would
determine whether a plan-created icon was misleading or confusing.
Response: As explained in the February 2020 proposed rule, we
intended to redesignate and reorganize requirements in the current
regulations in Subpart V and to codify existing guidance; that included
the ability for plans to create their own star icon, which we proposed
at Sec. Sec. 422.2263(c)(6)(ii) and 423.2263(c)(6)(ii) and are
finalizing here. The revision to the MCMG, section 40.6.1, to permit
such plans to create their own Star Ratings icons was announced in an
HPMS memo updating the MCMG on August 6, 2019 and predates this
rulemaking. If warranted, CMS may examine the effects of allowing plans
to use their own icons to denote CMS 5 Star Ratings. CMS will take
appropriate action against any plan that uses icons that are misleading
or confusing to beneficiaries and we intend to use information such as,
but not limited to, beneficiary complaints, CMS marketing reviews, and
CMS surveillance activities to identify violations of the prohibitions
on misleading or confusing beneficiaries. At this time, we believe that
providing plans with this flexibility, while also continuing to
prohibit misleading marketing and communications, is appropriate. We
note that we proposed and are finalizing the longstanding requirement
that low performing plans use the specific CMS-created Low Performing
Icon, state what that icon means, and may not attempt to refute or
minimize their Low Performing Status, as stated in Sec. Sec.
422.2263(c)(7) and 423.2263(c)(7). In situations where a plan has been
assigned the Low Performing Icon, there is a greater incentive for a
plan to mischaracterize its Star Ratings; therefore, by requiring use
of the CMS-created icon in those situations, we are sufficiently
guarding against the negative consequences of allowing plans to create
and use their own Star Ratings icons. Additionally, we will continue to
rely on the practices we have developed, discussed in prior responses,
for determining whether marketing language and methods are misleading
or confusing, including the use of plan-created icons.
Comment: A commenter was concerned about the limited enforcement in
the marketplace regarding marketing and referral fees. The commenter
suggested that instead of making changes to the requirements, CMS
should improve its coordination with state departments of insurance to
enforce existing regulations.
Response: CMS has mechanisms in place to monitor agent and broker
behavior in the marketplace, including prospective and retrospective
marketing reviews, CMS regional office account manager oversight, ad
hoc review by CMS Central Office staff, notification by peers (that is,
other health plans), and notification through 1-800-MEDICARE (via the
Complaints Tracking Module (CTM)) on a case-by-case basis.
Additionally, CMS reviews agent/broker payment data in the HPMS agent/
broker payment database for anomalies. CMS has a memorandum of
understanding (MOU) with all states to facilitate coordination with
state Departments of Insurance in order to share information and work
with these departments as appropriate. CMS also may take compliance or
enforcement action if it determines plans are not adhering to CMS'
requirements, including the requirements at Sec. Sec. 422.504(i) and
423.505(i) for the oversight of first tier, downstream, and related
entities, which includes for agents and brokers.
Comment: A commenter suggested that individuals not discuss
benefits with beneficiaries in any Medicare plan unless they are
licensed and certified.
Response: CMS believes beneficiaries need to understand their
benefits and to require a beneficiary to only speak to a licensed and
certified agent about the benefits in a plan would be burdensome to
both the beneficiary as well as the plan. For example, CMS does not
require a customer service representative (CSR) to be licensed and
certified to answer a beneficiary calling to determine what the co-pay
would be for a medical procedure. The requirements in Sec. Sec.
422.2272 and 423.2272 are designed to ensure that an individual
conducting marketing activities (that is selling) and enrolling
individuals into a plan are licensed and certified. CMS also has rules
in place at Sec. Sec. 422.503(b)(4)(vi)(F), 422.504(i)(3)(iii),
423.504(b)(4)(vi)(F), and 423.505(i)(3)(iv) requiring that MA
organizations and Part D plans contractually require downstream and
first tier entities to comply with Medicare rules when doing Medicare
business. We believe these requirements appropriately safeguard the
beneficiary without the need for additional restrictions.
After careful consideration of all the comments we received, and
for the reasons set forth in the February 2020 proposed rule and in our
responses to the comments, we are finalizing the proposed changes to
amend part 422, Subpart V (Sec. Sec. 422.2260 through 422.2274) and
part 423, Subpart V (Sec. Sec. 423.2260 through 423.2274), with some
modifications. Some comments alerted us to typographical errors in
either the preamble or regulatory text of the proposed rule; we are
finalizing the regulation text with those necessary corrections. Some
comments requested immediate clarification of our intentions or
semantics, which we have provided as appropriate. Some comments were
ultimately requests for clarifications or for additional guidance and,
in most cases as noted in our responses to those comments, we intend to
update our sub-regulatory guidance to clarify those

[[Page 5998]]

instructions. There were some comments that caused us to rethink the
nature of our proposed changes. We have also made technical and
grammatical changes to some provisions without changing the substance
of the proposed policy. Finally, we are finalizing the following
substantive changes compared to the proposed provisions in addition to
the substantive changes discussed in our responses to comment (e.g.,
the revision to Sec. Sec. 422.2264(c)(3) and 422.2264(c)(3) regarding
appointments with residents of long-term care facilities).
We are making four changes that are not specifically based on
comments. First is with regard to how required content (disclaimers)
outlined under Sec. Sec. 422.2267(e) and 422.2267(e) are classified as
either standardized under Sec. Sec. 422.2267(b) and 423.2267(b), or as
model under Sec. Sec. 422.2267(c) and 423.2267(c). We have
reconsidered some of those classifications to provide for more
flexibility for certain disclaimers by changing them from standardized
to model content. This change will give plans the option to adjust the
language used to convey the required message (that is, the disclaimer)
in a manner that is both understandable and consistent with other plan-
based communications. Aside from providing more flexibility, the
requirement for when the noted content must be used, as well as the
beneficiary protections afforded by the substantive message the content
is conveying, remains the same.
The following required content is changing from standardized to
model:

Sec. Sec. 422.2267(e)(31) and 423.2267(e)(33), Star Ratings
disclaimer
Sec. Sec. 422.2267(e)(33) and 423.2267(e)(34), accommodations
disclaimer
Sec. Sec. 422.2267(e)(36) and 423.2267(e)(37), provider co-
branding disclaimer
Sec. 422.2267(e)(37), out of network non-contracted provider
disclaimer
Sec. 422.2267(e)(38), NCQA SNP approval statement

We remind plans that, as required under Sec. Sec. 422.2262 and
423.2262, the language used for required content may not mislead,
confuse, or provide materially inaccurate information.
Second change, we are finalizing Sec. Sec. 422.2261(a)(2) and
423.2261(a)(2), with the heading Submission, review, and distribution
of materials, with modifications from the proposal. In the February
2020 proposed rule, we proposed that materials must be submitted to the
HPMS directly by the MA organization and that third party and
downstream entities are not permitted to submit materials directly to
CMS. This provision was, in part, based on technological limitations of
the HPMS Marketing Module that did not have a means for third parties
to submit materials directly to CMS. During the time between publishing
the NPRM and this final rule, we have begun updating the HPMS Marketing
Module. As a part of this update, we are considering changes that may
allow third parties, with the appropriate safeguards, to submit
materials on behalf of a plan or plans. As such, we are updating the
final rule to include Sec. Sec. 422.2261(a)(3) and 423.2261(a)(3)
which state that unless specified by CMS, third party and downstream
entities are not permitted to submit materials directly to CMS. This
added flexibility will give the agency the ability to grant third party
access in the future.
Third, we are finalizing a change to remove ambiguity from the
prohibition on providing gifts unless they are of a nominal value under
Sec. Sec. 422.2263(b)(2) and 423.2263(b)(2) by clearly indicating the
provision is applicable to all beneficiaries, that is both current and
potential enrollees. In the February 2020 proposed rule, we proposed
edits to the language in the existing regulations (Sec. Sec.
422.2268(b)(2) and 423.2268(b)(2)) to cite the HHS OIG guidance
governing nominal gifts for Medicare beneficiaries. In doing so, our
intention was for this requirement to apply to both current and
potential enrollees (that is those eligible for Medicare), as is the
case with the OIG's requirements as well as our current requirements
found under section 40.4 of the MCMG. Sections 1851(j)(2) and 1860D-
04(l)(2) of the Act effectively prohibit gifts unless they are nominal
gifts to prospective enrollees by requiring that limitation to be
included in marketing standards established for the Part C and Part D
programs. In addition, section 1856(b) authorizes CMS to adopt
standards to implement the statute and section 1857(e)(1) of the Act
authorizes the adoption of additional contract terms that the agency
determines are necessary and appropriate and not inconsistent with the
Medicare statute. Similar authority in connection with the Part D
program is in section 1860D-12(b)(3) of the Act. Under this authority,
we are finalizing the prohibition on gifts to any beneficiary, except
for nominal gifts that are within the value set in the OIG guidance
that are offered to all beneficiaries. This is consistent with our
current policy. CMS has historically viewed prohibitions on gift giving
to apply to both prospective and current plan members and Medicare
beneficiaries are prospective enrollees. This prohibition protects
beneficiaries from making an adverse enrollment decision because they
were influenced by the receipt of a plan gift. It also protects those
beneficiaries who may have been persuaded to remain enrolled in a
particular plan based on receiving a plan gift. We are also finalizing
a change in Sec. Sec. 422.2268(b)(2) and 423.2268(b)(2) of the
regulation to say that nominal gifts must be provided to ``similarly
situated'' beneficiaries as opposed to the current wording of ``all
beneficiaries''. We are making this change to allow plans to provide
nominal gifts as a part of attending an event without obligating the
plan to provide that gift to all current and prospective members
regardless of event attendance.
Fourth, we failed to list the Part D EOB under Sec. 423.2267(e)
(CMS required materials and content), even though we did list the Part
C EOB under Sec. 422.2267(e)(2). (For additional information on the
Part C EOB, please see Sec. 422.111(k) of this final rule.) This was
an oversight when we published the proposed rule. It is important to
note that the Part D EOB is already required under Sec. 423.128(e) and
its inclusion in the list at Sec. 423.2267(e)(2) is to make it easier
for users of the regulation to identify the various materials and
content required as a Part D sponsor. We have also renumbered this
section accordingly to account for the addition.
CMS is finalizing these provisions as applicable for coverage
beginning January 1, 2022, so these regulations will cover marketing
and mandatory disclosures made in 2021 for enrollments made for
effective dates in 2022. Additionally, this final rule largely
reorganizes current regulations and codifies current policies. As such,
CMS encourages MA organizations to take this final rule into account
immediately.

F. Past Performance (Sec. Sec. 422.502 and 423.503)

Since the publication of the first Medicare Advantage (MA) and Part
D program regulations in 2005, CMS has established, at Sec. Sec.
422.502(b) and 423.503(b), that we may deny an application submitted by
an organization seeking an MA or Part D sponsor contract if that
organization has failed to comply with the requirements of a previous
MA or Part D contract. In the April 2011 final rule, we completed
rulemaking that placed limits on the period of contract performance CMS
would review (that is, 14 months

[[Page 5999]]

preceding the application deadline) and established that CMS would
evaluate contract compliance through a methodology that would be issued
periodically through sub-regulatory guidance (75 FR 19684 through
19686). In the April 2018 final rule, we reduced the review period to
12 months (83 FR 16638 through 16639).
In the proposed rule, CMS sought to add clarity and predictability
to our review of MA and Part D applicants' prior MA or Part D contract
performance by identifying in the regulation text the criteria we will
use to make a determination to deny an application based on prior
contract performance. This approach will replace the past performance
methodology that CMS developed and issued annually through sub-
regulatory guidance.
CMS' overall policy with respect to past performance remains the
same. We have an obligation to make certain that MA organizations and
Part D sponsors can fully manage their current contracts and books of
business before further expanding. CMS may deny applications based on
past contract performance in those instances where the level of
previous non-compliance is such that granting additional MA or Part D
business opportunities to the responsible organization would pose a
high risk to the success and stability of the MA and Part D programs
and their enrollees. Accordingly, we proposed to adopt three factors,
each of which, on its own, represents significant non-compliance with
an MA or Part D contract, as bases for denying an MA or Part D
application: (A) The imposition of civil money penalties or
intermediate sanctions, (B) low Star Ratings scores, and (C) the
failure to maintain a fiscally sound operation. We proposed that the
presence of any one of these factors in an applicant's record (with the
exception of intermediate sanctions imposed on dual eligible special
needs plans (D-SNPs) under Sec. 422.752(d)) during the past
performance review period could subject it to the denial of its MA or
Part D application. Once finalized, these three bases would be added to
our already codified authority and may be used to deny an application
based on CMS' termination of an applicant's previous contract under
Sec. Sec. 422.502(b)(3) and 423.503(b)(3). We note that while in the
June 2020 (85 FR 33796) final rule we adopted Sec. 422.116(a)(1)(ii),
which states that CMS will not deny an application on the basis of an
evaluation of the applicant's contracted provider network, we also
stated in the preamble to the final rule at 85 FR 33866 that CMS would
still consider intermediate sanctions or CMPs imposed based on non-
compliance with network requirements as bases for the denial of an
application based on failure to comply with a current or previous
contract. Also, we decline to consider an application from an
organization still covered by the 2-year period during which it had
agreed, pursuant to Sec. Sec. 422.508(c) and 423.508(e), not to
submit applications for new MA or Part D contracts as part of a mutual
termination agreement entered into with CMS pursuant to Sec. Sec.
422.508(a) and 423.508(a).
For one of these proposed bases for application denial to be
considered, we proposed that the relevant non-compliance must be
documented by CMS (through the issuance of a letter, report, or other
publication) during the 12-month review period established at
Sec. Sec. 422.502(b)(1) and 423.503(b)(1). Thus, CMS may include in
our analysis conduct that occurred prior to the 12-month past
performance review period but either did not come to light, or was not
documented, until sometime during the review period.
In evaluating applications submitted by organizations with no
recent MA or Part D contracting history, we proposed to consider the
performance of contracts held by the applicant's parent organization or
another organization controlled by the same parent and ascribe that
performance to the applicant. Specifically, we proposed to identify
applying organizations with no recent prior contracting history with
CMS (that is, a legal entity brand new to the Medicare program, or one
with prior Medicare contract experience that precedes the 12-month
review period). We would then determine whether that entity is held by
a parent of other MA organizations or Part D sponsors or otherwise
shares common control with another contracting organization. In these
instances, it is reasonable in the absence of any recent actual
contract performance by the applicant due to a lack of recent Part C or
Part D participation, to impute to the applicant the performance of its
sibling organizations as part of CMS' application evaluation. Should
one or more of the sibling organizations meet one of the bases for
denial stated in (b)(1)(i), the application from the new legal entity
would be denied.
We proposed to codify the new bases for application denial based on
past contract performance as paragraphs (b)(1)(i)(A)--low Star Ratings,
(b)(1)(i)(B)--intermediate sanction or CMP, and (b)(1)(i)(C)--failure
to maintain fiscally sound operation under Sec. Sec. 422.502 and
423.503. The provision governing the consideration of applicant's
parent organizations or sibling entities will be stated at Sec. Sec.
422.502(b)(1)(ii) and 423.503(b)(1)(ii).
Comment: A commenter noted that the proposed regulatory provision
as it applies to Part D is stated in error. The revisions should have
been made to Sec. 423.503, not Sec. 423.502.
Response: We have revised the regulation language to be consistent
with our discussion in the preamble to the proposed rule, so that the
modification is made to Sec. 423.503.
Comment: Several commenters objected to the use of CMPs as a sole
basis for denying an application based on past performance. Some
commenters noted that CMPs are imposed in a wide range of dollar
amounts and for a wide range of instances of non-compliance. They
maintain that often CMPs are not issued based on what could be
considered substantial failures to meet MA or Part D program
requirements. Also, CMPs are frequently based on performance
information resulting from a routine CMS program audit. Commenters
stated that, since CMS audits only a portion of all MA or Part D
sponsors in a given year, using CMPs as a basis for evaluating past
performance is unfair since organizations are not uniformly at risk of
earning a CMP and thus being subject to an application denial based on
past performance. As a result, some commenters recommended the
elimination of CMPs altogether as a basis for denial. Others suggested
that CMS count only CMPs above a certain threshold dollar amount.
Response: We appreciate these comments and acknowledge that, while
all CMPs are based on significant non-compliance, the wide range of
dollar amounts of CMPs imposed each year reflects a variation in the
severity of conduct upon which they are based. It is worth considering
whether all CMPs warrant treatment as a basis for determining that an
applicant's past Medicare contract performance warrants denial of their
MA or Part D contract qualification application. Therefore, we will
strike CMPs from the regulation as a basis for an application denial
based on past performance. We may consider in a future rule whether we
should establish thresholds in dollar amounts or types of non-
compliance that would warrant denial.
Comment: Several commenters expressed opposition to the use of just
one year of low Star Ratings as a basis for denying an application
based on poor past performance. Generally, they stated that one year of
Star Ratings was not necessarily a true reflection of an

[[Page 6000]]

organization's performance and that consideration of a three-year
period of ratings was a better basis for making a determination of poor
past performance. Adopting this approach would be consistent with the
standard used to identify contracts with the low performing icon (LPI)
on the Medicare Plan Finder (MPF). Commenters also contend that one
year's performance might be an outlier for an organization that
otherwise has consistently good ratings. This is a particular concern
given the uncertainty surrounding the potential impact of the COVID-19
pandemic on quality measures. Finally, one commenter suggested that we
adopt overall scores as opposed to summary scores as the Star Ratings
basis for denial for MA-PD organizations since the overall score
reflects the full range of operations of those organizations.
Response: The regulations at Sec. Sec. 422.510(a)(4)(xi) and
423.509(a)(4)(x) already establish our authority to terminate an MA or
Part D sponsor contract in the event that it fails for three
consecutive years to achieve at least one summary rating score of at
least three stars. Also, for 38 months following such a termination,
CMS may deny a contract qualification application submitted by the
terminated organization or one of its related entities, per Sec. Sec.
422.502(b)(3) and (4) and 423.503(b)(3) and (4).
After reviewing comments and reconsidering, we are persuaded that 1
year of low ratings may be considered a contract compliance failure,
but not a substantial failure on par with the other two denial bases
being finalized in this rule (that is, sanctions and financial
solvency). By regulation, we have already established that 3 years of
low ratings is a substantial failure, justifying termination. In
comparison, enrollment sanctions are almost always based on substantial
compliance failures. Also, financial solvency issues by definition pose
a significant risk to a contracting organization's ability to
substantially comply with a contract. Therefore, those two topics
continue to warrant adoption as bases for application denial based on
poor past contract performance. Accordingly, in the final rule, we are
removing low Star Ratings from the list of bases for an application
denial. We note, however, that low Star Ratings remain a basis for the
denial of an application during the three years following the CMS
termination of a contract based on three consecutive years of low
ratings, pursuant to Sec. Sec. 422.52(b)(3) and 423.503(b)(3).
Comment: Several commenters recommended that a determination to
deny an application based on past performance should be based on
multiple factors, not the presence of any one of the bases (that is,
sanction/CMP, low Star Ratings, or financial risk). This approach would
be modeled more like our previous approach to making past performance
determinations, where we used a published methodology that described 11
elements we would consider, along with point values assigned to each
and established point total thresholds for denying an application.
Commenters believe that, by allowing denial based on the presence of
any one of our three proposed bases, our approach does not allow for a
comprehensive review of the applicant's true performance.
Response: The two bases for an application denial that we adopt
through this rule (enrollment sanctions and financial solvency) each by
their nature already capture significant and comprehensive information
about an applicant's past contract performance. Therefore, it is
appropriate for CMS to rely on the presence of either of the bases to
support a determination to deny an application.
CMS may impose enrollment sanctions in instances where it has found
that an organization has substantially failed to comply with the terms
of its Medicare contract. In our experience, such a determination may
be based on a systemic failure of the organization that produces non-
compliance across a range of requirements or a comprehensive failure to
properly administer a critical MA or Part D plan function. Either way,
the information that would support an enrollment sanction would in all
instances paint a detailed enough portrait of the organization's
performance to warrant the application denial.
Financial solvency goes to the heart of any organization's ability
to meet all of its obligations as an MA organization or Part D sponsor.
For an organization that cannot meet the programs' solvency
requirements, no further analysis of its capacity to take on additional
Medicare business is necessary, since this type of non-compliance
places in jeopardy the organization's ability to even meet its current
contractual requirements.
Comment: Several commenters recommended that CMS should afford
applicants the opportunity to correct the performance that would form
the basis for a determination that they failed to comply with a current
contract before CMS makes a final decision to deny the application.
Response: We believe that a ``curing opportunity'' is inconsistent
with the purpose of the past performance review. In effect, through the
past performance denial authority, CMS takes a snapshot of an
applicant's performance during a specific period of time and uses that
information as a kind of credit report to evaluate whether the
applicant should reasonably be entrusted with a new or expanded
Medicare contract. In that kind of analysis, the only relevant
information is the actual history of significant non-compliance that
has occurred during the review period. The fact that the non-compliance
occurred in the first place speaks to recent gaps in the applicant's
ability to manage its current Medicare business. An applicant curing
non-compliance during the review period reassures CMS that the
organization should continue to administer its current contract, but a
more sustained period of compliance is appropriate to demonstrate that
its operations are stable enough to warrant eligibility for new
Medicare business.
We also note that the past performance provision has its own built-
in cure period in the form of the 12-month review period. By operation
of the regulation, CMS reviews a new 12-month period during each annual
application review cycle. As a result, past non-compliance does not
stay on an applicant's record for a sustained period of time, and an
applicant that might have been denied based on past performance in one
application cycle can find itself eligible for approval in the very
next cycle if it has taken effective corrective action.
Comment: Some commenters recommended that the regulation be revised
to exclude intermediate sanctions as a basis when the organization has
cured the relevant non-compliance and the sanction has been lifted
during the review period. The commenters maintain that the lifting of
the sanction is evidence that the organization has restored its ability
to successfully manage its current operations and therefore should be
eligible to apply for additional contracts.
Response: For the purposes of assessing qualification for a new MA
or Part D contract, we believe that we should consider all instances of
failure to comply described in the regulation that occurred throughout
the twelve-month review period. While, of course, CMS expects all
sanctioned organizations to move promptly to complete the necessary
corrective action to have a sanction removed, we believe that in any
instance, the fact that a sanction had to be imposed at all speaks to
the stability of the organization and is relevant to whether it should
be approved for a new contract. The

[[Page 6001]]

applying organization will receive credit for resolving the non-
compliance that warranted the sanction during the next past performance
review period, when, presumably, the organization will not have an
active sanction in place at any time during the applicable 12-month
review period.
Comment: A commenter advocated that our past performance authority
should not be applied to applications where the purpose is not for the
applicant to qualify for a new contract or a current contract with an
expanded service area, but for a parent organization to restructure
their existing set of MA or Part D sponsor contracts. The commenter
noted that parent organizations periodically restructure their Medicare
managed care business without taking on new Medicare business. Often
this is done through one affiliate of the parent applying to qualify as
an MA organization so that it may assume responsibility, through
novation, of a contract held by another of the parent's affiliates or
through consolidation of two current contracts. The commenter is
concerned that our proposed policy would preclude parent organizations
from making legitimate reorganizations of their business arrangements.
Therefore, the commenter urges us to adopt an exception to our use of
poor past performance as a basis for denying MA and Part D applications
when they are part of a parent organization's plan to reorganize its
contracting arrangements
Response: We note that under the regulation, parent organizations
are not precluded from reorganizing their business arrangements. CMS
conducts the past performance analysis at the level of the contracting
entity. Parent organizations looking to have other entities take over
one of their subsidiary's Medicare contracts can select an entity that
already has an MA or Part D sponsor contract for that purpose. Assuming
that the experienced entity does not meet any of the bases for a past
performance-based denial, the entity would be eligible for approval to
take over the contract held by its sibling company.
The only instance where CMS considers the past performance of an
entity other than the applicant is when the applicant does not
currently hold an MA or Part D sponsor contract but is related to a
parent organization that has at least one subsidiary that is an MAO or
Part D sponsor. In that instance, if one of the parent's subsidiaries
met the criteria for a past performance-based application denial, we
would deny the application from the ``inexperienced'' entity. While the
application approval would not necessarily result in additional or
expanded Medicare business for the parent organization, allowing
another contracting entity with no Medicare experience of its own but
related to an entity with demonstrated compliance issues does not
promote the effective administration of the Medicare program. Even if
the parent organization is seeking only to rearrange the contracting
entities holding its Medicare contracts, and not to expand its number
of contracts, plan offerings, or enrollees, it still would be looking
to add to its roster of qualified contracting entities at a time when
its efforts should be focused on bringing all of its current
contracting entities into compliance with their contracts. In effect,
the parent organization would be attempting to expand its Medicare
business capability without focusing attention on resolving existing
weaknesses in its operations. We do not believe that parent
organizations should be permitted to evade our past performance review
authority in that manner.
Comment: A commenter stated that organizations that acquire poor
performing contracts should not have the performance of the acquired
contract counted as part of the parent organization's past performance.
The commenter noted that the acquiring organization should have time to
focus on improving the performance of the newly acquired contract, for
which it had no responsibility, without having to jeopardize its
opportunity to pursue other MA or Part D lines of business.
Response: We agree with this comment. The commenter is in effect
requesting that we codify the ``grace period'' policy we had previously
included in the Past Performance Methodology. Specifically, when an
organization acquired a contract with a record of issues related to
non-compliance, under the Methodology, the purchasing parent was
afforded a two-year period, calculated from the date of closing, before
any negative performance by the purchased entity or contract would be
imputed to the parent's existing entities. We adopted this policy in
recognition of the fact that the enrollees in the non-compliant plans,
as well as CMS, can benefit from a stronger organization taking over
responsibility for a poor performing contract. The acquisition of a
Medicare contract by a competent contracting organization is much less
disruptive to plan enrollees than termination or non-renewal, which
would require enrollees to obtain different Medicare coverage, often
resulting in different benefit plans and providers. We believe, in the
context of the evaluation of contract qualification applications, that
it is important to the administration of the MA and Part D programs
that qualified organizations not be discouraged from pursuing
acquisitions that could resolve issues created by non-compliant
contracting organizations and result in uninterrupted access to
benefits and providers for the affected enrollees. To ensure that our
past performance policy supports that goal, we are amending the
regulation to exempt organizations for two years following the
completion of an acquisition from the provision that applies the past
performance record of other subsidiaries of a parent to an applicant
from the same parent with no Medicare contracts. This provision will
remove any concerns an acquiring organization might have that taking on
a poor performing contract would compromise its ability to submit a
successful contract qualification application.
Comment: A commenter recommends that we provide clarification
regarding our use of the term, ``may'' in the regulation text for this
provision. Specifically, the commenter notes that language at Sec.
422.502(b)(1)(i) stating that, ``An applicant may be considered to have
failed to comply with a contract . . .'' [emphasis added] conveys the
message that CMS may or may not deny an application from an
organization that meets at least one of the proposed criteria. The
commenter also states that such an interpretation means that applicants
meeting the criteria should have the opportunity to present information
about extenuating circumstances. The commenter asks that if CMS intends
that there be no flexibility in the application of our denial
authority, we should make that explicit in the regulation text.
Response: As we stated in the preamble to the proposed rule, by
adopting these new past performance review criteria, we sought to ``add
clarity and predictability to our review of MA and Part D applicants'
prior MA or Part D contract performance.'' Accordingly, we proposed to
establish three clear bases for denial, each of which on its own is
sufficient to establish conclusively that an applicant has failed in a
significant way to comply with MA or Part D requirements. This
streamlined approach differed from our previous approach of publishing
an annual Past Performance Methodology, through which we would announce
the scoring of the multiple performance elements we would consider and
how we would score applicants' past performance, including setting
point thresholds to identify those whose application would be denied.
In

[[Page 6002]]

establishing all of our review criteria in regulation and streamlining
the number of factors to be considered, we intended to convey to
applicants that CMS will deny any applicant that meets any of the new
bases for a denial based on past performance. Therefore, organizations
should expect that we will not consider requests that we exercise
flexibility in the application of the new criteria and grant an
approval to an application that meets the denial criteria.
With respect to requesting an opportunity to provide information
about extenuating circumstances to CMS for consideration, we note that
our regulations still provide the opportunity for denied applicants to
request a review by a CMS hearing officer, and if unsuccessful there,
by the Administrator. More significantly, enrollment sanctions have
their own reconsideration process through which an organization may
assert that extenuating circumstances justify a CMS decision to decline
to impose the sanction.
Comment: A commenter urged that the past performance review should
not include contracts that the applicant has already non-renewed or
terminated for the upcoming contract year.
Response: We believe that the past performance analysis must be
based on an applicant's actual performance history, which should not be
subject to revision after the fact. An organization that non-renews a
particular contract for an upcoming contract year has already
established its performance history through its operation of that
contract. The non-renewal does not change the fact that there is record
of performance for CMS to review and consider in evaluating whether
that entity deserves a new or expanded MA or Part D contract. Moreover,
we would be concerned that adopting the commenter's policy would create
the wrong set of incentives for contracting organizations. They should
be encouraged to improve the performance of their existing contract
rather than abandon the contract, and its enrollees, for the
opportunity to seek to operate a new set of plans under a new contract.
Comment: A commenter questioned us to clarify that the analysis of
past performance under this provision is to be done of the contracting
organization and not of all contracts controlled by its parent
organization. The commenter believed that our previous application of
the past performance authority was done at the parent organization
level and unfairly punished large parent organizations that controlled
an extensive number of Medicare contracts.
Response: The new provisions we adopt in this rule continue our
general policy of evaluating the past performance of the contracting
organizations that have submitted applications, not their parent
organizations. We have codified here the exception to that policy that
we established under the previous Past Performance Methodology. That
is, when an organization that does not hold an MA or Part D sponsor
contract but is related to a parent organization that does hold at
least one contract itself or through another subsidiary, we do apply
the past performance record of the experienced subsidiary to the new
applicant.
Comment: A commenter expressed support for our decision to exclude
enrollment sanctions imposed against D-SNP organizations from
consideration as a sanction that would form the basis for a past
performance-based application denial.
Response: We appreciate the commenter's expression of support.
Comment: One commenter agreed with our proposal not to penalize an
MA organization based on non-compliance with integration standards at
the plan level. They suggested that CMS provide an initial enforcement
safe harbor from enrollment sanctions for D-SNPs who have made a good
faith effort to negotiate SMAC contracts with states. They stated that
imposing these sanctions on D-SNPs while implementing look-alike
standards could mean that beneficiaries could lack access to transition
into otherwise compliant D-SNPs.
Response: We appreciate the support for excluding D-SNP
intermediate sanctions for failure to implement the BBA of 2018 D-SNP
requirements from past performance. However, changes to the D-SNP
intermediate sanction policy are out of scope for this regulation.
Comment: A commenter questioned CMS to clarify whether an
enrollment prohibition imposed pursuant to Sec. Sec. 422.2410(c) and
423.2410(c) against an organization that failed for three consecutive
years to meet the minimum medical loss ratio (MLR) threshold would
count as an enrollment sanction for the purposes of a past performance-
based application denial.
Response: We intended to include all enrollment sanctions,
including those based on the failure to meet the minimum MLR, as a
basis for application denial based on past performance, with the
exception of those related to the failure of D-SNPs to integrate
Medicare and Medicaid benefits, which we specifically excluded. The
failure to reference the MLR sanctions in the proposed rule was simply
a drafting oversight since that sanction authority resides in a
different part of the MA and Part D regulations than Subpart O of Parts
422 and 423 where the general enrollment sanction authority resides.
Accordingly, we are revising Sec. 422.502(b)(1)(A) to add, ``an
enrollment sanction imposed pursuant to Sec. 422.2410(c)'' and Sec.
423.503(b)(1)(A) to add ``an enrollment sanction imposed pursuant to
Sec. 423.2410(c)'' to the statement of enforcement-related bases for
CMS to deny an application based on poor past performance to make
explicit the imposition of an MLR sanction as a basis for application
denial.
Congress established the significance of the MLR requirement by
mandating as part of the MA statute at section 1857(e)(4)(B) of the Act
and incorporating by reference into the Part D statute through1860D-
12(b)(3)(D) of the Act that organizations that consistently fail to
meet the 85 percent threshold should be prohibited from accepting new
enrollments until they can demonstrate that they comply with the MLR
requirement. Since the failure to meet the MLR requirement for three
consecutive years is subject to the same penalty that may be applied to
all other forms of substantial compliance failures, it follows that we
include the MLR failure among the bases for an application denial based
on poor past performance.
Comment: A commenter maintained that contracts with low enrollment
or a large portion of plan enrollees of low socioeconomic status (SES)
should not be subject to application denials based on poor past
performance.
Response: The commenter provided no explanation of why,
specifically, organizations that operate plans with low enrollment or
with a large portion of beneficiaries with low SES should be excluded
from the past performance review standard. These characteristics should
have no bearing at all on two of the new bases for denial, financial
solvency and intermediate sanctions.
No matter the level of a Medicare plan sponsor's enrollment or its
proportion of beneficiaries with low SES, it must have sufficient
financial resources to meet adequately its obligations to provide
health care and prescription drug benefits to its members. Also, the
required level of financial resources varies at least in part based on
an organization's enrollment, so those with low enrollment should not
be uniquely adversely affected by the financial solvency bases for
application denial.
An MA organization or Part D sponsor must comply with the
requirements of

[[Page 6003]]

the Part C and D programs, regardless of their level of enrollment or
proportion of beneficiaries with low SES. Enrollees in low enrollment
plans are not entitled to any lesser level of access to Medicare
services, nor should CMS expect weaker Medicare contract administration
from organizations offering such plans. Therefore, again, organizations
with low enrollment are not uniquely in jeopardy of being unfairly
subject to an intermediate sanction. Also, as with any sanctioned
organization, a low enrollment organization may always challenge the
imposition of the sanction through the appeals process stated in
subpart O of Part D 422 and 423. Similarly, enrollees with low SES
should receive the same level of Medicare services as all other
enrollees, and should receive these services from organizations with
sufficient resources to provide them.
Comment: A commenter questioned that CMS continue to produce the
Past Performance Outlier report that CMS previously issued every six
months to provide contracting organizations information concerning
their past performance record.
Response: We will discontinue publishing the Past Performance
Outlier report. CMS had adopted the report as a tool to assist
organizations in tracking their scores as it was calculated under the
multi-factor Past Performance Methodology. Such a report was useful
when an organization's performance was assessed various point values
and denial was based on those points meeting certain thresholds.
However, given the simplicity of the new method for determining whether
an applicant will be denied based on past performance, all
organizations can track their past performance status for themselves,
and no CMS report is needed.
After consideration of these comments, we are finalizing the
proposal with the following modifications:
(1) We are removing from Sec. Sec. 422.502(b)(1)(i)(A) and
423.503(b)(1)(i)(A) references to CMPs as a basis for a determination
that an applicant has failed to comply with a previous Medicare
contract;
(2) We are removing the references to Star Ratings as a basis for
denial at paragraph (B) of Sec. Sec. 422.502(b)(1)(i) and
423.503(b)(1)(i) and re-labeling the proposed paragraph (C) concerning
fiscal solvency as the new paragraph (B).
(3) We are adding language to Sec. Sec. 422.502(b)(1)(ii) and
423.503(b)(1)(ii) to provide parent organizations that acquire poor
performing contracts a two-year grace period during which the
performance of the acquired contract will not be considered as part of
our evaluation of an application submitted by a new subsidiary of the
parent;
(4) We are adding language to Sec. Sec. 422.502(b)(1)(i)(A) and
423.503(b)(1)(i)(A) clarifying that enrollment sanctions imposed for
failure to comply with MLR requirements for three consecutive years
will be considered among the sanctions that qualify for a determination
that the applicant failed to comply with a previous Medicare contract;
and
(5) We are making the technical correction to make the relevant
Part D modifications at Sec. 423.503, not Sec. 423.502.

G. Prescription Drug Plan Limits (Sec. 423.265)

Section 1857(e)(1) of the Act, incorporated for Part D by section
1860D-12(b)(3)(D) of the Act, provides CMS with the authority to
establish additional contract terms, not inconsistent with Part D, that
CMS finds ``necessary and appropriate.'' Section 1860D-11(d)(2)(B) of
the Act provides CMS with the authority to negotiate bids and benefits
that is ``similar to'' the statutory authority given to the Office of
Personnel Management (OPM) in negotiating health benefit plans. We
interpreted this authority to mean that we can negotiate a plan's
administrative costs, aggregate costs, benefit structure and plan
management (70 FR 4296). CMS regulations at Sec. Sec. 423.272(a) and
423.272(b) require Part D sponsors to submit bids and benefit plans for
CMS approval. As stated in Sec. 423.272(b), CMS approves the plan only
if the plan's offerings comply with all applicable Part D requirements.
Similarly, regulations at Sec. 423.265(b)(2) require that multiple
plan offerings by Part D sponsors represent meaningful differences to
beneficiaries with respect to beneficiary out-of-pocket costs or
formulary structures.
As we have gained experience with the Part D program, we have made
consistent efforts to ensure that the number and type of plans that PDP
sponsors may market to beneficiaries are no more numerous than
necessary to afford beneficiaries choices from among meaningfully
different plan options. CMS has declined to approve more than three
stand-alone prescription drug plans offered by a Part D sponsor in a
PDP region--one basic plan and (at most) two enhanced plans. A basic
plan consists of the following: (1) Standard deductible and cost-
sharing amounts (or actuarial equivalents), (2) an initial coverage
limit based on a set dollar amount of claims paid on the beneficiary's
behalf during the plan year, (3) a coverage gap phase, and (4) a
catastrophic coverage phase that applies once a beneficiary's out-of-
pocket expenditures for the year have reached a certain threshold. An
enhanced plan is an optional plan offering, which provides additional
value to beneficiaries in the form of reduced deductibles, reduced cost
sharing, additional coverage of some or all drugs while the beneficiary
is in the gap phase of the benefit, coverage of drugs that are
specifically excluded as Part D drugs under paragraph (2)(ii) of the
definition of Part D drug under Sec. 423.100, or some combination of
those features. Section 423.104(f)(2) prohibits a Part D sponsor (as
defined in Sec. 423.4) from offering enhanced alternative coverage in
a service area unless the sponsor also offers a prescription drug plan
in that service area that provides basic prescription drug coverage.
Prior to adopting regulations requiring meaningful differences
between each plan sponsor's plan offerings in a PDP Region, our
guidance allowed sponsors to offer additional basic plans in the same
region as long as they were actuarially equivalent to the basic plan
structure described in statute. However, under Sec. 423.265(b)(2), PDP
sponsors are no longer permitted to offer two basic plans in a PDP
Region because Part D sponsors cannot demonstrate a meaningful
difference between two basic plans and still satisfy statutory
actuarial equivalence requirements. In addition, we believe that
allowing more than one basic plan could result in sponsor behaviors
that adversely affect the program, such as the creation of plan options
designed solely to engage in risk segmentation whereby one basic plan
would target enrollment of the LIS beneficiaries and the second basic
plan would target a lower risk population. As it stands, healthier
beneficiaries are increasingly being incentivized to enroll in low
premium enhanced plans, leading to a higher risk pool in the basic
plans. Permitting a sponsor to offer two basic plans in a region could
ultimately result in increasing bids and premiums for basic plans,
given that LIS auto-enrollment is limited to basic plans. Total
government costs would likely increase because CMS pays most of the
premium for LIS beneficiaries.
Since the beginning of the Part D program, CMS has consistently
tried to ensure that Part D sponsors only market the number and type of
PBPs necessary to offer beneficiaries meaningfully different plan
options and allow them to carefully examine all of the plan offerings.
However, we were persuaded

[[Page 6004]]

by the argument that allowing sponsors to offer enhanced prescription
drug plan offerings that are not meaningfully different with respect to
beneficiary out-of-pocket costs could lead to more innovation and
provide sponsors with added flexibility to offer health care options
that can be tailored to different beneficiary choices with a portfolio
of plan options with different benefits, pharmacy networks, and
premiums. As such CMS eliminated the meaningful difference requirement
between a plan sponsor's enhanced alternative benefit offerings
effective for contract year 2019. As a result of eliminating this
requirement, we have seen a greater number of enhanced plan offerings.
CMS has examined Part D plan payment data in cases and markets with
different numbers of enhanced plans. When looking at this data, we
noted that markets with a greater number of enhanced plans have higher
costs than basic plans. This was true even when controlling for other
factors, such as population health and age. In these cases, the basic
component of enhanced plans' bids was found to trend higher than basic
plan bids themselves. Given the upward impact to program costs, CMS
proposed to codify our policy of limiting the total number of allowed
plan offerings by a Part D sponsor in a PDP region to offering no more
than three prescription drug plans (one basic and up to two enhanced)
per PDP region by adding a new paragraph at Sec. 423.265(b)(2). Since
this change would codify our existing practice, this change would not
alter any existing processes or procedures within the Part D bid
submission and approval process.
We solicited stakeholder input as to the impact of limiting the
number of enhanced plan offerings to two. In addition, we sought
information on what type of impact expanding the number of enhanced
plan alternatives would have and whether there is any need for more
than two standalone enhanced plan options per PDP sponsor per PDP
region.
We received 15 comments on this proposal, which we have summarized
below, and our responses follow:
Comment: Most commenters supported our proposal, citing the benefit
of helping ensure that beneficiaries are able to choose from among
meaningfully different plan offerings and the harm of risk
segmentation. The few commenters that disagreed with the proposal
stated their belief that the plan limit unnecessarily hinders sponsors
from offering a broader range of more innovative plan designs.
Response: We appreciate commenters support for this proposal as
well as the concern that was raised by the commenters that opposed it.
Based on our annual review of Part D sponsors plan benefit packages, we
believe that the current policy gives plans sufficient ability to
innovate. In addition, we believe that the potential negative
consequences of permitting sponsors to offer more than one basic plan
and two enhanced plans per PDP region, those consequences including
risk segmentation leading to additional costs to the government coupled
with the risk that there may not be meaningful differences between
plans offerings, outweigh any minimal benefit that may occur from
allowing Part D sponsors the ability to administer additional plan
offerings.
After careful consideration of all comments received, and for the
reasons set forth in the proposed rule and in this response to
comments, we are finalizing the proposed changes to Sec. 423.265(b)(2)
without modification. However, we recognize that this regulatory
provision is closely intertwined with our policy for crosswalking of
enrollees, under varying circumstances, within a plan sponsor's benefit
offerings. In the event that we decide to reexamine that policy, we may
revisit this limitation on the number of PDP plans offered in a region.
Although we are finalizing this provision as applicable beginning
January 1, 2022, it codifies current policies so we encourage Part D
sponsors to take this final rule into account immediately.

H. Definition of a Parent Organization (Sec. Sec. 422.2 and 423.4)

Pursuant to our authority under sections 1856(b) and 1860D-12(f)(1)
of the Act, we proposed to codify our definition of parent organization
for purposes of the MA and Part D programs as the legal entity
exercising controlling interest in an MA organization or Part D
sponsor. We proposed adding a definition for the term ``parent
organization'' to Sec. 422.2 in part 422, subpart A, and Sec. 423.4
in part 423, subpart A, to reflect this understanding.
We proposed the codification to ensure that the MA and Part D
programs apply a consistent definition of parent organization. CMS uses
the identity of an MA organization's or Part D sponsor's parent
organization in a variety of operational contexts, including, but not
limited to:

--Determining whether an individual can be deemed to have elected
enrollment in a D-SNP based in part on his enrollment in an affiliated
Medicaid managed care plan (Sec. 422.66(c)(2));
--Accounting for contract consolidations in assigning Star Ratings
under the Quality Rating System for health and/or drug services of the
same plan type under the same parent organization (Sec. Sec. 422.162
and 423.182);
--Determining whether a new MA contract constitutes a new MA plan for
calculation of Star Ratings, benchmarks, quality bonus payments, and
beneficiary rebates, (Sec. 422.252).
--Recognizing an individual's appointment as an MA organization's or
Part D sponsor's compliance officer based on his or her status as an
employee of the organization, its parent organization, or a corporate
affiliate (Sec. Sec. 422.503(b)(4)(vi)(B)(1) and
423.504(b)(4)(vi)(B)(1));
--Determining whether an applicant for a new PDP contract is eligible
to receive a contract in a particular service area (Sec.
423.503(a)(3)) after evaluating whether the approval of an application
would result in a parent organization, directly or through its
subsidiaries, holding more than one PDP contract in a PDP region;
--Determining whether to administer an essential operations test to a
Part D contract applicant new to the Part D program (Sec. Sec.
423.503(c)(4) and 423.505(b)(27), taking into account the exemption
from the essential operations test for subsidiaries of parent
organizations that have existing Part D business;
--Releasing summary Part D reconciliation payment data at the parent
organization level (Sec. 423.505(o)); and
--Determining whether CMS will recognize the sale or transfer of an
organization's PDP line of business, where CMS regulations require the
transfer of all PDP contracts held by the selling or transferring
sponsor unless the sale or transfer is between wholly owned
subsidiaries of the same parent organization (Sec. 423.551(g)).

We currently define the term ``parent organization'' for purposes
of applying the prohibition against approving an application that would
result in a parent organization holding more than one PDP sponsor
contract in a region as an entity that exercises a controlling interest
in the sponsor. (See Sec. 423.503(a)(3)). In conjunction with the
proposal to codify a more detailed definition that would apply
throughout the MA and Part D programs, we proposed to delete that
language in Sec. 423.503(a)(3).
Under the proposed definition, a parent organization is the legal
entity that holds a controlling interest in the

[[Page 6005]]

MA organization or Part D sponsor, whether it holds that interest
directly or through other subsidiaries. The controlling interest can be
represented by share ownership, the power to appoint voting board
members, or other means. Control of the appointment of board members is
particularly relevant with respect to not-for-profit organizations,
where there is often no direct corollary to the ownership of corporate
shares in for-profit organizations. We recognize that the many ways
that one legal entity may have a controlling interest in another legal
entity are varied and could take many forms too numerous for us to
create an exhaustive list. Therefore, we proposed a definition that
includes the ability for us to look at other means of control to be
exercised or established.
We further specified that the parent organization cannot itself be
a subsidiary of another entity. This ensures that each MA organization
or Part D sponsor has a single parent organization for purposes of the
MA and Part D programs. For example, if Company A owns 80 percent of
Company B, which in turn owns 100 percent of an MA organization,
Company A would be the parent organization of the MA organization under
the proposed definition.
We explained that the proposed definition codifies current policy
and ensures continued consistency throughout the MA and Part D
programs. We note that this definition of parent organization will
apply in implementing the proposed change to Sec. 422.550 regarding
the type of change of ownership that CMS would permit for MA contracts;
we discuss that proposal in section V.D. of this final rule.
Comment: A commenter suggested that we further clarify what we mean
by ``controlling interest'' by specifying that it means ownership of a
``majority'' of shares, appointment of a ``majority'' of voting board
members, and/or by being a sole member.
Response: We do not believe this clarification is necessary or
appropriate. We also believe it may unnecessarily narrow the definition
of ``controlling interest'' to one that simply counts shares of stock
when organizations may adopt other criteria for allocating board
membership and voting rights. For example, two organizations may own
equal shares in a legal entity, so that neither holds a majority of
shares, but the articles of incorporation or other organizational
documents may specify that one of them has the power to cast the
deciding vote when they disagree. In such a situation, CMS may
determine that the organization with the power to make decisions in
case of dispute is the parent despite there not being a single majority
shareholder. Conversely, if two organizations owned equal shares of a
legal entity and appointed equal numbers of board members and the
organizational documents specified that decisions must be made jointly,
CMS might determine that neither organization is the parent; additional
factual information might be necessary to identify the organization
that owns a controlling interest in the particular entity.
After consideration of the comments and for the reasons outlined in
the proposed rule and our response to comments, we are finalizing the
provision as proposed without modification. Although we are finalizing
this provision as applicable to coverage beginning January 1, 2022, it
codifies current policies so we anticipate that there will be no change
in operations or administration of the MA and Part D programs and
encourage MA organizations and Part D sponsors to take this final rule
into account immediately.

I. Call Center Requirements (Sec. Sec. 422.111 and 423.128)

In implementing sections 1851(d) and 1860D-4(a)(3) of the Act, CMS
established, at Sec. Sec. 422.111(h) and 423.128(d), that MA
organizations and Part D sponsors are required to have in place a
mechanism for providing, on a timely basis, specific information to
current and prospective enrollees, and, for a Part D plan, to
pharmacies in the plan network, upon request. One of these enumerated
mechanisms includes operating a toll-free customer service call center.
In this final rule, CMS is adding greater specificity and clarity
to our requirements for MA and Part D plans by delineating more
explicit minimum performance standards for MA and Part D customer
service call centers, as well as ensuring greater protections for
beneficiaries. We proposed changes to Sec. Sec. 422.111(h) and
423.128(d) for this purpose and explained in the proposed rule our
goals of providing plans clear standards under which to operate their
customer service call centers and eliminating uncertainty with regard
to CMS's expectations. Customer service call centers include call
centers operated for current enrollees, prospective enrollees, and for
pharmacies in plans' networks that are seeking information on drug
coverage for customers enrolled in a particular plan. For the most
part, we proposed, and are finalizing, amendments to Sec. Sec.
422.111(h) and 423.128(d) to codify existing guidance and CMS's overall
policy with respect to operating a toll-free customer service call
center remains largely the same. We have always expected MA
organizations and Part D sponsors to operate customer service call
centers in a way that ensures beneficiaries and pharmacies have timely
and accurate access to information about benefits in a manner that they
can understand and use. Providing specific performance standards in
regulation text clearly lays out the performance requirements and our
expectations for customer service call centers. Additionally,
beneficiaries will benefit from CMS holding plans to clearly defined
call center standards. As we explained in the proposed rule, failure to
comply with the more specific minimum requirements finalized in this
rule would represent significant deviation from acceptable call center
operational practices and a significant risk to beneficiaries' well-
being under our enforcement policies and applicable regulations.
In Sec. Sec. 422.111(h)(1)(i) and 423.128(d)(1)(i), we proposed
that customer service call centers must be open from at least 8:00 a.m.
to 8:00 p.m., local time, in all service areas and regions served by
the MA or Part D plan, and for Part D plans, that any call center
serving network pharmacies or pharmacists employed by those pharmacies
must be open any time a pharmacy in the plan service area is open. We
reminded stakeholders that MA-PD plans are Part D plans that must
comply with Part 423 requirements. We proposed these timeframe
standards to lend greater specificity to the current regulation text,
which only requires a call center to be open during ``normal business
hours.'' We explained that 8:00 a.m.-8:00 p.m. constitutes normal
business hours for beneficiary access, based both on our knowledge of
industry-wide practices and our experience with MA and Part D plans'
call center operations in particular. Codifying the requirement for
call centers serving network pharmacies to be open any time a pharmacy
in that network in the plan's service area is open reflects the need to
resolve questions about benefits and coverage promptly at the point of
sale. The vast majority of current MA and Part D plans meet these
standards. We explained that by requiring plans to be open for calls
from current and prospective enrollees from 8:00 a.m. to 8:00 p.m. in
all service areas or regions served by that Part C or D plan, our
proposal would ensure that in instances in which plans operate in

[[Page 6006]]

service areas that straddle multiple time zones, all beneficiaries and
pharmacists have equal access to call center services.
We proposed in Sec. Sec. 422.111(h)(1)(ii) and 423.128(d)(1)(ii) a
series of minimum requirements that define specific operational
requirements for customer service call centers. In Sec. Sec.
422.111(h)(1)(ii)(A) and 423.128(d)(1)(ii)(A), we proposed to codify
the requirement that the average hold time be 2 minutes or less, with
specific text to explain when the two-minute count starts to ensure
consistent application of the metric by defining the hold time as the
time spent on hold by callers following the interactive voice response
(IVR) system, touch-tone response system, or recorded greeting, before
reaching a live person. In Sec. Sec. 422.111(h)(1)(ii)(B) and
423.128(d)(1)ii)(B), we proposed to codify the requirements that the
call center answer 80 percent of incoming calls within 30 seconds after
the Interactive Voice Response (IVR), touch-tone response system, or
recorded greeting interaction. In Sec. Sec. 422.111(h)(1)(ii)(C) and
423.128(d)(i)(ii)(C), CMS proposed to codify the requirement that 5
percent or less of incoming call calls be disconnected or unexpectedly
dropped by the plan customer call center. These standards both ensure
that beneficiaries can consistently access call centers in a timely
manner and set thresholds that plans can reasonably attain. We
explained that data gathered from our call center monitoring studies
indicates that 90 percent of MA organizations and Part D sponsors have
average hold times of less than 2 minutes, 87 percent answer 80 percent
incoming calls within 30 seconds, and 82 percent have disconnect rates
of less than 5 percent. As we further explained, longstanding CMS
policy interpreting the current regulatory requirement for the call
center to meet standard business practices requires call centers to
answer calls within 30 seconds and plans overwhelmingly comply with
this requirement.
CMS also proposed to amend Sec. Sec. 422.111(h)(1)(iii) and
423.128(d)(1)(iii) to further delineate accessibility requirements for
non-English speaking and limited English proficient (LEP) individuals.
Plans have always been required to provide interpreters when necessary
to ensure meaningful access to limited English proficient individuals,
as that is consistent with existing civil rights laws. In addition, it
ensures meaningful access to Medicare beneficiaries to Medicare-covered
benefits. We proposed to further require that interpreters be available
within 8 minutes of reaching the customer service representative and
that the interpreter be available at no cost to the caller. These
requirements are consistent with our interpretation of the requirement
for call centers to meet standard business practices and performance is
measured against this standard in our current monitoring and oversight
activities. We explained that data from our call center monitoring
indicates that 95% of plans already meet this standard.
CMS proposed to add Sec. Sec. 422.111(h)(1)(iv) and
423.128(d)(1)(v), explicitly requiring that call centers respond to
TTY-to-TTY calls, consistent with standards established under existing
law governing access for individuals with disabilities at 47 CFR part
604, subpart F. Section 504 of the Rehabilitation Act, Section 1557 of
the Affordable Care Act, and the Americans with Disabilities Act
already require the provision of appropriate auxiliary aids and
services for individuals with disabilities, such as deaf or hard-of-
hearing individuals. We also proposed, at Sec. Sec. 422.111(h)(1)(v)
and 423.128(d)(1)(v), that when using automated-attendant systems, MA
and Part D plans must provide effective real-time communication with
individuals using auxiliary aids and services, including TTYs and all
forms of FCC-approved telecommunications relay systems. See 28 CFR
35.161, 36.303(d). We explicitly clarified that the requirements
proposed at Sec. Sec. 422.111(h)(1)(ii) and 423.128(d)(1)(ii)--
regarding the average hold time, average answer time, and disconnect
rate--also apply to TTY calls. CMS will hold plans accountable for
complying with the requirements of Sec. Sec. 422.111(h)(1)(ii) and
423.128(d)(1)(ii) when receiving TTY calls. We explained in the
proposed rule how the proposed standards are consistent with current
CMS interpretation and implementation of the requirement that plans
have a call center that meets standard business practices and how. We
explained that CMS data shows that 91 percent of plans currently
respond to TTY calls within 7 minutes. We solicited comments on
adopting the 7-minute response time as a TTY standard.
We proposed to codify our existing interpretations and policies
regarding MA and Part D plan call centers as explicit requirements for
operating a toll-free customer service call center in Sec. Sec.
422.111(h) and 423.128(d). We proposed this codification to ensure
transparency and stability for plans about the performance standards
they must meet.
In this section of this rule, we summarize the comments we received
and provide our responses and final decisions.
Comment: Several commenters requested that we clarify whether the
requirements for customer service call centers apply to call centers
operated primarily for sales and marketing to prospective enrollees.
The August 6, 2019 HPMS memo issuing the updated Medicare Communication
and Marketing Guidelines permitted plans to operate telephone lines
designated solely for marketing activities, such as sales and
enrollment, under different business hours than customer service call
centers for current and prospective enrollees. The guidelines required
that sales lines adhere to all other requirements for customer service
call centers. Some commenters requested that CMS revise the proposed
rule to reflect that guidance permitting sales and enrollment telephone
lines to operate during different business hours than customer service
call centers for current and prospective enrollees.
Response: Once applicable, the provisions of this final rule will
supersede prior, inconsistent call center guidance in the Medicare
Communications and Marketing Guidelines. While we proposed to codify
existing guidance, we did not include a provision permitting call
centers operated for the MA plan to have different business hours based
on specific functions. Sections 422.111(h) and 423.128(d) require the
call centers to be a mechanism for providing the information described
in those regulations to current and prospective enrollees. Using a
separate call center for prospective enrollees is not consistent with
the current regulation or the proposed revisions. We have therefore
reconsidered that prior guidance and will not be using it going
forward. Specifically, the policies included in this final rule apply
the same requirements applicable to all customer service call centers
for current and prospective enrollees, including those used for sales
and enrollment. This includes the requirements related to hours of
operation.
The guidance issued in in August 2019 to permit separate standards
for a sales-only call center has proved difficult for CMS to enforce
and confusing for some plans to adhere to. Specifically, plans have
expressed confusion about the distinction between sales call centers
and customer service call centers for prospective enrollees. CMS
discovered that some plans were inappropriately using their automated
answering system to direct calls from

[[Page 6007]]

numbers not known to be associated with plan enrollees to sales lines,
making it difficult for both current enrollees and prospective
enrollees to reach the customer service call center they were
attempting to call and compromising the ability of current and
prospective enrollees to get access to the information specified in
Sec. Sec. 422.111 and 423.128. That information addresses topics and
specifics that beneficiaries should have, such as information about
benefits (including cost sharing and out of network coverage), access,
and enrollment procedures, to make an enrollment election. Returning to
a clearer and uniform approach to interpreting and implementing the
call center requirements is important to ensure consistency and
clarity. We also do not believe that this increases burden on plans, as
even after the August 2019 guidance plans were required to continue
operating call centers for current and prospective enrollees from 8
a.m. to 8 p.m. Under this final rule, all plan call centers must comply
with the regulation standards.
Comment: Some commenters wrote in approval of what they perceived
to be stricter requirements for customer service call centers than CMS
previously applied. For example, a commenter noted that the proposed
rule would require call centers to connect callers with LEP to an
interpreter within 8 minutes 100 percent of the time. A few requested
that CMS apply more stringent standards than proposed and currently
used, including requiring that all customer service call centers be
open 24 hours a day, 7 days a week.
Response: CMS appreciates the support. Our intention in codifying
the current policy on customer service call center is to provide a
uniform standard for customer service call centers, including call
centers for current and prospective enrollees. We were explicit that
under our proposal, CMS's overall policy with respect to operating a
toll-free customer service call center would remain largely the same
and did not describe our proposals as creating more stringent specific
standards. We do not believe that the requirements of the final rule
represent a significantly more stringent standard than that which we
expected under earlier guidance. In particular, it was not our
intention to apply a stricter standard for interpreter availability or
call center hours of operation than is described in current guidance.
To clarify this, we are finalizing Sec. Sec. 422.111(h)(1)(iii)(B) and
423.128(d)(1)(iii)(B) with a change from the proposal to reflect the
current compliance standard we used evaluating interpreter
availability--80 percent of calls being connected to an interpreter
within 8 minutes. We note that plans already largely comply with this
requirement of the final rule because 95 percent of plans already meet
this standard and, in addition, the 80 percent threshold is consistent
with the thresholds codified with respect to the speed of answer.
We are also finalizing, at Sec. Sec. 422.111(h)(1)(i)(B) and
423.128(d)(1)(i)(A), the proposed standards for operating hours, with a
change to clarify that we are not expanding the hours of operation
required for customer call centers compared to current practice (except
to the extent we are discontinuing the allowance for sales and
enrollment call centers to be open for shorter hours than customer
service call centers for current and prospective enrollees). Not only
do we not believe that customer service call centers for current and
prospective enrollees need to be open 24 hours a day, 7 days a week
without exception to ensure adequate service to Medicare beneficiaries,
we do not believe it is necessary to expand the current policy in
section 80 of the Medicare Communications and Marketing Guidelines,
which permits call centers to be closed most Federal holidays and on
weekends from April 1 through September 30. Therefore, we are
finalizing our proposal for hours of operation with the addition of the
same exceptions that have been outlined in the Medicare Communication
and Marketing Guidelines for several years:

--From October 1 through March 31 of the following year, call centers
may be closed on Thanksgiving Day and Christmas Day, so long as the
interactive voice response system or similar technology records
messages from incoming callers on those holidays and such messages are
returned in one (1) business day. This time period encompasses both the
MA and Part D Annual Enrollment Period and the MA Open Enrollment
period. Plans must not close their call centers for any other days
during this period because of the need for both current and prospective
enrollees to reach plans during these generally applicable enrollment
periods in order to make informed decisions about their plan choices.
--From April 1 through September 30, call centers may be closed on any
Federal Holiday and on any Saturday or Sunday, so long as the
interactive voice response system or similar technology records
messages from incoming callers and such messages are returned in one
(1) business day.

These exceptions have been in place for many years and that there has
been no indication that allowing call centers to close on these days
has negatively impacted beneficiaries' ability to reach and obtain
services and information from plans.
Comment: Some commenters expressed approval of CMS codifying
performance standards in the regulation.
Response: CMS appreciates commenters' support for the proposed
rule. In this final rule, we are organizing and structuring the
addition of these more specific, minimum standards for plan call
centers to Sec. Sec. 422.111(h)(1) and 423.128(d)(1) in a different
way than proposed. Instead of replacing the existing regulation text
with the more specific standards, we are maintaining the current
regulation text that requires plan call centers to be open during usual
business hours, provide customer telephone service in accordance with
standard business practices, and provide interpreters for non-English
speaking and limited English proficient (LEP) individuals. These
general performance requirements remain applicable to plan call centers
and are not changed by this final rule. Rather, this final rule adds
the new specific standards with additional language to clarify how
these specific standards will be applicable for coverage beginning on
and after January 1, 2022. This means that these standards will apply
to call center operations made in 2021 for enrollments made for
contract year 2022 (e.g., for call center activities during the Annual
Election Period for 2022 that takes place in fall 2021). This clarifies
how these specific standards are minimum performance thresholds for
plan call centers and illustrates CMS' expectation that plan call
centers operate consistent with standard business practices to provide
information and assistance to current and prospective enrollees.
Regardless of whether there is a specific, minimum quantitative
standard in our regulations, plans should ensure that their call
centers provide high quality customer service, at a minimum consistent
with usual and standard business practices. The regulations at
Sec. Sec. 422.111(h) and 423.128(d) are clear that call centers are
one of several mechanisms by which plans must provide specific
information on a timely basis to current and prospective enrollees upon
request. By adding certain specific minimum standards, we do not intend
to dilute or lower that requirement.
Comment: A few commenters requested that CMS apply the standards
for pharmacy call centers to call centers for other health care
providers, such as

[[Page 6008]]

physicians and hospitals. The commenter explained that health care
providers also operate 24 hours, 7 days a week and may therefore need
real time access to plan representatives to determine coverage for
services.
Response: CMS appreciates the suggestion. We understand that
hospitals, physicians, and other non-pharmacy providers often operate
24 hours a day, 7 days a week and may wish to have real time access to
plan representatives at all times. However, unlike pharmacies,
physicians and hospitals do not administer a point of sale benefit.
Rather, they bill retrospectively. Therefore, immediate access to the
plan through the call center does not appear to be necessary to ensure
access to medically necessary covered health care. While CMS is open to
considering future rulemaking in this area, we need to gather more
evidence and stakeholder input to determine whether it is appropriate
or necessary to require plans to operate 24-hour, 7-day-a-week call
centers for non-pharmacy providers.
After consideration of the comments and for the reasons outlined in
the proposed rule and our response to comments, we are finalizing the
amendments to Sec. Sec. 422.111(h) and 423.128(d) regarding call
centers as proposed, with five modifications.
Two of the modifications address concerns explicitly raised by
commenters. We are finalizing the proposed standards for interpreter
availability with the addition that 80 percent of calls requiring an
interpreter must be connected to an interpreter within the proposed 8
minutes, rather than simply requiring all such calls to be connected
within 8 minutes. In addition, CMS is finalizing the proposed hours of
operation requirements with modifications to provide exceptions for
certain federal holidays and on certain weekends so long as callers can
leave messages and those messages are returned within one business day.
These modifications reflect CMS's intention to largely codify existing
policy in this rule.
The third modification that we are finalizing is similar to these
two changes. CMS requested comment on whether to adopt the 7-minute TTY
response time in the regulation. We received no comments on this issue
and have decided to finalize the rule with a requirement that 80
percent of TTY calls be connected to an operator within 7 minutes. As
discussed in the February 2020 proposed rule, this reflects current
performance by plans (91 percent connect calls within the required time
frame) and is consistent with the thresholds codified with respect to
speed of answer and interpreter availability.
Fourth, it has come to CMS's attention that 47 CFR, part 64,
subpart F applies to state-operated TTY relay systems and not to plan
call centers. The proposed rule would have, at 42 CFR 422.111(h)(1)(iv)
and 423.128(d)(1)(v)(A), required plan call centers to comply with
these standards. However, neither CMS nor plans have authority over
state-operated relay systems and Medicare plan call centers do not
perform the same function as state relay systems. Therefore, CMS is not
finalizing those provisions and is designating the remaining regulation
text accordingly.
Finally, we are finalizing the proposed additions to Sec. Sec.
422.111(h) and 423.128(d) with a slightly different structure to be
consistent with how this final rule is adding specific minimum
standards and is generally applicable beginning with coverage for 2022.
Although we are finalizing these changes to Sec. Sec.
422.111(h)(1) and 423.128(d)(1) regarding call centers, with the
modifications described above, as applicable with coverage beginning on
and after January 1, 2022, it codifies current policies so we encourage
MA organizations and Part D sponsors to take this final rule into
account immediately.

VI. Changes to the Programs of All-Inclusive Care for the Elderly
(PACE)

The intent of this final rule is to revise and update the
requirements for the Programs of All-Inclusive Care for the Elderly
(PACE) under the Medicare and Medicaid programs. The PACE program is a
unique model of managed care service delivery for the frail elderly,
most of whom are dually-eligible for Medicare and Medicaid benefits,
and all of whom are assessed as being eligible for nursing home
placement according to the Medicaid standards established by their
respective states. The proposals addressed reassessments, service
delivery requests, appeals, participant rights, required services,
excluded services, interdisciplinary team requirements, medical record
documentation, access to data and records, safeguarding communications,
and service delivery requirements. The finalized changes would reduce
unnecessary burden on PACE organizations, provide more detail about CMS
expectations and provide more transparent guidance.

A. Service Determination Request Processes Under PACE (Sec. Sec.
460.104 and 460.121)

Sections 1894(b)(2)(B) and 1934(b)(2)(B) of the Act specify that
PACE organizations must have in effect written safeguards of the rights
of enrolled participants, including procedures for grievances and
appeals. We issued regulations on grievances at Sec. 460.120, and we
issued regulations on appeals at Sec. 460.122. Additionally, CMS
created a process under Sec. 460.104(d)(2) to allow participants or
their designated representatives to request that the interdisciplinary
team (IDT) conduct a reassessment, when the participant or designated
representative believes the participant needs to initiate, eliminate or
continue a service. The process under Sec. 460.104(d)(2) is commonly
referred to by CMS and industry as the service delivery request
process. This process serves as an important participant protection, as
it allows a participant to advocate for services. As we stated in the
Medicare and Medicaid Programs; Programs of All-Inclusive Care for the
Elderly (PACE); Program Revisions final rule (hereinafter referred to
as the 2006 PACE final rule), ``[t]he provisions for reassessment at
the request of a participant [were] intended to serve as the first
stage of the appeals process.'' (71 FR 71292). Section 460.104(d)(2)
currently sets out the responsibilities of a PACE organization in
processing each request. Currently, a participant or their designated
representative initiates a service delivery request when they request
to initiate, eliminate, or continue a service. Once the IDT receives
the request, the appropriate members of the IDT, as identified by the
IDT, must conduct a reassessment. The IDT member(s) may conduct the
reassessment via remote technology when the IDT determines that the use
of remote technology is appropriate and the service request will likely
be deemed necessary to improve or maintain the participant's overall
health status and the participant or their designated representative
agrees to the use of remote technology. However, the appropriate
member(s) of the IDT must perform an in-person reassessment when the
participant or their designated representative declines the use of
remote technology, or before a PACE organization can deny a service
request. Following the reassessment, the IDT must notify the
participant or designated representative of its decision to approve or
deny the request as expeditiously as the participant's condition
requires, but generally no later than 72 hours from the date of the

[[Page 6009]]

request for reassessment. If the request is denied, the PACE
organization is responsible for explaining the denial to the
participant or the participant's designated representative both orally
and in writing. The PACE organization is also responsible for informing
the participant of his or her right to appeal the decision, including
the right to request an expedited appeal, as specified in Sec.
460.122. If the IDT fails to provide the participant with timely notice
of the resolution of the request, or does not furnish the services
required by the revised plan of care, the failure constitutes an
adverse decision and the participant's request must be automatically
processed as an appeal in accordance with Sec. 460.122.
While this section provides an important participant protection, we
have heard from stakeholders that the language in Sec. 460.104(d)(2)
is overly broad as written, and that even simple requests to initiate a
service require a reassessment and a full review of the request by the
PACE organization's IDT. Stakeholders have also noted that addressing
the service delivery request process in the section of the regulation
governing participant assessments undercuts the importance of the
requirements for processing these requests. Additionally, through CMS
oversight and monitoring, we have identified a need to better define
what constitutes a service delivery request and create clearer guidance
on how PACE organizations must identify and process these requests.
We proposed moving the requirements for service delivery requests
at Sec. 460.104(d)(2) to a new section of the regulations at Sec.
460.121, titled ``Service Delivery Requests.'' We used the term
``service delivery request'' because that is the term typically used by
industry and CMS to describe these actions, however, we solicited
comments on whether we should utilize this term or consider something
different. For example, the initial decision to cover a drug in Part D
is a coverage determination (Sec. 423.566), and the initial decision
to cover an item or service in Part C is an organization determination
(Sec. 422.566). We requested feedback on whether a term other than
``Service Delivery Request,'' such as ``PACE Organization
Determination,'' ``Coverage Determination,'' or ``Service
Determination,'' would be preferable.
In addition to proposing that the requirements for processing
service delivery requests would be moved from Sec. 460.104(d)(2) into
a new section, we also proposed to modify these requirements based on
industry feedback and lessons learned through our experience operating
the PACE program and monitoring PACE organizations. First, we proposed
to reorganize the requirements for clarity and to better align them
with the appeals regulations in subpart M of parts 422 and 423, for
Medicare Advantage (MA) and Part D respectively, while also ensuring
the requirements address the specific features of the PACE program,
which is a unique combination of payer and direct care provider. We
believe aligning the layout of the regulation and the notification
requirements of the initial determination processes in PACE, MA, and
Part D would allow us to minimize confusion for participants, who are
often familiar with the initial determination and appeals processes in
the Parts C and D programs, and would also increase transparency for
PACE organizations regarding CMS' expectations.
While the current regulation at Sec. 460.104(d)(2) begins with the
requirements for processing a request for reassessment, we added Sec.
460.121(a) to require that a PACE organization must have formal written
procedures for identifying and processing service delivery requests in
accordance with the requirements of Sec. 460.121. We believe it is
important to ensure that PACE organizations develop internal processes
and procedures to properly implement this process.
At Sec. 460.121(b), we define what constitutes a service delivery
request and what does not. We define what constitutes a service
delivery request at Sec. 460.121(b)(1). Currently, the process in
Sec. 460.104(d)(2) is triggered if the participant (or his or her
designated representative) believes the participant needs to initiate,
eliminate, or continue a particular service. At Sec. 460.121(b)(1), we
specify that the process for service delivery requests would apply to 3
distinct types of service delivery requests, specifically, a request to
(1) initiate, (2) modify, or (3) continue a service.
We note that the term ``services'' is already defined at 460.6 to
include ``items,'' and we proposed, as discussed in section VI.I. of
this final rule, to make explicit that this definition is meant to
reflect the full scope of the PACE benefit package, and thus also
includes ``items'' and ``drugs.'' Therefore, our use of ``service'' or
``services'' throughout Sec. 460.121 always includes any type of PACE-
covered services, items, or drugs, and participants have the right to
advocate with respect to all types of PACE-covered services, items, or
drugs that they believe may be necessary. The language at Sec.
460.121(b)(1) would retain the existing concepts of ``initiating'' and
``continuing'' services but would replace the term ``eliminate'' with
the term ``modify.''
In Sec. 460.121(b)(1)(i) that the first type of service delivery
request would be a request to initiate a service. This first type of
request is based on the existing language at Sec. 460.104(d)(2). In
Sec. 460.121(b)(1)(ii) that the second type of service delivery
request would be a request to modify an existing service. We specify
that requests to modify an existing service include requests to
increase, reduce, eliminate, or otherwise change a particular service.
We believe that defining service delivery requests to include requests
to modify an existing service is an important protection, as
participants may believe that the services they are currently receiving
are not sufficient to meet their needs. For example, a participant may
request to increase their home care from 3 hours a week to 6 hours a
week because they believe that they are becoming less steady in their
gait and they are afraid to be alone for long periods.
The third type of service delivery request at Sec.
460.121(b)(1)(iii), is a request to continue a service that the PACE
organization is recommending be discontinued or reduced. This type of
request would apply to circumstances where the PACE organization is
recommending to discontinue or reduce a service that the participant is
already receiving, and the participant wishes to continue receiving
that service. An example of this type of request would be a participant
that is attending the PACE center 5 days a week and the PACE
organization decides to reduce attendance to 4 days a week. If the
participant requests to continue attending the center 5 days a week,
this request must be processed as a service delivery request under our
proposal. Another example would be if a participant is receiving a
specific drug, and the IDT makes a decision to stop providing that
drug. Under the proposal, the participant's request to continue
receiving the drug would be processed as a service delivery request.
Through our monitoring of PACE organizations, we have identified
instances where a participant requests to continue receiving a service
that has been reduced or discontinued, and the PACE organization
provides the participant appeal rights under Sec. 460.122 instead of
conducting a reassessment as required under the current Sec.
460.104(d)(2). We would include requests to continue coverage of a
service in part to ensure that PACE organizations understand that they
must process a service delivery request for these situations before

[[Page 6010]]

processing an appeal under Sec. 460.122. Our revisions to this
section, as well as our revisions to the appeals regulation discussed
in section VI.B. of this final rule, would establish that the service
delivery request process is the first level of the appeals process, and
requests to continue a service must first be processed under the
service delivery request process prior to an appeal being initiated
under Sec. 460.122. We discuss the scope of the appeals process in
greater depth in our discussion of the updates to the appeals process
in section VI.B. of this final rule. We also proposed that participants
would be allowed to make this type of service delivery request before a
service was actually discontinued, to permit the participant to
advocate for a continuation of the service. This requirement is
reflected in the language we proposed for Sec. 460.121(b)(1)(iii),
where we emphasize that this provision relates to a service that the
PACE organization is recommending be discontinued or reduced. We
believe by wording this requirement in this way, we would make clear
that the participant could make a service delivery request as soon as a
PACE organization recommends reducing or discontinuing a service. For
example, if the IDT was recommending reducing center attendance from
three days a week to two days a week, and the participant wanted to
continue coming to the center three days a week, the participant could
request a service delivery request once the IDT recommended the
reduction, even if the reduction in days had not yet been implemented.
We recognize that our proposal defined what constitutes a service
delivery request broadly. We also understand that there are
circumstances that are unique to PACE where a request may not
constitute a service delivery request based on the role of a PACE
organization as a direct care provider that is responsible for
coordinating and delivering care. Therefore, we proposed an exception
to the definition of a service delivery request. In paragraph (b)(2) we
specify that certain requests to initiate, modify, or continue a
service would not constitute a service delivery request, even if the
request would otherwise meet the definition of a service delivery
request under (b)(1). Specifically, at Sec. 460.121(b)(2) if a request
is made prior to the development of the initial care plan the request
would not constitute a service delivery request. This exemption would
apply any time before the initial care plan was finalized (and
discussions amongst the IDT ceased). We believe this approach would be
beneficial to the participant and the PACE organization as the IDT and
the participant or caregiver continue to discuss the comprehensive plan
of care taking into account all aspects of the participant's condition
as well as the participant's wishes. For example, if the PACE
organization is developing the initial plan of care and actively
considering how many home care hours the participant should receive,
and the participant makes a request for a particular number of home
care hours, that request would not be a service delivery request
because the IDT was actively considering that question in developing
the plan of care. Once the initial plan of care is developed, if a
service was not incorporated into the plan of care in a way that
satisfies the participant, the participant would always have the right
to make a service delivery request at that time.
While drafting the proposal, we considered other ways to
potentially limit the application of the service delivery request
process to account for situations where it is possible to adequately
address a request without undertaking the full service delivery request
process. First, we considered excluding requests for services made
during the course of a treatment discussion with a member of the IDT
from the service delivery request process, so long as the IDT member is
able to immediately approve the service. Ultimately we decided these
situations should constitute service delivery requests, in order to
avoid confusion by requiring PACE organizations to distinguish between
requests for services that constitute service delivery requests and
those that do not. However, in an effort to reduce burden, we
determined that it would be appropriate to process service delivery
requests that an IDT member is able to approve in full at the time the
request is made in a more streamlined manner than other service
delivery requests. We discuss our proposals on this point in more
detail in the section relating to Sec. 460.121(e)(2) in this final
rule.
We also considered whether we could exclude other types of requests
from the service delivery request process. For example, we have
received questions from PACE organizations about requests that do not
relate to health care or to a participant's medical, physical,
emotional, and social needs, such as a participant requesting lemons in
their water, or a participant requesting a particular condiment at
lunch. We considered proposing to exclude requests that are not related
to health care or to the participant's medical, physical, emotional,
and social needs, and therefore would not constitute a service delivery
request. We strongly believe that any time a service may be necessary
to maintain or improve the participant's overall health status, taking
into account the participant's medical, physical, emotional, and social
needs, that request should be processed as a service delivery request.
We similarly understand that some requests are completely unrelated to
the participant's health care or condition. However, we believe that
adding a provision to address this relatively insignificant issue would
potentially cause confusion for PACE organizations and participants and
therefore we did not propose such a provision at this time. We
solicited comments on whether specifying that requests unrelated to a
participant's medical, physical, emotional, and social needs need not
be processed using the service delivery request process would benefit
PACE organizations without restricting participants' ability to
advocate for any service they believe may be necessary, regardless of
whether that is meals, transportation, drugs, home care, or other
services provided as part of the PACE benefit, and if so, how we should
word such a provision.
We also proposed at Sec. 460.121(c) to specify the individuals who
can make a service delivery request. Under the current requirements in
Sec. 460.104(d)(2), only the participant or the participant's
designated representative may request to initiate, eliminate, or
continue a particular service. This proposal would expand the number of
individuals who can make a service delivery request on behalf of a PACE
participant to include the participant, the participant's designated
representative, or the participant's caregivers. We believe that the
proposal would be consistent with the current practice of most PACE
organizations, in part because caregivers are often also participants'
designated representatives; however, it would affirmatively state in
regulation that these individuals may make service delivery requests.
We believe this would provide an important safeguard for participants,
as caregivers are usually aware of the participant's situation and have
valuable insight into what services would be beneficial. For example,
if a PACE participant's wife believes that the participant needs more
home care to assist with toileting, bathing and dressing, she would be
able to make a service delivery request to the PACE organization and
advocate for that service delivery request, regardless of

[[Page 6011]]

whether she is her spouse's designated representative. The proposal
also aligned with current care plan regulations (Sec. 460.106(e))
which state that the IDT must develop, review, and reevaluate the plan
of care in collaboration with the participant or caregiver or both.
Because caregivers are involved in the care planning process and
determining what care may be necessary, we believe that it is also
appropriate for these individuals to be able to advocate for services
as necessary on behalf of a participant, regardless of whether these
service delivery requests result in changes to the plan of care. While
a designated representative or caregiver such as a family member may
initiate the service delivery request process, the PACE organization
remains responsible for issuing a decision based on the individual
needs of the participant regardless of the party that initiated the
request. We solicited comments on this proposal to expand the number of
individuals who can make a service delivery request on behalf of a PACE
participant. In addition, we solicited comment regarding whether or not
there are other individuals that should be allowed to make service
delivery requests on behalf of a participant. For example, in MA and
Part D, providers or prescribers can initiate a request for coverage
(either coverage determination or organization determination) on behalf
of a beneficiary, which allows prescribers or other providers to
advocate for drugs or services that are unique to their discipline or
scope of practice. In PACE, this would mean that if a participant went
to a contracted specialist, that specialist would be allowed to
advocate or request a service specific to their discipline. We
specifically solicited comments on whether we should specify that
prescribers or providers, outside of the IDT, can make a service
delivery request on behalf of a participant in PACE.
We also proposed at Sec. 460.121(d) to specify how a service
delivery request may be made. The current regulation at Sec.
460.104(d)(2) is silent regarding how a participant or his or her
designated representative may request to initiate, eliminate, or
continue a particular service. We proposed at Sec. 460.121(d)(1) to
permit service delivery requests to be made either orally or in
writing. We believe this is consistent with current practice for all
PACE organizations. The right to request an initial determination
either orally or in writing is provided as an enrollee safeguard in
both MA and Part D (see Sec. Sec. 422.568(a)(1), 422.570(b),
423.568(a)(1), and 423.570(b)), and given the vulnerability of the PACE
population, we believe it is important that PACE participants also have
the ability to submit service delivery requests in either form. We also
proposed at Sec. 460.121(d)(2) that service delivery requests may be
made to any individual who provides direct care to a participant on
behalf of the PACE organization, whether as an employee or a
contractor. All employees and contractors that provide direct
participant care should be trained to recognize and document these
requests when they are made by a participant pursuant to Sec. 460.71.
Because of the comprehensive nature of the PACE program and the
requirement that PACE organizations provide care across all care
settings, participants may not know whom they should communicate with
when making a service delivery request. For example, certain
participants may not attend the PACE center on a routine basis and a
home care aide may be the only representative of the PACE organization
the participant has contact with frequently. Under this proposal, the
participant could make service delivery requests to the home care aide,
and those requests would be considered to have been made to the PACE
organization. All individuals providing direct care to participants,
whether contractors or employees, should be trained to recognize
service delivery requests and ensure such requests are documented
appropriately and brought to the IDT as part of the training employees
and contractors receive under Sec. 460.71(a)(1). While we require that
all contractors and employees that provide direct care be able to
receive service delivery requests from participants, we solicited
comment on whether this requirement should be limited to a smaller
subset of individuals. For example, we solicited comment on whether we
should instead require only those contractors or employees who provide
direct participant care in the participant's residence, the PACE
center, or while transporting participants to receive service delivery
requests.
We would establish new requirements at Sec. 460.121(e) specifying
how service delivery requests must be processed. In Sec. 460.121(e)(1)
all service delivery requests must be brought to the IDT as
expeditiously as the participant's condition requires, but no later
than 3 calendar days after the date the request was made. The existing
requirement at Sec. 460.104(d)(2)(iii) specifies that the IDT must
generally notify the participant or designated representative of its
decision in regard to a request to initiate, eliminate, or continue a
particular service no later than 72 hours after the date the IDT
receives the request for reassessment. Stakeholders have requested that
CMS explain if the current 72-hour timeframe begins when any member of
the IDT receives the service delivery request, or when the full IDT
receives the request. In order to avoid similar questions about the new
service delivery request process we proposed, we also established two
distinct timeframes. Specifically, an initial timeframe for the PACE
organization to bring a service delivery request to the IDT, and a
second timeframe for the IDT to make a decision and provide notice of
the decision to the participant. We would include this second timeframe
at Sec. 460.121(i), and discuss in more detail later in this section.
We believe that creating these distinct timeframes would benefit both
PACE organizations and participants. We also believe it is necessary to
ensure that once a service delivery request is made, it is brought to
the IDT for processing as expeditiously as the participant's condition
requires but no later than 3 calendar days from when the request was
actually made. In monitoring PACE organizations, we have seen
organizations take a week or longer after a request was first made to
bring the request to the IDT for consideration. By establishing a
requirement that service delivery requests must be brought to the IDT
as expeditiously as the participant's condition requires but no later
than 3 calendar days from the time the request is made, we believe this
would ensure participant requests are handled expeditiously while still
ensuring the IDT has sufficient time to process the service delivery
request and consider all relevant information when making a decision.
We solicited comments on this proposal to establish a new timeframe for
PACE organizations to bring service delivery requests to the IDT.
We also proposed at Sec. 460.121(e)(2) to specify an exception to
the processing requirements for service delivery requests.
Specifically, if a member of the IDT receives a service delivery
request and is able to approve the request in full at the time the
request is made, the PACE organization would not be required to follow
certain processing requirements. We understand that PACE organizations,
as direct care providers, routinely interact with participants when
providing care and services. These interactions often include treatment
discussions between an IDT member and a participant about what care may
or may not be appropriate for

[[Page 6012]]

the participant to receive. During these discussions, a participant may
request a service that the IDT member receiving the request is able to
immediately approve as requested based on their knowledge of the
participant and the participant's condition. For example, during a
physical therapy session, a participant may request a walker to assist
in his or her daily activities. If the physical therapist, who is a
member of the IDT, determines that the item is necessary and can
approve the walker at the time the participant requests it, then the
request would not need to be processed as a normal service delivery
request. The exception would not apply if the IDT member cannot approve
exactly what is requested. For example, if a participant requested 20
hours per week of home care but the IDT member is only willing to
approve 15 hours per week, the exception would not apply because the
participant's request would be partially denied. Specifically, at Sec.
460.121(e)(2)(i) would require that when a member of the IDT can
approve a service delivery request in full at the time the request is
made, the PACE organization must fulfill only the requirements in
paragraphs (j)(1), (k), and (m). These paragraphs are discussed in more
detail later in this section, and generally relate to notice of a
decision to approve a service delivery request, effectuation
requirements, and record keeping. We also proposed at Sec.
460.121(e)(2)(ii) that PACE organizations would not be required to
process these particular service delivery request in accordance with
paragraphs (f) through (i), paragraph (j)(2), or paragraph (l) of this
new section, all of which are discussed in more detail in this section
of this final rule.
This exception to how a service delivery request is processed based
on feedback from stakeholders that IDT members often have treatment
discussions with participants about modifying services and make
decisions to accommodate the participants' requests in full at the time
the requests are made. Additionally, we have seen situations where a
caregiver requests an item or service that an IDT member is able to
immediately approve at the time the request is made. In these
situations, it is important that the decision to approve the service is
communicated to the participant or the requestor at the time the
request is made so that the participant/requestor understands the
outcome of their request. If a decision to approve a requested service
cannot be made in full at the time of the request, the PACE
organization must fully process the service delivery request in
accordance with all relevant paragraphs of this new section. If an IDT
member can quickly approve a service as being necessary for the
participant, we do not believe that it would benefit the participant or
the organization to have to fully process a service delivery request,
since the participant or requestor has already been successful in
advocating for the service. Instead, the participant would be better
served by the IDT member quickly communicating the approval, and
working to provide the requested service as expeditiously as the
participant's condition requires. We want to note that pursuant to our
proposal in Sec. 460.121(d)(2), a service delivery request may be made
to any contractor or employee who provides direct care to a
participant, and that all individuals providing direct care to
participants, whether contractors or employees, should be trained to
recognize and receive service delivery requests pursuant to Sec.
460.71(a)(1). However, to specifically limit the exception in Sec.
460.121(e)(2) to requests made to IDT members, where the receiving
member of the IDT is able to approve the service delivery request in
full at the time the request is made. This will ensure that the IDT
remains responsible for determining the benefits a participant should
receive, and that contractors or employees, such as a home care aide,
are not authorizing services without the IDT's review.
We also believe this exception at Sec. 460.121(e)(2) would reduce
the current burden on PACE organizations in three primary ways. First,
PACE organizations would not have to bring requests that can be quickly
approved by one IDT member to the full IDT for consideration and
discussion, which would allow the IDT to use that time for other
purposes, including to focus on requests that require in-depth
consideration. Second, because the IDT would not have to conduct a
reassessment in each case, we expect that this change would improve the
overall speed with which PACE organizations are able to provide
necessary services. Third, the IDT would not have to provide separate
notification to the participant because the IDT member would inform the
participant or requestor that the request was approved in the initial
discussion.
Currently the IDT is required to process requests for reassessments
from participants and/or designated representatives under Sec.
460.104(d)(2). The IDT is responsible for selecting the appropriate IDT
members to conduct the reassessment under Sec. 460.104(d)(2), and for
issuing a decision to approve or deny a request under Sec.
460.104(d)(2)(iii). At Sec. 460.121(f), we would require that all
service delivery requests, other than those under Sec. 460.121(e)(2),
must be brought to the full IDT for review and discussion before the
IDT makes a determination to approve, deny or partially deny the
request. As required by Sec. 460.102(b), each PACE organization's IDT
must, at a minimum, be composed of members qualified to fill the roles
of 11 disciplines, each of which offers a unique perspective on the
participant's condition. CMS commonly refers to this group as the full
IDT. Because service delivery requests not processed under Sec.
460.121(e)(2) are processed only for services that cannot be approved
in full at the time the request is received, we believe that it is
important that the IDT, as a whole, discuss the service delivery
request in order to determine whether the request should be approved or
denied. A discussion by the full IDT would allow each discipline to
offer their perspective on the participant's condition as it relates to
the requested service, and ensure that the IDT is best equipped to
determine what services are necessary to improve or maintain the
participant's health status. As previously discussed, service delivery
requests that are approved in full by a member of the IDT at the time
the request is made would not have to be brought to the full IDT for
review.
In Sec. 460.121(g) we would require that the IDT must consider all
relevant information when evaluating a service delivery request.
Currently, the regulation is silent on what the IDT must consider when
making a decision under Sec. 460.104(d)(2). The IDT must consider, at
a minimum, the findings and results of any reassessment(s) conducted in
response to a service delivery request, as well as the criteria used to
determine required services specified in Sec. 460.92(b), as discussed
in section VI.C. of this final rule. We have seen through our
monitoring efforts that certain IDTs do not always consider the
reassessments conducted in response to a service delivery request when
making a decision. For example, a physical therapist and occupational
therapist may both indicate in their discipline-specific reassessments
that a participant would benefit from additional home care hours, but
the IDT might deny the request without explaining why the
recommendations resulting from those reassessments were not followed.
We believe it is important that an IDT is able to demonstrate that it
took any reassessments performed in the process of reviewing a service
delivery request into consideration when making a decision on that
service delivery

[[Page 6013]]

request. Additionally, we believe that IDT decision making for service
delivery requests should be aligned with the IDT's decision making for
what constitutes a required service under Sec. 460.92(b).
Specifically, we believe that a decision by the IDT to provide or deny
services must be based on an evaluation of the participant that takes
into account the participant's medical, physical, emotional and social
needs. We have encountered situations where the IDT made its decision
based on one aspect of the participant's condition, for example, their
physical health related to their ability to perform activities of daily
living, but disregarded other aspects of the participant's condition,
such as their medical, emotional, and social needs. We believe that the
IDT must consider all aspects of the participant's condition in order
to make an appropriate decision. For example, if the participant is
requesting to attend the PACE center on additional days due to feelings
of social isolation and depression, it would be inappropriate for the
IDT to make a decision based on the participant's physical needs
without considering their emotional and social needs. Additionally,
under the modifications in Sec. 460.92, we would also expect PACE
organizations to utilize current clinical practice guidelines and
professional standards of care when rendering decisions, as applicable
to a requested service. We discuss this decision making process and use
of these guidelines in more detail in section VI.C. of this final rule.
Based on feedback from PACE organizations and advocacy groups, at
Sec. 460.121(h) we proposed to require an in-person reassessment only
prior to an IDT's decision to deny or partially deny a service delivery
request. Currently, the IDT must perform a reassessment as part of its
consideration of any request to initiate, eliminate, or continue a
service under Sec. 460.104(d)(2), regardless of whether the request is
approved or denied. We modified the requirements related to conducting
reassessments in response to a participant or designated
representative's request to initiate, eliminate, or continue a service
in the 2019 PACE Final Rule (84 FR 25644 through 25646). The
regulations now permit the IDT to conduct that reassessment via remote
technology if certain requirements are met, but the IDT must conduct an
in-person reassessment prior to denying a request. However, since that
rule was published on June 3, 2019, we have continued to receive
feedback from PACE organizations requesting further action to address
the burden of conducting reassessments in response to service delivery
requests, specifically when the IDT can approve a request without
performing a reassessment. Under our proposal, if a service delivery
request is brought to the full IDT and the IDT determines that it can
approve the request based on the information available, the IDT would
not be required to conduct a reassessment of the participant prior to
making a decision to approve the service delivery request. We
understand that many IDTs have frequent interactions with PACE
participants and may be able to make a decision to approve a request
without having to conduct another reassessment based on internal
consultation and knowledge of the participant. As we indicated in our
discussion for Sec. 460.121(e)(2), we do not believe that delaying the
provision of a requested service the IDT has determined is necessary,
in order to conduct a reassessment, benefits the PACE organization or
the participant. We believe the IDT, with its knowledge of the
participant, is in the best position to determine if a reassessment is
necessary prior to approving a service delivery request. Therefore, CMS
would only require a reassessment prior to the IDT denying or partially
denying a request under this proposal.
If, after consideration of all available information, the full IDT
expects to make a decision to deny or partially deny a service delivery
request, the IDT would be required to perform an unscheduled in-person
reassessment pursuant to Sec. 460.121(h)(1), prior to making a final
decision. We would consider a request denied or partially denied
whenever the IDT makes a decision that does not fully approve the
service delivery request as originally requested. For example, if a
participant requested 3 hours of home care a week, and the IDT made a
decision that the participant only required 2.5 hours of home care each
week, such a decision by the IDT would constitute a partial denial
because the request was not fully approved as requested by the
participant. In other words, any decision to offer a compromise, an
alternative service, or to grant only a portion of the request would
constitute a partial denial. The in-person reassessment must be
conducted by the appropriate members of the IDT, as identified by the
IDT, in order to align with the current requirement under Sec.
460.104(d)(2) that the IDT is responsible for identifying the
appropriate members to conduct the reassessment. We believe this change
would strike an appropriate balance between protecting participants and
ensuring that the process for handling service delivery requests is not
overly burdensome for PACE organizations.
We also proposed in Sec. 460.121(h)(1) to require that any
reassessment conducted for a service delivery request must evaluate
whether the requested service is necessary to meet the participant's
medical, physical, emotional, and social needs in a manner consistent
with Sec. 460.92, and the revisions we proposed to those provisions.
We have seen through our monitoring efforts that in conducting
reassessments as a result of requests to initiate, eliminate or
continue particular services, the IDTs are not always evaluating
whether the requested service would actually improve or maintain the
participant's condition, taking into account all relevant aspects of
the participant's condition, including assessing the participant's
medical, physical, emotional and/or social needs as applicable. We
believe this information is vital, and must be considered by the full
IDT in making its decision. For example, if a participant is requesting
more days at the PACE center for social reasons, the IDT should ensure
that the appropriate members of the IDT conduct the reassessment in
order to evaluate the participant's social needs, and whether
additional center days are necessary to meet the participant's needs,
including improving the participant's social condition. We discuss our
proposed modifications for Sec. 460.92 in greater detail in section
VI.C. of this final rule.
In accordance with our belief that the IDT is in the best position
to determine if a reassessment is necessary prior to approving a
service delivery request, at Sec. 460.121(h)(2) we proposed that the
IDT may choose to conduct a reassessment (via either remote technology
or in-person) before approving a service delivery request, but we do
not believe we should require one as part of the process for approving
service delivery requests. If the IDT determines a reassessment should
be conducted prior to approving the request, the IDT would still be
responsible for processing the service delivery request, and notifying
the participant, in the timeframe specified at Sec. 460.121(i).
In paragraph (i) we would establish a time frame in which the IDT
must make its determinations regarding service delivery requests and
provide notification of its decisions. The current requirement under
Sec. 460.104(d)(2)(iii) states that the IDT must notify the
participant or designated representative of its decision to approve or
deny a service delivery request as expeditiously

[[Page 6014]]

as the participant's condition requires, but no later than 72 hours
after the date the IDT receives the request, unless the IDT extends the
timeframe. CMS has interpreted this language as requiring that the IDT
must notify the participant or their designated representative within 3
calendar days of receiving a request, based on the wording of the
requirement which states ``72 hours from the date'' and thus requires
that the timeframe starts on the day received. We proposed a similar
timeframe at Sec. 460.121(i), to require that the IDT make its
determination and notify the participant or their designated
representative of the determination as expeditiously as the
participant's health condition requires, but no later than 3 calendar
days after the date the IDT receives the request. We continue to
believe this is a reasonable timeframe for the IDT to discuss the
request, conduct reassessments when required, and make a decision.
The IDT is currently allowed to extend the timeframe for notifying
a participant or their designated representative by no more than 5
additional days under Sec. 460.104(d)(2)(iv). Extensions are currently
permitted when the participant or designated representative requests an
extension, or when the IDT documents its need for additional
information and how the delay is in the interest of the participant. In
Sec. 460.121(i)(1) we proposed to include a similar provision for
extensions, which would allow the IDT to extend the timeframe for
review by up to 5 calendar days beyond the original deadline in certain
circumstances. In Sec. 460.121(i)(1)(i) we proposed that the IDT may
extend the timeline for review and notification if the participant or
other requestor listed in Sec. 460.121(c)(2) or (3) requests the
extension. We would change designated representative to requestor to
account for the change we made in Sec. 460.121(c) regarding who can
make a service delivery request, and including caregivers in situations
where that person may not already be a designated representative. We
believe that the participant or other requestor should be able to
request an extension. For example, the participant may be out of town
and the caregiver may request the IDT to take an extension in order for
the participant to be in-person for the reassessment related to the
request. Under proposed Sec. 460.121(i)(1)(ii) the IDT could extend
the timeframe for review and notification when the extension is in the
best interest of the participant due to the IDT's need to obtain
additional information from an individual who is not directly employed
by the PACE organization, and that information may change the IDT's
decision to deny a service. We believe it is important that the IDT
does not routinely take extensions when the participant or other
requestor has not asked for an extension. We understand that when the
IDT has to obtain information from individuals not employed directly by
the organization, it may be difficult to get timely responses. We also
understand that obtaining this information is beneficial for the IDT
and the participant in order to ensure that the IDT has sufficient
information to make a decision on whether or not a service should be
approved. For example, if the IDT is considering a request for
dentures, information from the participant's dentist would be relevant
to the review, and the IDT may need to take an extension if the dentist
does not respond within the initial 3 calendar days. However, we
believe it is important that PACE organizations develop processes to
ensure prompt decisions about service delivery requests, and that IDTs
do not routinely or unnecessarily rely on extensions of the
notification timeframe, such as when information can be obtained from
an employee of the PACE organization. We also proposed, for extensions
based on the need for additional information, to apply the requirements
currently in Sec. 460.104(d)(2)(iv)(B) which require the IDT to
document the circumstances that led to the extension and to demonstrate
why the extension is in the participant's interest. We would add a new
requirement at Sec. 460.121(i)(2) to require the IDT to notify the
participant or the designated representative in writing, as
expeditiously as the participant's condition requires but no later than
24 hours after the IDT extends the timeframe, and to explain the
reason(s) for the delay. We would require that the notification of the
extension must occur within 24 hours from the time the IDT makes the
decision to extend the timeframe because we believe it is important
that participants or their designated representatives understand that a
decision may be delayed and why, especially if the extension was taken
by the IDT.
In addition, we proposed adding requirements at Sec. 460.121(j)
related to notifying the participant or the designated representative
of the IDT's decision to approve, deny, or partially deny a service
delivery request. Currently, IDTs are required to notify the
participant or their designated representative of the decision to
approve or deny a request under Sec. 460.104(d)(2)(iii). As we
previously discussed, in relation to our proposals under Sec.
460.121(c), we proposed to expand the number of individuals who can
make a service delivery request. However, we did not change the
individuals whom the IDT would notify of its decision to approve or
deny the service delivery request. We believe that in all
circumstances, the participant (or designated representative) should
receive the notification of the IDT's decision to approve or deny the
service delivery request. In the rare situation where a caregiver, such
as a family member, is not the designated representative, notification
of the service delivery request would be sent to either the participant
or designated representative, and not the family member. As always,
under current Sec. 460.102(f), the PACE organization remains
responsible for establishing, implementing and maintaining documented
internal procedures that govern the exchange of information between
participants and their caregivers consistent with the requirements for
confidentiality in Sec. 460.200(e). We would expect that PACE
organizations, as a part of that documented process, have a method for
determining when notification should go to the participant versus a
representative (including a caregiver).
In paragraph (j)(1) we would specify the notification requirements
when the IDT approves a service delivery request. Specifically, we
would require the IDT to notify the participant or the designated
representative of that decision either orally or in writing. We
proposed that the notification must explain any conditions for the
approval in understandable language, including when the participant may
expect to receive the approved service. We believe it is important that
the IDT explain to the participant or their designated representative
any conditions that may apply whenever the IDT approves a service
delivery request. For example, if the IDT is approving a service
delivery request for home care, the IDT should indicate the days and
hours that are being approved and when the home care would start.
For service delivery requests that can be approved in full at the
time the request is made under Sec. 460.121(e)(2), the IDT member who
approves the request would be responsible for ensuring that the
notification satisfies the requirements in new Sec. 460.121(j)(1).
Because a request must be able to be approved in full at the time the
participant makes the request under this provision, the IDT member who

[[Page 6015]]

approves the service would be responsible for providing notification,
and ensuring that the conditions of the approval (if any) are explained
to the participant. While we allow for the IDT to provide approval
notification either orally or in writing, because decisions under Sec.
460.121(e)(2) are made in real time, and communicated to the
participant at the time the request is made, we do not believe written
notification would be necessary in these instances; however, a PACE
organization may always choose to send written notification following
the oral notification in order to memorialize any conditions of the
approval.
We also proposed at Sec. 460.121(j)(2) provisions similar to those
currently set forth in Sec. 460.104(d)(2)(v), to require that PACE
organizations must notify participants or the designated representative
of a decision to deny or partially deny a service delivery request both
orally and in writing. We believe that the requirement to notify the
participant or their designated representative both orally and in
writing should be maintained to ensure participants or their designated
representatives receive and understand the denial. We also proposed to
expand upon the specific requirements for what a denial notice must
contain. At Sec. 460.121(j)(2)(i) we require that the IDT state the
specific reasons for the denial, including an explanation of why the
service is not necessary to improve or maintain the participant's
overall health status. Under what we proposed, the rationale for the
denial would have to be specific to the participant, taking the
participant's medical, physical, emotional, and social needs into
account, and it would include the results of any reassessment(s)
conducted by the PACE organization. The rationale would have to be
stated in understandable language so that the participant or designated
representative can comprehend why the request was denied. We believe
that it is important to continue to require that the IDT provide the
specific reasons for a denial. However, based on our experiences
monitoring PACE organizations, we believe we needed to propose more
detailed requirements about what the explanation of the specific
reason(s) for the denial should include. Providing this explanation for
a denial would allow the participant or their designated representative
to more fully understand why the IDT determined a requested service was
not necessary. This would also allow a participant or designated
representative to better understand what information they may need to
provide if they appeal the denial.
At Sec. 460.121(j)(2)(ii) and (iii), we would retain the
requirements currently codified in Sec. 460.104(d)(2)(v)(A) and (B)
that the PACE organization inform the participant or designated
representative of the right to appeal any denied service delivery
request as specified in Sec. 460.122; and that the PACE organization
must also describe the process for both standard and expedited appeals,
and the conditions for obtaining an expedited appeal. Additionally,
with minor modifications, we would retain a requirement similar to
current Sec. 460.104(d)(2)(v)(C): the PACE organization would be
required to notify Medicaid participants about their right to, and the
conditions for, continuing to receive a disputed service through the
duration of the appeal. Medicaid participants include all participants
that are enrolled in Medicaid only or both Medicaid and Medicare
(dually eligible). Currently, Sec. 460.104(d)(2)(v)(C) cross-
references all of Sec. 460.122(e), but we believe that a more tailored
reference to Sec. 460.122(e) would be preferable. Therefore, we
proposed to cross-reference only Sec. 460.122(e)(1) at Sec.
460.121(j)(2)(iv), because the information provided in Sec.
460.122(e)(2) relates to the PACE organization's continued
responsibility to continue to furnish to participants all required
services other than the disputed service, and is not specifically about
continuing to receive the disputed service. We do not believe we need
to require that the IDT include information from Sec. 460.122(e)(2) in
a service delivery request denial notification because this concept is
widely understood and could potentially confuse participants if they
received notification of that requirement. However, we solicited
comments on whether it would be preferable to retain a cross-reference
to all of Sec. 460.122(e).
In Sec. 460.121(k) we proposed to specify the timeframe in which
the PACE organization must provide services approved, in whole or in
part, through the service delivery request process. We would require
the PACE organization to provide the requested service as expeditiously
as the participant's condition requires, taking into account the
participant's medical, physical, emotional, and social needs. We did
not propose a specific timeframe due to the many varying types of
services that PACE organizations provide. However, we expect PACE
organizations to develop processes to help them identify how quickly
they need to provide a service based on the participant's condition.
For example, we would generally expect that a drug used to treat a
participant's diabetes would be provided much more quickly than we
would expect a dental cleaning to be provided. That is because a
treatment for diabetes may require a more immediate response, whereas a
dental cleaning may not be as urgent. We recognize that not all
services can be physically provided in a rapid timeframe, however, we
do expect that the PACE organization take prompt action to ensure the
approved service is provided as expeditiously as needed. Additionally,
for services that can be approved under Sec. 460.121(e)(2), while we
require that the IDT member be able to approve the request in full at
the time the request is made, we do not require that the approved
service be physically provided at the time the request is made.
Instead, those approved service delivery requests must also be
effectuated under the requirements in this section.
The current requirement at Sec. 460.104(d)(2)(vi) states that the
PACE organization must automatically process a participant's request as
an appeal when the IDT fails to provide the participant with timely
notice of the resolution of the request or does not furnish the
services required by the revised plan of care. We would retain this
requirement, unaltered, at Sec. 460.121(l). We continue to believe
that this is an important safeguard for participants to ensure they
have access to the appeals process, even when a PACE organization does
not adhere to the processing requirements under the rules of this part.
In paragraph (m) we would add requirements that would address
record keeping for service delivery requests. While PACE organizations
are currently required to document all assessments under Sec.
460.104(f), we believe that it would be important to have a separate
section in the new Sec. 460.121 that more specifically addresses the
record keeping requirements, to help ensure that PACE organizations
accurately document and track all service delivery requests and have a
complete and accurate record of each request and how it was resolved.
In Sec. 460.121(m) PACE organizations must establish and implement a
process to document, track, and maintain records related to all
processing requirements for service delivery requests. We would specify
that PACE organizations must account for, and document, requests
received both orally and in writing. PACE participants often call PACE
organizations and request a service over the phone, and it is important
for the PACE organization to have an

[[Page 6016]]

established process to accurately document and track those verbal
requests, along with requests submitted to the organization in writing.
Once a PACE organization receives a service delivery request, the PACE
organization would be responsible for documenting, tracking and
maintaining all records that relate to the processing of the service
delivery request, including but not limited to, the IDT discussion, any
reassessments conducted, all notification that was provided to the
participant or designated representative, and the provision of the
approved service, when applicable. These documentation requirements
would apply to all service delivery requests, including service
delivery requests that can be approved in full at the time the request
is made per Sec. 460.121(e)(2). Additionally, as we mention in our
discussion of Sec. 460.200(d) at section VI.E. of this final rule, we
would require that documentation be safeguarded against alteration, and
that written requests for services must be maintained in their original
form. We also proposed to require that these records must be available
to the IDT to ensure that all members remain alert to pertinent
participant information.
Because we proposed toe define the requirements for service
delivery requests in the new Sec. 460.121, we also proposed to remove
all requirements relating to service delivery requests from the current
Sec. 460.104(d)(2). Specifically, we are removing Sec.
460.104(d)(2)(i) through (v) and we would modify the existing language
in Sec. 460.104(d)(2) to reiterate that the PACE organization must
conduct an in-person reassessment if it expects to deny or partially
deny a service delivery request. Additionally, as we discussed in Sec.
460.121(h)(2), the IDT may conduct a reassessment as determined
necessary for services it intends to approve. We would modify language
in Sec. 460.104(d)(2) to direct readers to the new Sec. 460.121(h)
for the requirements regarding conducting reassessments in response to
service delivery requests.
We summarize the comments received on the proposals related to
service delivery requests and provide our responses to those comments
below.
Comment: All commenters that addressed this proposal were
supportive of moving the requirements for service delivery requests
from Sec. 460.104(d)(2) to a new section of the regulations in Sec.
460.121. A few commenters were generally supportive of the provisions
related to service delivery requests.
Response: We thank the commenters for their support of the
provisions related to service delivery requests.
Comment: A few commenters offered suggestions related to the
proposed use of the term ``service delivery request''. Most suggested
that CMS use ``service determinations'' rather than ``service delivery
request'' because it is more consistent with the objective of this
process which is to determine whether a PACE organization should
initiate, modify, or continue a service in response to a request from a
participant, designated representative, or caregiver. Another commenter
recommended using the term ``service request'' as it is consistent with
past practice and suggested that it was easier for participants to
understand.
Response: We appreciate the commenters' response to our request for
feedback and we are persuaded to make changes to the regulation text
and incorporate both of the recommended terms to use the term ``service
determination request'' rather than ``service delivery request'' for
requests that are processed under proposed Sec. 460.121. We anticipate
that such a change will help participants and PACE organizations to
understand that this process is ultimately about the determination of
whether to initiate, modify, or continue a service. After consideration
of the comments received, we recognize that there are two actions that
largely make up the proposed service delivery request process; the
request itself and the determination made by the PACE organization. In
order to maximize clarity regarding the process, we are revising the
title of new section Sec. 460.121 from ``Service delivery requests''
to ``Service determination process.'' We believe that this modified
title better reflects the process in its entirety and better
encompasses the nature of these actions. We are also revising the
remainder of the proposed regulatory text for part 460, where
applicable, to reflect this change in terminology. In addition, we will
use the terms ``service determination request'' and ``service
determination process'' when referring to the requirements under Sec.
460.121 in the remainder of this final rule.
Comment: All commenters that addressed the proposal at Sec.
460.121(a) were supportive of the requirement that PACE organizations
must have formal written procedures for identifying and processing
service determination requests.
Response: We thank the commenters for their support of this
provision and are finalizing this requirement as proposed.
Comment: The majority of commenters expressed concern with the
proposal at Sec. 460.121(b)(1)(ii) to require PACE organizations to
process a request to ``otherwise change'' an existing service as a
service determination request. These commenters agreed with CMS's
position that PACE organizations should be responsible for processing
requests to change existing services, but believed that requests to
change an existing service were more comparable to a grievance that
should be addressed under Sec. 460.120, rather than a service
determination request because requests of this sort suggest that a
participant is dissatisfied with the characteristics of the service.
The same commenters also recommended that CMS modify the proposed
language at Sec. 460.121(b)(1)(ii) by limiting requests to modify an
existing service to include requests to increase, reduce, or eliminate
a service.
Response: We thank the commenters for their feedback and
recommendations. We disagree that requests to otherwise change an
existing service under Sec. 460.121(b)(1)(ii) are better classified as
a grievance. A grievance for purposes of the PACE program, is defined
in regulation at Sec. 460.120 as a complaint, either written or oral,
expressing dissatisfaction with service delivery or the quality of care
furnished. Requests that otherwise change an existing service would not
be considered a grievance under the current definition. For example, if
a participant is currently receiving two hours of home care a day in
the morning, but requests to instead receive those hours in the evening
because the participant is physically weaker in the evening and needs
more assistance at that time, we would not consider this request a
grievance and would expect the organization to process such a request
as a service determination request. However, it's possible that a
request to modify a service would be both a service determination
request and a grievance. For example, if the participant requests their
home care hours to be modified but also expresses dissatisfaction with
the quality of home care being provided, we would expect the
organization to process both a service determination request and a
grievance. In addition, there are no regulatory timeframes for
processing grievances under Sec. 460.120, and the participant is not
afforded appeal rights if a grievance is not fully resolved in their
favor. As noted in the proposed rule, we believe that defining service
determination requests to include requests to modify an existing
service, which includes requests to increase, reduce, eliminate, or
otherwise change a particular service, is an important safeguard, as
participants may believe

[[Page 6017]]

that the services they are currently receiving are not sufficient to
meet their needs (85 FR 9125). We continue to believe that this is the
best way to capture and provide resolution for such requests and
therefore we are finalizing this provision as proposed. As a reminder,
pursuant to the requirements we are finalizing at Sec. 460.121(e)(2),
if a service determination request can be approved in full by a member
of the IDT at the time the request is made, the full IDT does not need
to consider it, and the PACE organization would not need to conduct a
reassessment.
Comment: A commenter agreed with CMS' proposal to limit service
determination requests to requests made after the development of the
initial care plan. Several commenters recommended that CMS expand the
scope of requests that do not constitute a service determination
request under proposed Sec. 460.121(b)(2), to include services
requested during the semi-annual and change in participant status
reassessment and care planning processes, services requested in the
course of participants' treatment discussions with PACE IDT members,
both during and outside the assessment and care planning processes, and
requests for services that are not appropriate for the treatment of the
participants' conditions. Another commenter agreed with expanding the
scope of exclusions and suggested that requests made during a semi-
annual or unscheduled assessment would necessitate pausing the
reassessment and care planning process currently underway and beginning
a separate service determination request process. Another commenter
recommended limiting requests processed as service determination
requests to those requests that occur after the completion of a
required initial, semi-annual, or change in status assessment and
requests that a participant or designated representative makes when
they are not in agreement with the care plan at the end of any
individual encounter with an IDT member.
Response: We agree that routine treatment discussions and
discussions that occur during the assessment and care planning process
are instrumental in determining the services necessary to meet a
participant's needs. However, we also strongly believe that the
recording, processing, and tracking of service determination requests
is an essential beneficiary protection which ensures PACE participants'
access to necessary care and services, and provides participants an
avenue to appeal adverse decisions. As proposed, there is an exception
at Sec. 460.121(b)(2) for requests to initiate, modify or continue a
service, made prior to the development of the initial care plan. We
continue to believe that this is appropriate and are not expanding the
scope of this exclusion. We do not believe that it would be in a
participant's best interest to exempt requests for services made during
semiannual or unscheduled reassessments required under Sec. Sec.
460.104(c) and (d)(1) or during the care planning processes described
in Sec. Sec. 460.104(e) and 460.106(d) from the service determination
process because the relevant regulations do not specify timeframes for
these processes. Absent regulatory timeframes, these processes
frequently take a long time to resolve and if a service determination
request made as part of those processes were exempted from the proposed
requirements for service determination requests, these requests could
take an unacceptably long time to resolve. For the same reason, we also
believe that requests for services made during treatment discussions
with PACE staff, including members of the IDT and others, should be
processed as service determination requests. Through CMS monitoring and
oversight, we have noted cases of non-compliance with the existing
requirements at Sec. 460.104(d)(2) governing the documentation and
processing of participant requests, and the provision of approved
services. We believe it is important that all requests that satisfy the
definition of a service determination request be processed using the
process we proposed. As stated in the proposed rule (85 FR 9126), we
decided that requests made during the course of treatment discussions
should constitute service determination requests in order to avoid
confusion by requiring PACE organizations to distinguish between
requests for services that constitute service determination requests
and those that do not.
CMS would like to clarify that the exception to the definition of
``service determination request'' for requests made prior to the
development of the initial care plan at Sec. 460.121(b)(2) includes
requests made during the initial care planning process under Sec. Sec.
460.104(b) and 460.106(a). We recognize that the regulation text as
proposed, which permits this exception ``if the request is made prior
to development of the initial care plan'', may have caused confusion
because this could be interpreted to mean that a participant or other
requestor could make a service determination request during the
development of the initial plan of care but prior to the completion of
the initial plan of care. This was not our intent. As noted in the
proposed rule (85 FR 9125), this exception would apply any time before
the initial care plan was finalized (and discussions amongst the IDT
ceased), and we continue to believe that this approach would be
beneficial to the participant and the PACE organization as it is during
this process that the IDT and the participant or caregiver continue to
discuss the comprehensive plan of care taking into account all aspects
of the participant's condition as well as the participant's wishes. In
order to avoid confusion regarding when this exception would apply, we
are modifying the proposed regulatory text at Sec. 460.121(b)(2) in a
manner consistent with our proposal, to emphasize our intent that this
exception would apply to all requests for services made prior to
completion of the development of the initial plan of care. As revised,
the text of Sec. 460.121(b)(2) will state ``Requests to initiate,
modify or continue a service do not constitute a service determination
request if the request is made prior to completing the development of
the initial plan of care''.
Comment: Comments on CMS' proposal to allow caregivers to make
service determination requests at Sec. 460.121(c)(3) were varied. A
few commenters agreed with the proposal at Sec. 460.121(c)(3) to allow
caregivers to make service determination requests, and one commenter
noted that allowing caregivers to request services on behalf of a
participant may increase the involvement of caregivers and distribute
the burden of transmitting provider or prescriber recommendations to
the IDT. However, the majority of commenters expressed concern with
this proposal, which would expand the individuals who can make a
service determination request to include caregivers. These commenters
suggested that this may result in requests from a large number of
individuals who do not have legal authority to speak on behalf of the
participant, requests that are inconsistent with the wishes of the
participant and designated representative, requests that may be
motivated by financial or personal gain, and increased administrative
burden on PACE organizations in processing these requests. These
commenters suggested that the involvement of multiple caregivers could
negatively impact PACE organizations' ability to respond to the wishes
of the participant or their designated representative(s), for example
in regard to end-of-life care decisions. These commenters noted that

[[Page 6018]]

it is important that the PACE organization and the IDT remain focused
on the wishes of the participant, either expressed directly or through
their designated representative. These commenters also stated that
including caregivers, which is not a term defined in regulation text,
among the individuals who are able to request service determinations on
behalf of participants may have unintended, negative consequences. The
commenters noted that although a caregiver or family member who has not
been identified as a designated representative would not be able to
make service determination requests under the existing regulatory
framework, they would not be prevented from providing input related to
a participant's care under Sec. 460.102(d)(2)(ii) and Sec.
460.106(c)(2). With regard to requests that are personally motivated,
the commenters suggested that this change would permit an individual
living in a participant's home who might lose housing if the
participant moved to a nursing home to request home modifications or
additional in-home services to permit the participant to remain at home
despite the fact that those requests could be inconsistent with the
wishes of the participant or their designated representative and prior
determinations by the IDT that the participant cannot remain safe in
the home. These commenters strongly recommended that requests for
service determinations could only be made by participants or their
designated representatives, stating that the term designated
representative has been interpreted by PACE organizations to be either
a legal representative or a representative identified according to the
PACE organization's policy who is authorized to act on behalf of the
participant. Additionally, all of these commenters recommended
modifying the plan of care requirements in Sec. 460.106(e) to replace
the term caregiver with the term designated representative.
Response: We thank commenters who supported this provision and
appreciate the feedback related to permitting caregivers to make
service determination requests. While we believe the designation of a
representative is important, the PACE regulations do not require or
describe any specific formal process for designating a representative,
nor do they require PACE organizations to develop such a process. As
discussed further, in section VI.D. of this final rule related to
service delivery, in response to comments, CMS confirms that the IDT
may take into consideration informal support when developing the
participant's plan of care. Specifically, the IDT may consider care
provided by willing and able caregivers when determining what necessary
services will be provided by the PACE organization, either directly or
through its contractors. Given the fact that caregivers may provide
some care to participants, we believe that it is equally important that
caregivers are able to advocate for services on a participant's behalf.
It is important that these individuals have an avenue to request
services for a participant, especially when caregivers that had
actively been providing care are no longer willing or able to provide
care in the manner they had been. For example, if a caregiver was
providing overnight supervision to a participant, but is no longer
willing or able to provide that care due to the participant's increased
dementia, the caregiver should be able to submit a service
determination request to the PACE organization. In regard to
commenters' concerns relating to the potential increase in burden on
PACE organizations related to the proposal to permit caregivers to make
service determination requests, we believe most PACE organizations
currently allow caregivers to make these requests. According to data
submitted by PACE organizations for auditing purposes from 2017 through
2019, approximately 50 percent of service determination requests were
made by participants and 30 percent were made by caregivers or other
family members. Because organizations are already accepting and
processing requests from caregivers (as these data show), we do not
anticipate that modifying the regulation in this way would result in a
significant influx of requests for PACE organizations. In addition, the
role of caregivers in PACE participants' lives has been recognized in
CMS's policies regarding the PACE program since the first PACE interim
final rule was published in 1999 (64 FR 66249), and caregivers play a
vital role in the development and reevaluation of the plan of care as
we noted at VI.A. of the preamble of this final rule.
We would like to state that nothing in this provision would expand
which individuals may be considered a caregiver, nor is it meant to
imply that any person in the participant's life may request services.
As we noted in the preamble to the 2006 PACE rule (71 FR 71284), a
caregiver is a person who attends to a participant's needs and has a
caregiving relationship with the participant. Historically, CMS has not
included employees or contractors of the PACE organization, such as
providers or prescribers, as ``caregivers'' under this definition, and
instead has interpreted this term to include less formal support
providers such as family members. This is consistent with our
discussion at 71 FR 71284 which stated that CMS uses the term ``family
member'' and ``caregiver'' interchangeably. Employees and contractors
of PACE organizations enter into a contractual relationship with the
PACE organization and generally have a predominantly financial
incentive to provide care; we have not considered these individuals to
be ``caregivers'' under the regulations. PACE organizations are already
required at Sec. 460.106(e) to involve a participant's caregiver or
caregivers for purposes of care planning. We believe that those
individuals, who should already have a relationship with the PACE
organization, should also be able to advocate for services outside of
the care planning process. We believe that permitting caregivers to
make service determination requests on behalf of a participant is an
important safeguard: Those participants who do not have a designated
representative may rely on a caregiver to advocate for services on
their behalf, and caregivers are usually aware of the participant's
situation and have valuable insight into what services would be
beneficial. For the same reasons, we also do not agree with the
commenters' recommendations to exclude caregivers from the care
planning process at Sec. 460.106(e). Additionally, caregivers have
been involved in the care planning process under PACE since the
regulations were implemented in 1999 through the interim final rule and
CMS has never previously received feedback indicating that this
practice might be problematic. As we gain more experience with
caregiver service determination requests, we may take further action as
appropriate; for example, to further refine our position on who may be
considered a caregiver for purposes of making service determination
requests.
With regard to requests that may be motivated by financial or
personal gain, we believe that the proposed service determination
process would prevent these types of personal conflicts of interest
from negatively impacting participants. The IDT is responsible for
deciding whether to approve or deny a service determination request,
and thus functions as a gatekeeper preventing the provision of
unnecessary services. Section 460.121(g) also requires the IDT to
consider all relevant information when evaluating a service
determination request, including the criteria specified

[[Page 6019]]

in Sec. 460.92(b). Under Sec. 460.92(b), the IDT must consider the
participant's current medical, physical, emotional, and social needs,
and current clinical practice guidelines and professional standards of
care applicable to the particular service, when deciding to provide or
deny a service. Additionally, if the IDT conducts a reassessment in
response to the service determination request, the reassessment should
take into consideration the participant's wishes and preferences for
care, to ensure that services, if approved, are in the participant's
best interest, in accordance with the participant's rights for
participation in treatment decisions under Sec. 460.112(e). If a
service determination request is made and the IDT determines, after
reassessing the participant, that the service is not necessary based on
all relevant information, the IDT should deny the request. These
requirements would apply to all requests for services, including
requests for end of life care. For example, a caregiver may request
palliative care for the participant, but the IDT would need to consider
all relevant information prior to approving or denying the service,
including the participant's and designated representative's wishes,
applicable clinical guidelines, and the participant's current medical,
physical, emotional, and social needs. Similarly, if a caregiver
requested the participant to remain in the home for self-serving
purposes, and the IDT determined that the participant was not safe to
remain in the home and did not wish to remain in the home, the IDT
should not approve the caregiver's request.
Therefore, we believe that the IDT plays a pivotal role in ensuring
that services are provided only when necessary, and this in turn
protects participants from receiving services that are not in their
best interest, including those that may be motivated by financial or
personal gain.
Comment: Several commenters provided feedback related to permitting
prescribers or other providers to make service determination requests.
One commenter was in favor of permitting prescribers or other providers
to make service determination requests on behalf of a participant. Most
commenters were opposed to CMS allowing other individuals to make
service determination requests. These commenters noted that PACE
organizations, through the participant's primary care provider, are
currently required to oversee the use of specialists. In situations
when another provider or prescriber's recommendation is not
implemented, the IDT would be required under proposed Sec.
460.102(d)(1)(ii) to document the reasoning behind this determination
in the participant's medical record. One commenter noted that for these
reasons, this contemplated proposal would be duplicative of the
proposed regulatory requirements under Sec. 460.102(d)(1)(ii), and as
a result would be disruptive to the effective functioning of the IDT.
Further, the commenters noted that a participant or his or her
designated representative has the right to submit a service
determination request if the PACE organization does not provide a
recommended service.
Response: We appreciate the commenters' feedback and recognize that
by finalizing our proposals at Sec. 460.102(d)(1)(ii), we will enhance
the consideration and documentation of recommendations made by
specialists, and better integrate those individuals into the process of
determining what care and services are necessary for participants. As
discussed in section VI.C.3 of this final rule and in response to other
comments received, we are finalizing the proposal at Sec.
460.102(d)(1)(ii), largely as proposed. While we continue to believe
that communication among specialists and the IDT is vital, we agree
with commenters that these communications do not need to be handled
through the service determination process. By requiring that the IDT
document such recommendations in the medical record in accordance with
Sec. 460.210(b), including proposed Sec. Sec. 460.210(b)(4) and
(b)(5), if there is a subsequent service determination request made by
a participant, designated representative, or a caregiver, there will be
a record of the recommendation and why it was not provided. We expect
that this information will provide useful perspective to the IDT and
will allow the IDT to conduct a more meaningful review of the service
determination request under Sec. 460.121(g). We also agree with the
commenter that a participant, designated representative, or caregiver
could make a service determination request for any service that was not
provided in accordance with a recommendation from an employee or
contractor of a PACE organization. Because of these proposals and the
integral role the IDT plays in determining what services are necessary,
we do not believe that it is necessary to specifically include
prescribers or other providers among the individuals who are allowed to
submit service determination requests at this time. Accordingly, we are
finalizing our proposals for Sec. 460.121(c)(3) as proposed.
Comment: Commenters were supportive of CMS's proposal to allow
service determination requests to be made either orally or in writing.
Response: We thank the commenters for their support of this
provision.
Comment: Some commenters agreed with CMS's proposal at Sec.
460.121(d)(2) which would allow service determination requests to be
made to any employee or contractor of the PACE organization that
provides direct care to a participant. The majority of these commenters
responded to CMS's request for feedback on whether this requirement
should be limited to a smaller subset of individuals and agreed that
CMS should limit the individuals to whom a service determination
request could be made to a PACE organization's employees and
contractors who provide direct participant care in the participant's
residence, the PACE center, and while transporting participants, which
would preclude service determination requests from being made to direct
care providers with whom participants would generally have less
frequent contact, for example, hospital staff or other medical
specialists. These commenters also suggested that requests for services
made while participants are being transported should be limited to
routine transportation and exclude transportation in emergency
situations. Another commenter recommended limiting request submission
to any employee or contractor who serve in a required interdisciplinary
team member role to eliminate any confusion for participants, their
designated representatives, and employees and contractors of the PACE
organization on the process of submitting service determination
requests.
Response: We appreciate the commenters' support for this provision.
After consideration of the comments received, we will specify in the
final rule that service determination requests may be made to any
employee or contractor of the PACE organization that provides direct
care to a participant in the participant's residence, the PACE center,
or while transporting participants. These are the settings where
participants have the most frequent contact with employees or
contractors of the PACE organization, often on a daily basis.
Therefore, we believe that these are the most logical settings where
service determination requests are most likely to occur. It would also
be a smaller subset of employees and contractors for the PACE
organization to train and oversee to

[[Page 6020]]

ensure those individuals were correctly identifying service
determination requests when they are made. We note that a participant's
residence would include a skilled-nursing facility or long-term care
facility and a participant would be able to make a service
determination request to staff who provide direct care to a participant
in those facilities. We also recognize that if we were to finalize this
requirement as proposed it could be difficult for a PACE organization
to operationalize because of the varied and significant roles played by
contractors in PACE. For example, PACE organizations routinely contract
with hospitals and it would be difficult to train all of the employees
within the hospital system to recognize and accept service
determination requests.
In terms of requests made while transporting participants, we do
not believe that it is necessary or appropriate to exclude
transportation in emergency situations from this requirement. Under the
requirements at Sec. 460.70(a), a PACE organization is required to
have a written contract with each outside organization, agency, or
individual that furnishes administrative or care-related services not
furnished directly by the PACE organization except for emergency
services. Because the requirement at Sec. 460.121(d)(2) would only
apply to an employee or contractor of the PACE organization, this
requirement would not apply to those situations where the PACE
organization does not have a contractual relationship for emergency
services, including emergency transportation. Additionally, based on
our oversight and monitoring experience we have never seen
circumstances where a service determination request was made while a
participant was being transported for emergency purposes; therefore, we
do not expect that this will happen with significant frequency. More
commonly, we would expect requests to be made during routine
transportation services, and the PACE organization would be required to
implement processes for staff and contracted employees to identify and
process these requests. However, to the extent that service
determination requests are made during emergency transportation, to a
contractor of the PACE organization, we believe it is important for
those requests to be captured and processed accordingly.
With regards to commenters' recommendation that requests only be
submitted to interdisciplinary team members, we do not believe that
this would be in the participant's best interest based on the nature of
the care provided by a PACE organization. As discussed in the proposed
rule, PACE organizations are required to provide care across all care
settings and a participant may not know with whom they need to
communicate in order to make a service determination request (85 FR
9127). Certain participants may also see home care aides more
frequently than members of the IDT and we believe it is appropriate to
permit individuals to communicate service determination requests to
home health aides rather than requiring them to make such requests to a
member of the IDT. Because of the vulnerability of the PACE participant
population, we believe it is important to have a robust system of
safeguards in place so that participants have the ability to easily
request and obtain access to those services that would improve or
maintain their overall health status. We believe that requiring a
participant or other requestor to go to a member of the IDT would
create an unnecessary hurdle and could lead to confusion, if for
example, an individual is instructed by an employee or contractor of a
PACE organization to make requests in a different manner.
Comment: A commenter agreed with the proposal at Sec.
460.121(e)(1) which would require the PACE organization to bring a
service determination request to the interdisciplinary team as
expeditiously as the participant's health condition requires, but no
later than 3 calendar days from the date the request is made. Other
commenters recommended that CMS change the proposed timeframe for
bringing a service determination request to the IDT from 3 calendar
days to 3 business days. These commenters were fully supportive of
CMS's perspective that there is an acceptable period of time between
when the service determination request is made and when it is received
by the IDT; however, noted that implementing a 3 calendar-day timeframe
will effectively force PACE organizations to convene full IDT meetings
on both Fridays and Mondays to consider requests for services initiated
on Thursdays and Fridays. The commenters also noted that holidays that
fall on Mondays may pose a challenge if requests must be brought to the
IDT within 3 calendar days from the day the request is received. The
majority of commenters also recommended CMS change the proposed
timeframe for notification in paragraph (i) from 3 calendar days to 3
business days.
Response: We appreciate the commenters' concerns regarding the 3
calendar day timeframes that we proposed for processing service
determination requests; however, we disagree with the commenters and
consider this to be a reasonable timeframe. Section 1894(b)(1)(B) of
the Act requires PACE organizations to provide necessary covered items
and services 24 hours per day, every day of the year. PACE
organizations must therefore be able to process requests efficiently
and timely, even on weekends and holidays. Under the current
requirements at Sec. 460.104(d)(2)(iii), the IDT must generally notify
a participant or designated representative of its decision to approve
or deny a request within 72 hours from the date the request is
received. As we stated in the preamble to the proposed rule (85 FR
9129), CMS has interpreted this language as requiring that the IDT must
notify the participant or their designated representative within 3
calendar days of receiving a request, based on the wording of the
requirement which states ``72 hours from the date.'' We stated that we
believe this is a reasonable timeframe for the IDT to conduct these
reviews, and therefore proposed a similar timeframe in the proposed
rule. We believe that requiring the IDT to notify the participant or
their designated representative of its decision as expeditiously as the
participant's health condition requires, but no later than 3 calendar
days at Sec. 460.121(i) provides the IDT sufficient time to meet and
make a decision regarding a participant's care, taking into account
weekends and holidays, and are finalizing this requirement as proposed.
Additionally, we created a second timeframe at Sec. 460.121(e) to
ensure that PACE organizations bring requests to the IDT for review
within a reasonable period of time. Specifically, we proposed to
require that requests must be brought to the interdisciplinary team as
expeditiously as the participant's condition requires but no later than
3 calendar days from the time the request is made, and we believe this
timeframe is appropriate for purposes of Sec. 460.121(e). We believe
that this timeframe strikes an appropriate balance between providing
sufficient time for PACE organization staff to transmit the request to
the IDT, while ensuring timely resolution of participant requests. We
are therefore finalizing this timeframe as proposed.
Comment: The majority of commenters requested that if CMS finalizes
the proposed requirement at Sec. 460.121(d)(2) which would allow for
participants to make service determination requests to individuals
other than IDT members, that CMS also

[[Page 6021]]

allow for service determination requests made to non-IDT members to be
brought to the appropriate IDT member and that the IDT member have the
opportunity to approve the request subject to the streamlined
requirements set forth under Sec. 460.121(e)(2). The commenters noted
that by adopting this approach, the need for a full-IDT review as
required under Sec. 460.121(f) would not be based on who received the
request but the nature of the request. The commenters stated that they
would not want the additional step of allowing a non-IDT member to
bring a service determination request to the appropriate IDT member to
lengthen the service determination process overall and recommended that
service determination requests be brought to the appropriate IDT member
in time for him or her to consider the request and, if approved, notify
the participant or his or her designated representative of the approval
within the 3 calendar timeframe proposed at Sec. 460.121(e)(1). The
commenters stated that this approach would be consistent with CMS'
objectives for Sec. 460.121(e)(2), as noted in the proposed rule,
``the participant would be better served by the IDT member quickly
communicating the approval, and working to provide the requested
service as expeditiously as the participant's condition requires.'' (85
FR 9128). The commenters further suggested that consistent with CMS'
observations in regard to proposed Sec. 460.121(e)(2), the recommended
approach would also reduce the current burden on PACE organizations.
Response: The exception that we proposed at Sec. 460.121(e)(2)
provided that if a member of the IDT receives a service determination
request and is able to approve the request in full at the time the
request is made, the PACE organization would not be required to follow
certain processing requirements. This provision was intended to allow
for immediate approval of a service determination request during a
conversation between a participant or their designated representative
or caregiver and a member of the IDT. Allowing an employee or
contractor of a PACE organization who is not an IDT member to
communicate the request to the appropriate IDT member for approval
would require the non-IDT employee or contractor to identify the
appropriate member of the IDT that should receive the request, which
could take several days and would take away from the immediacy of the
approval. We intended to create an exception to expedite the process
for approval of service determination requests, and reduce unnecessary
burden on the PACE organization, given the fact that PACE
organizations, as direct care providers, routinely interact with
participants and these interactions often include treatment discussions
that may result in a service determination request by the participant.
We do not anticipate that finalizing this requirement as proposed would
create a large burden on PACE organizations because, if a member of the
interdisciplinary team would have been able to approve a particular
service determination request in full at the time the request was made,
we presume that in the event the same service determination request was
brought to the full IDT, the full IDT would also have the ability to
quickly approve the request at that time, without having to conduct a
reassessment. Based on these considerations, we are not modifying this
requirement and are finalizing this provision as proposed.
Comment: Commenters were supportive of the proposal at Sec.
460.121(e)(2), which would allow a member of the IDT to approve a
service determination request in full at the time the request is made
and not be required to follow certain processing requirements.
Specifically, this would exclude the requirements at proposed Sec.
460.121(f) through (i), (j)(2), and (l) which include review by the
full interdisciplinary team, reassessment in response to a service
determination request, and notification timeframes.
Response: We thank the commenters for their support of this
provision.
Comment: The majority of commenters agreed with the proposed
provisions at Sec. 460.121(g) which set forth the specific information
the IDT must consider when evaluating a service determination request.
Response: We thank the commenters for their support of this
provision.
Comment: Several commenters were also in favor of the proposal at
Sec. 460.121(h), which would require that if the IDT expects to deny
or partially deny a service determination request, the appropriate
members of the IDT, as identified by the IDT, must conduct an in-person
reassessment before the IDT makes a final decision, and that the team
members performing the assessment must evaluate whether the requested
service is necessary to meet the participant's needs. These commenters
requested clarification on whether assessments can be completed in
advance of the IDT's receipt of the request, so long as the assessment
is completed in response to the request.
Response: We thank the commenters for their support of this
provision. With respect to assessments being completed in advance of
the request being brought to the full IDT, we wish to clarify that this
would be acceptable provided the regulatory requirements, including
Sec. 460.121(h), are satisfied. However, we would not expect this to
occur often. As required under Sec. 460.121(h)(1), if the IDT expects
to deny or partially deny a request, the appropriate member of the IDT,
as identified by the IDT, must conduct an in-person reassessment before
the IDT makes a final decision. Given the 3 calendar day timeframe for
a PACE organization to bring a service determination request to the IDT
under Sec. 460.121(e)(1), there may be situations when one or more
members of the IDT are able to conduct a reassessment in response to a
service determination request in order to gather the relevant
information needed for discussion and review by the full IDT within
that timeframe. However, there is a risk that the appropriate member of
the IDT, as identified by the IDT, may not participate in a
reassessment if the reassessment is completed prior to the IDT
convening. This fact notwithstanding, if the reassessment was completed
in response to a service determination request, and when the full IDT
meets, the IDT determines that the assessment was conducted by the
appropriate IDT members, this would be permitted.
Comment: Several commenters expressed concern that the proposed
criteria that must be met for the IDT to extend the 3 calendar day
timeframe for review and notification of a service determination
request at Sec. 460.121(i)(1) is overly restrictive. The commenters
also recommended revising the proposed requirements under Sec.
460.121(i)(1) to allow for extensions when a participant is not
available for an assessment or when an IDT member is unexpectedly not
available. The commenters explained that in addition to situations in
which the requestor may request an extension of the 3-day timeframe, it
is also possible that the participant may be unavailable for a
reassessment that is required for the IDT to make its determination.
These commenters suggested, for example that the participant may be out
of town or otherwise unavailable for reasons beyond the PACE
organization's control and rather than requiring the requestor to
request an extension in these situations, the IDT should, on its own,
be able to notify the requestor of the need for an extension beyond 3
days. The commenters also recommended that CMS not limit the extension
timeframe at Sec. 460.121(i)(1) to 5 days when the

[[Page 6022]]

participant or their designated representative requests an extension
for a longer period of time. Further, the commenters stated that while
they agree it is important that the IDT does not routinely take
extensions when the participant or other requestor has not requested
one or the participant is unavailable for a required reassessment, the
proposed language in Sec. 460.121(i)(2) does not take into account
circumstances that necessitate such extensions. Specifically, it is
possible that the IDT member identified by the IDT as needing to
perform a reassessment or who is critical to the IDT's discussion of
the service determination request is unexpectedly not available. In
situations when the PACE organization can demonstrate the importance of
this reassessment and/or the IDT member's participation in the IDT
discussion and the potential for it to change the IDT's decision to
deny a service, and that the circumstances surrounding the IDT member's
absence could not be anticipated, the commenters argue that an
extension of up to 5 business days is appropriate. They expressed their
belief that extending the timeframe for notification of the service
determination request would be preferable to exceeding the standard 3-
day timeframe and then having to automatically process the service
determination request as an appeal which would further delay the
requestor's receipt of a response to his/her request.
Response: We appreciate the commenters' concerns and agree that
there may be situations that arise during the course of the service
determination process that would hinder a PACE organization's ability
to make its decision and notify the participant or their designated
representative of its decision within the required timeframes under
Sec. 460.121(i). In the proposed rule (85 FR 9129), we accounted for
situations where the participant or other requestor should be able to
request an extension under Sec. 460.121(i)(1)(i) and used as an
example circumstances where the participant is out of town and stated
that the caregiver could request the IDT take an extension in order for
the participant to be in-person for the reassessment required for the
request. We would encourage the IDT to discuss service determination
requests with the participant where the IDT needs to perform a
reassessment and the participant would be out of town. Because
decisions related to service determination requests must be made as
expeditiously as the participant's condition requires, we do not
believe that it would be appropriate to allow for any additional
extensions beyond the proposed 5 calendar day timeframe. If the IDT is
unable to conduct a reassessment within that timeframe, then we would
expect that the IDT would issue a denial and subsequent appeal rights.
We reiterate in this final rule that it is important that the IDT does
not routinely take extensions when the participant or other requestor
has not solicited it because of the frailty of the PACE population. We
also note that that any extension must be documented in accordance with
the recordkeeping requirements at Sec. 460.121(m).
With respect to the recommendation that CMS allow for extensions
when an IDT member is unexpectedly not available, we do not believe
that it would be appropriate to view this as justifying an extension.
The requirements at Sec. 460.121(i) specify that the IDT must make its
decision and provide notification of that decision as expeditiously as
the participant's condition requires but no later than 3 calendar days
after the date the IDT receives the request and we do not believe that
it would be appropriate for an extension to be taken for a reason
unrelated to the participant's availability or condition. It is the
responsibility of the PACE organization to ensure that there is
sufficient staff coverage to meet these requirements.
Comment: The majority of commenters agreed with the proposed
provisions at Sec. 460.121(i)(2), which would require an IDT to notify
the participant or their designated representative in writing as
expeditiously as the participant's condition requires but no later than
24 hours after the IDT decides to extend the timeframe under Sec.
460.121(i)(1), and explain the reasons for the delay. However, these
commenters also recommended modifying the requirement to allow PACE
organizations to notify the participant or designated representative of
the extension either orally or in writing. The commenters suggested
that regardless of whether the notification is oral or in writing it
would include an explanation of the reason(s) for the delay and would
be issued no later than 24 hours after the IDT decides to extend the
timeframe. They also noted that allowing oral notification would
facilitate the requestor's receipt of notice of the extension, because
if CMS required PACE organizations to issue written notification within
24 hours after the IDT decides to extend the timeframe, it would
require at least a day or two for such written notification to reach
the requestor. Additionally, regardless of whether notification was
provided orally or in writing, commenters noted the PACE organization
would have to maintain documentation of the notification in accordance
with the recordkeeping requirements at Sec. 460.121(m).
Response: We appreciate the commenters' suggestions to modify the
proposed regulatory text at Sec. 460.121(i)(2) to allow PACE
organizations to provide notification of the decision by the IDT to
extend the regulatory timeframe either orally or in writing. We believe
that providing written notification of the rationale for an extension
is important in order to ensure the participant receives a full
explanation. Additionally, a written explanation of the extension will
allow the participant to share that information with family members or
caregivers if desired, for instance if the participant needs assistance
with understanding the rationale. Therefore, we are not persuaded to
modify the regulation at this time to allow PACE organizations to
notify participants orally instead of in writing, and are finalizing
the requirements under Sec. 460.121(i)(2) as proposed. We will
consider building additional flexibility into the regulation through
future rulemaking. Additionally, while we are not modifying the
regulation to allow for oral notification and PACE organizations will
be required to provide written notification when the IDT extends the
timeframe for processing a service determination request, nothing would
preclude the organization from choosing to call a participant in
addition to sending a written notification. This would alleviate any
concerns the organization might have about providing notice to the
participant in as timely a manner as possible.
Comment: The majority of commenters agreed with CMS's proposal to
require PACE organizations to provide the participant or designated
representative with oral or written notice of the IDT's decision to
approve a service determination request under Sec. 460.121(j)(1).
However, these commenters also requested clarification regarding CMS'
expectations with respect to the requirement that such notice must
explain the conditions of the approval.
Response: We appreciate the commenters' support. The explanation of
the conditions of an approval that the IDT is required to provide to
the participant or their designated representative under Sec.
460.121(j)(1) should include any parameters that may be applicable to
the approval. We wish

[[Page 6023]]

to clarify that PACE organizations would only be required to explain
the conditions of the approval if the request is approved in full, but
there are conditions applicable to the approval. As we discussed in the
proposed rule, requests are not considered approved in full unless the
IDT member can approve exactly what is requested. (84 FR 9127). In
these situations, if there are conditions on a particular service that
are not inconsistent with a participant's request but that the IDT
still needs to make the participant aware of, we would expect that they
notify the participant of the conditions of the approval that apply.
These conditions may include any additional information about duration
or timing, or a limitation on the service that needs to be conveyed to
the participant. For example, if a participant makes a general service
determination request for physical therapy (and does not request a
specific duration), and the PACE organization approves physical
therapy, but determines that the participant only needs physical
therapy 3 times a week for 6 weeks, the required notice must include
the specific duration and frequency of the approved service. Another
example would include circumstances where the PACE organization
approves a visit to a specialist, but requires the participant to go to
a particular contracted specialist, the required notice must include
this information. If the request cannot be approved in full as
requested, then the decision is a partial denial and the specific
reason for the denial and appeal rights must be provided both orally
and in writing pursuant to Sec. 460.121(j)(2). For example, if the
participant makes a service determination request for 8 hours of home
care, split over 3 visits each week, but the PACE organization approves
a total of 6 hours of home care, split between 2 visits each week, this
would be considered a partial denial and notification would have to be
provided pursuant to Sec. 460.121(j)(2). Another example would be if a
participant requested physical therapy for six weeks, but the PACE
organization only approved physical therapy for four weeks. Because the
PACE organization did not approve exactly what the participant
requested, and only approved four weeks instead of six, that decision
would be considered partially denied.
Comment: The majority of commenters agreed with CMS' proposed
provisions in Sec. 460.121(j)(2), which require PACE organizations to
provide the participant or designated representative with oral and
written notice of the IDT's decision to deny or partially deny a
request. We proposed that this notification must include the specific
reason(s) for the denial, including why the service is not necessary to
maintain or improve the participant's overall health status, taking
into account the participant's medical, physical, emotional, and social
needs, and the results of the reassessment(s) in understandable
language, inform the participant or their designated representative of
his or her right to appeal the decision under Sec. 460.122, describe
the standard and expedited appeals processes, and inform a Medicaid
participant of his or her right to continue receiving disputed services
during the appeals process and the conditions for continuing to receive
disputed services. One commenter recommended that CMS provide PACE
organizations with template language for denial notifications.
Response: We thank the commenters for their support of this
provision. Historically we have not been prescriptive about PACE
organizations' appeals processes, and it remains up to the PACE
organization to develop a formal written appeals process with specified
timeframes for response to address noncoverage or nonpayment for
services under Sec. 460.122(a), subject to the minimum requirements
specified in Sec. 460.122(c). Accordingly, we believe that each PACE
organization is in the best position to create a notice that is
tailored directly to its internal processes, in accordance with the
requirements at Sec. 460.122(j). We appreciate the commenters'
recommendation and we may consider providing template language for
denial notifications in the future, as appropriate in light of the
needs of the PACE program.
Comment: In response to CMS' request for feedback on whether it
would be preferable for Sec. 460.121(j)(2)(iv) to cross-reference
Sec. 460.122(e) or Sec. 460.122(e)(1), the majority of commenters
agreed that CMS should cross-reference Sec. 460.122(e)(1). Several
commenters requested confirmation that the provisions in Sec.
460.121(j)(2)(iv) would not prohibit a PACE organization from informing
all participants, regardless of Medicaid eligibility, of their ability
to continue receiving disputed services during the appeals process
until issuance of the final determination.
Response: We appreciate the commenters' responses to our request
for feedback and are finalizing the cross reference at Sec.
460.121(j)(2)(iv) as proposed. At this time the requirement at Sec.
460.121(j)(2)(iv) applies only to Medicaid eligible participants,
including those participants that are dually eligible for Medicare and
Medicaid, and we are not expanding this to include Medicare-only
participants in this rule. PACE organizations are not required under
Sec. 460.122(e) to continue to furnish the service(s) under dispute
during the appeals process for Medicare-only participants. The
requirements under Sec. 460.122(e)(1) specify that for a Medicaid
participant, the PACE organization must continue to furnish the
disputed services until issuance of the final determination if the PACE
organization is proposing to terminate or reduce services currently
being furnished or if the participant requests continuation with the
understanding that he or she may be liable for the costs of the
contested services if the determination is not made in his or her
favor.
Comment: Commenters agreed with CMS' proposal at Sec. 460.121(k)
regarding the effectuation requirements when the IDT approves a service
determination request, in whole or in part. As proposed, Sec.
460.121(k) would require PACE organizations to provide approved
services as expeditiously as the participant's condition requires,
taking into account the participant's medical, physical, emotional, and
social needs. This provision would also require the IDT to explain when
the participant may expect to receive the service in accordance with
Sec. 460.121(j)(1). Commenters also agreed with CMS's proposals under
Sec. 460.121(l) relating to the effect of failure by the IDT to meet
the processing timeframes. CMS proposed to require the PACE
organization to automatically process an appeal in accordance with
Sec. 460.122 if the IDT fails to provide the participant with timely
notice of the resolution of the request or does not furnish the
services required by the revised plan of care, as this failure would
constitute an adverse decision.
Response: We thank the commenters for their support of these
provisions and are finalizing as proposed.
Comment: Commenters were also supportive of the proposed
recordkeeping requirements at Sec. 460.121(m), which would require
PACE organizations to establish and implement a process to document,
track, and maintain records related to all processing requirements for
service determination requests received both orally and in writing, and
ensure those records would be available to the IDT to ensure that all
members remain alert to pertinent participant information.

[[Page 6024]]

Response: We thank the commenters for their support of this
provision and are finalizing as proposed.
After consideration of the comments received and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the changes at Sec. Sec. 460.121(e), (g), (h), (i), (j),
(k), (l), and (m) as proposed. We are finalizing the remaining
provisions at Sec. 460.121 with several modifications. First, we have
modified the terminology used at Sec. 460.121 by changing the title to
refer to ``service determination process'' and replacing the term
``service delivery request'' with ``service determination request''
throughout. We have also made corresponding changes throughout the
proposed regulatory text at part 460. We are amending proposed Sec.
460.121(a) by changing the word ``section'' to ``Part'' in order to
state that PACE organizations' written procedures for identifying and
processing service determination requests must be developed in
accordance with the requirements in part 460 rather than Sec. 460.121.
This change will better reflect the content of our proposals under
Sec. 460.121, which specifically reference other applicable
requirements in Part 460 of Title 42 and will not affect the meaning of
the regulation as proposed or described in the final rule. We have made
modifications to 460.121(b)(2) by changing the language from ``made
prior to the development of the initial care plan'' to ``prior to
completing the development of the initial plan of care'' to reflect our
intent, as expressed in the preamble to the proposed rule, that this
exception applies until the initial plan of care is complete. We are
also amending proposed Sec. 460.121(d)(2) to require that individuals
may make service determination requests to any employee or contractor
of the PACE organization that provides direct care to a participant in
the participant's residence, the PACE center, or while transporting
participants, in response to comments received about whether we should
adopt an approach that permits service determination requests to be
made only in those settings. In addition, at Sec. 460.121(f) we
proposed to use a question mark at the end of the paragraph title
instead of a period. This was an oversight and therefore, we have
modified the regulatory text to reflect this change. This change will
not have a substantive impact on the effect of the regulation. Finally,
we have made minor grammatical corrections to Sec. 460.121(b)(1), (c),
and (f) which will not change the intended meaning of the regulation as
proposed or described in this final rule. We are finalizing the changes
at Sec. 460.104(d)(2) as proposed, except in regard to the use of the
term ``service determination request.''

B. Appeals Requirements Under PACE (Sec. Sec. 460.122 and 460.124)

As discussed previously, sections 1894(b)(2)(B) and 1934(b)(2)(B)
of the Act require PACE organizations to have in effect written
safeguards of the rights of enrolled participants, including procedures
for grievances and appeals. In the preamble to Medicare and Medicaid
Programs; Programs of All-Inclusive Care for the Elderly (PACE) interim
final rule which was published in the Federal Register on November 24,
1999 (64 FR 66234) (hereinafter referred to as the 1999 PACE interim
final rule), CMS explained that we considered the appeals requirements
under what is now MA when creating the appeals requirements for PACE
(see 64 FR 66257 and 66258). CMS established the requirements for PACE
organizations' appeals processes in Sec. Sec. 460.122 (PACE
organization's appeals process) and 460.124 (Additional appeal rights
under Medicare or Medicaid). Over time, PACE organizations have
requested that CMS explain certain aspects of the appeals processes
described in Sec. Sec. 460.122 and 460.124. Therefore, we proposed
certain changes to Sec. Sec. 460.122 and 460.124 that would provide
additional detail about the appeals process and help ensure consistency
in the administration of the appeals process among PACE organizations.
We also proposed a few other changes to increase beneficiary awareness
of and access to the appeals process, and to align with other changes
in this rule. The term ``appeal'' is currently defined in Sec. 460.122
as a participant's action taken with respect to the PACE organization's
noncoverage of, or nonpayment for, a service including denials,
reductions, or termination of services. We would add a sentence after
the definition to require that PACE organizations must process all
requests to initiate, modify or continue a service as a service
delivery request before processing an appeal under Sec. 460.122. As we
discussed in section VI.A. of this final rule, we have seen through
audits that some PACE organizations will process an appeal instead of
processing a service delivery request when a participant makes a
request to continue receiving a service that the PACE organization is
discontinuing or reducing. We would add a sentence to this introductory
paragraph in order to affirmatively require that all requests that
satisfy the definition of a service delivery request under Sec.
460.121(b) must first be processed as such before a PACE organization
may process an appeal. Section 460.122(b) currently provides that upon
enrollment, at least annually thereafter, and whenever the IDT denies a
request for services or payment, the PACE organization must give a
participant written information on the appeals process. Consistent with
the changes to existing Sec. 460.104(d)(2) and new Sec. 460.121,
which are discussed in section VI.A. of this final rule, we would
modify Sec. 460.122(b) to specify that PACE organizations must provide
participants with written information on the appeals process at
enrollment, at least annually thereafter, and whenever the IDT denies a
service delivery request or other request for services or payment. By
proposing this change, CMS was seeking to ensure that participants
consistently and timely receive information about their appeal rights,
including when PACE organizations deny their service delivery requests.
Section 460.122(c) provides requirements for the minimum written
procedures that PACE organizations must establish for their appeals
process. We have heard that these requirements have created confusion
among PACE organizations, which has led to inconsistent implementation
among PACE organizations and a lack of participant awareness of and
participation in the appeals process. As a result, we proposed a number
of changes to decrease confusion and increase beneficiary awareness of
and access to the appeals process.
We proposed two modifications at paragraph (c)(2). First, we would
add a participant's designated representative as someone who has the
right to appeal on the participant's behalf. We believe that this is an
important participant safeguard because it allows for assistance in
navigating the appeals process. Additionally, in developing procedures
for how a participant or a participant's designated representative
files an appeal, PACE organizations would be required to include
procedures for receiving oral and written appeal requests. Because of
the comprehensive nature of the care PACE organizations provide,
participants are likely to have more verbal interactions with staff of
the PACE organization and may express their desire to appeal a
decision, but may be unsure or confused as to how. We believe that by
requiring PACE organizations to accept appeal requests made both orally
and in writing, we would create an important safeguard for the
participant population enrolled in the PACE program. By allowing both
oral and written requests for appeals, this proposal would enhance
participant access to the

[[Page 6025]]

appeals process, and to services covered under the PACE benefit.
Second, in response to questions received from PACE organizations,
we would add language in paragraph (c)(4) to specify the qualifications
required of an appropriate third party reviewer or members of a review
committee. Specifically, we would require PACE organizations to ensure
appeals are reviewed by an appropriate reviewer or committee. This
includes separating the requirements that an appropriate third party
reviewer and the members of a review committee must be ``independent''
and ``appropriately credentialed'' to emphasize the fact that an
appropriate third party reviewer or member of a review committee must
be both independent and appropriately credentialed. We discuss the use
of a review committee in the preamble to the 2006 PACE final rule (see
71 FR 71302) and PACE organizations currently utilize review committees
in their review processes; therefore, we would incorporate review
committees in regulation at this time and require the members of review
committees to satisfy the same requirements as appropriate third party
reviewers. Employees or contractors of a PACE organization may
participate in review committees as long as they meet the requirements
set forth in Sec. 460.122(c)(4). Consistent with the current
requirements at Sec. 460.122(c)(4), we would specify that in order to
be an appropriate third party reviewer or member of a review committee,
an individual must be an impartial third party who was not involved in
the original action and does not have a stake in the outcome of the
appeal. We also proposed to add language that more clearly defines an
appropriately credentialed reviewer. As we discussed in the preamble to
the 2006 final rule, the appropriate third party reviewer must be
someone with expertise in the appropriate field. Thus it would not be
appropriate for a social worker to review an appeal related to a
physical therapy denial; nor would it be appropriate for a gynecologist
to review a denial of services relating to coronary surgery (71 FR
71302). Therefore, we would modify the language in paragraph (c)(4) to
specify that an appropriate third party reviewer is one who is
credentialed in a field or discipline related to the appeal. We do not
believe that these proposals would affect the way PACE organizations
currently choose their third party reviewers since the existing
regulation at Sec. 460.122(c)(4) requires the appointment of an
appropriately credentialed and impartial third party that was not
involved in the original action and who does not have a stake in the
outcome of the appeal to review the participant's appeal. By proposing
amendments to expressly state that the same requirements also apply to
the members of a review committee, we believe that as proposed this
would give PACE organizations more clarity and flexibility to utilize
resources within the organization as well as contracted employees.
PACE organizations have expressed confusion about the third party
review process, and we are aware of inconsistent decisions made by
third party reviewers, such as inconsistent decisions at different PACE
organizations. In order to reduce confusion, create a more consistent
application of Medicare and Medicaid coverage requirements under PACE,
and increase consistency for participants, we proposed additional
modifications to the requirements under Sec. 460.122(c). Specifically,
we added a new paragraph (c)(5) that would require PACE organizations
to take specific steps to ensure their third party reviewers understand
the PACE benefit package and the coverage requirements under the PACE
program, and how to review requests in a manner consistent with both.
As noted in the preamble to the 2006 PACE final rule (71 FR 71302),
PACE organizations should ensure that credentialed and impartial third
party reviewers are trained to make decisions in a manner similar to
the determinations under section 1862(a)(1)(A) of the Act. Such
determinations would be based on the participant's medical needs and
not on other reasons such as the cost of the disputed care, who is
paying the third party reviewer's salary or fee, an individual's
reputation, or other factors. Therefore, we proposed, in new paragraph
(c)(5), to require PACE organizations to provide written or electronic
materials to an appropriate third party reviewer(s) that, at a minimum,
explain that services must be provided in a manner consistent with the
requirements in Sec. Sec. 460.92 and 460.98, the need to make
decisions in a manner consistent with determinations made under section
1862(a)(1)(A) of the Act, and the requirements in Sec. 460.90(a) that
specify that many of the limitations on the provision of services under
Medicare or Medicaid do not apply in PACE.
The requirements for providing appeal notifications at Sec.
460.122(d) currently provide that a PACE organization must give all
parties involved in the appeal (1) appropriate written notification and
(2) a reasonable opportunity to present evidence related to the
dispute, in person, as well as in writing. However, PACE organizations
have expressed that this section of the regulation is confusing because
it discusses both the notification requirements and the participant's
opportunity to submit evidence during an appeal. To reduce confusion,
we would separate these requirements. Accordingly, we would redesignate
paragraph (g) as (h) and also change the title of paragraph (h) to
``Actions following a favorable decision.'' This redesignation allows
for the addition of new paragraph (g) that sets forth notification
requirements. We would modify paragraph (d) to address the existing
requirement that the PACE organization must give all parties involved
in the appeal a reasonable opportunity to present evidence related to
the dispute in person as well as in writing. At new paragraph (g), we
proposed to revise the notice requirements for appeals to more closely
align with the notice requirements for service delivery requests at
Sec. 460.121(j) by specifying the content of the notice in order to
ensure consistency and minimize confusion for PACE organizations and
participants. PACE organizations would be required to give all parties
involved in the appeal (for example participants or their designated
representatives) appropriate written notice of all appeal decisions. In
the case of appeal decisions that are favorable to the participant, the
PACE organization would be required to explain any conditions on the
approval in understandable language. For partially or fully adverse
decisions, the PACE organization would be required to state the
specific reason(s) for the denial, explain the reason(s) why the
service would not improve or maintain the participant's overall health
status, inform the participant of his or her right to appeal the
decision, and describe the additional appeal rights under Sec.
460.124. Conditions of approval may include, but are not limited to,
the duration of the approval, limitations associated with an approval
such as dosage or strength of a drug, or any coverage rules that may
apply. We also proposed to revise and move the current requirements at
paragraph (h) into new paragraph (g)(2)(ii). These requirements specify
that for determinations that are wholly or partially adverse to a
participant, at the same time the decision is made, the PACE
organization must notify CMS, the State administering agency, and the
participant. Because this paragraph includes additional notification
requirements that PACE organizations

[[Page 6026]]

must follow after a decision is made to deny an appeal, we believe that
this belongs in Sec. 460.122(g)(2) for notice of adverse decisions. We
would revise this requirement to use terminology consistent with our
other amendments to Sec. 460.122, specifically, to refer to
``partially or fully adverse'' decisions and to refer to an appeal
decision rather than to a determination for consistency with Sec.
460.122(g)(2)(i) and other sections of this regulation.
We proposed a few minor changes to align with other changes in this
rule. First, we would change the reference to Sec. 460.104(d)(2)(iv)
in Sec. 460.122(c)(1) to reference the service delivery request
requirements in Sec. 460.121(i) and (m). The current citation
references the extension requirements for unscheduled reassessments;
however, we believe that this reference should have been to the general
timeframes for processing service delivery requests. We would
redesignate the current paragraphs (c)(5) and (6) as (c)(6) and (7) in
Sec. 460.122 to allow for the addition of a new paragraph (c)(5), as
discussed earlier in this section.
Lastly, we added language to Sec. 460.124 that delineates the
additional appeal rights that PACE participants are entitled to receive
under Medicare or Medicaid and add processing requirements for the PACE
organization. In response to comments CMS received on the 1999 PACE
interim final rule, CMS discussed stakeholder concerns about the PACE
appeals process in the preamble to the 2006 PACE final rule and
reiterated the intended process in the preamble. (See 71 FR 71303 and
71304.) Specifically, CMS stated in the preamble to the 2006 PACE final
rule that Medicare beneficiaries have access to the Medicare external
appeals route through the IRE that contracts with CMS to resolve MA
appeals, while Medicaid eligible participants have access to the State
Fair Hearing (SFH) process (see 71 FR 71303). However, despite this
clarification, CMS's audits have revealed that PACE organizations
continue to misinterpret the requirements under Sec. 460.124 relating
to participants' additional appeal rights under Medicare or Medicaid.
To address this issue, we proposed several changes to Sec. 460.124.
First, we would add new paragraphs (a) and (b) at Sec. 460.124. In
Sec. 460.124(a) we would specify that Medicare participants have the
right to a reconsideration by an independent review entity (IRE). We
recognize that there are differences in the terminology used in PACE
versus MA and therefore have to add similar language at new Sec.
460.124(a)(1), (2), and (3) to establish in regulation the requirements
for how an appeal may be made to the independent, outside entity, the
timeframe in which the independent outside entity must conduct the
review, and who are the parties to the appeal. In Sec. 460.124(a)
introductory text and (a)(1) we have intended to parallel the
requirements at Sec. 422.592(a) with minor differences. Under MA there
is automatic escalation to the independent review entity at this level
of appeal if the organization upholds its adverse decision, in whole or
in part. However, in PACE, appeals are not automatically escalated
because most PACE participants are dually eligible for Medicare and
Medicaid benefits and these participants may choose to utilize the
Medicaid or Medicare route for independent review. For these dually
eligible individuals, it may be more appropriate to pursue an appeal
through the Medicaid path rather than the Medicare path. The provisions
relating to automatic-escalation in MA ensure that the beneficiary
receives a review by an independent reviewer; however, this protection
is not necessary in PACE as the PACE participant has already received
an independent review on the appeal during the internal appeal
processed in accordance with Sec. 460.122. Therefore, we proposed at
Sec. 460.122(a)(1) to specify that a written request for a
reconsideration must be filed with the independent review entity within
60 calendar days of the decision by the third party reviewer. We did
not specify who must file the request because we discuss at Sec.
460.124 that the PACE organization must assist the participant in
choosing which appeal rights to pursue (that is, Medicaid SFH or
Medicare IRE) and as such, we believe that the PACE organization is
also responsible for ensuring that the request is filed with the
appropriate external entity. However, a participant always maintains
the right to file a request without assistance from the PACE
organization. At Sec. 460.124(a)(2) we would add a requirement that
the independent review entity must conduct the review as expeditiously
as the participant's health condition requires but must not exceed the
deadlines specified in the contract. The independent review entity is
currently operating under these timeframes, consistent with the
requirements at Sec. 422.592(b), and participants are currently
utilizing the independent review entity to exercise their external
appeal right, consistent with CMS's historical interpretation that
these requirements are applicable to the PACE program. We also proposed
adding language at Sec. 460.124(a)(3) that would parallel the
requirement at Sec. 422.592(c), to specify that when the independent
review entity conducts a reconsideration, the parties to the
reconsideration are the same parties described in Sec. 460.122(c)(2),
with the addition of the PACE organization. We are seeking to enhance
transparency and we believe it is important to make PACE organizations
aware that they are considered a party to the appeal once it reaches
the independent review entity. We would add a new paragraph (b) that
specifies that Medicaid participants have the right to a SFH as
described in part 431, subpart E. Finally, we would add a new paragraph
(c) to specify that participants who are dually eligible for both
Medicare and Medicaid have the right to external review by means of
either the IRE or the SFH process. This provision would specify that
dually eligible participants may choose to pursue an appeal through
either the Medicare or Medicaid process. In accordance with the
existing provisions under Sec. 460.124, PACE organizations must assist
dual eligible participants in choosing which route to pursue if both
the IRE and the SFH review processes are applicable. For example, if
the appeal is related to an enrollment dispute, the Medicaid SFH
process would be the appropriate route for a participant to pursue.
Whereas for a dispute related to a Part D medication, the IRE would be
the appropriate route for a participant to pursue. By codifying these
appeal rights in regulation, we are seeking to enhance transparency for
PACE organizations to ensure that participants are able to access
additional levels of appeal in order to receive services they believe
that they are entitled to under the PACE benefit.
We summarize the comments on the proposals related to appeal
requirements under PACE, and provide our responses to those comments,
below.
Comment: Numerous commenters agreed with the proposed changes to
the definition of ``appeal'' under Sec. 460.122, which the commenters'
noted would specifically state their understanding of CMS's
longstanding policy, that a service determination request must be
processed before an IDT determination regarding a request to initiate,
modify, or continue a service could be appealed. Another commenter
recommended revising the definition to eliminate the language ``a
participant's action taken with respect to the PACE organization's
noncoverage of, or nonpayment for, a service including denials,
reductions or termination of services'' and instead replace it with ``a
participant or their designated representative's action taken

[[Page 6027]]

with respect to the PACE organization's denial of a service request to
initiate, continue, increase, decrease or discontinue a service.'' The
commenter suggested that this would eliminate any confusion on what
constitutes an appeal.
Response: We appreciate commenter support of our changes to the
definition. While we proposed adding a sentence to the introductory
language of Sec. 460.122 to require that PACE organizations process
any request to initiate, modify, or continue a service as a service
determination request before the PACE organization can process an
appeal under Sec. 460.122, we did not propose any changes to the
current language regarding what constitutes an appeal. We have chosen
not to include the designated representative in the definition because
we specifically provide at Sec. 460.122(c)(2) that a PACE
organization's appeals process must include written procedures for how
``a participant or their designated representative files an appeal . .
.'', we do not believe it is necessary to refer to the designated
representative in the introductory text. Furthermore, we do not believe
it is necessary to change the proposed definition as the commenter
suggests since we are maintaining the proposed criteria for what
constitutes a service determination request to include requests to
initiate, modify, or continue a service. Therefore, we are finalizing
our proposed changes to the introductory text of Sec. 460.122 as
proposed.
Comment: The majority of commenters recommended that CMS modify the
proposed language in Sec. 460.122(b) from, ``or other request for
services or payment'' to ``or request for payment.'' These commenters
expressed confusion about why CMS would include ``or other services''
in addition to a service determination request. A commenter stated that
``or other request for services or payment'' is in reality a service
determination request and therefore is redundant in Sec. 460.122(b)
and should be removed.
Response: Section 460.122(b) does not address the right to appeal,
but rather the responsibility of the PACE organization to provide
participants with written information about their appeal rights. In
addition to providing notice of these rights at enrollment and
annually, we believe that it is important for the PACE organization to
provide notice when it denies a service determination request, which is
why we proposed to modify Sec. 460.122(b) to include that language. We
did not propose to make other changes to the text of Sec. 460.122(b)
such as removing ``or other requests for services or payment.'' We
agree with commenters that all requests for services would be resolved
within the service determination request process. Because all requests
for services would be resolved through the service determination
request process, there would be no ``other requests for services'' that
might be subject to appeal, and removing this language would not
substantively affect the meaning of the revised text of Sec.
460.122(b) as proposed. However we also note that certain requests for
payment may not meet the definition of a request to initiate, modify or
continue a service. For example, a PACE participant may go to the
hospital or emergency room without first requesting the service from
the IDT, and may subsequently submit the bill to the PACE organization
as a request for payment. Since the underlying service was already
received, this would not be a request to initiate, modify or continue a
service, but we would expect the PACE organization to provide
notification of appeal rights if the payment was denied by the IDT. We
can also envision scenarios where a participant receives a bill for
routine care provided by a contractor of the PACE organization, such as
care provided by a nursing facility or specialist, and the participant
subsequently requests payment from the PACE organization. Because these
services would not involve requests to initiate, modify, or continue a
service, these payment decisions would be processed outside of the
service determination process. For these reasons, we are persuaded to
remove ``or other request for services'' but will retain ``or payment''
as this would align with our proposal to require notification of appeal
rights following a denied service determination request or a decision
to deny a request for payment for a service. We are therefore revising
Sec. 460.122(b) to remove the reference to ``other services'' and to
require that upon enrollment, at least annually thereafter, and
whenever the interdisciplinary team denies a service determination
request or request for payment, the PACE organization must give a
participant written information on the appeals process.
Comment: The majority of commenters recommended modifying the
cross-reference in Sec. 460.122(c)(1), ``Minimum requirements'', from
Sec. 460.121(g) to Sec. 460.121(i) as it would make the appeals
requirement clearer.
Response: We appreciate the commenters' recommendation and agree
that this cross-reference should be revised. In section VI.B. of the
proposed rule, we proposed in Sec. 460.122(c)(1) to change the
reference from Sec. 460.104(d)(2)(iv) to Sec. Sec. 460.122(i) and (m)
to reference both the notification timeframes and the documentation
requirements for service delivery requests. (85 FR 9133). The proposed
regulation text at Sec. 460.122(c)(1) incorrectly referenced Sec.
460.121(g). Therefore we have modified the regulatory text in this
final rule to reflect the correct reference, to Sec. Sec. 460.121(i)
and (m).
Comment: The majority of commenters agreed with the revisions at
Sec. 460.122(c)(2), to require that a PACE organization's appeals
process must include written procedures for how a participant or their
designated representative files an appeal. The commenters specifically
noted their support for allowing the participant's designated
representative as an individual who may submit an appeal on the
participant's behalf.
Response: We thank the commenters for their support of this
provision.
Comment: We received several comments on the proposed requirements
for third party reviewers. The majority of commenters supported the
requirements that allow for third party review by a committee at Sec.
460.122(c)(4). The commenters also supported the requirement that a
third party reviewer or committee member must be appropriately
credentialed in the field or discipline related to the appeal. A
commenter specifically recommended requiring that appeals of physical
therapy services be reviewed by a licensed physical therapist. These
commenters also supported the proposed provisions at Sec.
460.122(c)(5), which require distribution of written or electronic
materials to third party reviewers.
Response: We thank the commenters for their support of these
provisions. With respect to the comment regarding review by licensed
physical therapists, we expect that the PACE organization would
determine what constitutes an appropriately credentialed individual in
the field or discipline related to the appeal as specified at proposed
Sec. 460.122(c)(4)(i). Given the vast array of services that could be
under appeal, we do not believe it would be feasible for CMS to list
each discipline or set of appropriate credentials that we would expect
to see in each case. Therefore, we are not adopting this suggestion. In
section VI.B. of the proposed rule, we provided an example stating that
it would not be appropriate for a social worker to review an appeal
related to a denial of physical therapy services, and

[[Page 6028]]

we would expect a PACE organization to consider this guidance when
making determinations about whether third party reviewers are
appropriately credentialed in the field or discipline related to the
appeal.
Comment: The majority of commenters recommended that CMS either
clarify the meaning of, ``all parties,'' as referenced in Sec.
460.122(d) and Sec. 460.122(g) by adding a list of individuals that
would be considered a ``party'', or modify the language to state, ``A
PACE organization must give the participant or designated
representative . . .'' These commenters also recommended adding
designated representative as a party that must be provided information
on the PACE organization's appeals process in Sec. 460.122(b).
Response: The use of the terminology ``all parties'' is consistent
with the current language used in the context of appeal notification
and the opportunity to present evidence at Sec. 460.122(d) and we
proposed to retain the existing language. According to Merriam-Webster.com, the term ``party'' includes ``a person or group taking one
side of a question, dispute, or contest.'' \75\ Generally, we would
interpret the term ``all parties'' to refer to all parties taking a
formal position on one or the other side of the appeal, which would
include the participant (and his or her designated representative, if
applicable), and the PACE organization. This terminology has been in
use in the PACE regulations since 1999 and based on CMS oversight
activities we do not have concerns with how PACE organizations are
currently interpreting this term. Under Sec. 460.122(c)(2) a
participant may file an appeal, or a participant's designated
representative may file an appeal on the participant's behalf. If a
designated representative has filed an appeal on behalf of a
participant, that representative typically acts on the participant's
behalf throughout the appeal process, and CMS considers the participant
and the designated representative to be the same ``party'' for purposes
of the appeal. For purposes of notification at Sec. 460.122(g), the
``parties'' to the appeal will depend on the circumstances of the
appeal. Generally, we believe the parties would include the participant
or the designated representative of the participant, if applicable. For
example, if a participant filed an appeal without assistance from a
designated representative, the PACE organization would be required to
provide notification to the participant, but if the participant
designated a representative to represent him or her in the appeal, the
designated representative should also receive notice. For purposes of
submitting evidence during the appeal at Sec. 460.122(d), there may be
circumstances where a representative submits evidence on behalf of the
participant, and there may be circumstances where both the participant
and the representative submit evidence during the appeal. After
consideration of the comments received, we are finalizing this
provision as proposed.
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\75\ https://www.merriam-webster.com/dictionary/party.
---------------------------------------------------------------------------

With respect to the recommendation to add the designated
representative as a party that must be provided information about the
PACE organization's appeals process under Sec. 460.122(b), we do not
agree that this is necessary, although there may be circumstances when
a designated representative should receive information about the
appeals process. As we discussed earlier in this section, the PACE
organization would be required to give a participant written
information on the appeals process upon enrollment, at least annually
thereafter, and whenever the interdisciplinary team denies a service
determination request or request for payment. A participant could
designate a representative for purposes of interacting with the PACE
organization at any one of these points in time, in which case the
notice to the participant could go to the designated representative who
is acting on the participant's behalf. Additionally, we proposed to
retain the current requirements for notification of an adverse decision
in regard to a service determination request, which provide that a PACE
organization must notify the participant or the designated
representative orally and in writing of the adverse determination, in a
notification that includes a description of both the standard and
expedited appeals processes Sec. 460.121(j)(2).
Comment: A commenter was supportive of the proposed notification
requirements at Sec. 460.122(g). The majority of commenters
recommended revising the language in Sec. 460.122(g)(2) to remove the
statement, ``the PACE organization must provide the participant with
written notification of the decision,'' since the requirement to notify
participants is already contained in the first paragraph of Sec.
460.122(g). These commenters also recommended removing the newly
redesignated Sec. 460.122(i). The commenters noted that the
requirements to notify CMS and the State administering agency of a
wholly or partially adverse decision in the newly redesignated Sec.
460.122(i), are incorporated into Sec. 460.122(g)(2)(ii) and are
therefore duplicative.
Response: We thank the commenters for their support and for their
recommendations. We recognize that the proposed language at Sec.
460.122(g)(2) restates the requirement to provide written notification
of the decision to the participant; we are persuaded to revise this
section to remove the duplicative language. At Sec. 460.122(g), we
proposed that a PACE organization must give all parties involved in the
appeal appropriate written notification of the decision to approve or
deny the appeal. We did not refer to ``all parties'' at Sec.
460.122(g)(2) and we realize that this could be viewed as inconsistent.
Therefore, we are removing the language at Sec. 460.122(g)(2) that
states that a PACE organization must provide the participant with
written notification of the decision. By making this change we are
enhancing consistency and also ensuring notification to all parties
involved in the appeal. Because the designated representative is
permitted to file an appeal on a participant's behalf, and therefore
are parties to the appeal, we believe it is important that any
notification, including one related to a partially or fully adverse
decision, be communicated to all parties involved.
With regards to removing the redesignated Sec. 460.122(i)
(existing Sec. 460.122(h)), we agree that the requirements to notify
CMS and the State administering agency of a wholly or partially adverse
decision in the redesignated Sec. 460.122(i) would be duplicative of
the notification requirements in proposed Sec. 460.122(g)(2)(ii). It
was not our intention to duplicate these requirements in the
regulations and therefore we are revising the amendatory language to
the regulation text to redesignate the current paragraph (h) as a new
paragraph (g)(2)(ii), as revised.
Comment: A commenter agreed with CMS's proposal at Sec. 460.122(g)
which sets forth the requirements for providing notification of appeal
decisions. The majority of commenters requested clarification regarding
the proposed requirements in Sec. 460.122(g)(2)(ii), which would
require PACE organizations to provide written notification of an
adverse appeal decision to the participant, CMS and the State
administering agency (SAA) at the same time the decision is made.
Specifically, the commenters sought to clarify the meaning of ``at the
same time the decision is made'' and how long

[[Page 6029]]

organizations would have to notify CMS and the SAA.
Response: We appreciate the commenter's support of this provision.
With respect to the commenters' question regarding what CMS intends by
the language ``at the same time the decision is made,'' we appreciate
the opportunity to share our historical interpretation of this
requirement. Under the current requirements at redesignated Sec.
460.122(c)(6), the PACE organization's appeals process must include
written procedures for responses to and resolution of appeals as
expeditiously as the participant's health condition requires, but no
later than 30 calendar days after the PACE organization receives the
request. Under the current requirements at Sec. Sec. 460.122(f)(1) and
(f)(2), a PACE organization must also have an expedited appeals process
and must respond to the appeal as expeditiously as the participant's
health condition requires, but no later than 72 hours after it receives
the appeal, unless the PACE organization takes an extension under Sec.
460.122(f)(3). While both the decision and notification must be made
within these regulatory timeframes, we recognize that generally the
decision for an appeal will occur prior to the notification (sometimes
by more than a day). Additionally, under the current requirements at
Sec. 460.122(h) (redesignated as Sec. 460.122(g)(2)(ii)), the PACE
organization must notify CMS, the State administering agency, and the
participant of a determination that is wholly or partially adverse to a
participant, at the same time the decision is made. We have not
historically expected PACE organizations to notify CMS and the SAA of a
decision at the same time as the decision is made; rather, our
historical interpretation has been that notification to those entities
should occur around the same time as when the PACE organization
notifies the participant of the adverse decision. We would expect that
organizations notify CMS and the SAA of the adverse decision at the
time they notify the participant of the adverse decision, or within the
regulatory timeframe for notification pursuant to Sec. Sec. 460.122.
We are removing ``participant'' from the list at Sec.
460.122(g)(2)(ii) because including that term on the list would be
duplicative in light of the change to the wording of that provision.
The requirement at Sec. 460.122(g) already establishes that the PACE
organization must give all parties involved in the appeal, which
includes the participant (or, as applicable, his or her designated
representative), appropriate written notification of the decision to
approve or deny the appeal. Therefore, we believe that removing
participant from the list of entities that must also receive
notification of a denial or partial denial at Sec. 460.122(g)(2)(ii)
will reduce confusion without affecting the substance of our proposals.
Comment: A commenter addressed the proposals at Sec. 460.124 and
was supportive of the additional clarifications around additional
appeal rights under Medicare and Medicaid.
Response: We thank the commenter for their support of this proposed
provision and therefore are finalizing as proposed.
After consideration of the comments received, and for the reasons
outlined in the proposed rule and our responses to comments, we are
finalizing the changes to the introductory text of Sec. 460.122, Sec.
460.122(c)(2), (c)(4), (c)(5), (d), (h), and Sec. 460.124 as proposed.
We are finalizing the provisions at Sec. 460.122(b) with
modifications. Specifically, we have modified the requirement at
paragraph (b) by removing the language ``other requests for services''.
We are finalizing the provision at paragraph (c)(1) with a minor
technical correction to change the reference from Sec. 460.121(g) to
Sec. Sec. 460.121(i) and (m). We are finalizing Sec. 460.122(g) as
proposed, with a few technical changes to address duplicative language.
First, we removed duplicative language in paragraphs (g)(2)(i) and
(g)(2)(ii) stating that the requirements in question applied to
decisions that are partially or fully adverse, and added ``partially or
fully'' in paragraph (g)(2) to reflect the fact that all of the
requirements within (g)(2) applied to decisions that were partially or
fully adverse to the participant. We also removed language from
paragraph (g)(2)(i) that restated the requirement at (g) that the PACE
organization must provide the participant with written notification of
its decision. Similarly, at paragraph (g)(2)(ii) we have removed
several references to ``the participant,'' including from the list of
people who must receive notification of a partially or fully adverse
decision, to reflect the fact the participant would already receive
notice of any decision under Sec. 460.122(g), as a party to the
appeal. In addition, there was an oversight in the proposed amendatory
language for the regulation text that would reflect the move of the
current requirements at paragraph (h) into new paragraph (g)(2)(ii), as
proposed at 85 FR 9133. Therefore, we are modifying the amendatory
language to reflect this change.

C. PACE Services, Excluded PACE Services, and the Interdisciplinary
Team (Sec. Sec. 460.92, 460.96, and 460.102)

1. Required Services
Sections 1894(a)(2)(B) and 1934(a)(2)(B) of the Act state that the
PACE program provides comprehensive health care services to PACE
participants in accordance with the PACE program agreement and
regulations under those sections. Sections 1894(b) and 1934(b) of the
Act set forth the scope of benefits and beneficiary safeguards under
PACE. Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act specify in
part that PACE organizations must provide participants, at a minimum,
all items and services covered under titles XVIII and XIX of the Act
without any limitation or condition as to amount, duration, or scope,
and all additional items and services specified in regulations, based
upon those required under the PACE protocol.\76\ CMS codified these
required services in Sec. 460.92 of the regulations, which provides
that the PACE benefit package for all participants, regardless of the
source of payment, must include all Medicare covered items and
services, all Medicaid covered items and services, as specified in the
State's approved Medicaid plan, and other services determined necessary
by the interdisciplinary team (IDT) to improve and maintain the
participant's overall health status.
---------------------------------------------------------------------------

\76\ The original PACE protocol was replaced by the PACE program
agreement (84 FR 25613).
---------------------------------------------------------------------------

We proposed to modify the requirements at Sec. 460.92 to more
clearly define required services, and to specify CMS' expectations for
making decisions about the services that are required under the PACE
benefit package. First, we would create a new paragraph (a) and include
under (a) the current requirements in Sec. 460.92. In order to do
that, we proposed to renumber existing paragraphs (a), (b), and (c) as
(a)(1), (2), and (3). We would add a new paragraph (b) that provides
the standards that the IDT must consider when evaluating whether to
provide or deny services described under (a) for a participant.
In addition to redesignating Sec. 460.92(a) as Sec. 460.92(a)(1),
we would modify the language to refer to all Medicare-covered services.
In light of our amendments to the definition of ``services'' in Sec.
460.6, and the current definition of that term, PACE organizations
should understand that providing necessary drugs, whether they are
covered under Medicare Parts A, B, or D, is an important part of the
PACE benefit package. See section VI.I. of this

[[Page 6030]]

final rule for a more detailed discussion of the definition of
``services.''
We would add a new paragraph (b) in order to specify the standards
that the IDT must consider when evaluating whether to provide or deny
services required under Sec. 460.92(a) for a participant. Under Sec.
460.92(b)(1) we would require the IDT to take into account all aspects
of a participant's condition, including the participant's medical,
physical, emotional, and social needs, when determining whether to
approve or deny a request for a service. As we discussed in section
VI.A. of this final rule, the determination for a service should be
based on all aspects of the participant's care. For example, additional
center days may not be necessary when considering the participant's
physical needs, but when taking into account the participant's social
needs, the IDT may find that those services become necessary in order
to improve the participant's social or emotional condition. We have
discovered through audits that PACE organizations sometimes only
consider the medical or physical needs of a participant but do not
consider their social or emotional needs when those social or emotional
needs are relevant to the request.
We also proposed to add language at Sec. 460.92(b)(2) that would
require organizations to utilize current clinical practice guidelines
and professional standards of care when making a decision, so long as
those guidelines and standards are applicable to the particular
service. PACE organizations are currently required to utilize current
clinical practice guidelines and professional practice standards when
developing the outcome measures for their quality improvement programs
at Sec. 460.134(b). When we discussed this requirement in the preamble
to the 1999 PACE interim final rule, we stated that we expect that PACE
organizations will utilize current clinical standards as a routine part
of their daily operations and care management strategies. (See 64 FR
66260). However, we have discovered through our PACE audits that
decisions to deny services are sometimes not based on accepted clinical
guidelines or standards. We understand that current clinical practice
guidelines and professional standards of care may vary based on the
type of service that is being considered. For example, when determining
if a participant requires a cardiac catheterization, the organization
may reference clinical practice guidelines issued by the American Heart
Association. On the other hand, when determining the appropriate
insulin for a participant the organization may appropriately refer to
guidelines published by the American Diabetic Association. We also
understand that certain services may not have an applicable clinical
practice guideline. For example, determining the frequency of PACE
center attendance may not be based on clinical practice guidelines, but
may instead be based on the medical, physical, emotional, and social
needs of the participant. Therefore, we added language to (b)(2) to
require the IDT to take into account current clinical practice
guidelines and professional standards of care if applicable to a
particular service. By adding this requirement, we do not intend to
restrict a PACE organization's ability to determine what service is
appropriate or necessary for a participant: The IDT would remain
responsible for determining the participant's overall health status and
needs, and ensuring those needs are met through the provision of
necessary services.
We are not scoring this provision in the Regulatory Impact Analysis
section because PACE organizations are already required to utilize
current clinical practice guidelines as a part of their quality
improvement program, and they are required to consider the
participant's physical, medical, emotional and social needs as a part
of care planning discussions. We believe that by modifying this
provision we will not be increasing burden on PACE organizations, as
they already consider these items on a routine basis.
We summarize the comments on the proposals related to required
services, and provide our responses to those comments, below.
Comment: All commenters that addressed this provision recommended
that CMS modify the proposed language at Sec. 460.92(b) to state,
``The interdisciplinary team makes determinations of whether or not to
approve, deny or partially deny services for participants. These
determinations must be based on an evaluation of the participant that
takes into account. . .''. These commenters asserted that this
modification is necessary based on the proposed removal of Sec.
460.96(a) and they believed the revised language would clarify the
IDT's authority to approve or deny services. These commenters also
agreed with removal of Sec. 460.96(a), contingent on CMS' use of the
recommended language in Sec. 460.92(b).
Response: We thank the commenters for their recommendation
regarding the establishment of the IDT's authority to make decisions.
As we stated in the preamble to the proposed rule, the IDT's authority
and responsibilities are defined throughout the PACE regulations, and
under our proposal the IDT would retain the its ability to determine
which services are appropriate for a participant, and would remain
responsible for coordinating the care of participants 24 hours a day,
every day of the year. Therefore, our proposal would retain the IDT's
ability to make decisions to approve or deny services consistent with
the proposed regulatory requirements at Sec. 460.92(a). 85 FR 9136. As
proposed, the introductory language at Sec. 460.92(b) states
``Decisions by the interdisciplinary team to provide or deny services
under paragraph (a) of this section. . . .'' Paragraph (a) of section
460.92 encompasses the complete PACE benefit package including all
Medicare-covered services and all Medicaid-covered services, as
specified in the State's approved Medicaid plan.
We believe that commenter's proposed change to ``the
interdisciplinary team makes determinations'' was suggested in order to
ensure that the IDT's authority to render these decision was clear.
However, we believe our proposed introductory language at Sec.
460.92(a) appropriately articulates this authority. We would also
reiterate that decisions made under 460.92(b) encompass all decisions
made by the IDT and are not limited to service determination requests
processed under 460.121. We do not believe that the commenters'
recommendation would significantly clarify the IDT's authority to make
decisions regarding what services will be approved or denied.
After consideration of the comments received, we are finalizing our
changes to Sec. 460.92 as proposed, without modification.
2. Excluded Services
As we stated earlier in this section, in the discussion regarding
required services, the PACE benefit package includes all Medicare-
covered items and services, all Medicaid-covered items and services, as
specified in the state's approved Medicaid plan, and other services
determined necessary by the IDT to improve or maintain the
participant's overall health status. The regulations at Sec. 460.96
list a number of services that are excluded from coverage under PACE.
Currently, paragraph (a) states that any service that is not authorized
by the IDT, even if it is a required service, is an excluded service
unless it is an emergency service. In addition, paragraph (b) states
that in an inpatient facility, private room and

[[Page 6031]]

private duty nursing services (unless medically necessary), and
nonmedical items for personal convenience such as telephone charges and
radio or television rental are also excluded from coverage under PACE
unless specifically authorized by the IDT as part of the participant's
plan of care. We proposed to remove Sec. 460.96(a) and (b).
These proposals are consistent with our authority to amend the
regulations. The exclusions in Sec. 460.96 are not specifically listed
in the PACE statute. They were included in the 1999 PACE interim final
rule that implemented the PACE program in part because they were
included in section A.6 of the PACE Protocol included as Addendum A to
the 1999 PACE interim final rule. (See 64 FR 66247 and 66301 and
subparagraphs 1894(f)(2)(A) and 1934(f)(2)(A) of the Act.) Sections
1894(f)(1) and 1934(f)(1) of the Act give the Secretary the authority
to issue regulations to carry out the PACE program created under
sections 1934 and 1894 of the Act. Sections 1894(f)(2) and 1934(f)(2)
of the Act state that, in issuing such regulations the Secretary shall,
to the extent consistent with the provisions of sections 1894 and 1934
of the Act, incorporate the requirements applied to PACE demonstration
waiver programs under the PACE protocol. As we stated in the 2019 PACE
final rule (84 FR 25613), we believe sections 1894(f) and 1934(f) of
the Act primarily apply to issuance of the initial interim and final
PACE program regulations because they refer to the PACE Protocol,\77\
which has now been replaced by the PACE program agreement.\78\ Sections
1894(f)(2)(B) and 1934(f)(2)(B) of the Act permit the Secretary to
modify or waive provisions of the PACE Protocol as long as any such
modification or waiver is not inconsistent with and does not impair any
of the essential elements, objectives, and requirements under sections
1894 or 1934 of the Act, but precludes the Secretary from modifying or
waiving any of the following provisions:
---------------------------------------------------------------------------

\77\ https://www.gpo.gov/fdsys/pkg/FR-1999-11-24/pdf/99-29706.pdf.
\78\ https://www.cms.gov/Medicare/Health-Plans/pace/downloads/programagreement.pdf.
---------------------------------------------------------------------------

The focus on frail elderly qualifying individuals who
require the level of care provided in a nursing facility.
The delivery of comprehensive integrated acute and long-
term care services.
The IDT approach to care management and service delivery.
Capitated, integrated financing that allows the PACE
organization to pool payments received from public and private programs
and individuals.
The assumption by the PACE organization of full financial
risk.
Taking this authority into account, we would remove Sec. 460.96(a)
for the following reasons. CMS has gained a significant amount of
experience with the PACE program since the 1999 PACE interim final
rule, and we now believe that a number of PACE organizations are
interpreting the exclusion under Sec. 460.96(a) in a manner that is
not consistent with sections 1894 and 1934 of the Act. Many PACE
organizations appear to be interpreting Sec. 460.96(a) to allow an IDT
to exclude from coverage any service that the IDT does not authorize
for a participant, even if it is clearly covered under the Medicare or
Medicaid programs and is medically necessary. For example, CMS has
identified through audits that some PACE organizations have denied
certain types of covered Part D drugs for participants, even when the
drug is medically necessary and the participant is qualified to receive
the drug under Medicare.
These denials are inconsistent with the statutory requirement under
sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act to provide all
items and services covered by Medicare and Medicaid, as well as all
additional items and services specified in regulations. As we stated in
the 2006 PACE final rule (71 FR 71248), in accordance with sections
1894 and 1934 of the Act, PACE organizations shall provide all
medically necessary services including prescription drugs, without any
limitation or condition as to amount, duration, or scope and without
application of deductibles, copayments, coinsurance, or other cost
sharing that would otherwise apply under Medicare or Medicaid. PACE
organizations are required to provide all Medicare covered services and
all Medicaid covered services in accordance with the State's approved
Medicaid plan under current Sec. 460.92(a) and (b). In addition, PACE
organizations are required to cover other items and services that are
determined necessary by the IDT to improve and maintain the
participant's overall health status under current Sec. 460.92(c). In
order to ensure that IDTs continue to make decisions that are
consistent with the statutory requirements, we would remove paragraph
(a) from Sec. 460.96. We believe that removing paragraph (a) is
necessary in order to ensure that participants receive the services to
which they are entitled under PACE.
By proposing to remove paragraph (a), we did not intend to waive or
eliminate the IDT approach to care management and service delivery. The
IDT's authority and responsibility are defined throughout the PACE
regulations, and under this amendment, the IDT would retain its ability
to determine which services are appropriate for a participant, and
would remain responsible for coordinating the care of participants 24
hours a day, every day of the year. Additionally, as discussed in our
changes to Sec. 460.92, the IDT's decision to provide or deny required
services must be based on an evaluation of the participant that takes
into account the participant's current medical, physical, emotional and
social needs, along with any current clinical practice guidelines and
professional standards of care that are applicable to the particular
service. We do not believe that the current provision at Sec.
460.96(a) affects an IDT's authority for determining what services are
required under Sec. 460.92, or changes the IDT's responsibility for
coordinating 24-hour care delivery. However, we are concerned that the
current language at Sec. 460.96(a) is confusing and implies that there
are some required services that are not covered under the PACE program
because they are excluded. The term ``excluded'' implies that a service
is outside of the benefit package or never covered. The term
``excluded'' could also suggest that services that are not authorized
are not appealable, which runs counter to our historical interpretation
of the PACE statutes and regulations and the policies we have
promulgated to safeguard participants' right to appeal adverse
decisions by the IDT. While the IDT remains responsible for determining
the needs of each participant, and then implementing services that
would meet those identified needs, PACE participants should always have
the ability to advocate for services, through the service delivery
request and appeal process, including any services the IDT determines
not to be necessary (or does not authorize).
We would eliminate paragraph (b) from Sec. 460.96 for the
following reasons. Currently, this paragraph generally excludes from
PACE coverage private rooms and private duty nursing services, and non-
medical items for personal convenience, in an inpatient facility, but
notes that a private room or private duty nursing services would be
covered if medically necessary, and non-medical items for personal
convenience would be covered if specifically authorized by the IDT as
part of the participant's plan of care. We continue to believe that
services such as a private room, private nursing services,

[[Page 6032]]

or non-medical personal care items would not be covered under PACE,
unless they were medically necessary or authorized by the IDT as part
of the participant's plan of care. However, we believe that including
this provision under a section of the regulation titled ``Excluded
Services'' may give a false impression that the IDT would not have to
consider whether those services are medically necessary or necessary to
improve and maintain the participant's overall health status. As we
previously indicated, the IDT is responsible for comprehensively
assessing each individual participant to determine their needs, and
then providing services that would meet those needs. If the IDT
determines that private nursing services or a telephone are necessary
to improve and maintain the participant's health status, those services
would be covered for that participant under PACE. Therefore, these are
not always or by definition excluded services, and we would eliminate
paragraph (b) from the excluded services provision for that reason.
In addition to eliminating paragraphs (a) and (b), we would
redesignate paragraphs (c) through (e) as (a) through (c).
We did not score this provision in the Regulatory Impact Analysis
section because PACE organizations are already required to cover all
PACE required services under Sec. 460.92, and by modifying the
provisions relating to excluded services we are hoping to increase
compliance with existing requirements.
We summarize the comments on the proposals related to excluded
services, and provide our responses to those comments, below.
Comment: All commenters that addressed this proposal expressed
concern with the removal of Sec. 460.96(b). The commenters noted that
although they understand CMS' rationale for removing this provision,
they believe this would impede a PACE organization's ability to deny
these services when they are not necessary to maintain the
participant's overall health. Specifically, commenters noted that
removing this provision could be interpreted to mean that inpatient
facilities, private rooms and private duty nursing services could be
available without approval from the IDT. The commenters also stated
that they do not believe removal of this section is necessary since the
services would be provided, if determined necessary by the IDT,
consistent with criteria established in Sec. 460.92(b).
Response: We appreciate the commenters' concern and wish to explain
that by removing the excluded language at Sec. 460.96(b) we would not
preclude a PACE organization from denying these services if they are
determined not to be necessary. Currently, Sec. 460.96(b) provides
that private rooms, private duty nursing services and nonmedical items
for personal convenience are excluded from coverage under PACE unless
medically necessary or specifically authorized by the IDT as part of
the participant's plan of care. As such, these services are not
actually excluded from coverage under PACE, and a participant is
currently able to receive these services if authorized by the IDT. We
do not include other services that are excluded or denied as part of
the PACE benefit package in this section and we do not believe that it
is necessary to specifically list out these services and therefore are
finalizing this provision as proposed. As noted in the proposed rule,
we do not want to give a false impression by including services that
should be considered by the IDT, as appropriate, under a section of the
regulation titled ``Excluded Services.''
After consideration of the comments received, we are finalizing our
proposed changes under Sec. 460.96 as proposed, without modification.
3. Responsibilities of the Interdisciplinary Team
A multidisciplinary approach to care management and service
delivery is a fundamental aspect of the PACE model of care (see for
example, the 1999 PACE interim final rule at 64 FR 66254). The
regulations at Sec. 460.102 require in part that the IDT must
comprehensively assess and meet the needs of each participant, and that
the IDT members must remain alert to pertinent input about participants
from team members, participants, and caregivers. While we believe many
IDTs appropriately apply the multidisciplinary approach to providing
care, we have learned through our monitoring efforts that some IDTs may
not consider pertinent input about participants from specialists and
other clinical and non-clinical staff, whether employees, or
contractors (for example, home health service providers). Because these
individuals have direct contact with participants, including in the
participant's home, and may have a similar level of expertise as the
members of the IDT listed in Sec. 460.102(b) or expertise in another
medical field, they are likely to be in the best position to provide
input that may contribute to a participant's treatment plan. An IDT
could not comprehensively assess a participant and provide a
multidisciplinary approach to care management if it did not consider
pertinent input about a participant from any individual with direct
knowledge of or contact with the participant, such as caregivers,
employees, or contractors of the PACE organization, including
specialists. For example, if a home care aide informed the organization
that a participant seems more confused than normal, the IDT might not
be able to fully meet the participant's needs if it did not take this
information into consideration. While the IDT is responsible for many
aspects of care provided to their participants, it might not interact
with their participants on a regular basis. It is important that the
IDT consider input from other individuals that have more regular or
direct contact with the participant population, in order to inform its
ability to appropriately meet participants' needs. Therefore, we would
revise Sec. 460.102(d)(2)(ii) by adding employees, contractors, and
specialists to the individuals from whom the IDT must remain alert to
pertinent input. We would include specialists because there may be
circumstances in which a participant is receiving care or seeking
treatment options from a provider that specializes in a particular area
and we believe that input from these medical professionals is vital in
order for a PACE organization to provide comprehensive care to its
participants. We would add these individuals as unique sub-paragraphs
under Sec. 460.102(d)(2)(ii) in order to emphasize that these are
unique groups of individuals, each of whom may provide information that
is pertinent to the IDT. As part of the requirement that the IDT
members remain alert to pertinent input from these individuals, we
expect that the IDT members would consider all recommendations for care
or services made by other team members, participants, caregivers,
employees, contractors, or specialists for a participant when making
treatment decisions.
We proposed a minor change to redesignate the provisions at Sec.
460.102(d)(1) under a new (d)(1)(i), and to retain the current
requirement that the IDT is responsible for the initial assessment,
periodic reassessment, plan of care, and coordination of 24-hour care
delivery. We would add a new Sec. 460.102(d)(1)(ii) to require the IDT
to document all recommendations for care and services and, if the
service is not approved, the reasons for not approving or providing
that care or service in accordance with the requirements in Sec.
460.210(b). By requiring the IDT to document all recommendations for
care

[[Page 6033]]

or services and, if not approved or provided, the rationale supporting
the IDT's decisions, we believe our proposals under Sec. 460.102(d)
would better position the PACE organization and the IDT to remain alert
to pertinent information and to share that information with
participants, caregivers, and appeal entities when applicable.
We believe the burden associated with this provision is related to
the documentation of the recommendations in the medical record. We
discuss and account for the burden of documenting these recommendations
in the medical record in the regulatory impact analysis.
We summarize the comments on the proposals related to
responsibilities of the IDT, and provide our responses to those
comments, below.
Comment: A commenter agreed with CMS' proposed revisions at Sec.
460.102(d)(1)(ii) which would make the IDT responsible for documenting
all recommendations for care or services and the reason(s) for not
approving or providing recommended care or services. However, the
majority of commenters expressed concern that the requirement is not
consistent with the preamble or regulatory language at proposed Sec.
460.210(b)(4) and (5), which limits documentation to recommendations by
employees and contractors of a PACE organization, including
specialists, as well as the reason(s) for not approving or providing
recommended services. Specifically, the commenters noted that the
language as proposed at Sec. 460.102(d)(1)(ii) could be interpreted to
require the IDT to document recommendations made by the individuals
other than those listed in Sec. 460.210(b)(4).
Response: We thank the commenter who supported this provision. We
do not agree, however, that the citation at Sec. 460.102(d)(1)(ii)
should be modified. We included a citation to Sec. 460.210(b) in order
to specify the IDT's responsibility for documenting all recommendations
for care or services and the reasons for not approving or providing
recommended care or services, if applicable, in any form encompassed
under Sec. 460.210(b). While we agree that recommendations will most
often come from the individuals identified in Sec. 460.210(b)(4), we
did not propose and did not intend to limit this requirement to only
those individuals. For example, redesignated Sec. 460.210(b)(9)
relates to hospital discharge summaries and, to the extent there are
recommendations for care included in a summary, we would want the IDT
to consider and document those recommendations. While PACE
organizations contract with hospitals, it is possible that a
participant would be taken to a non-contract hospital during the course
of an emergency, and we would want the PACE organization to consider
any recommendations for care provided by hospital staff even though the
hospital was not a contract provider.
Comment: All commenters who addressed the proposals at Sec.
460.102(d)(2)(ii), agreed with the proposal which would require the IDT
to remain alert to pertinent input from any individual with knowledge
of or contact with the participant. These commenters also recommended
expanding the list to include the designated representative, as that
individual plays a key role in the service delivery request process and
appeals process.
Response: We thank the commenters for their support for this
proposal and appreciate the suggestion to include the designated
representative in the list of individuals that the IDT must remain
alert to. We agree that designated representatives play an important
role in advocating for services on behalf of the participant. We note
that the change commenters suggest is consistent with our proposal; we
proposed to make the individual IDT members responsible for remaining
alert to pertinent input from any individual with direct knowledge of
or contact with a given participant, and provided a list of examples of
those individuals. The list was not all-inclusive, and we believe that
designated representatives would fall within the intended class of
individuals from whom IDT members must remain alert to pertinent input.
Therefore, we are finalizing the regulatory text with a modification to
include designated representatives among the specific list of
individuals from whom the IDT must remain alert to pertinent input.
After consideration of the comments received and for the reasons
outlined in our responses to comments, we are finalizing the changes to
Sec. 460.102(d)(1)(i) and Sec. 460.102(d)(1)(ii) as proposed. We are
also finalizing our proposed changes to Sec. 460.102(d)(2)(ii) as
proposed, with the exception of one modification to the regulatory text
at Sec. 460.102(d)(2)(ii)(G) to specify that the IDT must remain alert
to input from designated representatives.

D. Documenting and Tracking the Provision of Services Under PACE (Sec.
460.98)

As discussed at section VI.C. of this final rule, under sections
1894(a)(2)(B) and 1934(a)(2)(B) of the Act, PACE organizations provide
comprehensive health care services to PACE participants in accordance
with the PACE program agreement and regulations under those sections.
Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act specify in part
that PACE organizations must provide participants, at a minimum, all
items and services covered under titles XVIII and XIX of the Act
without any limitation or condition as to amount, duration, or scope,
and all additional items and services specified in regulations, based
upon those required under the PACE protocol.\79\ Sections 1894(b)(1)(A)
and 1934(b)(1)(A) of the Act also specify that, under a PACE program
agreement, a PACE organization must furnish items and services to PACE
participants directly or under contract with other entities.
Additionally, sections 1894(b)(1)(B) and 1934(b)(1)(B) of the Act
require that a PACE organization must provide participants access to
all necessary covered items and services 24 hours per day, every day of
the year. These statutory provisions ensure that a PACE participant can
receive all PACE covered services, as needed, 24 hours a day, every day
of the year. This includes the full range of services required under
the PACE statute and regulations. We have implemented these
requirements in several sections of the PACE regulations. For example,
we require in Sec. 460.70 that PACE organizations must have written
contracts that meet specific regulatory requirements with any outside
entity furnishing administrative or care-related services not furnished
directly by the PACE organization, except for emergency services as
described in Sec. 460.100. We also require PACE organizations to
establish and implement a written plan to furnish care that meets the
needs of each participant in all care settings 24 hours a day, every
day of the year at Sec. 460.98(a). Through oversight and monitoring,
we recognized that some PACE organizations are not appropriately
implementing these requirements. CMS routinely sees PACE organizations
deny or restrict necessary services. PACE organizations have also
documented in participants' medical records that they do not provide
access to care and services 24 hours a day, regardless of participant
need. CMS has also learned through monitoring of PACE organizations
that some organizations are not providing all care and services through
employees or contractors of the organization. Instead, these
organizations purport to rely on caregivers such as family members to

[[Page 6034]]

provide necessary care and services to participants.
---------------------------------------------------------------------------

\79\ The original PACE protocol was replaced by the PACE program
agreement (84 FR 25613).
---------------------------------------------------------------------------

We would make several modifications to Sec. 460.98 ``Service
Delivery'' in response to failure by certain PACE organizations to
fulfill their responsibilities to provide all necessary care and
services, through the use of employees or contractors, as expeditiously
as the participant's health condition requires, and ensure access to
those services 24 hours a day, every day of the year. Currently, Sec.
460.98(a) requires that PACE organizations establish and implement a
written plan to furnish the care that meets the needs of each
participant in all care settings 24 hours a day, every day of the year.
We are concerned that the current version of this paragraph places more
emphasis on the requirement to establish a written plan than it does on
the requirement that the PACE organization actually implement such a
plan by furnishing services. Therefore, we would modify paragraph (a)
to more clearly emphasize that PACE organizations must not only have a
plan to furnish care as described in existing Sec. 460.98(a), but must
also carry it out. We proposed to change the title of Sec. 460.98(a)
from ``Plan'' to ``Access to services'' in order to emphasize the
requirement is that PACE organizations must provide access to services
and not just have a plan. We also proposed to revise the language of
Sec. 460.98(a) to emphasize that PACE organizations are responsible
for providing care that meets the needs of each participant, across all
care settings, 24 hours a day, every day of the year, as well as
establishing a written plan to ensure that care is appropriately
furnished. We believe the amendments would align with the statutory
requirement that PACE organizations provide access to necessary care
and services at all times. We would retain the requirement that PACE
organizations must establish and implement a written plan to furnish
care, with one modification to specify that the plan must ensure that
care is appropriately furnished. Additionally, we want to emphasize
that, both under the current regulation and the amendments, the PACE
organization is (and would remain, if our proposed amendments are
finalized) responsible for providing this care regardless of the care
setting. In other words, regardless of whether the participant receives
care in the home, at the PACE center, or in an inpatient facility, the
PACE organization is (and would remain) responsible for furnishing care
in all care settings, 24 hours a day, every day of the year.
Currently, Sec. 460.98(b) specifies in part that the PACE
organization must furnish comprehensive medical, health, and social
services that integrate acute and long term care to each participant,
and must furnish these services in at least the PACE center, the home,
and inpatient facilities. We would make three changes to Sec.
460.98(b) by modifying paragraph (b)(1) and adding new paragraphs
(b)(4) and (5). Sections 1894(b)(1)(A) and 1934(b)(1)(A) of the Act,
and the PACE regulations at Sec. 460.70(a), require PACE organizations
to furnish administrative and care-related services by employees or
contractors of the organization. Through monitoring and oversight, we
have identified instances where PACE organizations have relied on
individuals other than employees or contractors to provide necessary
care and services to participants. To address these concerns we added a
reference to Sec. 460.70(a) at Sec. 460.98(b)(1) to reiterate the
requirement that PACE organizations furnish all services through
employees or contractors, regardless of whether the services relate to
medical, health, or social services, including both acute and long term
care.
We proposed to add a new paragraph at Sec. 460.98(b)(4), to
require that all services must be provided as expeditiously as the
participant's health condition requires, taking into account the
participant's overall medical, physical, emotional and social needs.
While there is a similar requirement in Sec. 460.104(e)(4), that
services that result in a change to the care plan must be provided as
expeditiously as the participant's health condition requires, we have
identified through monitoring and oversight that participants routinely
receive care that is determined necessary but is not formally
incorporated into the care plan, and is instead handled through
discipline-specific progress notes or treatment plans. For example, the
primary care provider may order pain medication for a participant, but
not incorporate that order into the participant's plan of care.
Regardless of whether the service is in the plan of care, we believe
that the PACE organization retains the responsibility of ensuring that
participants receive all recommended or ordered treatment or care as
expeditiously as the participant requires. We would specify at Sec.
460.98(b)(4) that services must be provided as expeditiously as the
participant's health condition requires, taking into account the
participant's medical, physical, emotional, and social needs. We do not
believe that we could implement a specific timeframe given the vast
array of services that PACE organizations provide. Additionally,
determining how quickly a service must be provided would depend on more
than just the physical health of the participant, and PACE
organizations should consider all aspects of the participant's
condition, including their social, emotional, and medical needs, when
determining the provision of services. For example, if the participant
has a high risk of falling, the provision of a service that mitigates
that risk may be necessary within a very short window of time. However,
if the necessary service is a preventative trip to the dentist for
routine care, the provision of that service may not be as urgent. These
decisions must be made on a case by case basis and the PACE
organization will be expected to demonstrate that services were
provided as expeditiously as the participant's medical, physical,
emotional, and social needs require through monitoring efforts by CMS.
Lastly, we added a new paragraph (b)(5) to Sec. 460.98 to require
PACE organizations to document, track, and monitor the provision of
services across all care settings, regardless of whether services are
formally incorporated into the participant's plan of care. PACE
organizations would be required to document, track and monitor
necessary services in order to ensure that they are actually provided
in accordance with Sec. 460.98(b)(4). CMS' audits have revealed that
in practice, certain PACE organizations do not routinely track the
services provided and often lack documentation that services have been
rendered. In order for the IDT to remain alert to pertinent information
and coordinate care appropriately, we believe the PACE organization
must be capable of ensuring that all approved services are tracked and
documented, regardless of whether they are formally incorporated into
the participant's plan of care. This means that not only should a PACE
organization document that a service has been ordered, but that the
PACE organization should also document when and how the approved
service was provided. We believe that monitoring the provision of
services is vital for a PACE organization in order to ensure their
participants are receiving appropriate services, and that those
services are achieving the desired effect. In addition, CMS regulations
at Sec. 460.134 require that PACE organizations use objective measures
to demonstrate improvement across a range of areas, such as the
utilization of PACE services and the effectiveness and

[[Page 6035]]

safety of staff-provided and contracted services, including the
promptness of service delivery, among other requirements. We believe
that this proposal will ensure that PACE organizations are able to more
effectively meet the minimum requirements established at Sec. 460.134.
We summarize the comments received on the proposals related to
documenting and tracking the provision of services, and provide our
responses to those comments, below.
Comment: While a commenter agreed with CMS' proposals at Sec.
460.98(a) and (b)(1), the majority of commenters requested
clarification on the preamble language describing the proposals.
Specifically, commenters agreed that PACE organizations are responsible
for providing care that meets the needs of the participant across all
care settings, 24 hours a day, every day of the year, and that neither
PACE organizations nor the IDTs may require caregivers to provide
necessary care or services on their behalf. However, the commenters
were concerned that the preamble implied that PACE organizations cannot
take into consideration family or informal caregiver support when
determining which services the PACE organization must furnish in order
to meet these needs. In order to clarify the regulatory requirements
and CMS's position, commenters requested that CMS confirm that willing
and able family members or other informal caregivers may be actively
involved in a participant's care and that a PACE organization would be
in compliance with the proposed regulatory requirements if the IDT
considers services provided to participants by willing and able
caregivers when determining which services must be provided by the PACE
organization. Another commenter suggested that the regulation, as
proposed at Sec. 460.98(b)(1), would not allow any individual
caregivers and informal support systems to be involved in helping meet
a participant's needs without contracting with the PACE organization.
Response: As noted in the proposed rule, sections 1894(b)(1)(B) and
1934(b)(1)(B) of the Act require the PACE organization to provide
participants with all PACE-covered services, as needed, 24 hours a day,
every day of the year. This includes the full range of services
required under the PACE statute and regulations. We believe the
existing requirements are clear. Our proposed changes in Sec.
460.98(a) and (b)(1) would not change the existing requirements; nor
would they change how we have historically interpreted those
requirements. Instead, our proposals would better align the regulatory
language with the statutory requirements that require PACE
organizations to provide access to necessary care and services at all
times. The PACE organization is responsible for ensuring that the
participant's needs are met 24 hours a day, every day of the year,
consistent with the existing Sec. 460.98(a).
We agree with commenters that a PACE organization cannot require or
compel a caregiver to provide care that the IDT determines is
necessary. However, we recognize that caregivers may be willing and
able to provide some care to participants, such as cooking a meal or
providing transportation to an appointment. None of our proposed
changes would change CMS' expectations regarding the relationship
between caregivers and PACE organizations. While we proposed to add a
reference to Sec. 460.70(a) at Sec. 460.98(b)(1), we did not propose
to change the requirement at Sec. 460.70(a) or our interpretation of
that requirement. Historically, CMS has interpreted the requirement at
Sec. 460.70(a) as not applicable in circumstances where family members
or other informal support willingly provide care to PACE participants
that could otherwise be provided by the PACE organization, without any
compensation from or agreement with the PACE organization. Thus, we
would not expect a PACE organization to have a contract with such
caregivers unless the caregivers are providing services on behalf of
the PACE organization and are receiving compensation from the PACE
organization for doing so. We note that Merriam-Webster's dictionary
defines willing as ``done, borne, or accepted by choice or without
reluctance'' \80\ and defines able as ``having sufficient power, skill,
or resources to do something''.\81\ We believe these definitions are
widely understood, and provide a valuable point of reference in this
context.
---------------------------------------------------------------------------

\80\ https://www.merriam-webster.com/dictionary/willing.
\81\ https://www.merriam-webster.com/dictionary/able.
---------------------------------------------------------------------------

The IDT may take into consideration informal support that willing
and able caregivers provide when determining what necessary services
will be provided by the PACE organization directly or through
contractors when developing the participant's plan of care. However,
the existence of a caregiver does not absolve a PACE organization of
its responsibilities to meet the needs of participants 24 hours a day,
7 days of the week. In determining how informal caregiver support
affects the necessary services the PACE organization must provide
directly or through contractors, PACE organizations must consider
whether a caregiver is both willing and able to provide care, and
whether it is safe for the participant to receive the care in question
from the caregiver. This would include for example, when the PACE
organization is evaluating participant and caregiver preferences for
care during the initial assessments under Sec. 460.104(a)(4)(iii) or
when obtaining approval from the participant or their designated
representative for a revised plan of care under Sec. 460.104(e)(3). In
particular, PACE organizations should not pressure a caregiver to
provide any service that is necessary and that could otherwise be
provided by the PACE organization, and should not rely on a willing
caregiver to provide care if there is evidence that the caregiver
cannot do so safely or in a way that meets the relevant needs of the
participant. Additionally, PACE organizations may not deny a request to
provide a service on the basis that a participant has a caregiver even
if the caregiver has historically informally provided care that meets
the participant's need for that service. We have seen through
complaints and audits that PACE organizations sometimes inappropriately
rely on caregivers, and in some instances attempt to require caregivers
to provide care the IDT has determined is necessary for a participant,
even when the caregiver is unable or unwilling to do so. For example,
CMS has identified instances where PACE organizations attempted to
require caregivers to provide 24-hour supervision or provide assistance
with activities of daily living (ADLs) even after the caregivers
indicated they could not do so, or were unwilling to do so. Through
complaints and audits, we have also seen situations where a PACE
organization inappropriately relied on a willing caregiver when it was
not safe for the participant to receive care from that caregiver. For
example, a caregiver may be willing to provide wound care, but without
the necessary skills and knowledge to provide that care, it would be
unsafe for the caregiver to attend to that need because it would
increase the participant's risk of infection. We note that even when a
caregiver previously had elected to provide some level of assistance to
a participant, their ability or willingness to provide assistance may
change during the course of a participant's enrollment in PACE,
rendering the caregiver unable or unwilling to continue to provide that

[[Page 6036]]

support (e.g., the caregiver does not have a vehicle to accommodate a
motorized wheelchair or the caregiver becomes ill). Similarly, a
caregiver may express an interest in providing assistance, but may not
be able to meet the needs of the participant. For example, the
participant may need assistance with toileting, but the caregiver is
physically unable to support this need. PACE organizations must ensure
that when a caregiver is unwilling or unable to assist with the
participant's care for any reason, that the needs of the participant
are being met through employees or contractors of the PACE
organization. In each of these situations, the PACE organization seems
to be incorrectly or inappropriately determining that certain care and
services are not needed because the PACE organization wants to rely
upon a particular caregiver, even when it is clear from the
circumstances that the participant needs the PACE organization to
provide services because the caregiver is unwilling or unable to
provide care, or because it is not safe for the participant to receive
this care from the caregiver. For these reasons, we proposed to revise
the regulations by adding a reference to Sec. 460.70(a) at Sec.
460.98(b) to ensure that PACE organizations understand their
responsibilities, and we will continue monitoring PACE organizations
for compliance with these requirements. We are finalizing these
provisions as proposed.
Comment: A commenter recommended that CMS provide further
clarification on how ``coordination'' and ``furnish'' are used and
defined in the PACE regulations and to take steps to ensure that terms
are used consistently throughout the PACE regulations. This commenter
stated that under the proposed language at Sec. 460.102(d)(1)(i), the
IDT would be responsible for the initial assessment, periodic
reassessments, plan of care, and coordination of 24-hour care delivery.
The commenter asserted that this has a very different meaning than the
proposed requirements at Sec. 460.98(b)(1) which states that the PACE
organization must furnish comprehensive medical, health, and social
services that integrate acute and long-term care, and that these
services must be furnished in accordance with Sec. 460.70(a).
Response: We agree with the commenter's observation that the
proposed requirements under Sec. 460.102(d)(1)(i) and Sec.
460.98(b)(1) are not the same, including the fact that Sec.
460.102(d)(1)(i) uses the term, ``coordinate'' while Sec. 460.98(b)(1)
uses the term ``furnish.'' However, we did not propose that those terms
would be used interchangeably. We agree that those terms have different
meanings, and we believe that those terms are used appropriately within
the regulation. PACE organizations are responsible for furnishing
comprehensive services to PACE participants. The IDT, which consists of
a subset of PACE organizations employees or contractors, is responsible
for certain activities, such as coordinating care, which includes
services that are furnished by the IDT as well as services furnished by
other employees and contractors of the PACE organization.
Comment: Multiple commenters requested clarification regarding the
intent of CMS's proposal under Sec. 460.98(b)(1) to add a reference to
Sec. 460.70(a) that would require services to be furnished through
either an employee or contractor of the organization. Specifically,
those commenters requested that CMS modify Sec. 460.70(a) to address
circumstances that might justify an exception to the requirement that
PACE organizations must have a written contract with each entity that
furnishes administrative or care related services not furnished
directly by the PACE organization except for emergency services. As an
example, commenters noted that there are times when a specialty
provider may be in short supply and the PACE organization may be
unsuccessful in obtaining a contract.
Response: We did not propose changes to Sec. 460.70(a), and as
such are not finalizing any changes to that section in this final rule.
With regards to the commenter's question about out of network
providers, that comment relates to the topic of network adequacy for
PACE organizations and we will take the commenter's feedback into
consideration in future policy development for PACE.
Comment: A commenter was supportive of the provisions at Sec.
460.98(b)(5), while the majority of commenters expressed concern with
to the use of the term ``track.'' These commenters suggested that
requiring a PACE organization to track the provision of services could
imply that PACE organizations would be required to establish and
maintain specific logs, universes or data sets, and that such a
requirement would conflict with CMS' Patients Over Paperwork
initiative. These commenters stated that PACE organizations should have
greater flexibility to determine how the provision of services is
monitored and rather than dictating the specific manner in which PACE
organizations maintain this documentation, they recommended the
following regulatory text: ``The PACE organization must monitor and
document the provision of services across all care settings in order to
ensure the interdisciplinary team remains alert to the participant's
medical, physical, emotional, and social needs regardless of whether
services are formally incorporated into the participant's plan of
care.'' Additionally, these commenters requested that CMS explain that
this provision would only require the PACE organization to monitor and
track services furnished by the PACE organization's employees or
contractors and not by caregivers.
Response: As noted in the proposed rule, in order for the IDT to
remain alert to pertinent information and coordinate care
appropriately, we believe that the PACE organization must be capable of
ensuring that all approved services are tracked and documented,
regardless of whether they are formally incorporated into the
participant's plan of care (85 FR 9139). In order to ensure services
are actually provided, we proposed that PACE organizations document,
track and monitor services. We understand from commenters' concerns
that the use of the word ``track'' could be interpreted to suggest that
PACE organizations would be required to maintain a real time ``log'' of
services which could potentially be burdensome to implement. As we
stated in the proposed rule, we believe that PACE organizations should
document that a service has been ordered as well as when and how the
approved service was provided. It was not our intention in the proposal
to dictate how an organization implements this provision, and we agree
with the commenter that PACE organizations should have flexibility in
how they operationalize the requirement to track, monitor and document
the provision of services. We expect that PACE organizations will
create their own methods for tracking and monitoring services. We
reiterate that the PACE organization is responsible for furnishing all
services determined necessary through its employees or contractors in
accordance with existing Sec. 460.70(a) and proposed Sec.
460.98(b)(1), and this provision would only apply to those services
furnished by the PACE organization's employees or contractors.
After consideration of the comments received, we are finalizing our
proposed changes to Sec. 460.98 without modification.

[[Page 6037]]

E. Access to Data and Safeguarding Records Under PACE (Sec. 460.200)

In accordance with sections 1894(e)(3)(A) and 1934(e)(3)(A) of the
Act, Sec. 460.200 requires PACE organizations to collect data,
maintain records, and submit reports, as required by CMS and the State
Administering Agency (SAA). The current requirement at Sec. 460.200(b)
requires that PACE organizations must allow CMS and the SAA access to
data and records, including but not limited to, participant health
outcomes data, financial books and records, medical records, and
personnel records. Some PACE organizations have requested clarification
on whether access is limited to allowing CMS or the SAA to view
requested information. CMS has long interpreted this provision to
require that CMS and the SAA must be able to obtain, examine, or
retrieve information as needed to administer and evaluate the program
and fulfill their oversight obligations. Therefore, we proposed to
codify CMS' interpretation of this requirement. Specifically, we would
redesignate current Sec. 460.200(b)(1) through (4) as Sec.
460.200(b)(1)(i) through (iv), in order to add a new paragraph (b)(2)
to state that CMS and the State administering agency (SAA) must be able
to obtain, examine, or retrieve the information described under Sec.
460.200(b)(1). This may include CMS or the SAA reviewing information at
the PACE site or remotely. It may also include CMS requiring a PACE
organization to upload or electronically transmit information, or send
hard copies of required information by mail.
PACE organizations are also required to safeguard data and records
in accordance with Sec. 460.200(d). This section currently provides
that a PACE organization must establish written policies and implement
procedures to safeguard all data, books, and records against loss,
destruction, unauthorized use, or inappropriate alteration. Through our
monitoring of PACE organizations, CMS has discovered that PACE
organizations do not always maintain and safeguard important records
such as communications related to a participant's care from family
members, caregivers, and the participant's community. In fact, CMS has
discovered that organizations may summarize written communications and
sometimes destroy or lose original written communications. When CMS has
obtained copies of original communications from an outside source (such
as the family or caregiver), we have noted that organizations are not
accurately summarizing information or retaining the relevant
information in the communication. In light of these findings, we
believe that any written communication received from a participant or
their informal support (for example, a family member, caregiver,
designated representative, or other member of the community) that
relates to the participant's care, health or safety must be safeguarded
and maintained in its original form. Therefore, we proposed to modify
Sec. 460.200(d) to require PACE organizations to maintain all written
communications received from a participant or other parties in their
original form when the communication relates to the participant's care,
health, or safety. We would expect that this would include most, if not
all, communications that an organization receives on these topics. For
example, the following types of communications would need to be
protected under this provision: Written requests for services that the
participant, designated representative or caregiver believes are
necessary; grievances or complaints relating to the participant's care
or health; and communications from the community that indicate concerns
over the well-being of a PACE participant. We proposed corresponding
changes to Sec. 460.210(b)(6), to require PACE organizations to
maintain original written communications in the participant's medical
record, as discussed at section VI.F. of this final rule.
We believe the burden associated with this provision is related to
the documentation of these original communications in the medical
record. We discuss and account for the burden of documenting these
communications in the medical record in the regulatory impact analysis.
We solicited comments on these proposals.
We summarize the comments on the proposals related to access to
data and safeguarding records, and provide our responses to those
comments, below.
Comment: All of commenters who responded to this proposal requested
clarification on the provision which would require access to data
described in Sec. 460.200(b)(1) both at the PACE site and remotely.
Specifically, commenters requested clarity around whether or not the
provision meant that the SAA and CMS would have independent remote
access to PACE organizations' medical records, without the knowledge of
the PACE organizations, or if it meant that CMS would require PACE
organizations to make records available, either remotely or onsite, via
a web-based or comparable application with the participation of PACE
organization staff. Commenters stated that participation of PACE
organization staff would ensure PACE organizations could maintain a
record of individuals who accessed participants' medical records and
would also assist CMS and SAA reviewers in locating documentation
within medical records.
Response: We appreciate commenters' feedback on this proposal. As
proposed under Sec. 460.200(b)(2), CMS and the SAA must be able to
obtain, examine, or retrieve the information specified at paragraph
(b)(1) of that section, which may include reviewing information at the
PACE site or remotely. We wish to clarify that it is not CMS's intent
that CMS or the SAA would have completely unrestricted access to a PACE
organization's medical records and the provision at Sec. 460.200(b)(2)
would not permit CMS or the SAA to access a PACE organization's medical
records without the PACE organization's knowledge. PACE organizations
will continue to be required to grant access to medical records, which
may be electronic and/or paper based, before these records are
obtained, examined or retrieved by CMS or the SAA. In order to be able
to obtain, examine, or access these records, CMS or the SAA may need
technical assistance from PACE organization staff, but otherwise would
not require staff involvement in the review process. For example, CMS
or the SAA may need assistance with navigating medical record systems
or locating records within medical record systems.
Comment: Commenters were split on the proposal to require original
documentation to be maintained in the medical record. A commenter
agreed with the proposed requirements in Sec. Sec. 460.200(d)(2) and
460.210(b)(6), which would require PACE organizations to maintain all
written communications received from participants or other parties, in
their original form, when the communications relate to a participant's
care, health or safety, including written communications from an
advocacy or governmental agency. Another commenter was opposed to this
provision stating that not all communication lends itself to being kept
in the original form and the proposed requirement may be impracticable
for mundane, routine communications such as confirming an address for a
family member. This commenter recommended that CMS remove the phrase
``all written communication'' and instead provide a specific list of
communications that must be kept in its original format. The

[[Page 6038]]

majority of commenters requested clarification and expressed some
concerns regarding the proposed requirements. This included concerns
that maintaining original documentation of any written communication
relating to the care, health or safety of a participant in any format
in the medical record would compromise the usefulness of the medical
record, due to the quantity of information that would be required to be
stored. These commenters also stated that requiring direct care
providers to download or otherwise transfer all such communications to
the medical record would be burdensome and take them away from
providing care to participants. As a solution, these commenters
recommended permitting PACE organizations to scan written documentation
and copy and paste communications received via email or text into
electronic medical records. The same commenters expressed concerns that
the requirements were overly broad and recommended that CMS revise its
proposals to both allow PACE organization staff to use their discretion
when determining the types of communication that must be included in a
participant's medical record and exclude communications related to
processing of service requests, appeals and grievances as those
communications are often kept in separate systems. Another commenter
indicated that the practice of summarizing verbal conversations and
documenting in the EMR should apply to written communications. This
commenter also recommended that CMS clarify its expectations with
regard to communications from advocacy or governmental agencies and
suggested that faxes and emails requesting documents should not be
placed in the medical record.
Response: We appreciate commenters' feedback and suggestions on
Sec. Sec. 460.200(d) and 460.210(b)(6). We address comments related to
Sec. 460.210(b)(6) in more detail at section VI.F of this final rule.
PACE organizations are required to safeguard data and records in
accordance with Sec. 460.200(d). This section currently provides that
a PACE organization must establish written policies and implement
procedures to safeguard all data, books, and records against loss,
destruction, unauthorized use, or inappropriate alteration. As we
stated in the proposed rule (85 FR 9134), through our monitoring and
oversight efforts, CMS has discovered that PACE organizations do not
always maintain and safeguard important records, and may often
summarize written communications in their records and destroy or lose
the original written communications. In addition, we have discovered
that in some cases, PACE organizations are not always retaining or
accurately summarizing all of the relevant information in those
communications. Because our oversight efforts have revealed that all
relevant information in written communications has not always been
retained or accurately summarized by PACE organizations, we are not
persuaded by commenters to allow PACE organizations to summarize
written communications that relate to a participant's care, health or
safety instead of maintaining the communication in its original form.
In order for the IDT to remain alert to pertinent input from the
participant and their caregivers, and for PACE organizations to provide
care that meets the needs of each participant in all care settings 24
hours a day, every day of the year, we believe that communications from
individuals who provide information pertinent to a participant's care,
health or safety, must be safeguarded and maintained in their original
form. Furthermore, we are not persuaded by one commenter's suggestion
that the practice of summarizing verbal communication in the medical
record should also apply to written communication. We believe that
summarizing verbal communication is a reasonable and necessary practice
because it would be unnecessarily burdensome to require PACE
organization staff to record verbal communication verbatim. In
contrast, it is not necessary to summarize written communications
because entire written communications can be stored in the medical
record. We also believe that, in many cases, the amount of time spent
summarizing the contents of written communications would exceed the
amount of time necessary to enter the original documentation into the
medical record, which would negate any benefits associated with
summarizing the written communication.
With respect to excluding certain communications from this
requirement or providing a specific list of communications that must be
kept in their original format, we note that we have already limited
this requirement by only requiring PACE organizations to maintain all
written communications that relate to a participant's care, health, or
safety. As we stated in the proposed rule (85 FR 9135), the types of
communication that would be protected under this provision include, but
are not limited to: Written requests for services that the participant,
designated representative or caregiver believes are necessary;
grievances or complaints relating to the participant's care or health;
and communications from the community that indicate concerns over the
well-being of a PACE participant. For example, if the participant sent
the PACE organization a letter requesting long-term nursing facility
placement or Adult Protective Services emailed the PACE organization to
express concern about the participant's ability to live on their own,
we would expect these communications to be maintained. Given the nature
of the PACE program, we recognize that there is frequent communication
between a PACE organization and various individuals regarding each
participant and that many of these communications would not be
appropriate to maintain. For example, if a caregiver texted the PACE
organization stating that they were going to be 15 minutes late in
dropping off a participant at the PACE center or a participant emailed
the PACE organization because they wanted to know what type of food
would be served at the PACE center on a particular day, we would not
expect this communication to be maintained.
After consideration of the comments received, we are finalizing
Sec. 460.200 as proposed with a minor grammatical change in the
introductory paragraph of Sec. 460.200(d), to add ``a'' before ``PACE
organization.'' This grammatical correction will not change the
intended meaning of the regulation as proposed and described in this
final rule.

F. Documentation in Medical Records Under PACE (Sec. 460.210)

In accordance with Sec. 460.210(a), a PACE organization must
maintain a single, comprehensive medical record for each participant,
in accordance with accepted professional standards, that is accurately
documented and available to all staff, among other requirements. We
have previously discussed the importance of maintaining a complete
record for each participant. In the preamble to the 2006 PACE final
rule (71 FR 71326), we stated that, because care for the PACE
population will be provided by a variety of sources (for example, PACE
center employees, contracted personnel, hospital staff, nursing home
staff, etc.), it is critical that all information on the participant be
documented in the medical record to ensure quality and continuity of
care. CMS currently specifies at Sec. 460.210(b) the minimum required
contents of a medical record. Based on audit and oversight experience,
we identified

[[Page 6039]]

additional requirements that we believe should be added under Sec.
460.210(b) to ensure that participant medical records are fully
comprehensive.
We proposed to redesignate Sec. 460.210(b)(4) through (12) as (7)
through (15), and to add three new paragraphs under Sec. 460.210(b) to
address how recommendations for care and treatment, decisions regarding
those recommendations, and communications relating to a participant's
care, health or safety should be documented in the medical record.
Specifically, we proposed to add a new paragraph (b)(4) that would
require the PACE organization to document all recommendations for
services made by employees and contractors of the PACE organization,
including by all specialists such as dentists, neurologists,
cardiologists, and others, in the participant's medical record. We
believe that all recommendations for services from these sources must
be documented in order for the IDT to remain alert to all pertinent
information, even if the IDT decides not to pursue the recommendations,
for example based on a determination that the service is not necessary.
Recommendations are made based on the employee or contractor's
determination that a participant might benefit from a particular
service given the participant's health status or condition. Even if the
IDT ultimately decides that the recommended service would not be
necessary to improve and maintain the participant's health status, the
IDT should document that recommendation in order to remain alert to why
a particular contractor or employee believed that service was necessary
as required by Sec. 460.102(d)(2)(ii).
Additionally, we proposed adding a new paragraph (b)(5) that would
require the IDT to document in the medical record the reason(s) for not
approving or providing a service recommended by one of these sources.
When an employee, contractor, or specialist recommends a service within
the scope of their authority to practice, we believe that it is
necessary for the IDT to consider this information and document any
decision against providing the recommended service in the medical
record. For example, if a gastroenterologist recommends that a
participant receive drug therapy for Hepatitis C, and after reviewing
the recommendation the IDT determines that treatment is not medically
necessary or is contraindicated, we would require the IDT to document
in the participant's medical record the rationale for not providing the
recommended drug therapy, including the clinical criteria used as the
basis for that determination. This not only ensures that the IDT can
review the information used to make the decision, but also that the
participant has access to information about the basis of the decision
not to provide a recommended service. This would also align with the
requirement we finalized in the 2019 PACE final rule (84 FR 25643) that
requires the IDT to document the rationale for determining certain
services are not necessary in the participant's plan of care following
the initial comprehensive assessment. While the 2019 PACE final rule
required the IDT to follow this process during the development of the
initial care plan, we are expanding the requirement to account for
situations that arise after the initial plan of care is developed. For
example, a participant may be diagnosed with diabetes after the
development of the initial care plan, and should the PACE organization
determine that treatment is not necessary, we would expect that it
document that decision and the reasons for that decision in the
participant's medical record.
We also proposed to require PACE organizations to maintain certain
written communications received by the PACE organization in the
participant's medical record, in new paragraph Sec. 460.210(b)(6). The
PACE program presents unique challenges in terms of providing care to
participants. PACE participants require a nursing facility level of
care and often have complex medical needs. When a Medicare or Medicaid
beneficiary is in a nursing home, they have daily interactions with
staff, and their needs, including changes in condition, are noted by
the staff and acted upon. PACE participants, on the other hand, largely
remain in their own homes and might not be seen on a daily basis by
PACE organization staff. PACE participants do, however, often have
regular interactions with caregivers, family members, neighbors, and
other members of their communities, as well as with social service
organizations like local Area Agencies on Aging (AAA) or Adult
Protective Services (APS) agencies. We believe that maintaining a
comprehensive, complete, and accurate medical record allows a PACE
organization to remain alert to all information that is relevant to a
participant's care, health, and safety and to provide appropriate and
timely care to the participant. We also believe information about a
participant's care, health, or safety provided to a PACE organization
by any of these sources could play a critical role in providing
comprehensive care to the participant. Therefore, we proposed to add a
new paragraph (b)(6) to Sec. 460.210, to require PACE organizations to
maintain, in a participant's medical record, original documentation of
any written communication relating to the care, health, or safety of a
participant that the PACE organization receives from certain sources in
any format (for example, emails, faxes, letters, etc.). At a minimum,
PACE organizations would be required to maintain communications from
the participant, his or her designated representative, family members,
caregivers, or any other individual who provides information pertinent
to a participant's care, health, or safety, as well as communications
from advocacy or governmental agencies like an AAA or APS. We also
proposed at Sec. 460.200(d)(2) a reference to Sec. 460.210(b)(6)
which would require that the PACE organization maintain this
information in its original written form rather than summarizing the
information in the participant's record. See 85 FR 9134-9135 and 9259).
We summarize the comments we received on the proposals related to
the requirements for the contents of participant medical records under
Sec. 460.210(b), and provide our responses to those comments, below.
Comment: A commenter agreed with the proposals under Sec. Sec.
460.210(b)(4) and (b)(5) which would require PACE organizations to
document all recommendations for services made by employees or
contractors of the PACE organization, including specialists, and the
reason(s) for not approving or providing services recommended by these
sources in the participant's medical record.
Response: We thank the commenter for their support of this
provision.
Comment: Commenters were split on the proposal to require original
documentation to be maintained in the medical record. A commenter
agreed with the proposed requirements in Sec. Sec. 460.200(d)(2) and
460.210(b)(6), which would require PACE organizations to maintain all
written communications received from participants or other parties, in
their original form, when the communications relate to a participant's
care, health or safety, including written communications from an
advocacy or governmental agency. Another commenter was opposed to this
provision stating that not all communication lends itself to being kept
in the original form and the proposed requirement may be impracticable
for mundane, routine communications such as confirming an

[[Page 6040]]

address for a family member. This commenter recommended that CMS remove
the phrase ``all written communication'' and instead provide a specific
list of communications that must be kept in its original format. The
majority of commenters recommended that the provisions at Sec.
460.210(b)(6) be modified consistent with their comments on the
proposal at Sec. 460.200(d)(2). Specifically, commenters were
concerned that maintaining original documentation of any written
communication relating to the care, health or safety of a participant
in any format in the medical record would compromise the usefulness of
the medical record, due to the quantity of information that would be
required to be stored. These commenters also stated that requiring
direct care providers to download or otherwise transfer all such
communications to the medical record would be burdensome and take them
away from providing care to participants. As a solution, these
commenters recommended permitting PACE organizations to scan written
documentation and copy and paste communications received via email or
text into electronic medical records. The same commenters expressed
concerns that the requirements were overly broad and recommended that
CMS revise its proposals to both allow PACE organization staff to use
their discretion when determining the types of communication that must
be included in a participant's medical record and exclude
communications related to processing of service requests, appeals and
grievances as those communications are often kept in separate systems.
Another commenter indicated that the practice of summarizing verbal
conversations and documenting in the EMR should apply to written
communications. This commenter also recommended that CMS clarify its
expectations with regard to communications from advocacy or
governmental agencies and suggested that faxes and emails requesting
documents should not be placed in the medical record.
Response: We appreciate commenters' feedback and suggestions on
Sec. Sec. 460.200(d)(2) and 460.210(b)(6). As we indicated in the
discussion regarding Sec. 460.200 at section VI.E. of this final rule,
we made corresponding changes to Sec. 460.210(b)(6) to require that
the PACE organization maintain written communications in their original
written form in the participant's medical record. (85 FR 9135). We made
these corresponding changes at Sec. 460.210(b)(6) in order to
establish requirements that would govern how PACE organizations must
maintain written communications under Sec. 460.200(d)(2). Currently,
Sec. 460.210(b)(7) (redesignated at 460.210(b)(10) in this rule)
requires PACE organizations to document reports of contact with
informal support, for example, caregivers, legal guardians, or next of
kin in the participant's medical record. Since these reports of contact
are already maintained in the medical record, we believe that PACE
organizations should also maintain original written communication from
the participant, his or her designated representative, family members,
caregivers, or any other individual who provides information pertinent
to a participant's care, health or safety, as well as communications
from advocacy or governmental agencies like an AAA or APS within the
medical record. We believe that documenting this written communication
is necessary to maintain a comprehensive medical record for each
participant that is complete and accurately documented, and in order to
ensure that the IDT is remaining alert to pertinent information. We do,
however, agree with the commenters' recommendation that PACE
organizations should be permitted to include an unaltered electronic
copy, such as a scanned pdf, of the original written communication in a
participant's medical record, which aligns with the intent of this
proposal. As discussed in the proposed rule related to Sec.
460.200(d)(2), we were motivated in making this proposal by a concern
that PACE organizations are not accurately summarizing written
communication or retaining relevant information in written
communications they receive. (85 FR 9134). The original basis for the
proposal at Sec. 460.200(d)(2) also led us to establish the
corresponding changes to Sec. 460.210(b)(6) which would require PACE
organizations to maintain these communications in the medical record.
(85 FR 9135). We continue to believe that this proposal will ensure
that PACE organizations retain relevant information received in written
communications relating to the care, health and safety of a
participant. We also believe that commenters' suggestion to permit PACE
organizations to retain an unaltered electronic copy would be
consistent with this proposal, while also reducing the burden
associated with storing the documentation in its original format. This
change means that PACE organizations would be required to maintain all
covered written communications described in Sec. 460.210(b)(6)(i) and
(ii), but that they can be maintained in either their original form or
as an unaltered electronic copy. We believe this change to Sec.
460.210(b)(6) will ensure that written communications are complete,
accurately documented, readily accessible, and available to all staff,
while allowing additional administrative flexibility for PACE
organizations in operationalizing this requirement. We are not
establishing specific requirements governing where affected
communications must be stored within a participant's medical record.
PACE organizations may operationalize these requirements in accordance
with the capabilities of their medical records systems. PACE
organizations may also identify which staff will be responsible for
entering these communications in the medical record. Section
460.210(b)(6) does not require that covered communications be entered
by direct care staff. Although direct care staff must remain alert to
the pertinent information contained within these covered
communications, PACE organizations may assign the responsibility for
entering these covered communications to any staff, including those
that does not provide direct care to participants.
After consideration of the comments received and for the reasons
outlined in our responses to comments, we are finalizing Sec.
460.210(b)(4) and (5) as proposed. We are also finalizing Sec.
460.210(b)(6) with one modification in the regulation text, which will
require PACE organizations to include original documentation, or an
unaltered electronic copy, of any written communication the PACE
organization receives relating to the care, health or safety of a
participant, in the participant's medical record.

G. PACE Participant Rights: Contact Information and Access Requirements
(Sec. 460.112)

Sections 1894(b)(2)(B) and 1934(b)(2)(B) of the Act specify in part
that PACE organizations must have in effect written safeguards of the
rights of enrolled participants including a patient bill of rights.
Previously, we established in Sec. 460.112 certain rights to which a
participant is entitled. This includes the participant's right to
receive accurate, easily understood information and to receive
assistance in making informed health care decisions under Sec.
460.112(b); and the participant's right to a choice of health care
providers, within the PACE organization's network, that is sufficient
to ensure access to appropriate high-quality

[[Page 6041]]

health care under Sec. 460.112(c). CMS proposed to add three new
participant rights in Sec. 460.112 to increase beneficiary
protections: The right to contact 1-800-MEDICARE for information or to
make a complaint; the right to have reasonable and timely access to
specialists as indicated by the participant's health condition and
consistent with current clinical practice guidelines; and the right to
receive necessary care across all care settings, up to and including
placement in a long term care facility when the PACE organization can
no longer maintain the participant safely in the community through the
support of PACE services.
Section 1804(b) of the Act requires CMS to provide information on
Medicare programs through 1-800-MEDICARE, as a means by which
individuals may seek information and assistance for Medicare programs.
This number may be utilized by Medicare beneficiaries to address
coverage questions, find plan information, or make complaints related
to the Medicare program. While PACE organizations are responsible for
providing to all participants all services covered under Medicare and
Medicaid, including prescription drugs, and other services determined
necessary by the IDT to improve and maintain the participant's overall
health status, PACE organizations are not required to provide this
toll-free number to participants in any current communication. In the
MA program, MA organizations must provide this information to
beneficiaries in their Annual Notice of Change (ANOC) and Evidence of
Coverage (EOC) under Sec. 422.111 as well as longstanding guidance
under the Medicare Communications and Marketing Guidelines.\82\ We have
discovered through oversight and monitoring efforts that PACE
participants and/or their caregivers are often not aware that, in
addition to the internal grievance process under Sec. 460.120,
participants also have the right to contact 1-800-MEDICARE; for
example, to file quality of care complaints, including filing a
complaint regarding the delivery of a necessary service. For example,
if the IDT approved treatment for a specific condition, but the
participant never received that treatment, the participant or caregiver
could call 1-800-Medicare to lodge a complaint. Given the frailty of
the PACE population, we believe it is important that these participants
be explicitly notified of their right to have their complaints heard
and resolved by calling 1-800-MEDICARE. When a participant files a
complaint with 1-800-MEDICARE, the complaint gets logged and routed to
a CMS account manager or case worker in order to ensure it is
appropriately responded to and resolved. To ensure PACE participants
are notified about 1-800-MEDICARE, we proposed to amend Sec. 460.112
by adding a new paragraph (b)(4) which would specify that participants
have the right to contact 1-800-MEDICARE for information and
assistance, including to make a complaint related to quality of care or
delivery of a service. PACE organizations are required under Sec.
460.116(c)(2) to display the PACE participant rights in a prominent
location in the PACE center, and to include the participant bill of
rights in the enrollment agreement under Sec. 460.154(m). Thus, by
adding (b)(4) would ensure each PACE organization makes the 1-800-
MEDICARE number available to participants by posting it in an
accessible location at the PACE center and including it in the
enrollment agreement.
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We also proposed to include a participant's right to have
reasonable and timely access to specialists as indicated by the
participant's health condition and consistent with current clinical
practice guidelines at new Sec. 460.112(c)(3). PACE organizations are
responsible for ensuring participants receive all necessary care from
specialists, which is coordinated through the primary care provider and
IDT in accordance with Sec. 460.102(c)(2)(ii) and (d)(1). In addition,
as noted in the preamble to the 1999 PACE interim final rule that
implemented the PACE program (see 64 FR 66260) and the preamble to the
2006 PACE final rule that implemented Sec. 460.92 of the regulations
(see 71 FR 71305), PACE organizations must utilize clinical practice
guidelines to ensure the quality of care for PACE participants. CMS has
also historically required the use of clinical practice guidelines and
professional standards in determining outcome measures applicable to
the care of PACE participants as part of the PACE organizations quality
improvement program (see Sec. 460.134(b)). The 1999 PACE interim final
rule also established the expectation that PACE organizations will
utilize current clinical standards as a routine part of their daily
operations. (64 FR 66260). Because part of the purpose of the quality
improvement program is to identify areas to improve or maintain the
delivery of services and patient care, CMS believes that these same
guidelines and standards should be used as part of care planning and in
making determinations about services as discussed in section VI.C. of
this final rule. However, CMS' audits of PACE organizations have shown
that some PACE participants have not received timely access to
appropriate specialists as necessary to improve and maintain the
participant's overall health status and in accordance with current
clinical practice guidelines. Instead, the IDTs at some PACE
organizations seem to be making their decisions based on factors not
related to the participant's health condition. In some instances,
participants have experienced negative outcomes because they have not
received access to a specialist. Therefore, we proposed to redesignate
paragraph (c)(3) as (c)(5) and add a new paragraph (c)(3), which
expressly states each participant has the right to reasonable and
timely access to specialists as indicated by the participant's health
condition and consistent with current clinical practice guidelines.
Lastly, we added a new paragraph at Sec. 460.112(c)(4) to address
a participant's right to receive care across all care settings. A PACE
organization is expected to provide for the care that is necessary for
each participant and determine the appropriate setting in which to
provide that care, up to and including placement in a long term care
facility when a participant's condition requires it (see Sec.
460.98(a) and (b)). However, CMS' monitoring and audit activity show
that some PACE organizations are not providing long-term care services,
even when their IDTs determine a participant can no longer live safely
in their home and requires a higher level of care. We have learned that
in some cases, affected participants disenroll from PACE in order to
receive the long-term care that is needed. One of the purposes of the
PACE program is to enable frail, older adults to live in the community
as long as medically and socially feasible (see Sec. 460.4(b)(3)).
PACE organizations are also responsible for furnishing comprehensive
medical, health, and social services that integrate acute and long-term
care, and providing services that are accessible and adequate to meet
the needs of its participants. (See Sec. 460.98(b) and (d)(2)
respectively). Lastly, enrollment in the PACE program continues until
the participant's death, regardless of changes in health status, unless
the participant voluntarily disenrolls, or is involuntarily
disenrolled. (See Sec. 460.160(a)). A PACE organization cannot deny
placement in

[[Page 6042]]

a long-term care facility if the IDT determines the participant
requires 24-hour care but the PACE organization does not have a method
for providing that care in the home through either its employees or
contractors. See the relevant discussion under section VI.D. of this
final rule regarding providing participants access to services 24 hours
a day, every day of the year, across all care settings. In order to
provide more specific detail about what this fundamental program
requirement entails, we added Sec. 460.112(c)(4) which would state
that a participant has the right to receive necessary care in all care
settings up to and including placement in a long term care facility
when the PACE organization can no longer provide the services necessary
to maintain the participant safely in the community.
We summarize the comments on the proposals related to PACE
participant rights, and provide our responses to those comments, below.
Comment: All commenters that addressed this proposal agreed with
CMS's proposal to add a participant right at Sec. 460.112(b)(4) to
inform participants of their right to contact 1-800-MEDICARE for
information or assistance, including making a complaint related to the
quality of care or the delivery of a service. These commenters also
requested that CMS ensure that call center representatives are trained
on PACE requirements and are able to handle inquiries from PACE
participants.
Response: We thank the commenters for expressing support for
including the 1-800-MEDICARE number in the participant rights. We are
committed to ensuring that participants concerns are addressed
appropriately. Call center operatives are currently educated and
trained on all Medicare programs, including PACE, and should be able to
fully address PACE participant inquiries. PACE participants currently
have the ability to contact 1-800-MEDICARE for concerns; however,
participants are not utilizing this resource frequently, potentially
because of a lack of knowledge about 1-800-MEDICARE, and we expect that
by requiring this telephone number to be displayed in the PACE center
and included in the participant's bill of rights, participants will
more frequently utilize this resource if needed.
Comment: All commenters that addressed this proposal were fully
supportive of the addition of Sec. 460.112(c)(3) and (c)(4). These
commenters noted that while they agree with the addition of (c)(4),
there may be situations when placement in a long-term nursing facility
may not be compatible with a participant's wishes.
Response: We appreciate the commenters' support for these
proposals. As noted in section VI.G. of the proposed rule, a PACE
organization cannot deny placement in a long-term care facility if the
IDT determines that the participant requires 24-hour care, but the PACE
organization is unable to provide 24-hour care in the home through
either its employees or contractors. Based on our experience overseeing
PACE organizations, we have observed situations in which participants
and caregivers were encouraged to disenroll from the PACE organization
when long-term care placement was necessary to meet the participants
needs. As required by Sec. 460.162(c), ``a PACE organization must
ensure that its employees or contractors do not engage in any practice
that would reasonably be expected to have the effect of steering or
encouraging disenrollment of participants due to a change in health
status.'' However, we understand that placement in a long-term care
facility may not always be in line with a participant's wishes, and it
is not our intent to require PACE organizations to place participants
into long-term care facilities against their wishes.
After consideration of the comments received, we are finalizing
this provision without modification.

H. Enforcement Action Appeal Rights Under PACE (Sec. 460.56)

Sections 1894(e)(7) and 1934(e)(7) of the Act specify that, under
regulations, the provisions at section 1857(h) of the Act, governing
the procedures for termination of a contract with an MA organization,
apply to the termination and sanctions of a PACE program agreement and
PACE organization in the same manner as they apply to an MA
organization under Medicare Advantage. The current enforcement
provisions at 42 CFR part 460, subpart D, do not specify a process for
appeals related to civil money penalties or intermediate sanctions.
However, at Sec. 460.54, the regulations include appeal rights for
termination procedures. In the preamble to the 1999 PACE interim final
rule (64 FR 66236), we discuss the requirement in the BBA of 1997 that
we take into account some of the requirements established for MA as we
develop regulations for PACE organizations in certain areas common to
both programs, such as beneficiary protections, payment rates, and
sanctions. CMS has interpreted this legal framework as granting the
agency the authority to utilize the appeals processes that apply to MA
organizations under Sec. 422.756 when imposing a suspension of
enrollment or payment, or imposing civil money penalties on PACE
organizations. Although it has not been codified in regulation, CMS
currently provides PACE organizations with these appeal rights when
imposing enforcement actions under Sec. Sec. 460.42, 460.46, and
460.48(b).
Therefore, in an effort to enhance transparency and ensure that
PACE organizations are aware of their right to appeal an enforcement
action, we added a new Sec. 460.56 in subpart D of the PACE
regulations to affirmatively state that a PACE organization may request
a hearing according to the procedures at Sec. 422.756 when CMS imposes
a sanction or civil money penalty under Sec. Sec. 460.42, 460.46, or
460.48(b) on PACE organizations.
For suspensions of enrollment or payment listed under Sec. Sec.
460.42 and 460.48(b), CMS will follow the hearing procedures for
imposing intermediate sanctions at Sec. 422.756(b), which includes the
right to a hearing before a CMS designated hearing officer under
subpart N of part 422. Under the process specified at Sec. 422.756(b),
CMS provides organizations with a notice of intent to impose sanctions
and their right to a hearing before a CMS hearing officer.
Organizations are given 15 days from the date of the notice to request
a hearing.
For civil money penalties listed under Sec. 460.46, CMS will
follow the procedures for imposition of civil money penalties at Sec.
422.756(e)(2)(v), which includes the right to a hearing before an
Administrative Law Judge (ALJ) under subpart T of part 422. In
addition, CMS must send a written notice of the agency's decision to
impose a civil money penalty, the amount of the penalty, the date the
penalty is due, information about the organization's right to a hearing
and where to file the request for hearing.
We believe this will ensure PACE organizations understand the
process CMS utilizes for imposing these enforcement actions, as well as
the PACE organization's right to appeal those actions.
We did not include Sec. 460.48(a) or (c) in the proposed rule
because those provisions refer to the termination of a PACE program
agreement, for which procedures are already set forth at Sec. 460.54.
However, Sec. 460.48(b) authorizes us to withhold payment under the
PACE program agreement, which is similar to the suspension of payment
provided at Sec. 460.42(b)(1).

[[Page 6043]]

Therefore, the procedures at Sec. 422.756 would apply, as specified at
Sec. 460.56(a).
We received no comments on our proposed new Sec. 460.56 to address
enforcement action appeal rights and therefore are finalizing this
provision without modification.

I. PACE Definitions (Sec. 460.6)

As discussed briefly at section VI.A. of this final rule, we
proposed to modify our existing definition of ``services.'' Currently,
the term ``services'' is defined as including items and services. We
proposed a change to use the term ``service'' in Sec. 460.6 to be
consistent with the use of the singular in the terms defined under
Sec. 460.6. The definition of the singular ``service'' would also
apply to the plural ``services.'' In addition, we proposed to modify
our definition of ``service'' to better reflect the full scope of the
PACE benefit package by stating that the term ``service'', as used in
part 460, means all services that could be required under Sec. 460.92,
including items and drugs. In the 1999 PACE interim final rule, we
stated that required services included all current Medicare services,
all Medicaid-covered services as specified by the state's approved
Medicaid plan, and specifically included ``drugs and biologicals'' as a
part of a list of minimum benefits PACE organizations were required to
provide. (64 FR 66246 and 66301). In the 2006 PACE final rule, we
removed the specific listing of all required services because we
determined that it was not possible to provide a complete list of all
services that must be furnished to participants if ordered by the IDT.
(71 FR 71281). Instead, we adopted the language that is currently used
in Sec. 460.92 to identify the services required as a part of the PACE
benefit package. Since that time, through CMS' monitoring and
oversight, we have found that some PACE organizations do not realize
that they are responsible for providing the full Medicare benefit,
including the provision of Part D drugs. Therefore, we proposed to make
changes by adding ``drugs'' to the definition of services for PACE
purposes which is consistent with how we have historically defined the
types of services that are required in PACE. We believe this change is
necessary to remove potential ambiguity about the meaning of the terms
``service'' or ``services'' when used in the PACE regulations.
We received no comments on the proposed definition of ``service''
in Sec. 460.6 and therefore are finalizing this provision without
modification.

VII. Technical Changes

A. Exclusion of Services Furnished Under a Private Contract (Sec.
422.220)

We proposed two substantive changes to Sec. 422.220 regarding the
limits on when an MA organization may or may not pay an opt-out
provider. In our proposal to amend Sec. 422.220, we sought first to
align the regulatory definition of ``physician'' in regard to private
contracts with the definition found in corresponding statute.
Currently, section 1802(b)(6)(B) of the Act defines ``physician,'' in
regard to private contracts, as a term that is defined by paragraphs
(1), (2), (3), and (4) of section 1861(r) of the Act; however, Sec.
422.220 currently defines ``physician,'' in respect to private
contracts, using only paragraph (1) of section 1861(r) of the Act--
narrowing the regulatory definition to exclude physicians who are not
doctors of medicine or osteopathy. To avoid confusion about what kinds
of providers the opt-out and private contracting rules apply to, we
proposed to extend the regulatory definition of ``physician'' to match
the statutory definition when the term is used in regard to private
contracts. We designed our proposal to achieve this by adding
references to paragraphs (2), (3) and (4) of section 1861(r) of the Act
to the definition of ``physician'' at Sec. 422.220 to make the
regulatory provision consistent with the statute.
Second, we proposed to clarify the prohibition at Sec. 422.220 in
regard to the types of items and services for which an opt-out provider
may and may not receive payment from an MA organization. In the
proposed rule, we discussed our interpretation of the Medicare statute
that payments for supplemental benefits are outside the scope of the
statutory restriction on payments to opt-out providers. Section
1802(b)(1)(B) of the Act states that an opt-out physician or
practitioner must receive no reimbursement under the Medicare statute
directly or on a capitated basis and ``no amount for such item or
service from an organization which receives reimbursement for such item
or service under [Title XVIII] directly or on a capitated basis.'' We
explained that because MA organizations only receive reimbursement for
Part A and Part B items and services under Title XVIII of the Act,
supplemental benefits are not among the items and services for which an
MA organization is prohibited from making payments to an opted-out
provider. In our proposal, we recommended amending the regulations at
Sec. 422.220 to make this distinction so that paragraph (a) states the
prohibition on payment while paragraphs (b) and (c) direct when an MA
organization must or may nonetheless pay an opt-out provider. We use
the terms ``basic benefits'' and ``supplemental benefits'' consistent
with how those terms are used in Sec. Sec. 422.100(c) and 422.102 and
in section VI.F. of this final rule.
We received the comments noted on this proposal and our responses
follow.
Comment: CMS received comments from an MA organization and a
provider association in regard to our proposals. The comments CMS
received were fully supportive of CMS's proposal to amend CMS's
regulatory definition of ``physician'' at Sec. 422.220, which pertains
to private contracts between providers and Medicare Advantage
enrollees, to align with the corresponding statutory definition of
``physician'' under section 1802(b)(6)(B) of the Act. CMS also received
full support from these commenters in regard to CMS's proposal to amend
Sec. 422.220 to clarify that the restrictions on payments to opt-out
providers apply only to payments for basic benefits (that is, items and
services covered under Parts A and B).
Response: We thank the commenters for their remarks, and believe
that in finalizing these proposals we better align our regulations with
the statutes from which they originated.
We received no additional comments on this proposal. After
consideration of the comments and for the reasons outlined in the
proposed rule and our response to comments, we are finalizing these
proposed changes to Sec. 422.220 without modification.

B. Disclosure Requirements for Explanation of Benefits (Sec. 422.111)

In a final rule titled, ``Medicare Program; Changes to the Medicare
Advantage and the Medicare Prescription Drug Benefit Programs for
Contract Year 2012 and Other Changes; Final Rule'' (73 FR 21504)
(hereinafter referred to as the April 2011 final rule), we finalized a
regulation at Sec. 422.111(b)(12) that requires an MA organization to
furnish directly to enrollees, in the manner specified by CMS and in a
form easily understandable to such enrollees, a written explanation of
benefits, when benefits are provided under this part. Following the
finalization of this regulation, CMS tested model Explanation of
Benefits (EOB) templates, and, based on public comments solicited via
HPMS memo and in 77 FR 70445, November 26, 2012, made final revisions
to the EOB templates and issued guidance about the Part C EOBs.
Subsequently, the

[[Page 6044]]

requirement for MA organizations to furnish Part C EOBs to their
enrollees applied beginning April 1, 2014.
In the February 2020 proposed rule, we sought to clarify and codify
existing requirements for the Part C EOB. First, we sought to change
where this requirement appears in Sec. 422.111(b) because paragraph
(b) specifies general information about the MA plan that must be
disclosed to each enrollee at the time of enrollment and annually,
which is not when the EOB should be sent. We also proposed to clarify
that the requirement to send the Part C EOB is permanently in effect.
To achieve this, we proposed to move the substance of the regulation
from (b)(12) to a new paragraph (k), with a minor change to delete the
phrase ``CMS may require'' and to add the word ``must'' after ``MA
organizations.'' We received no comments in regard to these two
proposed changes.
We also proposed to codify the existing content requirements of the
Part C EOB in new Sec. 422.111(k)(1), (k)(2) and (k)(3). For each Part
A and Part B covered item and service, mandatory supplemental benefit,
and optional supplemental benefit furnished during the reporting
period, we proposed that an MA organization must include a
corresponding descriptor, billing code, and amount billed; total cost
approved for reimbursement, share of the total cost paid by the plan;
and the share of the total cost for which the enrollee is liable. We
also proposed that MA organizations must include the most current year-
to-date totals in the EOB: the cumulative amount billed by all
providers, the cumulative total costs approved by the plan, the
cumulative share of total cost paid for by the plan, the cumulative
share of total cost for which the enrollee is liable, the amount an
enrollee has incurred toward the MOOP limit (as applicable), and the
amount an enrollee has incurred toward the deductible (as applicable).
We also proposed that MA organizations must provide clear contact
information for enrollee customer service, instructions on how to
report fraud, and for any EOB that includes one or more denied claims,
the EOB must include a clear identification of the claim(s) denied as
well as information about the denial and the enrollee's appeal rights.
Our proposed regulation directed that this information about denied
claims in the EOB would not replace the notice for adverse coverage
decisions required by Sec. Sec. 422.568 and 422.570.
We also proposed to codify the time frame choices available for MA
organizations in sending the EOB. Proposed Sec. 422.111(k)(4) would
require an MA organization to choose to either send EOBs on a monthly
basis or quarterly basis with per-claim notification. Consistent with
our current policy, we proposed that MA organizations that send EOBs
monthly must send them before the end of each month that follows the
month a claim was filed and that a per-claim notice must be sent on the
same cycle as a monthly EOB, which is before the end of each month that
follows the month a claim was filed; MA organizations that choose to
send per-claim notices must also send quarterly summary EOBs.
Consistent with our current policy, we also proposed that MA
organizations that choose to send EOBs on a quarterly basis must send
an EOB no later than the end of each month following the quarter a
claim was filed.
We summarize the comments received on our proposal and our
responses follow.
Comment: A commenter asked CMS to clarify the term ``filed'' as it
is used in paragraph (k)(4) to require the monthly EOB to be sent
before the end of the month after the month in which a claim is filed
and the quarterly EOB to be sent before the end of each month that
follows the quarter in which a claim was filed.
Response: We clarify that we consider a claim to be filed when it
has been received by an MA organization. This is consistent with our
current policy.
Comment: Although CMS did not specifically discuss the existing
policy that exempts MA organizations from sending EOBs to dual-eligible
enrollees, one commenter asked CMS whether or not D-SNPs must send EOBs
to their enrollees as a result of this rule.
Response: Currently, MA organizations are not required to send EOBs
to dual-eligible enrollees, which would necessarily include any
enrollee of a D-SNP, because dual-eligible enrollees generally do not
pay any out-of-pocket costs. In the April 2011 final rule, we discussed
the comments we solicited on this matter, and determined we would study
the issue of applicability to dual-eligible enrollees (including those
enrolled in D-SNPs) further under our pilot program. (76 FR 21507). At
the conclusion of our pilot program, and after reviewing additional
public comments solicited via a Health Plan Management System (HPMS)
memo release with a 30-day comment period, as well as a November 26,
2012 Federal Register notice (77 FR 70445), the policy that exempts MA
organizations from sending EOBs to dual-eligible enrollees was
finalized. As we did not intend to make changes to Part C EOB policy in
our proposal during this current round of rulemaking, we are finalizing
this exception at Sec. 422.111(k)(5).
Comment: A commenter, an MA organization, suggested that CMS no
longer require MA plans and Part D sponsors to send Part C and Part D
EOBs on a monthly basis. The MA organization stated that their
enrollees experience confusion in regard to their EOBs which
unnecessarily leads to complaints to their customer service department
and to CMS. The MAO stated that their consumer research found that
enrollees often did not read or did not know how to interpret their
EOBs because the documents are lengthy and complex. They also found
that their enrollees had a tendency to be interested in seeing how
their cost sharing applied toward their deductible and maximum-out-of-
pocket costs, and less interested in information that involves complex
claims details or medical terminology. The MAO also stated that
enrollees often complain about receiving EOBs on a monthly basis. The
MAO recommended that CMS modify existing EOB guidance to permit MA
plans and Part D sponsors to send quarterly statements to enrollees
that include EOB totals related to cost sharing only, rather than the
full EOB.
Response: The current Part C EOB was designed to ensure that MA
enrollees have all of the information necessary to make important
decisions about their health care, and its content was informed by
input from MA organizations, patient advocacy groups, and other
stakeholders. After publication of the April 2011 final rule, we
engaged MA organizations, industry and advocacy groups, and enrollees
in listening sessions to gather their feedback; using the feedback we
collected, we then designed and tested models through a small pilot
program with a volunteer MA organization in CY 2012. After the
conclusion of this process, we sought additional public comments on the
models through a Health Plan Management System (HPMS) memo release with
a 30-day comment period. Based on public comment we received on the
HPMS memo and a November 26, 2012 Federal Register notice, we finalized
the current models for the Part C EOB. While an enrollee may not always
need the entirety of the information stated in their EOB, some
circumstances (for example, appeals) may arise when the enrollee needs
more information than just their updated cost-sharing totals. At this
time, CMS will not be changing the content requirements of the EOB;
however, we acknowledge the importance of providing easily

[[Page 6045]]

understandable information to enrollees and may consider limiting the
content requirements in future rulemaking. We are finalizing the
proposed option for MA organizations to use a quarterly cycle for
furnishing the EOBs. We note that the regulation text does not require
that the MA organization use the same cycle for every enrollee, so an
MA organization may elect to provide an option for enrollees to select
the monthly or quarterly cycle, provided that the applicable content
and timing requirements are met. Finally, the Part D EOB notice is
outside the scope of this rulemaking.
Comment: Some commenters asked that CMS reconsider the requirement
to send enrollees hard copies of their EOBs. An MA organization
suggested that rather that mail paper EOBs, plans should be permitted
to instead send enrollees a paper disclosure notice instructing them to
contact customer service to obtain a hardcopy, or go online to view an
electronic copy. The same MA organization stated that plans should
continue to mail hard copies of the Integrated Denial Notice (IDN).
Another commenter suggested that CMS consider changing the default
requirement to electronic EOBs with paper opt-in, and stated that
savings on paper, printing, and mailing could be used toward enhanced
care and benefits.
Response: While CMS continues to drive innovation with respect to
electronic health data access, we also recognize that a default
electronic format could create disparity for enrollees who do not have
the skills or equipment to obtain their claims data digitally. In order
to help ensure that all enrollees are able to access their EOBs, CMS
does not support a change in policy that would permit MA organizations
to send EOBs electronically by default at this time. With respect to
paper and electronic EOBs, CMS is not changing the requirement
(finalized in section V.E of this rule) that MA organizations mail
required materials in hard copy or provide them electronically
following the requirements set forth in Sec. 422.2267(d). CMS notes
that in order to send an EOB to an enrollee electronically, the MA
organization must obtain prior consent from the enrollee, provide
instructions on how and when the enrollee can access the EOB, have a
process in place through which an enrollee can request hard copies be
mailed, and have a process for automatic mailing of hard copies when
electronic versions are undeliverable, consistent with the requirements
outlined at Sec. 422.2267(d)(2)(ii).
Comment: An MA organization recommended that CMS provide more
flexibility with regard to the frequency that an EOB can be sent to
enrollees. Specifically, the MA organization suggested that CMS allow
health plans to send the EOB every two weeks.
Response: Under our current policy and the regulation being
finalized here at Sec. 422.111(k), an MA organization must deliver the
EOB at least on a monthly or quarterly basis, complying with the
applicable content requirements. While CMS currently permits these two
different frequency cycles, plans may still communicate information to
their enrollees on a more frequent basis as long as the requirements of
either the monthly or quarterly cycle continue to be met. At this time,
CMS will not be making changes to the EOB frequency cycles or their
respective requirements.
After consideration of the comments and for the reasons outlined in
the proposed rule and our responses to comments, we are finalizing our
proposal for Sec. 422.111(k), with one substantive modification to
provide that MA organizations are not required to send the explanation
of benefits to dual-eligible enrollees.

C. Special Requirements During a Disaster or Emergency (Sec. 422.100)

Section 422.100(m)(5)(iii) currently requires an MA organization to
provide the information described in paragraphs (m)(1), (2), (3), and
(4)(i) on its website, but Sec. 422.100(m) does not have a paragraph
(m)(4)(i) and paragraph (m)(4) requires a notice to CMS regarding the
MA organization's ability to resume normal operations; rather,
paragraph (m)(5)(i) describes the terms and conditions of payment
during a public health emergency or disaster for non-contracted
providers furnishing benefits to plan enrollees residing in the state-
of-disaster area, which is the information we intended to be posted by
the MA organization. As noted in the proposed rule, the final rule that
adopted Sec. 422.100(m), titled ``Medicare Program Contract Year 2016
Policy and Technical Changes to the Medicare Advantage and the Medicare
Prescription Drug Benefit Programs'' (80 FR 7912), was clear that the
requirement at 422.100(m)(5)(iii) was to post the disaster and
emergency policies in order to facilitate enrollee access to needed
services while normal care delivery is unavailable, which would enable
enrollees and providers to know the payment policies for out-of-network
services provided during disasters.
We proposed to amend Sec. 422.100(m)(5)(iii) to correct the text,
replacing the reference to paragraph (m)(4)(i) to paragraph (m)(5)(i).
We also proposed to update the regulation text to use ``website''
rather than ``Web site'' since the non-hyphenated non-capitalized term
``website'' is now commonly used and more consistent with other
regulations in part 422.
We received no comments on this proposal and are finalizing the
proposed technical amendments to Sec. 422.100(m)(5) for the reasons
outlined in the proposed rule.

D. Effective Date for Exclusion of Coverage for Kidney Acquisitions
From Basic Benefits (Sec. 422.100)

Section 1852(a)(1)(B)(i) of the Act defines the term ``benefits
under the original Medicare Fee-for-Service program option'' for
purposes of the requirement in subparagraph (a)(1)(A) that each MA
organization provide these benefits to MA enrollees. Section
17006(c)(1) of the Cures Act amended section 1852(a)(1)(B)(i) of the
Act by inserting ``or coverage for organ acquisitions for kidney
transplants, including as covered under section 1881(d)'' after
``hospice care.'' Per section 17006(c)(3) of the Cures Act, this
amendment applies with respect to plan years beginning on or after
January 1, 2021. Thus, effective January 1, 2021, MA plans will no
longer cover organ acquisitions for kidney transplants.
In the April 2019 final rule, we amended the definition of ``basic
benefits'' at Sec. 422.100(c)(1) to include ``additional telehealth
benefits,'' and in doing so, we also amended Sec. 422.100(c)(1) to
note the new exclusion of coverage for organ acquisitions for kidney
transplants (in addition to the existing exclusion for hospice care).
However, we inadvertently omitted the identification of the 2021
effective date for this change set forth in the Cures Act.
In the proposed rule, we proposed a technical correction that would
add the 2021 effective date to Sec. 422.100(c)(1) for the exclusion of
original Medicare coverage for organ acquisitions for kidney
transplants. Specifically, we proposed to correct the phrase ``(other
than hospice care or coverage for organ acquisitions for kidney
transplants)'' to read: ``(other than hospice care or, beginning in
2021, coverage for organ acquisitions for kidney transplants).'' This
provision is technical and, as stated in the proposed rule, is
therefore not expected to have economic impact beyond current operating
expenses.
We received no comments on this proposal and are finalizing the
proposed amendments to Sec. 422.100(c)(1) without

[[Page 6046]]

modification for the reasons outlined in the proposed rule.

E. Add Back Cost Plan Related Sections From Previous Final Regulation
(Sec. 422.503)

In the Medicare Program; Contract Year 2015 Policy and Technical
Changes to the Medicare Advantage and Medicare Prescription Drug
Benefit Programs; Final Rule (hereinafter referred to as the May 2014
final rule), we finalized regulations affecting the cost plan non-
renewal-related requirements (79 FR 29850 through 29851, 29959). The
final regulation inadvertently identified the non-renewal section as
Sec. 422.503(b)(4)(vi)(G)(5)(i) and (ii) when instead the revisions
should have been specified as revising Sec. 422.503(b)(5)(i) and (ii).
Although the regulatory text for the provision was published in the May
2014 final rule, it was not correctly codified in the CFR. In the
February 2020 proposed rule, we proposed to designate the provision in
the correct paragraph of Sec. 422.503.
The rule we adopted in 2014 provides that an entity seeking to
offer an MA organization may not accept new enrollees under a section
1876 reasonable cost contract in any area in which it seeks to offer an
MA plan. In the February 2020 proposed rule, we proposed to codify a
policy adopted in the May 2014 final rule that prohibits an
organization from offering and accepting enrollment in both an MA plan
and a cost plan in the same service area; that policy applied to when
the MA organization and the cost plan organization were the same legal
entity or corporate affiliates. The proposed rule explained the
redesignation:
In new Sec. 422.503(b)(5)(i), we specify that an entity
seeking to contract as an MA organization must not accept, or share a
corporate parent organization owning a controlling interest in an
entity that accepts, new enrollees under a section 1876 reasonable cost
contract in any area in which it seeks to offer an MA plan.
In new Sec. 422.503(b)(5)(ii), we specify that an entity
seeking to offer an MA organization must not accept, or be either the
parent organization owning a controlling interest of or subsidiary of,
an entity that accepts, new enrollees under a section 1876 reasonable
cost contract in any area in which it seeks to offer an MA plan.
We also proposed minor technical corrections to the regulation text
described in the May 2014 final rule to improve the flow of the
regulation text.
CMS received comments from two healthcare organizations and a trade
association.
Comment: The commenters requested that the provision not be
finalized, stating that it was not necessary. They commented that
should CMS finalize the proposal, that it not be applied to entities
that have both a cost plan and dual eligible special needs plan (D-SNP)
or EGWPs, as the likelihood of an organization moving enrollees from
one of these plans to another was especially low. In addition, the
commenters requested that we revise our current understanding of the
service area affected by the provision to determine whether there is an
overlap between a cost plan and an MA plan on a county-by-county basis.
Response: The proposal in this rule is to restore, with minor
technical and grammatical changes, language from a rule published in
the Federal Register on May 23, 2014, that was not included in the Code
of Federal Regulations. As such, we are proposing a technical change
and the comments are outside the scope of this rule. Similar comments
regarding the scope of the policy and whether it should apply to D-SNPs
were submitted and addressed in that earlier rulemaking. For public
comments and CMS responses to policy questions on the provision, as
well as additional discussion of this provision, see the May 23, 2014
final rule (79 FR 29850-29851; 29944; 29959).
After considering the comments and for the reasons outlined in the
proposed rule and our responses to comments, we are finalizing the
amendment to Sec. 422.503(b)(5) as proposed with minor grammatical
changes.

F. Definition of ``Institutionalized'' (Sec. 422.2)

Section 1859(b)(6)(B)(i) of the Act permitted the Secretary to
define the term institutionalized for the purposes of establishing
eligibility criteria for Medicare Advantage (MA) special needs plans
for individuals who are institutionalized (I-SNPs). In addition,
section 1851(e)(2)(D) of the Act permitted the Secretary to define the
term for purposes of eligibility for a continuous open enrollment
period to enroll or change enrollment in an MA plan, except for MA MSA
plans. CMS codified the current definition of institutionalized at
Sec. 422.2 in the January 2005 final rule (70 FR 4588) as an MA
eligible individual who continuously resides or is expected to
continuously reside for 90 days or longer in a long-term care (LTC)
facility which is a skilled nursing facility (SNF) nursing facility
(NF); SNF/NF; an intermediate care facility for individuals with
intellectual disabilities (ICF/IID); or an inpatient psychiatric
facility. This definition is used in the MA regulations (42 CFR part
422) to establish eligibility for I-SNPs and eligibility for continuous
open enrollment.
We proposed to revise the definition of institutionalized in Sec.
422.2 to expand the list of facilities and to add a standard to use to
identify additional facilities where an institutionalized individual
may reside in order to provide necessary flexibility to the regulation.
Under our proposal, an institutionalized individual would be an
individual who continuously resides or is expected to continuously
reside for 90 days or longer in one of the following long-term care
facility settings:
(1) Skilled nursing facility (SNF) as defined in section 1819 of
the Act (Medicare);
(2) Nursing facility (NF) as defined in section 1919 of the Act
(Medicaid);
(3) Intermediate care facility for individuals with intellectual
and developmental disabilities as defined in section 1905(d) of the
Act;
(4) Psychiatric hospital or unit as defined in section 1861(f) of
the Act;
(5) Rehabilitation hospital or unit as defined in section
1886(d)(1)(B) of the Act;
(6) Long-term care hospital as defined in section 1886(d)(1)(B) of
the Act;
(7) Hospital which has an agreement under section 1883 of the Act
(a swing bed hospital); and,
(8) Subject to CMS approval, a facility that is not listed in
paragraphs (1) through (7) but meets both of the following: (i)
Furnishes similar long-term, healthcare services that are covered under
Medicare Part A, Medicare Part B, or Medicaid; and (ii) whose residents
have similar needs and healthcare status as residents of one or more
facilities listed in paragraphs (1) through (7).
We explained in the proposed rule our concern that the current
definition is too limited in scope given the array of institution and
facility types in place today. We noted how our current subregulatory
guidance identifies additional facilities and that the proposed changes
to the definition would align the regulatory text with existing
operational practice and current guidance, clarify our policy for MA
organizations, and promote the expansion of I-SNP offerings under the
MA program. Our guidance (Chapter 16b of the Medicare Managed Care
Manual (MMCM) and the MA Enrollment and Disenrollment

[[Page 6047]]

Guidance \83\) taken together list the five types of institutions in
the current definition and other institutions that are identified in
some way in Titles XVIII or XIX of the Act in connection with the
Medicare and Medicaid programs. We also explained the need for a
standard that we could use to identify additional facility types,
without having to go through future rulemaking, that we believed would
be appropriate to use for defining when an individual is
institutionalized. We explained how, under our proposal and using this
new standard, CMS could permit an MA organization to offer an I-SNP to
serve beneficiaries that continuously reside in facilities that meet
this new standard but are not listed in the definition, provided the
plan meets the remaining criteria for I-SNPs. We explained how our
proposed new definition, as a whole, could lead to additional types of
I-SNPs and provide more options to Medicare beneficiaries for special
needs plans targeted to the needs of individuals who are
institutionalized.
---------------------------------------------------------------------------

\83\ Chapter 16b of the MMCM can be found here: https://
www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/
mc86c16b.pdf; and the MA Enrollment and Disenrollment Guidance
document can be found here: https://www.cms.gov/Medicare/Eligibility-and-Enrollment/MedicareMangCareEligEnrol/Downloads/CY_2019_MA_Enrollment_and_Disenrollment_Guidance.pdf.
---------------------------------------------------------------------------

In the proposed rule, we acknowledged that the proposed definition
would not fully align with Sec. 423.772, which defines
``institutionalized individual'' as a full-benefit dual eligible
individual who is an inpatient in a medical institution or nursing
facility for which payment is made under Medicaid throughout a month,
as defined under section 1902(q)(1)(B) of the Act. We explained that we
did not believe alignment was necessary because the definition in Sec.
423.772 serves a different purpose than the definition we proposed for
Sec. 422.2 and that differences between the two definitions had been
in place since 2005, reflecting these different purposes. (85 FR 9145)
Finally, we discussed why we did not propose to change the
definition of ``institutionalized-equivalent'' even though that term is
also used to establish I-SNPs and eligibility for I-SNPs.
We received the following comments related to our proposals, and
our responses follow:
Comment: A commenter stated that the proposed rule disqualifies
Medicare Advantage enrollees with advanced cancer disease residing in a
neoplastic disease care hospital by implementing a time requirement of
90 days, and that current subregulatory guidance in section 30.3 of
Chapter 2 to the Managed Care Manual and regulations at 42 CFR
422.62(a)(4) do not require the 90-day time requirement for an
institutionalized stay.
Response: As proposed and finalized, the revised definition of the
term institutionalized aligns with current CMS guidance and expands the
definition of institutionalized in Sec. 422.2 to reflect the evolution
of institutions over time and the current landscape of institutional
health care today. The current definition of institutionalized in Sec.
422.2 includes, and has included since the definition was adopted in
2005 (70 FR 4596, 4714), the criterion that the MA eligible individual
continuously resides or is expected to continuously reside for 90 days
or longer in a long-term care (LTC) facility. Our guidance in Chapter 2
of the Medicare Managed Care Manual, regarding enrollment and
disenrollment, might not specifically address the requirement in the
definition in Sec. 422.2 that an individual reside or be expected to
reside in a long term care facility of the type listed but that does
not change the regulation. Because the definition includes individuals
who are expected to reside in facility for a 90-day or longer
continuous period, enrollment into an I-SNP may precede the 90-day
point based on an appropriate assessment that the regulatory standards
are met, as CMS explained in the preamble to the 2005 final rule. (70
FR 4596). The new definition of institutionalized maintains this
criterion and identifies seven specific types of long-term care
facilities rather than the original five institution types listed in
the definition.
In addition, the definition in the final rule specifies that CMS
may approve additional facilities that are not listed previously, but:
(i) Furnish similar long-term, healthcare services that are covered
under Medicare Part A or Part B or Medicaid; and (ii) whose residents
have similar needs and healthcare status as residents of one or more
facilities previously listed. In implementing this final rule, CMS will
establish a review process to determine whether a particular different
institution type meets these standards for designation under this
definition and therefore permit an MA organization to offer an I-SNP to
serve beneficiaries that continuously reside in (or are expected to
continuously reside for 90 days or longer in) such designated
facilities, provided the plan meets the remaining qualifying criteria
for I-SNPs. This new authority to identify non-listed facilities for
purposes of determining if an individual is institutionalized is
applicable for the contract and coverage year beginning January 1, 2022
and we intend to review requests from MA organizations and others to
meet that timeframe for identifying facilities that meet this standard.
In addition, individuals residing in institutions that qualify under
this part of the definition will also be eligible for the continuous
open enrollment under Sec. 422.62(a)(4).
Comment: Another comment stated that the proposed rule would expand
use of the definition by making it also applicable to the open
enrollment period for institutionalized individuals. They note that
this would have the effect of expanding a 90-day length of stay
requirement to individuals for purposes of their qualification for the
open enrollment period for institutionalized individuals (OEPI).
Response: The existing requirements establishing qualifications for
the open enrollment period for institutionalized individuals (OEPI) are
established in 42 CFR 422.62(a)(4), which provides that an individual
who is eligible to elect an MA plan and who is institutionalized, as
defined in Sec. 422.2, is not limited (except with regard to MA MSA
plans) in the number of elections or changes he or she may make. The
use of the definition in Sec. 422.2 to identify individuals who are
eligible for this OEPI was adopted in a revision of Sec. 422.62(a)(4)
in the April 2018 final rule (83 FR 16616 through 16618, 16723). This
final rule does not amend Sec. 422.62(a)(4), so the revised definition
of institutionalized at Sec. 422.2 will apply to identify who is
eligible for the OEPI. The revised definition expands the list of
qualifying institutions and provides an opportunity for similar
institutions to qualify. We disagree with the commenter, however, that
the definition of institutionalized, as finalized under this rule,
changes the previous requirement that an MA eligible individual must
continuously reside or is expected to continuously reside for 90 days
or longer in a long-term care (LTC) facility to meet the definition or
to be eligible for the OEPI. Because the definition includes
individuals who are expected to reside in facility for a 90 day or
longer continuous period, enrollment into an I-SNP may precede the 90
day point based on an appropriate assessment.
Comment: Another commenter supported the proposed rule but had
concerns that the change may hinder state Medicaid agency efforts to
integrate Medicare and Medicaid programs on behalf of dual eligible
beneficiaries through FIDE SNPs. First, the commenter believes that
expanding the list of facilities and adding a

[[Page 6048]]

standard to use to identify additional facilities where an
institutionalized individual may reside could result in a managed care
plan's ability to offer I-SNPs that do not meet the requirements to be
D-SNPs to a largely dual eligible beneficiary population, and thus, the
MA plan would be able operate outside of the State Medicaid Agency
Contract (SMAC) requirement in section 1859 of the Act (added by the
MIPPA). The commenter noted that the change in the definition of
institutionalized creates concerns similar to the recent growth of D-
SNP lookalike MA plans that CMS has sought to regulate. Second, the
commenter stated that definitional change of institutionalized could
potentially confuse dual eligible beneficiaries when selecting the best
SNP for the beneficiary's specific needs. The commenter advised CMS and
state Medicaid agencies to coordinate implementation if CMS adopted the
proposed changes.
Response: We thank the commenter for their remarks, but do not
share the same concerns that aligning the definition of
institutionalized in Sec. 422.2 with current CMS guidance and adding a
standard to recognize facilities that are not listed in the definition,
but serve the same function for individuals with similar needs, would
adversely impact integration of Medicare and Medicaid services for
dually eligible beneficiaries. First, with regard to the specifically
listed facilities in the definition, this final rule is consolidating
current CMS guidance regarding I-SNP and OEPI enrollment policies and
is not a significant break from them. The final rule will also provide
additional flexibility to account for changes in the types of
institutions that could potentially be used for I-SNPs that are not
covered by the current definition of institutionalized. As we stated in
the proposed rule, we are creating criteria that would accommodate
changes in forms of institutional care within American healthcare
without fundamentally changing or conflicting with other regulatory and
statutory provisions surrounding I-SNPs. Under the finalized rule, the
definition of institutionalized could include, subject to CMS approval,
an additional facility that is not listed previously but (i) furnishes
similar long-term, healthcare services that are covered under Medicare
Part A or Part B or Medicaid and (ii) whose residents have similar
needs and healthcare status as residents of one or more facilities
previously listed. Therefore, CMS could permit an MA organization to
offer an I-SNP to serve beneficiaries that continuously reside in
facilities that meet this new standard but are not listed in the
definition, provided the plan meets the remaining criteria for I-SNPs.
In addition, any I-SNP application containing newly authorized
institutions will still need to meet the remaining review standards to
gain approval.
Second, we recognize that a portion of I-SNP enrollees are dually
eligible for Medicare and Medicaid, and that is also true for many
Medicare beneficiaries requiring a nursing level of care; however, this
overlap of eligible populations is not complete. This change in the
definition of institutionalized does not change the current
requirements that establish the process for I-SNP application approval
such as meeting the care management requirements for all SNPs, required
by section 1859(f)(5) of the Act. Given that an MA organization would
need to meet a separate set of standards, we believe there is limited
incentive for an MA organization to establish an I-SNP as opposed to a
D-SNP as a means to circumvent the requirement for a contract between a
state and MA organization, which is limited to D-SNPs under section
1859(f)(3)(D) of the Act and Sec. 422.107. Finally, while we
appreciate that having several plan options available for a beneficiary
requires the beneficiary to think through his or her needs carefully
and compare those to the specific benefits and costs of each plan, we
do not believe that permitting I-SNPs to enroll individuals who
continuously reside in (or are expected to continuously reside) for 90
days or longer in a facility that meets the new standard we are
adopting creates unnecessary confusion or burden for beneficiaries.
Having a number of plan choices will allow beneficiaries to choose
among plans with potentially different plan networks, levels of out-of-
pocket costs, and extra benefits like vision, hearing, and dental. We
believe this ultimately increases the likelihood that beneficiaries
will be able to find a satisfactory MA plan that fits their healthcare
needs.
Comment: Another commenter supported the proposal, but recommended
a clarification that a ``facility that furnishes similar long term
healthcare services that are covered under Part A or Part B or Medicaid
. . . .'' includes facilities/settings where the services may be
furnished by external healthcare entities that are overseen by the
facility.
Response: We do not believe the proposed rule will prohibit
services from being furnished by external healthcare entities as long
as all other requirements are met by the I-SNP and contracted facility
under the plan. Therefore, we are not making the recommended revision.
After consideration of the comments and for the reasons outlined in
the proposed rule and our responses to comments, we are finalizing the
revised definition of institutionalized at Sec. 422.2 as proposed. In
reviewing our proposal to amend the definition of institutionalized, we
realized that the definition of ``special needs individual'' in Sec.
422.2 refers to an individual who is institutionalized but not to an
individual who is institutionalized-equivalent. In the final rule
published in the Federal Register on January 12, 2009 (74 FR 1495
through 1496), we first clarified that that I-SNPs can enroll
individuals who are institutionalized-equivalent. In that rule, we
noted that section 164 of MIPPA amended section 1859(f) of the Act,
allowing institutional SNPs to enroll a special needs individual who is
living in the community but requires an institutional level of care
(LOC) (that is, an ``institutional-equivalent individual''). In
connection with that statutory amendment, we added the definition for
the term ``institutionalized equivalent'' to Sec. 422.2 but failed to
amend the definition of ``special needs individual'' to include
individuals who meet the standard of being institutionalized-
equivalent. In order to address this oversight, we are finalizing here
a technical change in the definition of ``special needs individual'' to
add that an individual who is institutionalized-equivalent is also a
special needs individual, which is consistent with that prior final
rule and our current practice.

G. Medicare Electronic Complaint Form (Sec. Sec. 422.504 and 423.505)

On April 15, 2011, CMS amended Sec. Sec. 422.504 and 423.505 to
add a new Sec. Sec. 422.504(a)(15) and 423.505(b)(22) requiring MA and
Part D plans to address and resolve complaints received through CMS'
complaint tracking system and to provide a direct link on their main
web page to the Medicare.gov electronic complaint form. We are
finalizing our proposal to modify Sec. Sec. 422.504(a)(15) and
423.505(b)(22) by removing Sec. Sec. 422.504(a)(15)(ii) and
423.505(b)(22)(ii) and recodifying the substance (requiring plans to
display a link to the electronic complaint form on the Medicare.gov
internet website on the plan's main web page) to subpart V,
Communication requirements. Sections 422.111(h)(2) and 423.128(d)(2)
require MA and Part D plans to maintain a

[[Page 6049]]

website. In section VI.H. of this final rule, we are adding new
Sec. Sec. 422.2265 and 423.2265, which provide requirements for MA and
Part D plan websites. Specifically, in Sec. Sec. 422.2265(b) and
423.2265(b), we identify the required content for websites, including a
link to the Medicare.gov electronic complaint form. We believe the
requirement for a direct link is more appropriately addressed in CMS'
website requirements rather than in Sec. Sec. 422.504(a)(15) and
423.505(b)(22).
We are not making any substantive changes to Sec. Sec.
422.504(a)(15) and 423.505(b)(22) other than minor changes in the text
to make it clear that plans must use the CMS complaint tracking system
to address and resolve complaints received by CMS against the plan. In
connection with removing Sec. Sec. 422.504(a)(15)(ii) and
423.505(b)(22)(ii), we are redesignating the substance of Sec. Sec.
422.504(a)(15)(i) and 423.505(b)(22)(i) as Sec. Sec. 422.504(a)(15)
and 423.505(b)(22).
We received no comments on this proposal and are finalizing the
proposed technical amendments to Sec. Sec. 422.504(a)(15) and
423.505(b)(22) without modification for the reasons outlined in the
proposed rule.

H. General Requirements for Applicable Integrated Plans and
Continuation of Benefits (Sec. Sec. 422.629 and 422.632)

We proposed technical changes to Sec. 422.629(k)(4)(ii) to correct
four technical errors from the April 2019 final rule. Paragraph
(k)(4)(ii) references Medicare coverage criteria, however Medicaid
coverage criteria are also applicable during the unified appeals
process described in this section. Therefore, we proposed to add the
phrase ``and Medicaid'' following ``knowledge of Medicare'' in Sec.
422.629(k)(4)(ii).
Also in paragraph (k)(4)(ii) of this section, there is an incorrect
reference to the MA organization. We proposed to replace ``MA
organization'' with the correct term, ``applicable integrated plan''.
Also, we proposed to add the word ``integrated'' before ``organization
determination decision'' to conform to the terminology used elsewhere
in Sec. 422.629(k). Lastly, we proposed to remove the comma between
the words ``expertise'' and ``in'' in the regulation text to clarify
that the required expertise is in the topics identified in the text.
In Sec. 422.632(b)(1), we proposed to change the citation from
Sec. 422.633(e) to (d). Section 422.632(b)(1) reflects the requirement
that the enrollee file a request for an integrated appeal in a timely
manner, with a cross reference to the regulation that sets the
timeframe for such appeals. Paragraph (d) of Sec. 422.633 sets that
timeframe while paragraph (e) addresses the requirements for expedited
integrated reconsiderations. We therefore proposed to amend Sec.
422.632(b)(1) to use the correct cross-reference.
We received no comments on this proposal and are finalizing the
proposed technical amendments to Sec. Sec. 422.629(k)(4)(ii) and
422.632(b)(1) without modification for the reasons outlined in the
proposed rule.

I. Representatives in Part D Appeals (Sec. Sec. 423.560, 423.566,
423.578, 423.2014, and 423.2036)

The regulations for Medicare fee-for-service (Part A and Part B)
claims and entitlement appeals at part 405, subpart I, reference two
types of representatives--authorized and appointed. Section 405.902
defines an authorized representative as an individual authorized under
state or other applicable law to act on behalf of a beneficiary or
other party involved in an appeal, and separately defines an appointed
representative as an individual appointed by a party to represent the
party in a Medicare claim or claim appeal. Similarly, for appeals of
Medicare Part C organization determinations, Sec. 422.561 defines
``representative'' as an individual appointed by an enrollee or other
party, or authorized under state or other applicable law, to act on
behalf of an enrollee or other party involved in the grievance or
appeal. For appeals of Medicare Part D coverage determinations,
however, Sec. 423.560 defines ``appointed representative'' as meaning
either an individual appointed by an enrollee or authorized under state
or other applicable law to act on behalf of the enrollee.
For consistency in the use of these terms across Medicare programs,
we proposed to replace the definition of ``appointed representative''
in Sec. 423.560 with a definition of ``representative.'' We also
proposed to replace references to appointed representatives in
Sec. Sec. 423.566(c)(2), 423.578(b)(4), 423.2014(a)(1)(ii), and
423.2036(c) and (d) with references to representatives.
We summarize the comment we received on this proposal and respond
as follows.
Comment: We received one comment in support of the proposal to
replace the definition of ``appointed representative'' in Sec. 423.560
with a definition of ``representative.'' The commenter requested that
sufficient time be built in for the implementation of this provision to
allow affected enrollee communications documents to be modified to
reflect this change.
Response: We appreciate the commenter's support for this proposal.
Given that we are enhancing consistency in the use of the term
``representative'' across the Medicare program and not substantively
altering the concept of who may be a representative in the grievance
and appeals processes, we believe the effective date of this rule
affords plans ample opportunity to make any necessary changes to
enrollee communications.
After consideration of the comments and for the reasons outlined in
the proposed rule and our responses to comments, we are finalizing,
without modification, the proposed amendments to Sec. Sec. 423.560,
423.566, 423.578, 423.2014, and 423.2036 to clarify and streamline
references to ``representatives'' in the Part D appeal regulations.

J. Copayments and Coinsurance in Amount in Controversy Calculations
(Sec. Sec. 422.600 and 423.2006)

We proposed amendments to Sec. Sec. 422.600 and 423.2006 to
clarify how the amount in controversy (AIC) is calculated for appeals
for MA plans, section 1876 cost plans, section 1833 health care
prepayment plans and Part D plans. The regulations applicable to cost
plans and healthcare prepayment plans, Sec. Sec. 417.600 and 417.840
respectively, require those plans to also use the MA appeal
regulations.\84\
---------------------------------------------------------------------------

\84\ We cited Sec. 405.840 in the proposed rule but provide the
correct citations here.
---------------------------------------------------------------------------

We explained in the proposed rule the statutory background for
using the same rules for calculating the AIC as used for the Medicare
FFS program for MA appeals. The regulations at part 405, subpart I,
specifically Sec. 405.1006(d), provide the methodology for calculating
the amount in controversy (AIC) in Medicare fee-for-service (Part A and
Part B) claims and entitlement appeals. In general, and subject to the
exceptions listed in Sec. Sec. 405.1006(d)(2) through (6), Sec.
405.1006(d)(1) provides that the AIC is computed as the amount that the
provider or supplier bills (``the actual amount charged the
individual'') for the items and services in the disputed claim, reduced
by any Medicare payments already made or awarded for the items or
services, and further reduced by ``any deductible and/or coinsurance
amounts that may be collected for the items or services.''
For Medicare Part C appeals under part 422, subpart M, Sec.
422.600(b) provides that the AIC is computed in

[[Page 6050]]

accordance with the part 405 rules (concerning appeals of initial
determinations under original (fee-for-service) Medicare). However, we
stated in the proposed rule that while original Medicare uses
deductibles and coinsurance (where the beneficiary pays a percentage of
the cost for an item or service) as forms of cost sharing, MA plans may
also use copayments (where the enrollee pays a flat fee for an item or
service) as a form of cost sharing. We stated in the proposed rule that
because Sec. 405.1006(d)(1) provides that the AIC excludes ``any
deductibles and/or coinsurance amounts that may be collected for the
items or services,'' questions have arisen regarding whether it is also
appropriate to exclude any copayment amounts that may be collected for
the items or services when applying the part 405 rules to appeals of
Part C organization determinations made under part 422, subpart M. To
resolve ambiguity on the proper calculation of the AIC and to help
ensure that the AIC in Part C appeals is reflective of the actual
amount at issue for the enrollee, we proposed to revise Sec.
422.600(b) to clarify that the AIC, which can include any combination
of Part A and Part B services, is computed in accordance with part 405,
and that any references to coinsurance in the part 405 regulations, for
purposes of computing the AIC under Sec. 422.600, should be read to
include both coinsurance and copayment amounts.
We also proposed a revision to the regulations for appeals of Part
D plan sponsor coverage determinations and at-risk determinations made
under part 423, subpart M. The AIC for these appeals is addressed in
Sec. 423.2006, which does not reference cost-sharing amounts. To
clarify the AIC calculation for Part D appeals and help ensure that the
AIC in Part D appeals is reflective of the actual amount at issue for
the enrollee, we proposed to redesignate paragraphs Sec.
423.2006(c)(1) and (2) to (2) and (3), and to amend (c)(1) to provide
general AIC calculation provisions for Part D appeals, specifying that
the AIC calculation would be reduced by any cost-sharing amounts,
including deductible, coinsurance, or copayment amounts, that may be
collected from the enrollee for the Part D drug(s).
We received no comments on these proposals and are finalizing
amendments to Sec. Sec. 422.600 and 423.2006 without modification to
clarify application of the AIC rules to Part C and Part D appeals, for
the reasons outlined in the proposed rule.

K. Stipulated Decisions in Part C (Sec. 422.562)

The regulations for Medicare fee-for-service (FFS) (Part A and Part
B) claims and entitlement appeals at part 405, subpart I provide for
stipulated decisions at Sec. 405.1038(c). This provision permits
Office of Medicare Hearings and Appeals (OMHA) adjudicators to issue
abbreviated, stipulated decisions if CMS or one of its contractors
submits a written statement or makes an oral statement at a hearing
indicating the item or service should be covered or payment may be
made.\85\ In this situation, an ALJ or attorney adjudicator may issue a
stipulated decision finding in favor of the appellant or other liable
parties on the basis of the written or oral statement and without
making findings of fact, conclusions of law, or further explaining the
reasons for the decision. The MA appeal regulations at Sec. 422.562(d)
provide that the FFS appeals procedures in part 405, subpart I apply to
appeals of Part C organization determinations to the extent they are
appropriate and identifies specific part 405 regulations that are not
appropriate to apply to MA appeals. We explained in the proposed rule
that because MA organizations are not generally included within the
definition of ``contractors'' in Sec. 405.902, it was not readily
apparent that the rules for stipulated decisions at Sec. 405.1038(c)
apply to MA appeals. For consistency with the Part D regulations (which
allow stipulations to be made by Part D plan sponsors under Sec.
423.2038(c)), and to afford OMHA adjudicators the same flexibilities in
Part C cases where the MA organization that issued the organization
determination and plan reconsideration no longer disputes that an item
or service should be covered or that payment should be made, we
proposed to revise Sec. 422.562 by adding new paragraph (d)(3) to
clarify that, for the sole purpose of applying the regulations at Sec.
405.1038(c) to Part C appeals under part 422, subpart M, an MA
organization is included in the Sec. 405.902 definition of
``contractors'' as that definition relates to stipulated decisions
issued by ALJs and attorney adjudicators. As we stated in the proposed
rule, we believe this revision will permit OMHA adjudicators to more
efficiently issue decisions where there is no longer any material issue
in dispute, which would ultimately benefit MA enrollees because these
decisions could potentially be issued, and effectuated by the MA
organization, sooner.
---------------------------------------------------------------------------

\85\ For appeals in which the amount of payment is an issue
before the ALJ or attorney adjudicator, Sec. 405.1038(c) further
provides that the written or oral statement must agree to the amount
of payment the parties believe should be made.
---------------------------------------------------------------------------

We received no comments on this proposal and therefore are
finalizing the proposed changes to Sec. 422.562 without modification
for the reasons provided in the proposed rule.

L. Beneficiaries With Sickle Cell Disease (SCD) (Sec. 423.100)

Section 1860D-4(c)(5)(C)(ii) of the Act contains exemptions from
DMPs for certain beneficiaries, and provides the Secretary with the
authority to elect to treat other beneficiaries as an exempted
individual. As currently codified at Sec. 423.100, exempted
beneficiaries include those receiving hospice or end-of-life care,
residents of a long-term care facility, or those being treated for
active cancer-related pain.
Consistent with the statutory authority and current clinical
literature detailed in the preamble of the proposed rule, CMS proposed
to add beneficiaries with SCD to the categories of exempted
beneficiaries in Sec. 423.100.
Comment: CMS received a number of comments on this proposal, which
were unanimously supportive of adding beneficiaries with SCD to the
list of individuals exempted from DMPs.
Response: CMS thanks the commenters for their support.
Comment: Several commenters suggested that individuals with other
disease states also should be exempt from DMPs, including: Chronic pain
in cancer survivors, any chronic pain, complex regional pain syndrome,
fibromyalgia, rare chronic pain diseases, Ehlers Danlos syndrome,
degenerative disc disease, osteoarthritis, rheumatoid arthritis,
ankylosing spondylitis, common variable immunodeficiency, and non-pain
syndromes for which opioids are utilized, such as dyskinesias and
autoimmune conditions affecting the excretory system.
Response: CMS appreciates these suggestions but disagrees that
additional exemptions from DMPs are warranted at this time. In the
April 2018 final rule establishing DMPs (83 FR 16454), CMS stated that
if exemptions are crafted too broadly or are too numerous, they would
risk undermining the purpose of DMPs, which serve as a patient safety
tool for beneficiaries who use opioids. CMS believes it is appropriate
to narrowly tailor exemptions, distinguish between different clinical
scenarios, and account for differences in coordinating care in distinct
patient populations. The clinical presentation of SCD is such that
individuals with this condition regularly require access to opioid pain
medications when experiencing acute

[[Page 6051]]

crises in addition to treatment for chronic pain and are more likely to
have additional prescribers due to frequent visits to emergency
rooms.\86\ These factors lead to beneficiaries with SCD being
identified as PARBs by OMS criteria while case management, care
coordination, and DMP coverage limitations are less practicable for
them. Thus, while CMS appreciates commenters' feedback on additional
disease states to be considered for exemption from DMPs, at this time
CMS does not have sufficient data to demonstrate that the clinical
presentation and factors affecting care coordination for the other
disease states mentioned in comments make DMP activities of similarly
limited value. However, CMS will continue to evaluate OMS response
data, other available data sources, and medical literature for
consideration in future policy development. In addition, CMS monitors
DMPs to ensure they are functioning in the positive ways CMS
anticipates will support appropriate pain management.
---------------------------------------------------------------------------

\86\ James, CV and Wilson-Frederick, SM. The Invisible Crisis:
Understanding Pain Management in Medicare Beneficiaries with Sickle
Cell Disease. CMS Office of Minority Health Data Highlight, No. 12.
Baltimore, MD. 2018. Available from: https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/CMS-OMH-September2018-Sickle-Cell-Data-Highlight.pdf.
---------------------------------------------------------------------------

Comment: A commenter stated that disease-specific exemptions are
discriminatory against beneficiaries with other diseases that involve
pain and may require opioid therapy, such as inherited autoimmune
disorders like ankylosing spondylitis and rheumatoid arthritis and
generalized osteoarthritis.
Response: CMS disagrees that the sickle cell disease exemption we
proposed is discriminatory. As background, section 1860D-4(c)(5)(C)(ii)
of the Act defines an exempted individual as one who (I) receives
hospice care, (II) is a resident of a long-term care facility, of a
facility described in section 1905(d), or of another facility for which
frequently abused drugs are dispensed for residents through a contract
with a single pharmacy, or (III) the Secretary elects to treat as an
exempted individual. While the first two exemptions are required under
CARA, CMS previously exercised the authority in section 1860D-
4(c)(5)(C)(ii)(III) of the Act to establish the exemption for a
beneficiary who is being treated for active cancer-related pain and is
exercising that authority in this rule to exempt beneficiaries with
SCD. These discretionary exemptions are not discriminatory toward
beneficiaries with other diseases that may require opioid therapy
because inclusion in a DMP is not a punitive step. Inclusion means that
a beneficiary's opioid use will be reviewed during case management for
medical necessity and safety, and DMPs do not dictate the amount or
length of opioid use for a beneficiary that is deemed medically
necessary. Additionally, CMS adopts discretionary exemptions as part of
our ongoing efforts to minimize identification of ``false positives,''
that is, beneficiaries are exempted who may meet OMS criteria but are
unlikely to need case management for their safety and medical necessity
review.
Comment: A few commenters requested additional flexibilities to
include SCD patients in DMPs if case management suggested intervention
would benefit them or if they were previously identified as an ARB and
a coverage limitation was applied.
Response: Plan sponsors are not permitted to include exempted
individuals in their DMPs. Based on the statutory language at section
1860D-4(c)(5)(C) of the Act, current CMS guidance \87\ states that: (1)
Exempted beneficiaries cannot be placed in a Part D sponsor's DMP, (2)
a sponsor must remove an exempted beneficiary from a DMP as soon as it
reliably learns that the beneficiary is exempt, whether that be via the
beneficiary, the facility, a pharmacy, a prescriber, or an internal or
external report, and (3) a beneficiary's identification as an ARB
terminates as soon as a sponsor discovers that the beneficiary is
exempted. Other than adding individuals with SCD to the existing
exemptions starting January 1, 2022, this final rule does not change
existing policy with respect to exempted individuals.
---------------------------------------------------------------------------

\87\ https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/2019-Part-D-Drug-Management-Program-Policy-Guidance-Memo-November-20-2018-.pdf.
---------------------------------------------------------------------------

Comment: A few commenters requested that CMS update OMS technical
elements (for example, response codes) consistent with the final
provision.
Response: CMS appreciates this comment and intends to update OMS
response forms and technical guidance accordingly.
After consideration of the comments received and for the reasons
provided in the proposed rule and preceding responses to comments, CMS
is finalizing the exemption for beneficiaries with SCD as proposed with
one modification to clarify that this definition is applicable starting
in plan year 2022 instead of plan year 2021.

M. Drug Management Programs (DMPs): Additional Requirements (Sec. Sec.
423.100 and 423.153)

In order to improve the clarity of the DMP regulations, CMS
proposed a number of technical wording and reference changes. CMS
received no comments on these proposed revisions and are finalizing
them without modification for the reasons given in the proposed rule.
In response to a comment received on the provision to include
beneficiaries with a history of opioid-related overdose in DMPs in
section III.B., CMS is making an additional technical change to add
``who is not an exempted beneficiary'' to the PARB definition at Sec.
423.100. This change makes the definitions for PARB and ARB consistent
and codifies existing guidance that once a PARB is determined to be an
exempt beneficiary, they are no longer to be included in DMPs. CMS also
noticed a grammatical error at Sec. 423.153(f)(15)(ii)(D). In order to
improve the clarity of the statement at this citation, CMS is changing
the two occurrences of ``no later than 7 days of the date'' to ``no
later than 7 days from the date'' in this statement.

VIII. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), we are required to provide 60-day notice in the Federal Register
and solicit public comment before a ``collection of information,'' as
defined under 5 CFR 1320.3(c) of the PRA's implementing regulations, is
submitted to the Office of Management and Budget (OMB) for review and
approval. In order to fairly evaluate whether an information collection
requirement should be approved by OMB, section 3506(c)(2)(A) of the PRA
requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Our February 2020 proposed rule solicited public comment on our
proposed information collection requirements, burden, and assumptions.
Summaries of the public comments on the proposed information collection
requirements, burden, and assumptions for the policies being
implemented in this final rule are included in this

[[Page 6052]]

section with our responses under: (1) ICRs Regarding Information on the
Safe Disposal of Prescription Drugs (Sec. 422.111), (2) ICRs Regarding
Eligibility for Medication Therapy Management Programs (MTMPs) (Sec.
423.153), (3) ICRs Regarding Beneficiaries' Education on Opioid Risks
and Alternative Treatments (Sec. 423.128), (3) ICRs Regarding
Establishing Pharmacy Performance Measure Reporting Requirements (Sec.
423.514), and (4) ICRs Regarding PACE.
We did not receive PRA-related comments pertaining to: (1) ICRs
Regarding Improvements to Care Management Requirements for Special
Needs Plans (SNPs) (Sec. 422.101), (2) ICRs Regarding Mandatory Drug
Management Programs (DMPs) (Sec. 423.153), (3) ICRs Regarding
Beneficiaries with History of Opioid-Related Overdose Included in Drug
Management Programs (DMPs) (Sec. 423.153), (4) ICRs Regarding
Information on the Safe Disposal of Prescription Drugs (Sec. 422.111),
(5) ICRs Regarding Suspension of Pharmacy Payments Pending
Investigations of Credible Allegations of Fraud and Program Integrity
Transparency Measures (Sec. Sec. 405.370, 422.500, 422.503, 423.4,
423.504, and 455.2), (6) ICRs Regarding Beneficiary Real Time Benefit
Tool (RTBT) (Sec. 423.128), and (7) ICRs Regarding Stipulated
Decisions in Part C (Sec. 422.562).
The following provisions of the February 2020 proposed rule were
finalized in our June 2020 final rule (85 FR 33796) and are thereby
excluded from this final rule: (1) ICRs Regarding Special Supplemental
Benefits for the Chronically Ill (SSBCI) (Sec. 422.102), (2) ICRs
Regarding Contracting Standards for Dual Eligible Special Needs Plan
(D-SNP) Look-Alikes (Sec. 422.514), (3) ICRs Regarding Medicare
Advantage (MA) Plan Options for End-Stage Renal Disease (ESRD)
Beneficiaries (Sec. Sec. 422.50, 422.52, and 422.110), (4) ICRs
Regarding Medical Loss Ratio (MLR) (Sec. 422.2440), and (5) ICRs
Regarding Special Election Periods (SEPs) for Exceptional Conditions
(Sec. Sec. 422.62 and 423.38).

A. Wage Data

To derive mean costs, we are using data from the most current U.S.
Bureau of Labor Statistics' (BLS's) National Occupational Employment
and Wage Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm), which, at the time of publication of this rule,
provides May 2019 wages. In this regard, Table H1 presents the mean
hourly wage, the cost of fringe benefits and overhead (calculated at
100 percent of salary), and the adjusted hourly wage.

Table H1--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
Fringe
Occupation Mean hourly benefits and Adjusted
Occupation title code wage ($/hr) overhead ($/ hourly wage ($/
hr) hr)
----------------------------------------------------------------------------------------------------------------
Compliance Officer.............................. 13-1041 35.03 35.03 70.06
Computer Programmers............................ 15-1251 44.53 44.53 89.06
Computer Systems Analysts....................... 15-1211 46.23 46.23 92.46
Dietician....................................... 29-1031 29.97 29.97 59.94
General Operations Manager...................... 11-1021 59.15 59.15 118.30
Health Technician, All Other.................... 29-9098 28.17 28.17 56.34
Healthcare Social Workers....................... 21-1022 28.51 28.51 57.02
Management Analyst.............................. 13-1111 45.94 45.94 91.88
Occupational Therapist.......................... 29-1122 41.45 41.45 82.90
Office and Administrative Support............... 43-9199 18.41 18.41 36.82
Medical and Health Services Managers (PACE 11-9111 55.37 55.37 110.74
Center Manager)................................
Passenger Vehicle Driver........................ 53-3058 15.97 15.97 31.94
Personal Care Aides............................. 31-1120 12.71 12.71 25.42
Pharmacist...................................... 29-1051 60.34 60.34 120.68
Physical Therapist.............................. 29-1123 43.35 43.35 86.70
Physician....................................... 29-1216 96.85 96.85 193.70
Recreational Therapist.......................... 29-1125 24.58 24.58 49.16
Registered Nurse................................ 29-1141 37.24 37.24 74.48
----------------------------------------------------------------------------------------------------------------

As indicated, we are adjusting our employee hourly wage estimates
by a factor of 100 percent. This is necessarily a rough adjustment,
both because fringe benefits and overhead costs vary significantly from
employer to employer and because methods of estimating these costs vary
widely from study to study. We believe that doubling the hourly wage to
estimate total cost is a reasonably accurate estimation method.
Revised Wage and Cost Estimates: While our proposed rule's costs
were based on BLS's May 2018 wage estimates, this final rule uses BLS's
more recent May 2019 wage estimates. Changes to the wage estimates
represent shifts in average wages of occupations between 2018 and 2019
and are presented in Table H2. The table also reflects occupation
titles used in both the proposed rule and this final rule with
corresponding changes in wages and changes in occupation codes.

Table H2--Comparison of Proposed and Final Rule Wage Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
CMS-4190-P: CMS-4190-F2 CMS-4190-P: CMS-4190-F2:
Occupation title Occupation code Occupation code (BLS: May 2018 (BLS: May 2019 Difference ($/
(BLS: May 2018) (BLS: May 2019) ($/hr)) ($/hr)) hr)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Compliance Officer................................................ 13-1041 No change 69.72 70.06 +0.34
Computer Programmers.............................................. 15-1131 15-1251 86.14 89.06 +2.92
Computer Systems Analysts......................................... 15-1121 15-1211 90.02 92.46 +2.44
Dietician......................................................... 29-1031 No change 58.86 59.94 +1.08

[[Page 6053]]

General Operations Manager........................................ 11-1021 No change 119.12 118.30 -0.82
Healthcare Social Workers......................................... 21-1022 No change 56.22 57.02 +0.80
Management Analyst................................................ 13-1111 No change 90.76 91.88 +1.12
Occupational Therapist............................................ 29-1122 No change 82.08 82.90 +0.82
Office and Administrative Support................................. 43-9199 No change 36.04 36.82 +0.78
Medical and Health Services Managers (PACE Center Manager)........ 11-9111 No change 109.36 110.74 +1.38
Personal Care Aides............................................... 31-1011 31-1120 24.36 25.42 +1.06
Pharmacist........................................................ 29-1051 No change 118.90 120.68 +1.78
Physical Therapist................................................ 29-1123 No change 85.46 86.70 +1.24
Physician......................................................... 29-1069 29-1216 196.04 193.70 -2.34
Recreational Therapist............................................ 29-1125 No change 48.68 49.16 +0.48
Registered Nurse.................................................. 29-1141 No change 72.60 74.48 +1.88
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Information Collection Requirements (ICRs)

The following ICRs are listed in the order of appearance within the
preamble (see sections II through VII) of this final rule.
1. ICRs Regarding Improvements to Care Management Requirements for
Special Needs Plans (SNPs) (Sec. 422.101)
The following changes will be submitted to OMB for approval under
control number 0938-1296 (CMS-10565). Subject to renewal, the control
number is currently set to expire on June 30, 2022. It was last
approved on June 30, 2019 and remains active.
This rule amends Sec. 422.101(f) to implement the new requirements
legislated by the BBA of 2018 to section 1859(f) of the Act for C-SNPs
and to extend them to all SNP types. Specifically, we are adding the
following new regulations to account for new requirements governing SNP
enrollee care management and SNP MOC submissions. The new regulations
impacting MA SNP MOCs consist of the following:
We are amending the end of Sec. 422.101(f)(1)(i) by
adding the following language: ``. . . and ensure that results from the
initial and annual reassessment conducted for each individual enrolled
in the plan are addressed in the individual's individualized care plan
as required under paragraph (f)(1)(ii) of this section.'' To comply
with this provision, MA SNPs will have to provide the necessary
guidance to SNP plan staff and develop related internal processes for
employees of the SNP that are responsible for incorporating this
requirement into their MOC.
New Sec. 422.101(f)(3)(ii)(A) through (C) will implement
the requirement that: As part of the evaluation and approval of the SNP
MOC, NCQA must evaluate whether goals were fulfilled from the previous
MOC; plans must provide relevant information pertaining to the MOC's
goals as well as appropriate data pertaining to the fulfillment the
previous MOC's goals; plans submitting an initial MOC must provide
relevant information pertaining to the MOC's goals for review and
approval; and if the SNP MOC did not fulfill the previous MOC's goals,
the plan must indicate in the MOC submission how it will achieve or
revise the goals for the plan's next MOC. Under this change, each
plan's MOC must provide relevant information pertaining to the MOC's
goals as well as appropriate data pertaining to the fulfillment the
previous MOC's goals. Note, all SNPs are currently required to identify
and clearly define measurable goals and health outcomes as part of
their MOC under MOC 4, Element B: Measurable Goals and Health Outcomes
for the MOC.
Lastly, new Sec. 422.101(f)(3)(iii) will implement the
requirements that each SNP MOC submitted to CMS will be evaluated by
NCQA based on a minimum benchmark (of 50 percent) for each of the
existing four elements.
At the time SNP applications are due, MA organizations wishing to
offer a new SNP will submit a MOC with their SNP application in the
Application module in HPMS for NCQA review and approval. MA
organizations wishing to renew their current SNP will submit a MOC in
the MOC module in HPMS for NCQA review and approval. Based on their MOC
scores, I-SNPs and D-SNPs receive an approval for a period of 1, 2, or
3 years. C-SNPs must renew their MOCs annually per section
1859(b)(6)(B)(iii) of the Act. For calendar year 2020, CMS received 273
SNP MOCs during the annual submission process and received 11 off-cycle
submissions during the following time period. We believe these figures
are representative of future SNP MOC submission totals going forward.
The burden related to these new requirements for SNP MOCs reflect
the time and effort needed to adhere to the new requirements under the
amendments to Sec. 422.101(f), and as listed in the bullets in this
section, and collect the information as previously described, as well
as all other MOC data, and report this information to CMS. To derive
average costs, we selected the position of registered nurse because the
SNP nurse usually develops and submits the MOC to CMS and typically
interacts with the health plan quality registered nurse in matters
related to the MOC after it is submitted to CMS.
As is current practice, the MA organization/SNP will click on the
Application or MOC module in HPMS and download the SNP MOC Matrix
document. The SNP will complete the document, and then upload its MOC
matrix document with the MOC narrative. The SNP MOC Matrix upload
document outlines the CMS SNP MOC standards and elements that must be
addressed in the MOC narrative. The document also serves as a table of
contents for the MOC narrative.
Training to use the MOC module will be minimal at 3 hours annually,
and training materials and non-mandatory webinar sessions are provided
by CMS at no cost to the SNPs except for the time (and cost) to
participate. While the training is not mandatory, SNP personnel (we
believe this is a SNP compliance officer at $70.06/hr) normally attend
the full 3-hour session. In aggregate, we estimate an ongoing annual
burden of 819 hours (273 SNPs

[[Page 6054]]

* 3 hr) at a cost of $57,379 (819 hr * $70.06/hr).
Using HPMS contract year 2020 submission data, for annual
submissions under 42 CFR 422.101(f)(3) we estimate that each year 273
SNPs will submit MOCs. Note, this calculation is based on estimates
that include annual MOC submissions for C-SNPs and semi-annual
submissions for I-SNPs and D-SNPs. I-SNPs and D-SNPs submitting a MOC
can receive MOC approval for one, two, or three year terms. For each
SNP, we assume an additional 6 hours at $74.48/hr for a registered
nurse. In aggregate, we estimate an ongoing annual burden of 1,638
hours (273 SNPs x 6 hr) at a cost of $121,998 (1,638 hr x $74.48/hr).
For plans seeking to revise their MOC based on qualifying events
during the off-cycle season, we estimate that approximately 11 SNPs (D-
SNPs/I-SNPs) will submit off-cycle MOC changes based on historical
submission rates. For each SNP submitting off-cycle MOC changes, we
assume an additional 4 hours at $74.48/hr for a registered nurse. In
aggregate, we estimate an ongoing annual burden of 44 hours (11 SNPs x
4 hr) at a cost of $3,277 (44 hr x $74.48/hr).
Since Sec. 422.101(f)(3)(iii) sets a minimum benchmark for each
MOC element, we anticipate that there will be some impact to the number
of MOC submissions that will not pass NCQA's initial MOC review.
Looking at data for contract year 2020, our element benchmark of 50
percent would have impacted 20 of the 273 MOCs submitted, or 7.3
percent. For contract year 2020, 7 plans required submitting their MOCs
for revision based on the current scoring system and an additional 7
plans decided to withdraw their MOCs before the revision process for a
total of 14 MOCs. The 14 SNPs must resubmit, taking 3 hours, or half
the full 6-hour estimate. In aggregate, we estimate an added ongoing
annual burden of 42 hours (14 SNPs * 3 hr) at a cost of $3,128 (42 hr *
$74.48/hr).
For the aforementioned MOC requirements under the amended 42 CFR
422.101(f)(3), we estimate an added annual burden of 2,543 hours (819
hr for training to use the MOC module + 1,638 hr for MOC submissions +
44 hr for MOC revisions + 42 hr for MOC resubmissions) at a cost of
$185,782 ($57,379 + $121,998 + $3,277 + $3,128, respectively).
Separate from the MOC process, newly added Sec. 422.101(f)(1)(iv)
will implement a new requirement that plans provide face-to-face
encounters with consenting individuals enrolled in the plan not less
frequently than on an annual basis. The new regulation requires an
annual face-to-face visit, that is, in-person or by visual, real-time,
interactive telehealth technology, to occur starting within the first
12 months of enrollment within the plan. CMS will consider a visit to
or by employed and/or contracted staff that perform clinical functions,
such as direct enrollee care, as a qualifying encounter. Such
activities may include, but are not limited to, annual wellness visits
and/or physicals, HRA completion, meeting with the interdisciplinary
team (IDT), care plan review, health-related education, and care
coordination activities. It is also the expectation that any concerns
related to physical, mental/behavioral health, and overall health
status, including functional status, are addressed and any appropriate
referrals, follow-up, and care coordination activities are provided or
scheduled as necessary.
We believe that most, if not all, SNP enrollees will have a
qualifying face-to-face encounter under Sec. 422.101(f)(1)(iv) through
an initial or annual HRA, a qualifying encounter with an IDT member, or
an annual wellness visit. We estimate that approximately 734 SNPs that
have at least 11 members will need to track face-to-face encounters for
their enrollees annually. For each SNP tracking face-to-face
encounters, we assume 4 hours of work by SNP personnel, typically a
registered nurse. In aggregate, we estimate 2,936 hours (734 SNPs x 4
hr) at a cost of $ 218,673 (2,936 hr x $74.48/hr).
Section 422.101(f)(1)(iii) will also require that MA organizations
offering a SNP must provide each enrollee with an IDT in the management
of care that includes a team of providers with demonstrated expertise,
including training in an applicable specialty, in treating individuals
similar to the targeted population of the plan. Plans must develop and
implement this requirement into their MOC components to assure an
effective management structure. We believe this requirement is
consistent with currently approved information tracking practices for
all existing SNPs, and thus, does not impose any new or revised
requirements and/or burden beyond what is currently approved by OMB
under the aforementioned control number.
The remaining changes under Sec. 422.101(f)(2) and (3), will
codify current guidance governing SNP MOC submission practices, which
is captured under our active information collection request.
We received no comments on our proposed burden estimates.
Consequently, we are finalizing them without modification.
2. ICRs Regarding Mandatory Drug Management Programs (DMPs) (Sec.
423.153)
The following changes will be submitted to OMB for approval under
control number 0938-0964 (CMS-10141). Subject to renewal, the control
number is currently set to expire on November 30, 2021.
As discussed in section III.A. of this final rule, we are codifying
the requirement under section 2004 of the SUPPORT Act that Part D plan
sponsors establish DMPs by 2022 at Sec. 423.153(a).
For context, in general, the required elements of a DMP are
codified at Sec. 423.153(f). The provisions require Part D sponsors to
conduct case management of PARBs identified by OMS through contact with
their prescribers to determine if a beneficiary is at-risk for abuse or
misuse of opioids and benzodiazepines.\88\ After case management is
completed, if a plan sponsor intends to limit a beneficiary's access to
coverage of opioids and benzodiazepines, the sponsor must provide an
initial written notice to the beneficiary. After the beneficiary has a
30-day time period to respond, the plan sponsor sends a second notice
to the beneficiary, if the sponsor determines the beneficiary is an at-
risk beneficiary (ARB), that the sponsor is implementing a coverage
limitation on opioids and/or benzodiazepines, or an alternative second
notice if the plan sponsor determines that the beneficiary is not an
ARB. Thus, every beneficiary who receives an initial notice receives a
second or alternate second notice.
---------------------------------------------------------------------------

\88\ CMS currently designates both opioids and benzodiazepines
as ``Frequently Abused Drugs'' for purposes of DMPs. See ``Part D
Drug Management Program Policy Guidance'', November 20, 2018, p. 6;
https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/2019-Part-D-Drug-Management-Program-Policy-Guidance-Memo-November-20-2018-.pdf.
---------------------------------------------------------------------------

In 2019, a CMS internal analysis found that a majority of Part D
contracts (669 of 779, or 85.9 percent) voluntarily included a DMP. Our
requirement that sponsors adopt DMPs would only affect the remaining
minority of sponsors currently not offering such programs. There are
111 contracts (plan sponsors) run by 79 parent organizations that would
be involved. Furthermore, we estimate that only 158 additional PARBs
will be identified by these 111 contracts due to meeting the minimum
OMS criteria. We estimate burden at the parent organization level
because we believe that is a closer reflection of the

[[Page 6055]]

number of systems that will need to be updated versus the contract
level.
The estimated reporting burden to these sponsors has four aspects.
Under Sec. 423.153(f), sponsors must: (1) Design a DMP; (2) conduct
case management, which includes sending written information about PARBs
to prescribers; (3) program and issue written notices to PARBs and
ARBs; and (4) report data to CMS about the outcome of case management
via OMS and about any coverage limitation information into MARx.
For one-time initial development, we estimate it would take each
parent organization without a DMP 80 hours for a team of four clinical
and non-clinical staff to design its DMP. Thus the burden for one
parent organization is 320 hours (80 hr x 4 staff). Therefore, the
aggregate burden for the 79 remaining parent organizations to develop
DMPs consistent with the requirements of Sec. 423.153(f) is 25,280
hours (79 parent organizations x 320 hr).
With regard to costs, we estimate that development, as just
indicated, will require a development team consisting of four staff,
two pharmacists (working at $120.68/hr) and two general operation
managers (working at $118.30/hr) per organization. Thus, the average
hourly wage for the organization's development team is $119.49/hr
($477.96/hr/4 staff). The rates for the development team are summarized
in Table H3. Consequently, the aggregate cost to develop the DMPs is
$3,020,707 ($119.49/hr * 25,280 hr) or $38,237 per parent organization
($3,020,707/79 organizations).

Table H3--Labor Rates for the Development Team
----------------------------------------------------------------------------------------------------------------
Hourly wage ($/ Number of Total wages ($/
Occupation hr) staff hr)
----------------------------------------------------------------------------------------------------------------
General operations manager...................................... 118.30 2 236.60
Pharmacist...................................................... 120.68 2 241.36
-----------------------------------------------
Total (for hourly wage and total wages)..................... * 119.49 4 477.96
----------------------------------------------------------------------------------------------------------------
* Note: 119.49 is the average wage per hour (477.96/4) and equals total wages for four staff (477.96) divided by
total staff (4). The 119.49 is a weighted average representing the hourly wage of the team; that is a team of
four working on average at $119.49/hr. incur a total cost of $477.96. The reason an average is taken is
because not all four members are working all the time. This number is important since it enters the summary
table and is the only number that when multiplied by number of hours (4 staff * 1 hr) will give the correct
total wage. Since this number is not a total, the ``Totals'' row header has been clarified to indicate that
totals only apply ``hourly wage'' and ``total wages''. This is a standard practice.

The 79 Part D parent organizations affected by this requirement
also will have to upload beneficiary notices into their internal claims
systems before they can issue them. We estimate that it will take each
organization, on average, 5 hours at $89.06/hr for a computer
programmer to upload all of the notices into their claims systems
(note, this is an estimate to upload all of the documents in total, not
per document). In aggregate, we estimated a one-time burden of 395
hours (5 hr * 79 sponsors) at a cost of $35,179 (395 hr * $89.06/hr).
Once a DMP is developed and in place, the primary operations for
impacted sponsors will involve case management by the sponsor to assess
those enrollees reported as PARBs by CMS's OMS. The 111 contracts run
by 79 parent organizations that did not voluntarily establish a DMP are
generally smaller plans that in some cases offered alternative means of
managing comprehensive beneficiary care, such as through PACE. They
enroll only 410,000 Part D beneficiaries (less than 1 percent of total
Part D enrollment in 2019). Accordingly, based on internal analysis of
the first 3 quarters (January-March, April-June, and July-September of
2019) of the OMS report data, we found that only 127 beneficiaries
(about 0.7 percent) who met the minimum OMS criteria were not reported
thus far in 2019 by CMS to the sponsors, because the sponsors did not
have a DMP. Using this estimate of 0.7 percent of beneficiaries
extrapolated over the entire year, CMS can project that annually that
about 158 beneficiaries would not be reported to their plan sponsors
due to not having a DMP until DMPs become mandatory no later than
January 1, 2022.
Once required DMP policies are developed and operational, sponsors
would have to case-manage their PARBs (as outlined in Sec.
423.153(f)(2)). The case management requirement includes a requirement
that sponsors send written information to prescribers about PARBs. The
burden for sending this information, which may be accomplished by any
of several means (such as mail or fax), is already included in the case
management burden estimates provided earlier in this section and does
not need to be separately accounted for.
The case management team would consist of a pharmacist (such as
initial review of medication profiles, utilization, etc.) working 2
hours at $120.68/hr; one health technician working 2 hours at $56.34/
hr; and one physician working 1 hour at $193.70/hr to work directly
with providers on discussing available options and determining the best
course of action. The case management team would require 5 hours at a
cost of $547.74 per PARB case managed ([2 hr x $120.68/hr] + [2 hr *
$56.34/hr] + [1 hr * $193.70/hr]). Therefore, the case management
team's wage is $109.55/hr ($547.74/5 hr). This is summarized in Table
H4. In aggregate, we estimate an annual burden of 790 hours (5 hr x 158
beneficiaries at a cost of $86,545 per year (790 hr x $109.55/hr).

Table H4--Hourly Wage of Case Management Team
----------------------------------------------------------------------------------------------------------------
Occupation Time (hours) Wages ($/hr) Labor cost ($)
----------------------------------------------------------------------------------------------------------------
Health Technician............................................... 2 56.34 112.68
Pharmacist...................................................... 2 120.68 241.36
Physician....................................................... 1 193.70 193.70
-----------------------------------------------

[[Page 6056]]

Totals (For hours and labor cost)........................... 5 * 109.55 547.74
----------------------------------------------------------------------------------------------------------------
* Note: 109.55 is the average wage per hour (547.74/5) and equals total wages for five staff (547.74) divided by
total staff (5). The 109.55 is a weighted average representing the hourly wage of the team; that is a team of
five working on average at $109.55/hr. incur a total cost of $547.74. The reason a weighted average is being
used is because not all team members are working at each instant. This number is important since it enters the
summary table and is the only number that when multiplied by number of hours (5 staff * 1 hr) will give the
correct total wage. Since this number is not a total, the ``Totals'' row header has been clarified to indicate
that totals only apply ``hours'' and ``labor cost''. This is a standard practice.

Since currently 5 percent of PARBs receive an initial and second
notice (or alternate second notice), we estimated that 8 beneficiaries
(158 beneficiaries * 0.05) would receive an initial notice and 8 would
receive a second notice (or alternate second notice). At most, 8
sponsors would be responsible for sending the notices to these 8
beneficiaries. CMS estimates it will take 10 minutes (0.1667 hr) at
$56.34/hr for a health technician to send two notices (each notice
would require 5 minutes). In aggregate, CMS estimates an annual burden
for sending notices to beneficiaries of 1.3336 hours (8 beneficiaries x
0.1667 hr) at a cost of $75 (1.3336 hr x $56.34/hr).
Under Sec. 423.153(f)(15), as stated earlier, the plan sponsors
newly impacted by a mandatory DMP policy will be required to report to
CMS the outcome of case management via OMS and any associated coverage
limitation information into MARx. CMS estimates that it will take
sponsors on average 1 minute (0.0167 hr) to report this information to
OMS and MARx. In aggregate, we estimate an annual burden of 2.6386
hours (158 newly identified PARBs annually x 0.0167 hr) at a cost of
$149 (2.6386 hr x $56.34/hr).
Table H5 summarizes the burden associated with the mandatory DMP
provision.

Table H5--Summary for Mandatory DMPs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total cost
Number of Number of Time per Total Labor Total cost in
Regulatory citation Subject respondents responses response time cost ($/ in 1st year subsequent
(hr) (hr) hr) ($) years ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 423.153...................... Creating DMP................ 79 79 320 25,280 119.49 3,020,707 0
Sec. 423.153...................... Upload Model Notices........ 79 79 5 395 89.06 35,179 0
Sec. 423.153...................... Conduct Case Management..... 79 158 5 790 109.55 86,545 86,545
Sec. 423.153...................... Send Model Notices.......... 8 8 0.1667 1.3336 56.34 75 75
Sec. 423.153...................... Report to CMS............... 79 158 0.0167 2.6386 56.34 149 149
-------------------------------------------------------------------------------------
Total........................... ............................ 79 482 varies 26,469 varies 3,142,655 86,769
--------------------------------------------------------------------------------------------------------------------------------------------------------

CMS received no comments on the proposed burden estimates and
assumptions. In the proposed rule, CMS had estimated the cost
associated with case management of PARBs by combining the wage for all
of the case management team members into one unit of case management
time with the associated wage being the total of wages for the entire
case management team to carry out case management ($547.74). This was
reflected as 1 hour of burden in the proposed rule. While this
intermediate presentation did not ultimately affect the estimate of
cost associated with case management, CMS realized that this was not an
accurate representation of the true time associated with case
management. Case management of each of the 158 PARBs requires 5 hours
of work (2 from a pharmacist, 2 from a health technician and 1 from a
physician). Therefore, CMS is revising the burden calculations for case
management to reflect 5 hours of burden and calculated the case
management team's hourly wage, prorated according to the number of
hours contributed by each team member ($109.55). CMS is revising the
number of hours from 158 to 790 (158 PARBs x 5 hr) as this is more
accurate. It should be noted, however, that the total cost estimates
associated with case management does not change between the proposed
rule and this final rule. CMS is finalizing everything else without
modification.
3. ICRs Regarding Beneficiaries With History of Opioid-Related Overdose
Included in Drug Management Programs (DMPs) (Sec. 423.153)
The following changes will be submitted to OMB for approval under
control number 0938-0964 (CMS-10141). Subject to renewal, the control
number is currently set to expire on November 30, 2021.
In this rule, CMS is finalizing the proposed changes to Sec.
423.153(f)(16) to identify and report beneficiaries with a history of
opioid-related overdose through OMS to Part D plan sponsors as required
by section 2006 of the SUPPORT Act. As a result of this requirement,
additional beneficiaries will be reported by OMS as PARBs meeting CMS'
proposed criteria for having a history of opioid-related overdose. In
producing the estimates below, the burden per affected enrollee for
case management (5 hr/response), notification of enrollees (10 min/
response), and report to CMS (1 min/response) are identical with those
estimated in section VIII.B.2. (ICRs Regarding Mandatory Drug
Management Programs (DMPs) (Sec. 423.153)) of this final rule. That
is, the overall burden associated with management of each PARB is the
same whether the PARB is identified based on the current clinical
guidelines or the updated clinical guidelines which include the
criteria for identifying PARBs with a history of opioid-related
overdose. The updated clinical guideline criteria to incorporate
history of opioid-related overdose increase the total number of
beneficiaries identified and included in DMPs. The estimates that
follow outline the burden associated with these additional PARBs.

[[Page 6057]]

Model beneficiary notices \89\ provided by CMS, as well as the
required written information sent by sponsors to prescribers of PARBs
as part of the case management process, will need to be revised to
incorporate language specific to a PARB having a history of opioid-
related overdose. For the model beneficiary notices, this includes
updates to the sections defining DMPs and possible justifications for
applying a coverage limitation. Additionally, sponsors may need to
update their DMP prescriber written communications to include history
of opioid-related overdose as a possible reason for a beneficiary
meeting the OMS criteria. The changes needed to align the model
beneficiary notices and the written communication are expected to be
minimal. CMS estimates it will take no more than 1 hour at $56.34/hr
for a health technician to draft and implement such changes. In
aggregate, CMS estimates a one-time burden of 288 hours (288 parent
organizations x 1 hr/response) at a cost of $16,226 (288 hr x $56.34/
hr).
---------------------------------------------------------------------------

\89\ Notice documents available at https://www.cms.gov/Medicare/Prescription-Drug-Coverage/PrescriptionDrugCovContra/Downloads/Part-D-Drug-Management-Program-Notices-.zip.
---------------------------------------------------------------------------

Based on July 2017 through June 2018 opioid-related overdose data,
CMS's internal analysis estimates that about 18,268 enrollees meet the
criteria of an opioid-related overdose and would be PARBs. All of these
PARBs will require case management. Using the wage and cost data
outlined for the case management team in Table H4, in aggregate, CMS
estimates an annual burden of 91,340 hours (5 hr x 18,268 PARBs) at a
cost of $10,006,297 (91,340 hr x $109.55/hr).
In order to estimate the number of beneficiary notices needed to be
sent, CMS compared two populations: (1) Part D beneficiaries projected
to be potentially at-risk, by meeting the OMS criteria (which CMS
estimates as 22,516 PARBs, based on internal data); and (2)
beneficiaries with a history of opioid-related overdose (which CMS
estimates as 18,268 PARBs, based on internal data). CMS believes the
population of beneficiaries with a history of opioid-related overdose
would have a much higher rate of coverage limitations imposed by
sponsors, due to the history of overdose being the risk factor most
predictive for another overdose or suicide-related event.\90\ CMS
estimates that about 47.5 percent or 8,677 beneficiaries (18,268
beneficiaries x 0.475) of this population will receive an initial
notice from the plan sponsor, informing the beneficiary of the
sponsor's intention to limit their access to coverage of opioids and/or
benzodiazepines. Thus, the beneficiary will also receive a second or
alternate second notice informing them whether the limitation was in
fact implemented. CMS estimates it will take 10 minutes (0.1667 hr) at
$56.34/hr for a health technician to send two notices (each notice
would require 5 minutes). In aggregate, CMS estimates an annual burden
of 1,446 hours (8,677 enrollees x 0.1667 hr) at a cost of $81,468
(1,446 hr x $56.34/hr). Evaluation of the use of point-of-sale (POS)
claim edits under OMS since 2013 does not demonstrate a steady increase
or decrease in edits. The OMS and POS edit reporting systems commenced
in 2013 and 2014, and then between 2015 and 2018 the number of
beneficiaries with opioid POS claim edits only ranged from 1,152 to
1,351 annually. As such, given that the vast majority of Part D
enrollees are in a plan already offering a DMP, including the majority
of Part D enrollees with a history of opioid-related overdose, CMS does
not anticipate major shifts in the baseline average number of annual
POS edits (and related initial notices). This stability in the annual
number of ARBs and related notices to date appears largely unaffected
by the baseline population of identified PARBs. However, CMS recognizes
that this change is projected to approximately double the number of
beneficiaries CMS identifies to sponsors as PARBs.
---------------------------------------------------------------------------

\90\ Bohnert KM, Ilgen MA, Louzon S, McCarthy JF, Katz IR.
Substance use disorders and the risk of suicide mortality among men
and women in the US Veterans Health Administration. Addiction. 2017
Jul; 11/2(7):1193-1201. doi: 10.1111/add.13774.
---------------------------------------------------------------------------

With respect to the reporting of DMP data to CMS for PARBs
identified based on history of opioid-related overdose, CMS estimates
it will take sponsors (on average) 1 minute (0.0167 hr) at $56.34/hr
for a health technician to report in OMS and/or MARx the outcome of
case management and any applicable coverage limitations. In aggregate,
CMS estimates an annual burden of 305 hours (18,268 PARBs x 0.0167 hr)
at a cost of $17,184 (305 hr x $56.34/hr).
Table H6 summarizes the burden associated with the inclusion of
PARBs with a history of opioid-related overdose in DMPs.

Table H6--Summary for Identification of Additional PARBs Based on History of Opioid-Related Overdose
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total cost
Number of Number of Time per Total Labor Total cost in
Regulatory citation Subject respondents responses response time cost ($/ in 1st year subsequent
(hr) (hr) hr) ($) years ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 423.153(f)(16)............... Revise Model Notices........ 288 288 1 288 56.34 16,226 0
Sec. 423.153(f)(16)............... Conduct Case Management..... 288 18,268 5 91,340 109.55 10,006,297 10,006,297
Sec. 423.153(f)(16)............... Send Model Notices.......... 288 8,677 0.1667 1,446 56.34 81,468 81,468
Sec. 423.153(f)(16)............... Reporting to CMS............ 288 18,268 0.0167 305 56.34 17,184 17,184
-------------------------------------------------------------------------------------
Total........................... ............................ 288 45,501 Varies 93,379 Varies 10,121,175 10,104,949
--------------------------------------------------------------------------------------------------------------------------------------------------------

We received no comments on our proposed burden estimates and
assumptions. In the proposed rule, CMS had estimated the cost
associated with case management of PARBs by combining the wage for all
of the case management team members into one unit of case management
time with the associated wage being the total of wages for the entire
case management team to carry out case management ($547.74). This was
reflected as 1 hour of burden in the proposed rule. While this
intermediate presentation did not ultimately affect the estimate of
cost associated with case management, CMS realized that this was not an
accurate representation of the true time associated with case
management. Case management of each of the 18,268 PARBs identified
based on the definition of opioid-related overdose requires 5 hours of
work (2 from a pharmacist, 2 from a health technician and 1 from a
physician). Therefore, CMS is revising the burden calculations for case
management to reflect 5 hours of burden and calculated the case
management team's hourly wage, prorated according to the number of

[[Page 6058]]

hours contributed by each team member ($109.55). CMS is revising the
number of hours from 18,268 to 91,340 (18,268 PARBs x 5 hr) as this is
more accurate. It should be noted, however, that the total cost
estimates associated with case management does not change between the
proposed rule and this final rule. We are finalizing everything else
without modification.
4. ICRs Regarding Information on the Safe Disposal of Prescription
Drugs (Sec. 422.111)
Section 6103 of the SUPPORT Act amended section 1852 of the Act by
adding a new subsection (n). Section 1852(n)(1) requires MA plans to
provide information on the safe disposal of prescription drugs when
furnishing an in-home health risk assessment. Section 1852(n)(2)
requires CMS to establish, through rulemaking, criteria that we
determine appropriate with respect to information provided to an
individual during an in-home health risk assessment to ensure that he
or she is sufficiently educated on the safe disposal of prescription
drugs that are controlled substances. In order to implement the
requirements of section 1852(n)(1) for MA plans, CMS revised the Sec.
422.111, Disclosure Requirements, to add a paragraph (j), which would
require MA plans that furnish an in-home health risk assessment on or
after January 1, 2022, to include both verbal (when possible) and
written information on the safe disposal of prescription drugs that are
controlled substances in such assessment. Consistent with section
1852(n)(1), we proposed that information must include details on drug
takeback programs and safe in-home disposal methods.
In educating beneficiaries about the safe disposal of medications
that are controlled substances, we proposed that MA plans would
communicate to beneficiaries in writing and, when feasible, verbally.
We proposed that MA plans must do the following to ensure that the
individual is sufficiently educated on the safe disposal of controlled
substances: (1) Advise the enrollee that unused medications should be
disposed of as soon as possible; (2) advise the enrollee that the US
Drug Enforcement Administration allows unused prescription medications
to be mailed back to pharmacies or other authorized sites using
packages made available at such pharmacies or other authorized sites;
(3) advise the enrollee that the preferred method of disposing of
controlled substances is to bring them to a drug take back site; (4)
identify drug take back sites that are within the enrollee's MA plan
service area or that are nearest to the enrollee's residence; and (5)
instruct the enrollee on the safe disposal of medications that can be
discarded in the household trash or safely flushed. Although we did not
propose to require MA plans to provide more specific instructions with
respect to drug disposal, we did propose that the communication to
enrollees would provide the following additional guidance: If a drug
can be safely disposed of in the enrollee's home, the enrollee should
conceal or remove any personal information, including Rx number, on any
empty medication containers. If a drug can be discarded in the trash,
the enrollee should mix the drugs with an undesirable substance such as
dirt or used coffee grounds, place the mixture in a sealed container
such as an empty margarine tub, and discard in the trash.
We also proposed that the written communication include a web link
to the information available on the United States Department of Health
and Human Services website identifying methods for the safe disposal of
drugs available at the following address: https://www.hhs.gov/opioids/prevention/safely-dispose-drugs/index.html. We noted in our proposed
rule that the safe disposal of drugs guidance at this website can be
used for all medications not just medications that are controlled
substances. We stated in our proposed rule that we believed that plan
communications consistent with the standard on this website would
furnish enrollees with sufficient information for proper disposal of
controlled substances in their community.
The statute specifically limited this educational requirement to
those situations when MA plans elect to perform in-home health risk
assessments (HRAs) of MA enrollees. We note that while SNP plans are
required to perform enrollee health risk assessments all other MA plan
types are not required to perform health risk assessments. In addition,
SNPs may conduct HRAs over the phone. Since the performance of in-home
heath risk assessment is not a specific requirement for MA plans we do
not track or have data on the number of in-home HRAs that MA plans
elect to perform. As we will further discuss while there is a burden
imposed by the law and our regulation MA plans can almost entirely
avoid this burden by choosing to not perform an in-home HRA. As
previously discussed the burden for an MA plan when electing to conduct
an in-home HRA is that consistent with CMS guidelines as previously
described it must develop written guidance for the enrollee and also
furnish when possible a verbal summary of the main options for the safe
disposal of unused controlled medications.
5. ICRs Regarding Eligibility for Medication Therapy Management
Programs (MTMPs) (Sec. 423.153)
The following changes will be submitted to OMB for approval as a
reinstatement under control number 0938-10396 (CMS-1154). We received
one comment in response to our proposed changes. A summary of this
comment, along with our response, is provided below.
In developing the burden estimates for this final rule, we removed
the exclusion of beneficiaries enrolled in the Part D Enhanced MTM
model because it will end before 2022, and the deadline for plans to
come into compliance with the new Part D MTM program requirements
finalized in this rule is January 1, 2022.
Since the inception of the Medicare Part D benefit, the Act has
required that all Part D plans offer a MTM program to eligible
beneficiaries. The Act also established criteria for targeting
beneficiaries for MTM program enrollment and a minimum set of services
that must be included in MTM.
Under Sec. 423.153(d), all MTM enrollees must be offered a
Comprehensive Medication Review (CMR) at least annually and Targeted
Medication Reviews (TMRs) no less than quarterly. A CMR is an
interactive, person-to-person, or telehealth consultation performed by
a pharmacist or other qualified provider that includes a review of the
individual's medications and may result in the creation of a
recommended medication action plan. An individualized, written summary
in CMS's Standardized Format must be provided following each CMR. The
SUPPORT Act expanded the population of beneficiaries that must be
targeted for Part D MTM, and added a requirement that information on
the safe disposal of prescription drugs that are controlled substances
be furnished to all MTM program enrollees. This final rule modifies our
Part D regulations to incorporate those changes to the MTM
requirements. The new requirements will affect the number of
beneficiaries enrolled in MTM programs and potentially some of the
content for the Standardized Format for the CMR and, therefore, the
burden. In this regard, we are estimating burden for:
a. The expanded population of beneficiaries that must be targeted
for enrollment in MTM programs;
b. Mailing safe disposal information as part of the CMR summary;
and

[[Page 6059]]

c. Mailing safe disposal information once a year as part of a TMR
or other MTM correspondence or service.
a. The Expanded Population of Beneficiaries That Must Be Targeted for
Enrollment in MTM Programs
We estimate that in 2022 there will be 50,684,424 beneficiaries
enrolled in Part D plans with MTM programs (line 1 of Table H7).
According to internal data, we estimate that section 6064 of the
SUPPORT Act requires targeting 10,366 ARBs for MTM in 2022 (line 2).
Based on our experience with the MTM program, we estimate that 71.8
percent of beneficiaries targeted for MTM under the existing
requirements will accept the offer of a CMR (line 3). This number has
been updated based on more recent data which became available after the
proposed rule was published. We assume this percentage will also apply
to beneficiaries who will be enrolled in MTM programs under the new
criteria; therefore, 7,443 ARBs (line 4) (10,366 targeted ARBs x 0.718)
are expected to accept a CMR under the new provision.
To estimate the burden on Part D plans of furnishing CMRs to the
7,443 ARBs who would be expected to accept the offer of a CMR under the
final policy, we separately calculate the labor cost of preparing the
CMR and packaging it, and the non-labor cost of mailing.
To estimate the labor cost of preparing the CMR, we note that the
CMR is a clinical consultation service and therefore must be
administered by a pharmacist, physician, nurse practitioner, or other
qualified provider. Currently, 100 percent of MTM programs employ
pharmacists to conduct CMRs, which is the basis of the hourly rate
estimate. Stakeholder comments that were received outside of this
rulemaking effort and responded to in a previous collection of
information request indicate that an average CMR requires 40 minutes or
0.6667 hours (line 5) at $120.68/hr (line 7) for a pharmacist to
complete. This results in an annual labor burden of 4,962 hours (line
6) (7,443 ARBs x 0.6667 hr) at a cost of $598,814 (line 8) (4,962 hr x
$120.68/hr).
To estimate the cost of mailing, we note that paper costs $2.50 per
ream (500 sheets) of paper (at $0.005 per sheet) and toner costs $50.00
per cartridge and lasts for 10,000 sheets (at $0.005 per sheet). We
estimate that the average CMR summary will be 6 pages in length based
on revisions which would streamline the Standardized Format; therefore,
the paper and printing costs for each CMR summary will be $0.06. Since
CMR summaries contain private health information, they must be mailed
first class, for which postage costs $0.70 per mailing. Based on
industry standards, we assume envelopes cost $0.08 each, while folding
and stuffing costs about $0.08 per document. We therefore estimate the
non-labor cost to print and mail a CMR summary in CMS's Standardized
Format will be $0.92 per mailing (line 9). This results in a cost of
$6,848 (line 10) ($0.92 cost per mailing x 7,443 ARBs).
Therefore, we estimate that the total annual cost of providing CMRs
to 7,443 ARBs is $605,662 (line 11) ($598,814 labor costs + $6,848 non-
labor mailing costs). These figures and calculations are summarized in
Table H7. The Line ID column contains identifiers for each row
following the flow of logic and calculations. Where applicable, the
calculations are described in the ``Source'' column.

Table H7--Estimated Burden of Targeting ARBs for MTM
----------------------------------------------------------------------------------------------------------------
Line ID Item Number Source
----------------------------------------------------------------------------------------------------------------
(1)........................ Part D enrollees in 2022..... 50,684,424 Internal CMS Data.
(2)........................ Part D enrollees expected to 10,366 Internal CMS data.
meet the ARB criteria.
(3)........................ Percent of enrollees under 71.8% Internal CMS data.
the existing program
targeted for a CMR who
accept the offer.
(4)........................ ARBs targeted for MTM 7,443 (2) * (3).
expected to accept CMR offer.
(5)........................ 40 minutes is the industry 0.6667 Industry data.
standard for conducting a
CMR.
(6)........................ Number of hours needed to 4,962 (4) * (5).
fulfill the preparation of
CMRs under the new provision
including stuffing and
mailing.
(7)........................ Wage for a pharmacist to $120.68 BLS Wage data.
prepare a CMR.
(8)........................ Cost to send CMRs to ARBs $598,814 (6) * (7).
under the new provision.
(9)........................ Non-labor cost of mailing one $0.92 See narrative.
CMR: 6 pages * ($2.50 * 500
cost per page + $50/10000
cost of toner) + $0.08
stuffing + $0.08 envelope +
$0.70 for postage.
(10)....................... Non-labor cost of mailing.... $6,848 (8) * (9).
(11)....................... Total cost for preparing and $605,662 (8) + (10).
mailing the CMR to ARBs.
----------------------------------------------------------------------------------------------------------------

b. Mailing Safe-Disposal Information as Part of the CMR Summary
Under the revisions to Sec. 423.153(d)(1) adopted in this final
rule, Part D plans will be required to provide all MTM enrollees with
information about safe disposal of prescription medications that are
controlled substances. The provision will allow plans to mail the newly
required safe disposal information either as part of the CMR summary, a
TMR, or other MTM correspondence or service. We estimate the safe
disposal information will take one page, may include personal
information, and can be mailed out as a standalone correspondence if
not included in the annual CMR.
However, for those enrollees receiving a CMR, we believe it will be
most economical to include the one page with the already existing CMR
summary. We solicited comments regarding this assumption, but did not
receive any feedback. Therefore, we are estimating that the cost of
mailing one extra page per enrollee is $0.01 (line 21 ([1 page x $2.50/
ream of 500 sheets] + [1 page x $50 toner/10,000 sheets]). We note that
the envelope to mail the CMR is already being paid for under current
regulations (although folding and stuffing of 7 pages versus 6 pages
might require some extra effort, we do not believe this will raise the
$0.08 current cost estimate and we did not receive any comments on this
assumption); the $0.70 first class postage for 2 ounces is sufficient
for 7 pages (there would be no increase in postage).
To estimate total mailing cost, we add the estimates of (i) total
number of Part D enrollees who are not ARBs who will receive a CMR
under the existing criteria and (ii) total number of ARBs who will
receive a CMR under the new criteria we are adopting in this final
rule.
As shown in Table H7, lines (1) and (2), we estimate that in 2022
there will be 50,684,424 Part D enrollees and, as previously
determined, 10,366 of those

[[Page 6060]]

will meet the new MTM targeting criteria, leaving 50,674,058 Part D
enrollees (Table H8, line 14) (50,684,424 Part D enrollees minus 10,366
enrollees meeting the ARB criteria) that must be targeted for MTM if
they meet the existing criteria. Our internal data shows that 6.54
percent (line 15) of Part D enrollees will be targeted for MTM programs
under the existing criteria. Hence, this leaves 3,314,083 Part D
enrollees (0.0654 * 50,674,058) who will be targeted for MTM under the
existing criteria (line 16). Of the 3,314,083 targeted enrollees, as
stated previously, based on internal CMS data, we estimate 71.8 percent
will accept the annual CMR offer (line 17). Therefore 2,379,512
beneficiaries (3,314,083 * 0.718) will receive a CMR under the existing
criteria (line 18).
Hence, in 2022 a total of 2,386,955 enrollees will receive a CMR
under the existing and new criteria (7,443 ARBs under the new criteria
+ 2,379,512 under the existing criteria) (line 20), at a total non-
labor mailing cost of $23,870 (2,386,955 enrollees x $0.01 mailing cost
per enrollee) to add an additional page containing safe disposal
information to all CMRs (line 22).
The figures and calculations are summarized in Table H8.

Table H8--Estimated Burden for Mailing Safe Disposal Information as Part of the CMR
----------------------------------------------------------------------------------------------------------------
Line ID Item Number Source
----------------------------------------------------------------------------------------------------------------
(12)....................... Part D enrollees in 2022..... 50,684,424 (1).
(13)....................... Enrollees estimated to meet 10,366 (2).
ARB criteria under the new
provision.
(14)....................... Part D enrollees who do not 50,674,058 (12)-(13).
meet ARB criteria.
(15)....................... Percentage of Part D 6.54% Internal CMS data.
enrollees who meet the
existing criteria for MTM.
(16)....................... Estimated number of Part D 3,314,083 (14) * (15).
enrollees not meeting ARB
criteria who are targeted
for MTM under the existing
criteria.
(17)....................... Percent of enrollees under 71.8% Internal CMS data.
the current program targeted
for an MTM who accept the
offer.
(18)....................... Estimated number of Part D 2,379,512 (16) * (17).
enrollees under the existing
criteria who will receive a
CMR.
(19)....................... Estimated number of Part D 7,443 (4).
enrollees under the new
provision meeting ARB
criteria who will elect to
receive a CMR.
(20)....................... Total number of Part D 2,386,955 (18) + (19).
enrollees (under the
existing and new criteria)
who will receive a CMR.
(21)....................... Non-labor costs of one extra $0.01 See narrative.
page (2.50/500) and toner
for one page ($50/10000).
(22)....................... Estimated cost of mailing $23,870 (20) * (21)
safe disposal information
with a CMR.
----------------------------------------------------------------------------------------------------------------

c. Mailing Safe Disposal Information Once a Year as Part of a TMR or
Other MTM Correspondence or Service
All targeted beneficiaries who have not opted out of the MTM
program must receive TMRs at least quarterly, and we are allowing Part
D sponsors the flexibility of choosing whether to include safe disposal
information in the CMR, through a TMR or other MTM correspondence or
service at least once annually. Since we assume that 71.8 percent of
targeted enrollees accept an offer of a CMR (Table H7, line 3), it
follows that 28.2 percent (100 percent-71.8 percent) (Table H9, line
26) of Part D enrollees who are targeted for enrollment in an MTM
program refuse the CMR offer but do not opt out of the MTM program
completely. As discussed previously, 10,366 ARBs (Table H7, line (2))
under the new criteria and 3,314,083 enrollees (Table H8, line (16))
under the existing criteria, for a total of 3,324,449 enrollees
(3,314,083 + 10,366) (line 25) will be targeted to receive a CMR.
Therefore 937,495 enrollees (3,324,449 total enrollees x 0.282 who
refuse a CMR) would need to be mailed the safe disposal information as
part of a TMR or other MTM correspondence or service (line 27). For
purposes of calculating the burden, we are assuming that any safe
disposal information that is not included in a CMR is either (i) being
mailed in a TMR, which may be as short as one page and may contain
private health information or (ii) is mailed as a stand-alone document
which does not contain any private health information. For purposes of
impact, (i) if one additional page is included in the TMR, then there
is no additional postage; (ii) if the safe disposal information is
mailed separately, there would be no private health information, and
the burden would be the cost of one page plus bulk postage. Due to a
lack of data in regard to what percentage of safe disposal information
will be mailed as a CMR, TMR, or other MTM correspondence or service,
we are assuming the maximum amount, which is that all safe disposal
information not sent with a CMR will be one page that is mailed
separately using bulk postage. The cost to mail one page of safe
disposal information is $0.01095 per enrollee if the letter does not
contain private health information and thus bulk mailing is used (line
28) [1 page x $2.50 per ream of paper/500 sheets] + [1 page x $50 per
toner/10,000 pages] + [$0.19/200 items]). Therefore, we estimate that
the cost of mailing safe disposal information to those MTM enrollees
who do not receive it in a CMR summary is $10,266 (line 29) (937,495
enrollees x $0.01095 mailing cost per page).
These calculations are summarized in Table H9.

Table H9--Burden of Mailing Safe Disposal Information to Enrollees Not Receiving a CMR
----------------------------------------------------------------------------------------------------------------
Line ID Item Number Source
----------------------------------------------------------------------------------------------------------------
(23)....................... The number of Part D 3,314,083 (16).
enrollees who meet the
existing criteria for MTM.
(24)....................... The number of Part D 10,366 (2).
enrollees who meet the
criteria for ARB under the
new provision.
(25)....................... The number of Part D 3,324,449 (23) + (24).
enrollees meeting existing
or new criteria for being
targeted for a CMR.
(26)....................... The percentage of enrollees 28.2% 100%-(17).
estimated to refuse the
offer of a CMR (100-87%).

[[Page 6061]]

(27)....................... Number of enrollees to whom 937,495 (25) * (26).
safe disposal information
must be mailed even though
they don't receive a CMR.
(28)....................... Non-labor cost of mailing a $0.01095 See narrative.
one page correspondence (at
$2.50/500 cost per page +
$50/10,000 cost of toner for
one page + $0.19/200 cost of
bulk mailing).
(29)....................... Cost of mailing safe disposal $10,266 (27) * (28).
information to those who do
not receive a CMR.
----------------------------------------------------------------------------------------------------------------

d. Summary for Eligibility for MTMPs and Information on the Safe
Disposal of Prescription Drugs
As discussed in section (b) (Table H8, line (22)), we estimate a
cost of $23,870 for mailing safe disposal information to those
beneficiaries receiving a CMR (under the assumption that the plan will
bundle the safe disposal and CMR). In section (c) (Table H9, line 29),
we estimate a total cost of $10,266 for mailing safe disposal
information to those beneficiaries who do not receive a CMR. Thus, the
total cost of mailing safe disposal information to all Part D
beneficiaries enrolled in MTM programs is estimated to be $34,136. This
is summarized in Table H10.

Table H10--Burden of Mailing Safe Disposal Information to Beneficiaries Enrolled in MTM Programs
----------------------------------------------------------------------------------------------------------------
Line ID Item Number Source
----------------------------------------------------------------------------------------------------------------
(30)....................... Estimated cost of mailing $23,870 (22).
safe disposal items to those
receiving a CMR (under
assumption that the plan
will bundle the safe
disposal and CMR).
(31)....................... Cost of mailing safe disposal 10,266 (29).
to those who do not receive
a CMR.
(32)....................... Total cost of mailing safe $34,136 (30) + (31).
disposal information.
----------------------------------------------------------------------------------------------------------------

The total additional annual cost for 288 parent organizations to
provide CMRs to ARBs and to send information on safe disposal of
prescription medications that are controlled substances to all MTM
program enrollees is $663,668. Table H11 provides a compact summary of
the bottom lines of impact by activity.

Table H11--Summary for Eligibility for MTMPs (Sec. 423.153) and Information on the Safe Disposal of Prescription Drugs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non
Total labor
Number of Number of Time per annual cost Labor cost Total annual
Regulatory citation Subject respondents responses response time for ($/hr) cost ($)
(hr) (hr) mailing
($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 423.153...................... Targeting ARBs for CMR...... 288 7,443 0.6667 4,962 N/A 120.68 598,814
Sec. 423.153...................... Mailing ARBs CMR............ 288 7,443 N/A N/A 6,848 N/A 6,848
Sec. 423.153...................... Safe Disposal Page in CMR... 288 2,386,995 N/A N/A 23,870 N/A 23,870
Sec. 423.153...................... Safe Disposal Page as part 288 937,495 N/A N/A 10,266 N/A 10,266
of TMR or other MTM
correspondence or service.
-------------------------------------------------------------------------------------
Total........................... ............................ 288 3,339,376 Varies 4,962 40,984 Varies 639,798
--------------------------------------------------------------------------------------------------------------------------------------------------------

As indicated above, one PRA-related comment was received. The
following summarizes the comment and sets out our response.
Comment: CMS received a comment stating that the percent of Part D
enrollees who accept the offer of a CMR (87 percent) was overestimated.
Response: We appreciate the comment and have updated our estimate
based on more recent data. We are now estimating the acceptance rate of
a CMR to be closer to 71.8 percent in 2022.
As previously stated, we updated our estimates to no longer exclude
beneficiaries enrolled in the Part D Enhanced MTM model because the
model will end before 2022, and the deadline for plans to come into
compliance with the new Part D MTM program requirements finalized in
this rule is January 1, 2022. We also updated the estimates for
enrollment and CMR rates based on more current data. We did not receive
any comments in response to our estimates regarding the cost of mailing
a CMR with information on safe disposal of prescription drugs, nor did
stakeholders object to our assumption that the distribution of
information on safe disposal of prescription drugs would be most
economically distributed as part of the CMR summary.
6. ICRs Regarding Beneficiaries' Education on Opioid Risks and
Alternative Treatments (Sec. 423.128)
The following changes will be submitted to OMB for approval under
control number 0938-0964 (CMS-10141). Subject to renewal, the control
number is currently set to expire on November 30, 2021.
With regard to our proposed changes, comments were received and are
responded to below.
In this rule, Sec. 423.128 will require Part D sponsors to
disclose, beginning in 2022, information about the risks of prolonged
opioid use to enrollees. In addition to this information, Part D
sponsors of MA-PDs must disclose coverage of non-pharmacological
therapies, devices, and non-opioid medications under their plans and
under Medicare Part C. Part D sponsors of PDPs must disclose coverage
of non-pharmacological therapies, devices, and non-opioid medications
under their plans and under Medicare Parts A and B.
Before Part D sponsors can send this information, they would have
to create

[[Page 6062]]

and upload materials into their internal systems. Based on 2019 CMS
data, there are 608 Part D legal entities (sponsors) with which CMS
contracts, associated with 288 parent organizations that these
contracts identified in their initial applications, which is confirmed
annually. Based on our knowledge of the way parent organizations and
their Part D legal entities are structured, we believe it is
appropriate to estimate burden at the parent organization level, as it
is a closer reflection of the number of systems that will need to be
updated versus at the contract level.
We estimate that 288 Part D sponsors would be subject to this
requirement, based on 2019 data. We estimate a one-time burden of 2
hours at $120.68/hr for a pharmacist to develop the materials(s) to be
sent to the beneficiaries. In aggregate, we estimate a one-time burden
of 576 hours (288 parent organizations x 2 hr) at a cost of $69,512
(576 hr x $120.68/hr). Although there might be the need for updates in
future years (if opioid risk and/or coverage information changes), we
believe the burden to making such updates to existing materials will be
negligible as the changes will be minor and may only occur in some
future years. Hence, the more accurate approach adopted here is to
estimate this as a one-time update.
We also estimate that it will take on average 2 hours at $89.06/hr
for a computer programmer to upload the information into the systems.
This would result in a one-time burden of 576 hours (2 hr x 288 parent
organizations) at a cost of $51,299 (576 hr x $89.06/hr). Once the
information is uploaded into the parent organization's database, we
anticipate no further burden associated with this task, as the process
will be automated after the initial upload with the same information on
subsequent materials that are sent. The automation will include the
sending of information to those enrollees who wish to receive an
electronic copy. The automation will also cover updates in future years
as the plan enrollment changes.
We proposed that Part D sponsors be permitted to disclose the
opioid and coverage information in electronic form. Some enrollees
preferred electronic notification and some preferred paper mailing. We
had no way of estimating the proportions for each preference, but our
experience suggests that most enrollees expect a paper mailing.
Therefore, we assumed 75 percent (the average of 50 percent and 100
percent) would prefer a paper mailing, while the remaining 25 percent
would prefer electronic notification.
There are several Part D enrollee groups presented in section
III.D. of this final rule that we suggested could be sent the required
information and thus, several approaches to estimate the burden. These
enrollee group estimates ranged from sending the information to
2,698,064 to 46,759,911 enrollees.
In making estimates on the burden of sending out notices, we
assumed that the IT systems of the plan would generate and mail the
documents once a template is produced. Thus, the only costs are paper,
toner, and postage. We also assumed one page per notice. We therefore
estimate:
Cost of paper: Typical wholesale costs of paper are
approximately $2.50 for a ream of 500 sheets. The cost for one page is
$0.005 ($2.50/500).
Cost of toner: Toner costs can range from $50 to $200 and
each toner cartridge can last from 4,000 to 10,000 sheets of paper. In
this rule, we assume a cost of $50 for 10,000 pages. In that regard,
the cost per page is $0.005 ($50/10,000 pages).
Cost of postage: Currently, the bulk postage rates are
$0.19 per 200 pages. The cost per page is $0.00095 ($0.19/200 pages).
Thus, the aggregate cost per page is $0.01095 ($0.005 for paper +
$0.005 for toner + $0.00095 for postage). Note that mailing costs are
annual while the programming updates and the development of materials
are first-year costs with minimal or no costs in future years. The
product of the cost per page (at $0.01095) times the number of
enrollees (35,069,933) plus the one time first year costs $120,811
($51,299 + $69,512) equals $504,827 ([$0.01095 x 35,069,933 enrollees]
+ $120,811) as shown in Table H12.
[GRAPHIC] [TIFF OMITTED] TR19JA21.042

[[Page 6063]]

The following summarizes the PRA-related public comments that we
received and sets out our response to those comments. We are finalizing
our proposed provisions, burden estimates, and assumptions without
change.
Comment: We received two comments that suggested a specific subset
to send this information to. The commenters also recommended focusing
on any beneficiary who received an opioid fill in the last 7 days, but
also appreciated the flexibility provided in this rule.
Response: We thank the commenters for their feedback. Although some
commenters offered their opinion on the subset that might be the best
group to receive the information, there was no consensus to inform
sponsors' ultimate decisions on a specific enrollee population. Because
there was no consensus, CMS will continue to maintain flexibility for
plans and therefore are not committing to any specific approach.
7. ICRs Regarding Suspension of Pharmacy Payments Pending
Investigations of Credible Allegations of Fraud and Program Integrity
Transparency Measures (Sec. Sec. 405.370, 422.500, 422.503, 423.4,
423.504, and 455.2)
The following changes will be submitted to OMB for approval under
control number 0938-1383 (CMS-10724) for Medicare Advantage Plans and
0938-1262 (CMS-10517) for Part D Plans.
Sections 422.503(b)(4)(vi)(G)(4) and 423.504(b)(4)(vi)(G)(4) will
require the MA organization or Part D plan sponsor, respectively, to
have procedures to identify and report to CMS or its designee: (1) Any
payment suspension implemented by a plan, pending investigation of
credible allegations of fraud by a pharmacy, which must be implemented
in the same manner as the Secretary does under section 1862(o)(1) of
the Act; and (2) any information related to the inappropriate
prescribing of opioids and concerning investigations, credible evidence
of suspicious activities of a provider of services (including a
prescriber) or supplier, and other actions taken by the plan.
CMS initiated a reporting pilot program in December 2016 with six
plan sponsors to test the effectiveness of mandatory reporting of
fraud, waste, and abuse. The pilot collected all external or internal
Medicare complaints and referrals submitted to the plan's Special
Investigations Unit (SIU). The data collected as part of the pilot
program was time limited, but broader than the scope of reporting
required by sections 2008 and 6063 of the SUPPORT Act. The scope of
that pilot tested the reporting of all types of health care fraud,
waste, and abuse that the plan sponsors could encounter in their
operations and, therefore, could be utilized as a reasonable estimate
of burden involved with the quarterly plan reporting to CMS that CMS
will use to implement sections 2008 and 6063 of the SUPPORT Act. The
pilot program analyzed information that was reported from five of six
plan participants on time spent collecting three quarterly data
submissions. Based on the results of the pilot study, if every Part C
plan reported, we estimate it will take 605 MA plans 149,435 hours (605
plans * 247 hr/plan) at a cost of $13,730,088 (149,435 hr * $91.88/hr
for a management analyst using 2019 BLS wage estimates) to fulfill the
reporting and procedure preparation in the first year as shown in Table
H13. In subsequent years, we estimate an annual burden of 94,380 hours
(605 plans *156 hr/plan) at a cost of $8,671,634 (94,380 hr * $91.88/
hr) as shown in Table H13.
Based on the results of the pilot study, if every Part D plan
reported, we estimate it will take 63 Part D plans 15,561 hours (63
plans * 247 hr/plan) at a cost of $1,429,745 (15,561 hr * $91.88/hr) to
fulfill the reporting and procedure preparation in the first year as
shown in Table H14. In subsequent years, we estimate an annual burden
of 9,828 hours (63 plans * 156 hr/plan) at cost of $902,997 (9,828 hr *
$91.88/hr) as shown in Table H14.
The first-year burden consist of the time and effort needed to
prepare the procedures and report the inappropriate prescribing
information. Subsequent effort consists solely of the ongoing time and
cost to report the inappropriate prescribing information to CMS. We
could not anticipate how many plans will need to report any payment
suspension to pharmacies in the plans' network or information on
inappropriate opioid prescribing to CMS.
[GRAPHIC] [TIFF OMITTED] TR19JA21.043

[[Page 6064]]

[GRAPHIC] [TIFF OMITTED] TR19JA21.044

We received no comments on our proposed provisions, burden
estimates, and assumptions. Consequently, we are finalizing without
change.
8. ICRs Regarding Beneficiary Real Time Benefit Tool (RTBT) (Sec.
423.128)
The following changes will be submitted to OMB for approval under
control number 0938-0763 (CMS-R-262). Subject to renewal, the control
number is currently set to expire on April 30, 2022.
As described in section IV.G. of this final rule, the new
paragraphs at Sec. 423.128(d)(4) and (5) require each Part D plan to
implement a beneficiary RTBT no later than January 1, 2023. This tool
will allow enrollees to view the information included in the prescriber
RTBT system which includes complete, accurate, timely, and clinically
appropriate patient-specific real-time formulary and benefit
information (including cost, formulary alternatives, and utilization
management requirements). Plans will be able to use existing secure
patient portals to fulfill this requirement, to develop a new portal,
or to use a computer application.
In estimating the cost impact of this provision it is important to
bear in mind that the rewards and incentives are optional for each Part
D sponsor. Additionally, based on our conversations with the industry,
participation on industry workgroups, and research, we understand that
most Part D plans have already created beneficiary portals that satisfy
existing privacy and security requirements. We believe that the few
plans that have yet to create a portal or web application will have one
in place by January 1, 2023. Finally, some Part D Sponsors who wish to
use such a portal may find it cheaper to rent an existing portal from a
third party vendor. Consequently, the impacts below are maximum
impacts; they overestimate the impact of the provision by assuming that
all Part D sponsors must create a completely new RTBT.
We estimate it will take 104 hours at $89.06/hr for a computer
programmer to program this information into the beneficiary portal and
an additional 52 hours to put this information into a user interface
that is easily understood by enrollees. The time estimates are based on
consultation with the healthcare industry and their IT staff to
determine the time that it takes for minor changes in programming.
Thus, the burden for implementing RTBT is 44,928 hours (288
organizations * 156 hr) at a cost of $4,001,288 (44,928 hr * $89.06/
hr).
This is a maximum one-time first year cost. We are not estimating
ongoing maintenance costs because: (1) Many plan sponsors already have
a beneficiary portal and (2) the total maintenance costs per plan
sponsor tend to be stable from year because although there is variation
in what software needs maintenance, some software needs more usage,
some needs less, and some needs routine. The average absorbs and
stabilizes this variability. Adding one more software cost that is not
excessively above the average would not change that average beyond
rounding or uncertainty error.
We next estimated the cost of implementing the rewards and
incentives program for use of RTBT. We estimated three items: (A)
Development of policies for the new program, (B) updating of systems,
and (C) maintaining the program. We solicited stakeholder feedback on
all of our proposed assumptions. We informally questioned stakeholders
who believe that only 10 percent of parent part D sponsors would create
such a program. Since there are 288 Part D sponsors we expect 29 (288 *
0.10) organizations to develop and use a reward and incentive program.
(A) Development of policy: We estimate that for each parent
organization an operations manager and compliance officer working
together at a combined hourly wage of $188.36/hr ($118.30/hr + $70.06/
hr) would take 40 hours. Therefore, the impact is 1,160 hours (40 hr *
29 parent organizations) at a cost of $218,498 (1,160 hr * $188.36/hr).
(B) Since systems already exist to collect enrollee data, they will
only have to be updated to collect data on use of RTBT and most of this
work will be done when creating the RTBT. We therefore estimate, per
parent organization, an extra 40 hours for a computer programmer.
Therefore, the impact is 1,160 hours (40 hr * 29 organizations) at a
cost of $103,310 (1,160 hr * $89.06/hr).
(C) We estimate that 2 administrative support workers each working
at $36.82/hr will take 15 hours every month to maintain the program.
The impact is 10,440 hours (15 hr/month * 12 months * 2 workers * 29
organizations) at a cost of $384,401 (10,440 hr * $36.82/hr).
The aggregate impact for implementing the rewards and incentives
for RTBT among those Part D sponsors who wish to do so is 57,688 hours
(44,928 hr + 1,160 hr + 1,160 hr

[[Page 6065]]

+ 10,440 hr) at a cost of $4,707,497 ($4,001,288 + $218,498 + $103,310
+ $384,401).
Since plans are in the best position to estimate their
implementation costs, we solicited comment on the accuracy of this
burden estimate and on any measures that CMS can take to decrease the
impact of this provision, while maintaining its utility for enrollees.
In addition, because plans are in the best position to estimate any
information collection implications, since they will be the
stakeholders implementing this provision, we solicited comment on any
other potential information collection implications. We received no
comments on our proposed provisions and burden estimates. Consequently,
we are finalizing them without change.
9. ICRs Regarding Establishing Pharmacy Performance Measure Reporting
Requirements (Sec. 423.514)
The following changes will be submitted to OMB for approval under
control number 0938-0992 (CMS-10185). Subject to renewal, the control
number is currently set to expire on December 31, 2021. It was last
approved on December 7, 2018, and remains active.
This rule amends Sec. 423.514(a) by giving CMS the authority to
collect Part D sponsors' pharmacy performance measures data that is
used to evaluate pharmacy performance, as established in their network
pharmacy agreement. Given the growing practice of Part D sponsors
measuring the performance of pharmacies that service Part D
beneficiaries to determine the final cost of a drug under Part D, this
reporting requirement will enable CMS to monitor the impact of these
recoupment practices. We estimate a collection of less than 15 data
elements. As noted in section IV.G of this final rule, the Part D
reporting requirements data elements, consistent with our standard,
will be specified through the standard non-rule PRA process after
publication of this final rule. The standard non-rule process includes
the publication of 60- and 30-day Federal Register notices. At that
time, the data elements, timeline, and method of submission will be
made available for public review and comment.
Although the data elements will be made available for public review
through the standard PRA process, we are providing the interested
parties with an initial projection of the potential burden estimates.
In this regard there are currently 627 contracts that would be required
to report their pharmacy performance measures' data. Part D sponsors
currently report 6 sections of data to CMS in accordance with the Part
D reporting requirements. Therefore, CMS does not expect compliance to
these reporting requirements will result in additional start-up costs.
Anticipated staff time spent performing these data collection
activities would be 30 minutes for a data analyst and/or IT analyst at
a rate of $92.46/hr. We will require this information to be reported at
the plan level once annually. Reporting at the plan level would
generate 5,234 responses since there are currently 5,234 plans. In
aggregate, we estimate an annual plan sponsor burden of 2,617 hours
(5,234 plans x 1 report/year x 0.5 hr/report) at a cost of $241,968
(2,617 hr x $92.46/hr). We solicited input from stakeholders on the
accuracy of these estimates and on any measures that CMS could take to
decrease the burden of this provision. The following comment was
received.
Comment: We received one comment stating that we had underestimated
the financial burden of Part D plans reporting their pharmacy
collection measures.
Response: We appreciate the comment. However, we believe that based
on current wages from the Bureau of Labor Statistics, and from our long
current history of collecting other Part D plan reporting requirements,
that our burden estimate is fair and reasonable.
We did not receive any other comments related to the projected
burden for this provision. As a result, we are finalizing our proposed
provisions and burden without change.
10. ICRs Regarding PACE
Subsequent to the publication of the proposed rule, we revised the
burden estimates in this final rule by: (1) Incorporating service
determination request (formerly ``service delivery request'') data from
2019 PACE audits which was not available at the time the estimates were
published in the proposed rule, (2) updating enrollment data from
40,040 participants to 42,800 participants based on 2017-2019
enrollment data from the CMS Office of the Actuary (OACT), (3) updating
PACE organization contract data from 131 PACE organizations to 133 PACE
organizations based on data from the Health Plans Management System
(HPMS), and (4) updating wage figures based on May 2019 BLS data.
The following changes in subsections 10a through 10e will be
submitted to OMB for approval under control number 0938-0790 (CMS-R-
244). Subject to renewal, the control number is currently set to expire
on December 31, 2023.
a. ICRs Regarding Service Determination Request Processes Under PACE
(Sec. Sec. 460.104 and 460.121)
Section 460.121(i)(2) will require that PACE organizations provide
written notification to participants when the interdisciplinary team
extends the timeframe for processing service determination requests.
Based on our experience with PACE audits during 2017, 2018, and 2019,
during which time we reviewed all operating PACE organizations at least
once, we found a total of 30,173 service determination requests. The
average total PACE enrollment during that same period was 42,800. Thus
the average number of service determination requests per 1,000
enrollees was 705 (30,173/42,800). This service determination request
ratio or intensity (705 service determination requests per 1,000
enrollees) is used to estimate the number of service determination
requests PACE organizations will receive from 2022-2024. The service
determination request ratio is an intuitive way of capturing the rate
of service determination requests per thousand enrollees and is used to
estimate the burden associated with service determination requests for
2022-2024.
Based on the same audit experience and data collected, we further
estimate that:
Approximately 10.16 percent of all service determination
requests currently received are extended, and
Of those 705 service determination requests currently
received per 1,000 enrollees, 77.53 percent are approved (546.6
requests per 1,000 enrollees), while 22.47 percent are denied (158.4
requests per 1,000 enrollees).
With respect to the final service determination request
requirements in the new Sec. 460.121, we estimate that half of all
approved service determination requests (that is, 50 percent of the
546.6 approved requests per 1,000 enrollees or 273.3 requests per 1,000
enrollees) could be approved in full by an IDT member at the time the
request is made. Because those approval decisions could be made
immediately, extension notifications would not be needed for those
service determination requests.
Therefore, the requirement to provide written notification when a
service determination request is extended will apply to:
The 2.28 percent of service determination requests which
are extended and subsequently denied (22.47 percent of service
determination requests that are denied * 10.16 percent of service
determination requests that are extended); and

[[Page 6066]]

The 3.94 percent of service determination requests that
are approved and not routine (that is, a member of the IDT cannot
approve the service determination request in full at the time the
request is made) and are extended (77.53 percent of service
determination requests that are approved * 50 percent of requests that
are not routine * 10.16 percent of requests that are extended).
Thus the requirement will apply to 6.22 percent (2.28 percent of
denied service determination requests and 3.94 percent of approved
service determination requests) of all service determination requests.
Based on OACT estimates, the average projected PACE enrollment for
2022-2024 is 53,549 per year or an increase of 10,749 enrollments from
2017-2019 (53,549-42,800). The multiplication of the estimated 2022-
2024 PACE enrollment (53,549 enrollees) by the current service
determination request intensity of 705 per 1,000 enrollees gives a
reasonable estimate of the number of service determination requests
PACE organizations will receive for 2022-2024. Based on our audit
experience, we estimate that it would take the IDT approximately 1 hour
to prepare and issue notification of the extension to a participant or
the designated representative.
Consequently, the total annual burden for providing written
notification to participants when the interdisciplinary team extends
the timeframe for processing service determination requests in
accordance with Sec. 460.121(i)(2) is 2,350 hours (705 requests per
1,000 enrollees x 53,549 projected enrollment for 2022-2024 x 6.22
percent of requests that require extensions x 1 hour to process each
service determination request extension) at a cost of $133,997 (2,350
hr x $57.02/hr for a Master's-level Social Worker (MSW) (BLS:
Healthcare social worker) to process them).
To meet the notification requirements finalized in Sec.
460.121(i)(2), we expect most PACE organizations will develop a
template letter to notify the appropriate parties of an extension. We
estimate a burden of 1 hour at a cost of $70.06/hr for a compliance
officer (quality improvement coordinator) to create an extension letter
template.
In addition to the one-time burden associated with creating an
extension letter template, we also anticipate a one-time burden
associated with the requirements we are finalizing in Sec.
460.121(j)(2), which clarify the required content of denial
notifications. As a result of these requirements, we expect that PACE
organizations will need to revise their denial notification letter
templates. We estimate a burden of 1 hour at a cost of $70.06/hr for a
compliance officer (quality improvement coordinator) to revise any
existing denial letter templates.
In aggregate, for the development and revision of both the
extension notification and denial notification, we estimate it will
take of 2 hours at $70.06/hr for a compliance officer (quality
improvement coordinator) to create and revise the materials. We
estimate a one-time burden of 266 hours (133 PACE organizations x 2 hr)
at a cost of $18,636 (266 hr x $70.06/hr).
We received no comments on our proposed burden estimates in
Sec. Sec. 460.121 and 460.104. In this final rule, we revised the
burden estimate for these provisions using updated data previously
discussed in the introductory paragraph to section VIII.B.10. of this
final rule. The updated data used to revise the burden estimates
includes: (1) Service determination request data from 2019 PACE audits,
(2) 2017-2019 enrollment data, (3) PACE organization contract data, and
(4) wage data. Based on this updated data, we have revised the burden
estimate for service determination request extension notification in
new Sec. 460.121(j)(2), which resulted in a decrease of 578 hours
(from 2,928 hr to 2,350 hr) and $30,615 (from $164,612 to $133,997)
from the proposed rule. We have also revised the burden estimate for
service determination request denial notification requirements in new
Sec. 460.121(i)(2), which resulted in an increase of 4 hours (from 262
hr to 266 hr) and $369 (from $18,267 to $18,636) from the proposed
rule.
b. ICRs Regarding Appeals Requirements Under PACE (Sec. Sec. 460.122
and 460.124)
Section 460.122 currently states the requirements for implementing
an appeals process in PACE. In this rule we are finalizing requirements
for PACE organizations to develop and distribute written materials that
will explain the PACE requirements to the third party reviewers that
are responsible for making appeal determinations. Additionally, we are
finalizing requirements for appeal decision notifications, which we
expect will require PACE organizations to revise their current appeal
notification materials.
For the development and distribution of materials to the third
party reviewer, we estimate it will take 4 hours at $70.06/hr for a
compliance officer (quality improvement coordinator) at each PACE
organization to create and distribute these materials (3 hr to create
and 1 hr to distribute). For the revision of the written appeal
notices, we estimate it will take 1 hour at $70.06/hr for a compliance
officer (quality improvement coordinator) at each PACE organization to
revise the current notices.
In aggregate, we estimate a one-time burden of 665 hours [133 PACE
organizations * (4 hr + 1 hr)] at a cost of $46,590 (665 hr * $70.06/
hr).
We received no comments on our proposed burden estimates for this
provision. In this final rule, we revised the burden estimate for
developing and distributing written materials to third party reviewers
using updated data previously discussed in the introductory paragraph
to section VIII.B.10. of this final rule. The updated data used to
revise the burden estimate includes: (1) 2017-2019 enrollment data, (2)
PACE organization contract data, and (3) wage data. Updated service
determination request data was not utilized to revise this burden
estimate since the data does not impact appeals notifications. Based on
the updated data, we have revised the burden estimate for this
provision which resulted in an increase of 10 hours (from 655 hr to 665
hr) and $923 (from $45,667 to $46,590) from the proposed rule.
c. ICRs Regarding Documenting and Tracking the Provision of Services
Under PACE (Sec. 460.98)
As discussed in section VI.D. of this final rule, we are amending
Sec. 460.98(b)(5) in part to require PACE organizations to document,
track and monitor the provision of services across all care settings,
regardless of whether services are formally incorporated into a
participant's plan of care.
We estimate a one-time burden of 50 hours at $56.34/hr for
technical staff at each PACE organization to develop the necessary
procedures and written materials. We estimate a one-time burden of
6,650 hours (133 PACE organizations * 50 hr) at a cost of $374,661
(6,650 hr * $56.34/hr) for the first year. Since PACE organizations are
currently required to document all services furnished in the medical
record in accordance with Sec. 460.210(b)(2), we believe the one-time
burden of 50 hours is a reasonable estimate for developing the
necessary procedures and written materials to document, track, and
monitor the provision of services.
We also estimate this provision will result in increased ongoing
costs to PACE organizations. To estimate the increased burden, we use
the following assumptions about the documentation, tracking and
monitoring of services,

[[Page 6067]]

based on our experience monitoring and auditing PACE organizations.
As discussed above, PACE organizations are already required to
document services furnished in the participant's medical record;
however, PACE organizations will need to devote time to monitoring and
tracking the provision of services. We therefore estimate a burden of
50 hours at $56.34/hr for technical staff to complete these activities,
including, when warranted, revision of the aforementioned program
procedures and monitoring measures. We estimate an annual burden of
6,650 hours (133 PACE organizations * 50 hr) at a cost of $374,661
(6,650 hr * $56.34/hr).
In aggregate, we estimate a burden of 13,300 hours (6,650 hr +
6,650 hr) at a cost of $749,322 ($374,661 + $374,661) for the first
year of implementation. In subsequent years, we estimate a burden of
6,650 hours at a cost of $374,661 for the ongoing documentation,
monitoring and tracking of services.
We received the following comments on the estimated burden for this
provision.
Comment: The majority of commenters expressed concern with to the
use of the term ``track.'' These commenters suggested that requiring a
PACE organization to track the provision of services could imply that
PACE organizations would be required to establish and maintain specific
logs, universes or data sets, and that such a requirement would
potentially increase burden and conflict with CMS' Patients Over
Paperwork initiative.
Response: As we discussed in greater detail in section VI.D. of
this final rule, we understand from commenters' concerns that the use
of the word ``track'' could be interpreted to suggest that PACE
organizations would be required to maintain a real time ``log'' of
services which could potentially be burdensome to implement. As we
stated in the proposed rule, we believe that PACE organizations should
document that a service has been ordered as well as when and how the
approved service was provided. It was not our intention in the proposal
to dictate how an organization implements this provision, and we agree
with the commenter that PACE organizations should have flexibility in
how they operationalize the requirement to track, monitor and document
the provision of services. We expect that PACE organizations will
create their own methods for tracking and monitoring services. We note
that while commenters expressed concerns regarding the potential
burden, no one commented on our estimates related to the burden. We
believe this indicates that we were accurate in predicting the
potential burden associated with this provision.
Therefore, in this final rule, we did not revise the estimates
based on comments received, but revised the burden estimate for these
provisions using updated data previously discussed in the introductory
paragraph to section VIII.B.10. of this final rule. The updated data
used to revise the burden estimates includes: (1) 2017-2019 enrollment
data, (2) PACE organization contract data, and (3) wage data. Updated
service determination request data was not utilized to revise this
burden estimate since the data does not impact documenting and tracking
the provision of services. Based on the updated data, we have revised
the first year burden estimate for this provision which resulted in an
increase of 200 hours (from 13,100 hr to 13,300 hr) and $82,532 (from
$666,790 to $749,322) from the proposed rule. We have also revised the
ongoing burden estimate for this provision which resulted in an
increase of 100 hours (from 6,550 hr to 6,650 hr) and $41,266 (from
$333,395 to $374,661) from the proposed rule.
d. ICRs Regarding Documentation in Medical Records Under PACE (Sec.
460.210)
Subsequent to the publication of our proposed rule and based on
public comment, this final rule revises the proposed requirements in
Sec. 460.210(b)(6) to require PACE organizations to maintain original
documentation, or an unaltered electronic copy, of any written
communication the PACE organization receives relating to the care,
health or safety of a participant, in any format (for example, emails,
faxes, letters, etc.) and including, but not limited to the following:
(i) Communications from the participant, his or her designated
representative, a family member, a caregiver, or any other individual
who provides information pertinent to a participant's health or safety
or both and (ii) Communications from an advocacy or governmental agency
such as Adult Protective Services.
Section 460.210 currently sets out the requirements relating to
medical records for PACE participants. This includes the minimum
content of participant medical records. Under Sec. 460.210(b) of this
final rule, CMS requires PACE organizations to maintain additional
information and documentation in the medical record, including
documentation of all recommendations for services made by employees or
contractors of the PACE organization, the reasons for not approving or
providing any service recommended by an employee or contractor of the
PACE organization, and original documentation, or an unaltered
electronic copy, of any written communication the PACE organization
receives relating to the care, health or safety of a participant.
We expect that PACE organizations will have to revise their
policies and procedures and re-train staff on the new requirements. We
believe that a compliance officer (quality improvement coordinator)
will be responsible for ensuring the necessary materials are updated
and that staff are trained. For revising materials and training staff,
we estimate a one-time burden of 10 hours at $70.06/hr for a compliance
office (quality improvement coordinator) to revise materials and lead
training. Therefore, the one-time burden to implement this provision is
1,330 hours (133 PACE organizations * 10 hr) at a cost of $93,180
(1,330 hr * $70.06/hr).
We also estimate this provision will result in increased ongoing
costs to PACE organizations. To estimate the increased burden, we use
the following assumptions about medical record documentation. These
assumptions are based on our monitoring and oversight experience.
Each of the new requirements discussed above may require the
involvement of any IDT occupation. Therefore, to determine the cost
associated with this provision, we took the wages for the full IDT
($846.48/hr) and divided it by the 11 occupations included in the IDT
(see Table H15) to determine an average wage of $76.95/hr ($846.48/hr/
11 occupations). We believe this is the most accurate estimate as it
will be unlikely all occupations will be working on the medical record
at the same time, and we are unable to estimate how much any one
occupation will work in comparison to the other occupations.
In the proposed rule, we estimated that the proposed requirement to
maintain original documentation of any written communication the PACE
organization receives relating to the care, health or safety of a
participant, would not create a significant burden, as organizations
would only be required to store existing documentation within a medical
record. Therefore, we estimated that the burden for this part of the
provision would be 5 hours per PACE organization or 665 total hours (5
hr * 133 organizations) at a cost of $51,172 (665 hr * $76.95/hr).
Following publication of the proposed rule, while we did not
receive any comments specific to our burden

[[Page 6068]]

estimates for this requirement, we did receive general comments that
expressed concern regarding the potential burden associated with
storing written communications in a participant's medical record. Based
on these comments, we believe we underestimated the burden for this
provision. In response to comments received we revised the requirements
at Sec. 460.210(b)(6) to permit PACE organizations to maintain
original documentation, or an unaltered electronic copy, of any written
communication the PACE organization receives relating to the care,
health or safety of a participant. This change means that PACE
organizations would be required to maintain all covered written
communications in Sec. 460.210(b)(6)(i) and (ii), but that they can be
maintained in either their original form or as an unaltered electronic
copy. In addition to revising the regulatory text to permit PACE
organizations to maintain unaltered electronic copies of affected
written communications, we are also revising our burden estimates for
Sec. 460.210(b)(6). In this final rule, we estimate that the burden
for maintaining original documentation, or an unaltered electronic
copy, of any written communication the PACE organization receives
relating to the care, health or safety of a participant will be 10
hours per PACE organization or 1,330 total hours (10 hr * 133
organizations) at a cost of $102,344 (1,330 hr * $76.95/hr). This
burden is an ongoing burden in all years.
This final rule at Sec. 460.210 also requires a PACE organization
to document all recommendations for services from employees or
contractors of the PACE organization, including specialists, and
require PACE organizations to document the reasons a service
recommended by an employee or contractor of the PACE organization is
not approved or provided .We considered several factors when
determining the burden associated with these provisions. First, PACE
organizations are already required under Sec. 460.104(b)(1) to
document the rationale for not providing services in developing the
plan of care; therefore, this provision will only apply to services
recommended following the initial development of the plan of care.
Second, PACE organizations will only have to document the rationale
under Sec. 460.210(b)(5) when the PACE organization does not approve
or provide a recommended service, so there will be no additional burden
in situations where the PACE organization approves or provides a
recommended service. Considering these two factors, we determined that
each PACE organization will have to spend approximately 52 hours
(approximately 1 hr per week) to implement this part of the regulation.
Therefore, we estimate a total of 52 hours per organization per year,
or a total of 6,916 hours (52 hr * 133 organizations) at a cost of
$532,186 (6,916 hr * $76.95/hr).
We therefore estimate the total ongoing burden of all aspects of
this provision at Sec. 460.210 to be 8,246 hours (1,330 hr + 6,916 hr)
at a cost of $634,530 ($102,344 + $532,186).

Table H15--Wages for IDT Staff Members
------------------------------------------------------------------------
Adjusted wage *
Occupation title Occupation code ($/hr)
------------------------------------------------------------------------
Dietician......................... 29-1031 59.94
Driver (Passenger Vehicle Driver). 53-3058 31.94
Home Care Coordinator (often a RN) 29-1141 74.48
Masters of Social Work............ 21-1022 57.02
Occupational Therapist............ 29-1122 82.90
PACE Center Manager (Medical and 11-9111 110.74
Health Services Manager).........
Personal Care Attendant........... 31-1120 25.42
Physical Therapist................ 29-1123 86.70
Primary Care Provider............. 29-1216 193.70
Recreational Therapist............ 29-1125 49.16
Registered Nurse.................. 29-1141 74.48
-------------------------------------
Total......................... ................. 846.48
-------------------------------------
Average IDT Cost Per Hour ................. 76.95
(846.48/11 occupations)......
------------------------------------------------------------------------
* See section VIII.A. of this final rule for additional wage
information.

We received the following comments on the estimated burden
resulting from this provision in the proposed rule.
Comment: Commenters expressed concerns that maintaining original
documentation of any written communication relating to the care, health
or safety of a participant in any format in the medical record would
increase burden for PACE organizations as well as increase burden on
providers that may be responsible for transferring these communications
to the medical record. As a solution, these commenters recommended
permitting PACE organizations to scan written documentation and copy
and paste communications received via email or text into electronic
medical records.
Response: In response to commenters' concerns, we reviewed our
initial burden estimate and determined that we had underestimated the
burden for maintaining this documentation in its original format within
the medical record. We increased the burden estimate in the final rule
accordingly. In determining what an appropriate estimate for this
provision would be, we considered both that we may have underestimated
the original burden in the proposed rule, as well as the additional
operational flexibility that we are allowing for in the final rule, as
discussed in greater detail in section VI.F. of this final rule. Given
these two factors, we estimate that the burden for maintaining original
documentation, or an unaltered electronic copy, of any written
communication the PACE organization receives relating to the care,
health or safety of a participant will be 10 hours per PACE
organization instead of the 5 hours we initially proposed.
In this final rule, we revised the burden estimate for these
provisions using updated data previously discussed in the introductory
paragraph to section VIII.B.10. of this final rule. The updated data
used to revise the burden estimates includes: (1) 2017-2019 enrollment
data, (2) PACE organization contract data, and (3) wage data. Updated
service determination request data was not utilized to revise this
burden estimate since the data does

[[Page 6069]]

not impact medical record documentation. The estimates were also
revised to account for additional burden for the requirements in Sec.
460.210(b)(6). Based on this updated data, we have revised the burden
estimate for revising materials and training related to the changes in
this provision which resulted in an increase of 20 hours (from 1,310 hr
to 1,330 hr) and $1,847 (from $91,333 to $93,180) from the proposed
rule. We have also revised the burden estimate for the ongoing
implementation of this provision which resulted in an increase of 910
hours (from 7,336 hr to 8,246 hr) and $75,453 (from $559,077 to
$634,530) from the proposed rule.
e. ICRs Regarding PACE Participant Rights: Contact Information and
Access Requirements (Sec. 460.112)
Section 460.112 currently includes the specific rights to which
PACE participants are entitled. As discussed above in section VI.G.,
this final rule amends the participant rights to identify three
additional rights, specifically, the participant's right to have
reasonable and timely access to specialists as indicated by the
participant's health condition and consistent with current clinical
practice guidelines, the right to call 1-800-MEDICARE for information
and assistance, and the right to receive necessary care in all care
settings, up to and including placement in a long-term care facility
when the PACE organization can no longer maintain the participant
safely in the community. PACE organizations are currently required to
provide a copy of the participant rights to participants at the time of
enrollment and to post a copy of the rights in the center. Under this
rule, PACE organizations will be required to revise the current
participant rights to account for the three new requirements and post a
copy of the revised document.
We estimate it will take 2 hours at $70.06/hr for a compliance
officer (quality improvement coordinator) to update the participant
rights information included in the enrollment information and post the
new participant rights in the center. In aggregate, we estimate a one-
time burden of 266 hr (133 PACE organizations * 2 hr) at a cost of
$18,636 (266 hr * $70.06/hr).
We did not receive any comments related to our projected burden
estimates for this provision. With the exception of the adjusted number
of organizations, we are finalizing the proposed burden without change.
11. ICRs Regarding Stipulated Decisions in Part C (Sec. 422.562)
In order to permit OMHA adjudicators to more efficiently issue
decisions where there is no longer any material issue in dispute, we
are providing in Sec. 422.562(d) that, for the sole purpose of
applying Sec. 405.1038(c), MA organizations are included in the
definition of ``contractors'' as that definition relates to stipulated
decisions issued by ALJs and attorney adjudicators under Sec.
405.1038. We are scoring this impact as negligible for several reasons.
The total number of favorable decisions in MA for contract year 2018,
the most recent year for which we have complete appeals data, was 578.
The number of these overturned denials that were stipulated decisions
is not currently quantifiable as it is not data that existing appeals
systems are equipped to track, and ALJs do not track this data on their
own.
We consulted with OMHA for its opinion on stipulated decisions.
OMHA estimated that the number of contractors submitting oral or
written statements in an ALJ hearing or attorney adjudicator review was
in the single digits as plans typically prefer an alternate, informal
approach that removes the claim from the appeals process altogether:
Requesting that the beneficiary withdraw their appeal and resubmit
their claim for payment.
CMS estimates that while this change would positively impact
beneficiaries both in receipt of their items or services, and afford
beneficiaries due process protections in a formalized stipulated
decisions process, the number of beneficiaries that would be affected
is minimal. Despite this estimation of negligible impact, we included
this change to promote regulatory uniformity in OMHA's approach to
stipulated decisions as far as Medicare contractors are concerned. The
submission of a written or oral statement seeking a stipulated decision
is associated with an administrative action pertaining to specific
individuals or entities (5 CFR 1320.4(a)(2) and (c)). Consequently, the
burden for preparing and filing the oral or written statement for use
in the appeal is exempt from the requirements of the PRA.
We received no comments on the assumptions related to our proposed
provisions. We are finalizing the burden assessment on these provisions
without modification.

C. Summary of Information Collection Requirements and Associated Burden
Estimates

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IX. Regulatory Impact Analysis

A. Statement of Need

The provisions in this final rule implement specific provisions of
the BBA of 2018 and the SUPPORT Act. The statutory need for these
policies is clear. However, this rule also contains discretionary
policies, including enhancements to the Programs of All-Inclusive Care
for the Elderly (PACE) requirements, hence we provide economic
justification for some of these noteworthy provisions in the following
paragraphs.
Based on industry feedback over the course of several years, and
our experiences auditing PACE organizations, we proposed to modify
certain PACE requirements to enhance stakeholders' understanding of our
requirements and reduce administrative burden. Stakeholders have
suggested that the existing processes for addressing service
determination requests is burdensome for PACE organizations, and can
delay participants' access to services. We are finalizing several
changes to the PACE regulations to streamline these processes while
ensuring that important participant protections remain intact. We
estimate these changes will save PACE organizations, as a whole,
approximately $16.8 million in the first year, increasing (due to
expected increased PACE enrollment), to $21.3 million in ten years.
Summaries of the public comments that are within the scope of the
provisions' proposed regulatory impact analyses implemented in this
final rule are included in this section with our responses under the
appropriate headings.

B. Overall Impact

We examined the impact of this final rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), Executive Order 13272 on Proper Consideration of
Small Entities in Agency Rulemaking (August 13, 2002), section 1102(b)
of the Act, section 202 of the Unfunded Mandates Reform Act of 1995
(UMRA) (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C.
801-808), and Executive Order 13771 on Reducing Regulation and
Controlling Regulatory Costs (January 30, 2017). This rule is
economically significant under Executive Order 12866, as it may result
in over $100 million in costs, benefits, or transfers annually. The
Office of Information and Regulatory Affairs has designated this rule
as a major rule pursuant to the Congressional Review Act, 5 U.S.C.
804(2).
Section 202 of UMRA also requires that agencies assess anticipated
costs and benefits before issuing any rule whose mandates require
spending in any 1 year of $100 million in 1995 dollars, updated
annually for inflation. In 2020, that threshold is approximately $156
million. This final rule is not anticipated to have an unfunded effect
on state, local, or tribal governments, in the aggregate, or on the
private sector of $156 million or more.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct requirement costs on state and local governments,
preempts state law, or otherwise has federalism implications. Since
this final rule does not impose any substantial costs on state or local
governments, preempt state law or have federalism implications, the
requirements of Executive Order 13132 are not applicable.
If regulations impose administrative costs on reviewers, such as
the time needed to read and interpret this final rule, then we should
estimate the cost associated with regulatory review. There are
currently 795 contracts (which includes MA, MA-PD, and PDP contracts),
55 state Medicaid Agencies, and 300 Medicaid MCOs. We also expect a
variety of other organizations to review (for example, consumer
advocacy groups, major Pharmacy Benefit Managers). We expect that each
organization will designate one person to review the rule. A reasonable
maximal number is 2,000 total reviewers. We note that other assumptions
are possible.
Using the BLS wage information for medical and health service
managers (code 11-9111), we estimate that the cost of reviewing this
final rule is $110.74 per hour, including fringe benefits and overhead
costs (http://www.bls.gov/oes/current/oes_nat.htm). Assuming an average
reading speed, we estimate that it will take approximately 19 hours for
each person to review this final rule. For each entity that reviews the
rule, the estimated cost is therefore $2,100 (19 hours x $110.74).
Therefore, we estimate that the maximum total cost of reviewing this
final rule is $4.2 million ($2,104 x 2,000 reviewers). However, we
expect that many reviewers, for example pharmaceutical companies and
PBMs, will not review the entire rule but just the sections that are
relevant to them. We expect that on average (with fluctuations) 10
percent of the rule will be reviewed by an individual reviewer; we
therefore estimate the total cost of reviewing to be $0.4 million.
Note that this analysis assumed one reader per contract. Some
alternatives include assuming one reader per parent organization. Using
parent organizations instead of contracts will reduce the number of
reviewers. However, we believe it is likely that review will be
performed by contract. The argument for this is that a parent
organization might have local reviewers assessing potential region-
specific effects from this final rule.
In accordance with the provisions of Executive Order 12866, this
final rule was reviewed by OMB.

C. Impact on Small Businesses--Regulatory Flexibility Analysis (RFA)

The RFA, as amended, requires agencies to analyze options for
regulatory relief of small businesses if a rule has a significant
impact on a substantial number of small entities. For purposes of the
RFA, small entities include small businesses, nonprofit organizations,
and small governmental jurisdictions.
This final rule has several dozen provisions. Although several
provisions are technical or codify existing guidance, and therefore are
not expected to have economic impact beyond current operating expenses,
there are other provisions with paperwork or other costs. These
provisions are analyzed in both this section and in section VIII of
this final rule. A compact summary of burdens by year and provision are
summarized in Tables H16 and I14 of this final rule. Also, where
appropriate the cost burdens and cost savings of groups of provisions
that are related are summarized in this section. For example, Table H16
of section VIII of this final rule lists eight paperwork burdens
related to PACE organizations which are summarized in Table I7 of this
section. Table I7 is then used in Table I9 to give total savings
related to PACE organizations, the total savings reflecting all costs
and savings of the various provisions whether paperwork or not.
This rule has several affected stakeholders. They include (1)
insurance companies, including the five types of Medicare health plans,
MA organizations, PDPs, cost plans, PACE organizations, and
demonstration projects, (2) providers, including institutional
providers, outpatient providers, clinical laboratories, and

[[Page 6074]]

pharmacies, and (3) enrollees. Some descriptive data on these
stakeholders are as follows:
Pharmacies and Drug Stores, NAICS 446110, have a $30
million threshold for ``small size'' with 88 percent of pharmacies,
those with under 20 employees, considered small.
Direct Health and Medical Insurance Carriers, NAICS
524114, have a $41.5 million threshold for ``small size,'' with 75
percent of insurers having under 500 employees meeting the definition
of small business.
Ambulatory Health Care Services, NAICS 621, including
about 2 dozen sub-specialties, including Physician Offices, Dentists,
Optometrists, Dialysis Centers, Medical Laboratories, Diagnostic
Imaging Centers, have a threshold ranging from $8 to $35 million
(Dialysis Centers, NAICD 621492, have a $41.5 million threshold).
Almost all firms are big, and this also applies to sub-specialties. For
example, for Physician Offices, NAICS 621111, receipts for offices with
under 9 employees exceed $34 million.
Hospitals, NAICS 622, including General Medical and
Surgical Hospitals, Psychiatric and Substance Abuse Hospitals,
Specialty Hospitals have a $41.5 million threshold for small size, with
half of the hospitals (those with between 20-500 employees) considered
small.
Skilled Nursing Facilities (SNFs), NAICS 623110, have a
$30 million threshold for small size, with half of the SNFs (those with
under 100 employees) considered small.
We are certifying that this final rule does not have a significant
economic impact on a substantial number of small entities. To defend
our position, we first describe at a high level the cash flows related
to the Medicare program. We then provide more specific details.
The high-level underlying idea in creating the MA, Medicare cost
plan, and MA-PD Medicare health insurance programs, is to allow private
insurers to coordinate care, resulting in efficiencies of cost. The
high-level underlying idea in creating the non-government-managed
Prescription Drug program (PDPs and drug portion of MA-PDs) is to allow
beneficiaries to obtain prescription drugs in a competitive market to
reduce costs. For MA, MA-PD, and cost plans, enrollees obtain the same
original Medicare Part A and B services they would otherwise obtain in
the original Medicare program, generally at reduced cost (however, for
the small percentage of plans bidding above the benchmark, enrollees
pay more, but this percentage of plans is not ``significant'' as
defined by the RFA and as justified below).
The savings achieved by the MA and the MA-PD plans, the amount of
reduced cost, can then be used by the private insurers in a variety of
ways, including providing supplemental benefits to the required
original Part A and Part B Medicare services. Some examples of these
supplemental benefits include vision, dental, and hearing; in addition,
MA plans may provide supplemental benefits in the form of reductions in
cost sharing compared to the Medicare FFS program. The cost for
furnishing these supplemental benefits comes from a combination of the
Medicare Trust Fund and enrollee premiums.
Part D plans submit bids and are paid by the Medicare Trust Fund
for their projected costs in the form of direct premium subsidy and
reinsurance. For any enrolled low-income beneficiaries, plans receive
and additional low-income premium subsidy and low-income cost sharing
subsidy. The national average monthly bid amount, or NAMBA, determines
the base premium. A plan's premium is the sum of the base premium and
the difference between its bid amount and the NAMBA.
Thus the cost of providing services by these insurers is met by a
variety of government funding and in some cases by enrollee premiums.
In order to achieve these goals, the government pays the MA health
plans a portion of the funds that would have been paid had plan
enrollees remained in original Medicare. These funds are then used to
provide additional benefits on behalf of the health plans' enrollees.
This unique insurance relationship has several consequences beneficial
to all parties: First, the various insurance programs are not expected
to suffer burden or losses since the government subsidizes them;
second, the government often incurs savings because health plans, by
virtue of coordinating care, are furnishing the same services, albeit
often at a reduced cost. This lack of expected burden applies to both
large and small health plans. As a consequence of this design, the
unique MA regulations, such as those in this final rule, are defined so
that small entities are not expected to incur additional burden since
the cost of complying with any final rule is passed on to the
government.
We next examine in detail each of the stakeholders and explain how
they can bear cost. (1) For Pharmacies and Drug Stores, NAICS 446110;
(2) for Ambulatory Health Care Services, NAICS 621, including about two
dozen sub-specialties, including Physician Offices, Dentists,
Optometrists, Dialysis Centers, Medical Laboratories, Diagnostic
Imaging Centers, and Dialysis Centers, NAICD 621492; (3) for Hospitals,
NAICS 622, including General Medical and Surgical Hospitals,
Psychiatric and Substance Abuse Hospitals, and Specialty Hospitals; and
(4) for SNFs, NAICS 623110: Each of these are providers (inpatient,
outpatient, or pharmacy) that furnish plan-covered services to plan
enrollees. Whether these providers are contracted or, in the case of
PPOs, PFFS, and MSA, not contracted with the MA plan, their aggregate
payment for services is the sum of the enrollee cost sharing and plan
payments. For non-contracted providers, Sec. 422.214 and sections
1852(k)(1) and 1866(a)(1)(O) of the Act require that a non-contracted
provider accept payment that is at least what they would have been paid
had the services been furnished in a fee-for-service setting. For
contracted providers, Sec. 422.520 requires that the payment is
governed by a mutually agreed upon contract between the provider and
the plan. Consequently, for these providers, there is no additional
cost burden above the already existing burden in original Medicare.
For Direct Health and Medical Insurance Carriers, NAICS 524114,
plans estimate their costs for the coming year and submit bids and
proposed plan benefit packages. Upon approval, the plan commits to
providing the proposed benefits, and CMS commits to paying the plan
either (1) the full amount of the bid, if the bid is below the
benchmark, which is a ceiling on bid payments annually calculated from
original Medicare data; or (2) the benchmark, if the bid amount is
greater than the benchmark.
Theoretically, there is additional burden if plans bid above the
benchmark. However, consistent with the RFA, the number of these plans
is not substantial. Historically, only 2 percent of plans bid above the
benchmark, and they contain roughly 1 percent of all plan enrollees.
Since the CMS criteria for a substantial number of small entities is 3
to 5 percent, the number of plans bidding above the benchmark is not
substantial.
The preceding analysis shows that meeting the direct cost of this
final rule does not have a significant economic impact on a substantial
number of small entities, as required by the RFA. There are certain
indirect consequences of these provisions which also create impact. We
have already explained that 98 percent of the plans bid below the
benchmark. Thus, their estimated costs

[[Page 6075]]

for the coming year are fully paid by the government. However, the
government also pays the plan a ``beneficiary rebate'' amount that is
an amount equal to a percentage (between 50 and 70 percent depending on
a plan's quality rating) multiplied by the amount by which the
benchmark exceeds the bid. The rebate is used to provide additional
benefits to enrollees in the form of reduced cost sharing, lower Part B
or Part D premiums, or supplemental benefits. (Supplemental benefits
may also partially be paid by enrollee premiums if the plan chooses to
use premiums or offers optional supplemental benefits that enrollees
may elect to purchase.) It would follow that if the provisions of this
final rule cause the bid to increase and if the benchmark remains
unchanged or increases by less than the bid does, then the result would
be a reduced rebate and possibly fewer supplemental benefits for the
health plans' enrollees.
CMS has observed that from year to year MA organizations prefer to
reduce their profit margins, rather than substantially change their
benefit package. This is due to marketing forces; a plan lowering
supplemental benefits even for one year may lose its enrollees to
competing plans that offer these supplemental benefits. Thus, it is
advantageous for the MA Organization to temporarily reduce margins,
rather than reduce benefits.
We note that we do not have definitive data on this. That is, we
can at most note the way profit margins and supplemental benefits vary
from year to year. The thought processes behind the plan are not
reported. More specifically, when supplemental benefits are reduced, we
have no way of knowing the cause for this reduction, whether it be new
provisions, market forces, or other causes.
A second indirect impact arises from effects on the MLR. More
specifically, several provisions of this final rule have non-benefit,
administrative classification. For example, the RTBT provision is a
requirement for plans to utilize or create certain software; the cost
of this creation is classified as administrative and hence is entered
in the bid as a non-benefit expense. Similarly, the cost of rewards and
incentives is being codified at Sec. 422.134(g)(3) as a non-benefit
expense in the plan bid. Several other provisions, including those
related to models of care, call centers, and marketing standards,
represent non-benefit administrative cost. A non-benefit expense
contributes to the denominator of the MLR but not the numerator.
If the costs of complying with a particular provision are
excessive, then the MLR could be adversely impacted and MLR
requirements could possibly not be met. For contract year 2014 and
subsequent contract years, MA organizations, Part D sponsors, and cost
plans are required to report their MLRs and are subject to financial
and other penalties for failure to meet the statutory requirement that
they have an MLR of at least 85 percent (Sec. Sec. 422.2410 and
423.2410). The statute imposes several levels of sanctions for failure
to meet the minimum MLR requirement, including remittance of funds to
CMS, a prohibition on enrolling new members, and ultimately contract
termination.
There are two ways of showing that this burden is not substantial
for at least one provision. As noted in section VIII.B.7. of this final
rule, the estimated cost of creating and maintaining an RTBT is $4.7
million. We explicitly requested stakeholder impact on this specific
estimate and received none. The experience of OACT is that for almost
all plans, an extra burden of $0.7 million is unlikely to affect the
MLR.
Additionally, the RTBT provision addresses multiple possibilities
of implementation, some of them significantly less costly than others.
Plans, in implementing the RTBT have the following options: (1) Whether
they want to develop a new portal, or use an existing computer
application, (2) whether they want to offer rewards and incentives to
their enrollees who log onto the beneficiary RTBT, (3) whether they
want to exclude certain clinically appropriate formulary alternatives
from the RTBT, and (4) whether they want to include the negotiated
price.
By both allowing exclusions from the RTBT and also by not requiring
that plans build their own portals, the RTBT cost may be significantly
less than $4.7 million.
Based on the previous discussion, we certify that this final rule
does not have a significant economic impact on a substantial number of
small entities.

D. Anticipated Effects

Some provisions of this final rule have negligible impact either
because they are technical provisions or are provisions that codify
existing guidance. Other provisions have an impact although it cannot
be quantified or whose estimated impact is zero. Throughout the
preamble, we have noted when we estimated that provisions have no
impact. Additionally, this Regulatory Impact Analysis discusses several
provisions with either zero impact or impact that cannot be quantified.
The remaining provisions are estimated in section VIII of this final
rule and in this Regulatory Impact Analysis. Where appropriate, when a
group of provisions have both paperwork and non-paperwork impact, this
Regulatory Impact Analysis cross-references impacts from section VIII
of this final rule in order to arrive at total impact. Additionally,
this Regulatory Impact Analysis provides pre-statutory impact of
several provisions whose additional current impact is zero because
their impact has already been experienced as a direct result of the
statute. For further discussion of what is estimated in this Regulatory
Impact Analysis, see Table I13 and the discussion afterwards.
1. Beneficiaries With History of Opioid-Related Overdose Included in
Drug Management Programs (DMPs) (Sec. 423.153)
This provision requires that CMS identify beneficiaries enrolled in
Medicare Part D with a history of opioid-related overdose (as defined
by the Secretary) and include such individuals as PARBs for
prescription drug abuse under the Part D sponsor's drug management
program. We projected a list of approximately 18,000 beneficiaries that
met the criteria for this provision between July 2017 and June 2018,
but did not meet other criteria for classification as a potential at-
risk beneficiary. Under this provision, this population is projected to
(1) increase the population of enrollees requiring case management by
plan sponsors (see section IX.B.3. of this final rule), and (2) reduce
Part D drug cost.
We evaluated their Prescription Drug Event (PDE) data for the same
July 2017 and June 2018 period to determine the effects of this
provision. After examining the PDE data, we found that these
beneficiaries had an average gross drug cost per beneficiary per year
of $9,675. Because this amount is high relative to the typical Part D
spending and because they do not meet other at-risk criteria, it is
likely that many of these beneficiaries have conditions that require
expensive specialty medications. These drugs have complex clinical
criteria that are difficult to alter through utilization management.
Accordingly, and because there is no directly pertinent information
available on the potential savings for increased prescription drug
management on this segment of the population, we have, based on the
actuarial judgment of staff with pharmaceutical experience as well as
based on discussions with pharmacists, assumed that 5 percent of their
Part D drug cost would be reduced

[[Page 6076]]

through additional plan management. We note that the we received no
comments on this estimate as a result of its publication in the
proposed rule and therefore believe it reasonable. Our estimated fiscal
year federal savings rounded to the nearest million are shown in Table
I1. Since these drugs would not be purchased as a result of efficient
case management, they represent reduction in goods consumed and are
true savings to the Medicare Trust Fund.
[GRAPHIC] [TIFF OMITTED] TR19JA21.048

Table I2 summarizes the aggregate impact of the changes to DMPs. It
reflects all the estimates related to DMPs in section IX of this final
rule (which incur costs) and the savings due to reduction in drug costs
discussed in this Regulatory Impact Analysis.
[GRAPHIC] [TIFF OMITTED] TR19JA21.049

2. Automatic Escalation to External Review Under a Medicare Part D Drug
Management Program (DMP) for At-Risk Beneficiaries (Sec. Sec. 423.153,
423.590, and 423.600)
The SUPPORT Act requires automatic escalation of drug management
program appeals to the independent outside entity contracted with the
Secretary for review and resolution. We are finalizing our proposal to
codify that provision, with a modification to permit plan sponsors up
to 24 hours after the expiration of the applicable adjudication
timeframe to assemble and forward the administrative case file to the
IRE. We do not believe the modification reflected in this final rule
impacts our previous estimate. To estimate the impact, we first
determined how many Part D sponsors had implemented drug management
plans. As of July 9, 2019, we found that 60 Part D sponsors had
implemented drug management plans. Next, we estimated of the number of
CARA-appeals per 1,000 enrollees and the percentage of plan denials
related to CARA. To do this, we contacted nine Part D sponsors and
asked how many CARA related appeals they had received from January 1,
2019 through July 31, 2019.
Of those nine, eight plans responded they had have not received any
CARA appeals. One Part D sponsor responded to say they had received
CARA related appeals. That plan reported a rate of 0.014 CARA related
appeals per 1000 enrollees. This accounted for 0.08 percent of plan
denials. Since there are about 28,600 appeals per year, therefore there
are only about 23 cases (0.08 percent * 28,600) affected by this
provision. Since most IRE cases are judged by a physician at a wage of
$202.46 and typically an IRE will take at most 1 hour to review most
cases, the total burden is about $4,656.58 (23 cases

[[Page 6077]]

* $202.46 * 1 hour) which is entered as $0.0 million in the summary
table since regulatory accounting standards impose a rounding to the
nearest tenth of a million.
3. Suspension of Pharmacy Payments Pending Investigations of Credible
Allegations of Fraud and Program Integrity Transparency Measures
(Sec. Sec. 405.370, 422.500, 422.503, 423.4, 423.504, and 455.2)
We were unable to determine the overall impact of implementing
sections 2008 and 6063 of the SUPPORT Act because we do not have
adequate data to support an estimate of the potential costs and
savings. While we do have access to estimates of overall Medicare Part
D opioid spending, sections 2008 and 6063 of the SUPPORT ACT are not
expected to impact all Part D opioid prescriptions, nor do we expect
that they would impact all pharmacies that dispense those medications.
For example, section 2008 of the SUPPORT Act requires Part D plan
sponsors to report to CMS any payment suspension pending investigation
of credible allegations of fraud by a pharmacy, which must be
implemented in the same manner as the Secretary does under section
1862(o) of the Act. In addition, section 6063 of the SUPPORT Act
requires MA organizations and Part D plan sponsors to report
information on the investigations, credible evidence of suspicious
activities of a provider of services (including a prescriber) or
supplier related to fraud, and other actions taken by the plan related
to inappropriate prescribing of opioids. In both cases, these
provisions would directly impact a percentage of all opioid
prescriptions written by prescribers and dispensed by pharmacies. While
we believe there may be savings generated through actions taken by Part
D plan sponsors that will conduct their own due diligence from the
reporting and sharing of administrative actions between CMS, MA
organizations and Medicare Part D plan sponsors (including MA
organizations offering MA-PD plans), as well as additional law
enforcement actions, we cannot estimate the impact at this time. We
welcomed comment and suggestions for data that could be relied upon for
this purpose.
We received no comments on the proposed regulatory impact and
consequently we are finalizing them without modification.
4. Medicare Advantage (MA) and Part D Prescription Drug Program Quality
Rating System (Sec. Sec. 422.162, 422.164, 422.166, 422.252, 423.182,
423.184, and 423.186)
We are finalizing measure updates, clarifying and codifying
policies in this final rule. These changes are routine and are not
expected to have an impact on the highest ratings of contracts (that
is, overall rating for MA-PDs, Part C summary rating for MA-only
contracts, and Part D summary rating for PDPs). These types of routine
changes have historically had very little or no impact on the highest
ratings. Hence, there will be no, or negligible, impact on the Medicare
Trust Fund from the routine changes.
We are also clarifying some of the current rules around assigning
Quality Bonus Payment (QBP) ratings and codifying the rules around
assigning QBP ratings for new contracts under existing parent
organizations. We are not finalizing any changes to our current QBP
policies, so there will be no impact on the Medicare Trust Fund from
these provisions.
5. Permitting a Second, ``Preferred,'' Specialty Tier in Part D
(Sec. Sec. 423.104, 423.560, and 423.578)
The option for Part D sponsors to offer a second, ``preferred''
specialty tier has the potential to impact Part D drug costs in at
least two ways. First, a Part D sponsor may have additional negotiating
power with brand drug manufacturers by offering a preferential tier
position relative to the current single specialty tier. Second, Part D
sponsors may promote lower-cost biosimilar biological products on a
preferred specialty tier. We consider each of these possibilities in
the following discussion.
For a Part D sponsor to be able to negotiate better formulary
position and lower beneficiary cost sharing for a particular specialty-
tier drug, there must be a substantial difference between the cost
sharing on the preferred specialty tier and the higher cost-sharing,
specialty tier. Because the regulation limits the maximum allowable
cost sharing to the range of 25 to 33 percent, Part D sponsors must
achieve this difference by lowering the cost sharing on the preferred
specialty tier. For example, because of the high cost for specialty-
tier drugs and the structure of the Part D benefit, Part D enrollees
and prescribers might not significantly alter their behavior in
response to a five percent change in coinsurance. A substantial
reduction in the cost sharing for preferred specialty tier would
necessitate a substantial increase in cost sharing for other tiers to
maintain an actuarially equivalent benefit, which may unfavorably
change the competitive position of the Part D sponsor's plan offering.
In particular, a plan that offers lower cost sharing on high-cost
specialty-tier drugs and higher cost sharing on conventional drugs
would risk adverse selection from Part D enrollees.
In addition, allowing tiering exceptions between the preferred
specialty tier and the higher cost-sharing, specialty tier creates a
risk for the Part D sponsor that may exceed the benefit of being better
able to negotiate with respect to brand drugs. A portion of the higher
cost-sharing, specialty-tier drugs may be granted exceptions as the
clinical criteria for such Part D drugs is complex and can lead to
different prescriptions for beneficiaries with similar conditions.
These Part D drugs are often more complicated chemically and apply to
complex conditions, such as Rheumatoid Arthritis or Multiple Sclerosis.
This added complexity requires greater specialized knowledge than a
traditional small molecule drug would for denying an exception. This
will be known to manufacturers, who will be less inclined to provide
additional incentives for the preferred placement given that a
significant amount of non-preferred use will limit any market share
gains from their enhanced formulary position. Part D sponsors would
also face additional liability from the difference in cost sharing
between the preferred and the higher cost-sharing, specialty tiers on
prescriptions that are granted tiering exceptions. This dynamic serves
as a disincentive for Part D sponsors to place specialty-tier-eligible
drugs on a non-specialty, non-preferred drug tier under current
regulation.
Regarding savings from biosimilar biological products that could be
promoted through a preferred specialty tier, some of the same
previously discussed issues still apply. For example, Part D sponsors
may expect a portion of a non-preferred reference biological product's
utilization to be given an exception to the preferred tier for a
biosimilar biological product if such biosimilar biological product is
not licensed for all of the same indications as the reference
biological product. Furthermore, the selection of these products is
often largely determined by the behavior of the prescriber rather than
the formulary status of the Part D sponsor. If the prescriber prefers
the reference biological product, they are more likely to prescribe it
rather than the biosimilar biological product, regardless of the
formulary position.

[[Page 6078]]

This is particularly true for specialty-tier drugs, where the
differences in total drug cost and the cost-sharing requirements of the
plan are not as extreme as the differences between conventional brand
and generic drugs. Finally, it is worth noting that several large Part
D sponsors do not currently promote biosimilar biological products. For
example, Zarxio[supreg], a biosimilar biological product to
Neupogen[supreg], is not included on the formulary for several large
Part D plans.
Our conclusion is that the provisions of the final rule to allow
Part D sponsors to structure their benefits with a second,
``preferred'' specialty tier are unlikely to have a material impact on
Part D costs. While it is possible that a small savings to the Part D
program could result from the enhanced flexibility, particularly for
MA-PD plans with greater prescriber integration, broad adoption of a
second specialty tier is unlikely. Nevertheless, we believe there are
reasons for a second specialty tier. As discussed in more detail in
section IV.E. of this final rule, stakeholders requesting this change
have posited that it might lead to better rebates on certain Part D
drugs and reduced costs for Part D enrollees and CMS. Most importantly,
we are currently not aware of any major adverse effects that could
result to Part D enrollees by allowing Part D sponsors to structure
their benefits with a second, ``preferred'' specialty tier. For
example, concern for undue financial burden on some Part D enrollees
has prompted us to retain the current maximum allowable cost sharing
(that is, 25/33 percent, as discussed in more detail in section IV.E.
of this final rule). Additionally, we solicited comment regarding
whether negative consequences to Part D enrollees could result from
this proposal. If there were no foreseeable notable harms to Part D
enrollees, it would seem reasonable to provide the requested
flexibility to Part D sponsors and see if additional benefits do
result, while monitoring implementation for adverse effects and
responding as necessary.
As discussed in section IV.E. of this final rule, improving Part D
enrollee access to needed drugs, including lowering drug costs, are
central goals for CMS. While this regulatory impact analysis assesses
the potential impact this policy will have on Part D drug costs, we
also believe this policy has the potential to impact patient access and
lower drug costs more broadly, by providing further incentives for
manufacturers to develop generic drugs and biosimilar and
interchangeable biological products. Even if notable savings for the
Part D program were not to materialize, individual Part D enrollees
might save a great deal on rebated Part D drugs. Or, the policy might
result in the benefit of (1) more formulary choices, or (2) more
choices at a lower cost than might have otherwise been the case. These,
in turn, might lead to positive health outcomes with associated
indirect savings to Part D enrollees or the government. We solicited
comment on any other unforeseen benefits that might result. And, again,
in finalizing this proposal, we will closely monitor for any adverse
effects and take any necessary action including warranted changes for
future rulemaking.
Comment: Some commenters suggested that CMS should conduct
additional research on the impact of specialty tiers on Part D
enrollees, generally, before enacting this policy.
Response: In finalizing our proposals to permit Part D sponsors to
maintain up to two specialty tiers, we intend to monitor the uptake of
the use of a second specialty tier. We are unclear about, generally,
what the commenters believe we should research, given the Part D
enrollee protections we are finalizing as part of this final rule.
Comment: Some commenters suggested that the specialty tier(s) serve
as perverse ``reverse insurance,'' reasoning that the sickest patients
who need specialty-tier eligible drugs subsidize the benefit to keep
premiums and cost sharing on non-specialty tiers lower for the rest of
the benefit.
Some commenters stated that CMS's proposals exacerbate an existing
lack of transparency and the impact of misaligned rebate incentives in
the Part D program because CMS's proposal provides no incentive or
imposes no requirement that the rebates on these high-cost drugs be
passed on to Part D enrollees at the point of sale. They suggested that
these misaligned incentives lead to inappropriate tier placements as
Part D sponsors choose higher negotiated prices in exchange for higher
rebates, and may prefer a drug with a higher net cost over a less
expensive alternative. These commenters suggested that CMS's proposals,
due to this inappropriate tier placement, could increase costs to Part
D enrollees and the government in two ways: First, as Part D enrollees
enter catastrophic coverage more quickly; and second, because Part D
enrollees could pay more for preferred products, despite a lower
coinsurance percentage, because the coinsurance percent is calculated
from a higher list price. These commenters also suggested that
misaligned rebate incentives in the Part D program will discourage plan
use of newer market alternatives.
Response: We disagree with the sentiment that the specialty tier(s)
serve as a perverse, ``reverse insurance'' whereby the sickest patients
who need specialty-tier eligible drugs subsidize the benefit to keep
premiums and cost sharing on non-specialty tiers lower for the rest of
the benefit. We believe this reasoning is flawed because the specialty
tier is aligned with the Defined Standard benefit, and the Part D plan
bid requirements also necessitate that the benefit structure below the
specialty tier also be actuarially equivalent to the Defined Standard
benefit. Therefore, the use of specialty-tier eligible drugs has no
differential impact on lowering the premiums and cost sharing on non-
specialty tiers for the rest of the benefit. Finally, our proposals
would not change the role of rebates in the Part D program.
Comment: Relative to the Part D enrollee and governmental impacts
of CMS's proposals, some commenters urged CMS to ensure premiums do not
go up, and others expressed concern that cost sharing on other (in
other words, non-specialty) tiers would increase as Part D sponsors are
required to maintain actuarial equivalence. Some commenters suggested
that plans will utilize a second specialty tier to shift more risk of
financial exposure to Part D enrollees, leading to higher coinsurance
for enrollees who use specialty-tier drugs.
Relative to the Part D sponsor impacts of our proposals, some
suggested that CMS's proposals would increase costs to Part D sponsors
due to increases in administrative burden from tiering exceptions
requests. Others disagreed with CMS's assertion that without any
specialty tiers, plan costs would increase, and stated that CMS
provided no data to suggest that specialty tier drugs at lower cost
sharing could cause increases to premiums or cost sharing for non-
specialty tiers.
Some commenters were concerned that CMS's proposals would increase
costs to Part D enrollees, the government, and Part D sponsors. These
commenters suggested that if the higher cost-sharing, specialty tier
were kept at the current specialty tier cost threshold (in other words,
25/33 percent) with no changes (in other words, permitting the higher
cost-sharing, specialty tier to have cost sharing greater than 25/33
percent), the Part D sponsor's costs for specialty drugs would
increase, leading, in turn, to higher bids, and higher premiums and
cost sharing for Part D enrollees.
Response: Substantial reductions in cost sharing below the 25/33
percent

[[Page 6079]]

maximum for the preferred specialty tier necessitate substantial
increases in cost sharing for non-specialty tiers in order to meet
actuarial equivalence requirements. Therefore, we recognize that, in
order for Part D sponsors to offer competitive plan benefit designs,
Part D sponsors may not offer plan benefit designs with cost sharing
for the preferred specialty tier far below the 25/33 percent maximum
for the higher cost-sharing, specialty tier, and consequently, Part D
enrollee savings for drugs on the preferred specialty tier may be
limited. However, because Sec. 423.104(d)(2)(iv)(D) maintains the
existing 25/33 percent maximum allowable cost sharing for the specialty
tiers, Part D enrollees will not pay more for specialty-tier drugs
under our proposals than they do now. Therefore, we disagree that our
proposals will increase Part D enrollees' cost sharing for specialty-
tier drugs.
We do not understand the commenter's assertion that plans will
utilize a second specialty tier to shift more risk of financial
exposure to Part D enrollees, leading to higher coinsurance for
enrollees who use specialty-tier drugs. While this may be the case in
the commercial market, which does not, as a matter of policy, establish
or maintain either a specialty-tier cost threshold or a maximum
allowable cost sharing, and thus, may have incentives to place more
drugs on the specialty tier(s), the methodologies to establish an
increase the specialty-tier cost threshold that we are finalizing in
this rule will serve to limit the specialty tier(s) to only the
highest-cost Part D drugs. We welcome further input on this matter.
Because specialty-tier drugs are playing an increasing role in the
prescription drug marketplace, and we have concern about the impact
this will have on the Part D program, we believe that the increase in
volume of specialty-tier drugs, but not our proposals, could increase
costs to the government.
Regarding administrative burden, tiering exceptions are requested
at a much lower volume than formulary exception requests and coverage
determinations in general. Based on 2019 Part D plan reported data,
tiering exceptions accounted for only 10.8 percent of all exception
requests received at the coverage determination level, and 5.6 percent
of all coverage determination requests. We do not anticipate that our
proposals to permit Part D sponsors to maintain up to two specialty
tiers will significantly impact this volume.
Although implementation will be delayed until coverage year 2022,
we are finalizing as proposed our proposals to permit a second
specialty tier, except that we are not finalizing our proposal to
specify a specialty tier threshold of $780. Additionally, in response
to comments, we are finalizing new paragraph Sec.
423.104(d)(2)(iv)(A)(6) which describes the eligibility for placement
on the specialty tier of newly-FDA-approved Part D drugs.
To retain the policies in effect before coverage year 2022, we are
amending the definition of specialty tier at Sec. 423.560 by adding
paragraph (i) to clarify that the existing definition will apply before
coverage year 2022, and paragraph (ii) to cross reference the
definition which appears in Sec. 423.104(d)(2)(iv), which will apply
beginning coverage year 2022. Additionally, as discussed in section
IV.E.2. of this final rule, we are amending Sec. 423.578(a)(6)(iii) by
adding paragraph (A) to cross reference the definition of specialty
tier which will apply before coverage year 2022, and paragraph (B) to
cross reference placement of the definition of specialty tier at Sec.
423.104(d)(2)(iv) which will apply beginning coverage year 2022.
Additionally, paragraph (A) will remove the phrase ``and biological
products,'' and paragraph (B) will (1) reflect the possibility of a
second specialty tier, and (2) clarify that Part D sponsors may design
their exception processes so that Part D drugs on the specialty tier(s)
are not eligible for a tiering exception to non-specialty tiers.
6. Service Determination Request Processes Under PACE (Sec. Sec.
460.104 and 460.121)
We have revised the estimated impact from that presented in the
proposed rule in the following ways: (1) We adjusted our estimates to
account for an increase in wages according to the May 2019 BLS, (2) we
included 2019 PACE audit data which was not available at the time these
estimates were published in the proposed rule, (3) we updated
enrollment data based on 2017-2019 data from the CMS Office of the
Actuary (OACT) and (4) we updated PACE organization contract data based
on data from the Health Plans Management System (HPMS). Based on these
revisions, we continue to estimate that the finalized provisions will
result in savings to PACE organizations.
To estimate the savings from the revisions we are finalizing to the
service determination request provisions, we rely upon the assumptions
described in the next section. These assumptions are based on our
experience monitoring PACE organizations' compliance with current
service determination request requirements and on data collected during
those monitoring efforts.
We estimate that under the current regulation, the aggregate total
annual cost to all PACE organizations for processing service
determination requests is approximately $33.2 million.
We estimated that cost by using the following assumptions. First,
we estimate the wages for each of the 11 Interdisciplinary team (IDT)
members in order to better estimate a total cost. The eleven
disciplines shown are the minimum disciplines required to compose the
IDT under Sec. 460.102(b). The occupation codes and wages used come
from the BLS's website. The wage for each discipline includes the mean
hourly wage plus 100 percent of the mean hourly wage for overhead and
fringe benefits. Table I3 allows us to estimate the mean hourly wage of
the IDT as a whole.

Table I3--Wages for IDT Staff Members
------------------------------------------------------------------------
Mean hourly
wage with
Occupation title Occupation code overhead and
fringe
benefits ($)
------------------------------------------------------------------------
Dietician......................... 29-1031............. 59.94
Driver............................ 53-3058............. 31.94
Home Care Coordinator (often an 29-1141............. 74.48
RN).
Masters of Social Work............ 21-1022............. 57.02
Occupational Therapist............ 29-1122............. 82.90
PACE Center Manager............... 11-9111............. 110.74

[[Page 6080]]

Personal Care Attendant........... 31-1120............. 25.42
Physical Therapist................ 29-1123............. 86.70
Primary Care Provider............. 29-1216............. 193.70
Recreational Therapist............ 29-1125............. 49.16
Registered Nurse.................. 29-1141............. 74.48
-------------------------------------
Total......................... .................... 846.48
-------------------------------------
Wages/hr (Total/11)....... .................... 76.95
------------------------------------------------------------------------

Currently, when processing a service determination request, the IDT
must determine the appropriate discipline(s) to conduct a reassessment
under Sec. 460.104(d)(2) and is responsible for notifying the
participant or designated representative of its decision to approve or
deny a request under Sec. 460.104(d)(2)(iii). Based on our experiences
monitoring PACE organizations, we estimate that the IDT takes
approximately 1 hour to handle these responsibilities for each service
determination request (1 x $846.48 = $846.48).
Reassessments performed in response to service determination
requests are varied and may be done by multiple disciplines. For
purposes of this estimate, we assume a registered nurse (RN) and
Master's-level social worker (MSW) conduct reassessments, and that the
total hours for reassessments equals 1.5 hours per discipline.
Therefore, we estimate that reassessments would cost (1.5 x $74.48 =
$111.72) and (1.5 x $57.02 = $85.53). This is summarized in Table I4.

Table I4--Cost per Service Determination Request for a Pace Organization Assessment
----------------------------------------------------------------------------------------------------------------
Occupation
Occupation title code Wage/hr ($) Time (hr) Total cost ($)
----------------------------------------------------------------------------------------------------------------
Masters of Social Work.......................... 21-1022 57.02 1.5 85.53
Registered Nurse................................ 29-1141 74.48 1.5 111.72
---------------------------------------------------------------
Total Cost.................................. .............. .............. .............. 197.25
----------------------------------------------------------------------------------------------------------------

Additionally, once a decision has been rendered, one discipline
(usually the MSW) notifies the applicable parties which we believe
takes about 1 hour (1 x $57.02 = $57.02). This is summarized in Table
I5.

Table I5--Cost per Service Determination Request for a Pace Organization Notification
----------------------------------------------------------------------------------------------------------------
Occupation title Occupation code Wage/hr ($) Time (hr) Total cost ($)
----------------------------------------------------------------------------------------------------------------
Masters of Social Work...................... 21-1022 57.02 1 57.02
----------------------------------------------------------------------------------------------------------------

Therefore, the processing of a service determination request under
current regulations is $1,100.75 ($57.02 + $846.48 + $197.25) per
request.
Additionally, based on combined audit data collected from all PACE
organizations in 2017, 2018, and 2019 we estimate there are 705.0
service determination requests per 1,000 enrollees (30,173 total
service determination requests for 2017, 2018, and 2019 divided by
42,800, the average enrollment for that time period). Consequently, the
total cost of processing service determination requests for 2017-2019
under the current regulations was approximately $33.2 million (705.0
service determination requests/1,000 enrollees x 42,800 enrollees x
$1,100.75 per service determination request) per year.
We anticipate the changes in Sec. 460.121 of this final rule will
reduce burden on PACE organizations in the following ways. First, the
final rule establishes a streamlined approval process for service
determination requests when an IDT member can approve the request in
full at the time the request is made, under new Sec. 460.121(e)(2).
These approved requests will not need to be brought to the full IDT for
review and will not require the IDT to conduct a reassessment. We also
do not anticipate notification of the approval adding an additional
burden because the IDT member would approve the request immediately and
presumably satisfy the notification requirements under Sec.
460.121(j)(1) at the time the request is made. As discussed in section
VIII.B.10. of this final rule, we estimate:
22.47 percent of all service determination requests are
denied, while 77.53 percent are approved; and
Of the 77.53 percent of service determination requests
that are approved, 50 percent of those are routine (that is, can be
approved in full by an IDT member), while 50 percent are not routine.
Consequently,

[[Page 6081]]

273 service determination requests/1,000 enrollees are
routine and approved (50 percent routine x 77.5 percent approved x
705.0 service determination requests/1,000 enrollees);
158 service determination requests/1,000 enrollees are
denied (22.5 percent x 705.0 service determination requests/1,000
enrollees); and
273 service determination requests/1,000 enrollees are
approved but not routine (77.5 percent approved x 50 percent not
routine x 705.0 service determination requests/1,000 enrollees).
These estimates are summarized in Table I6.

Table I6--Breakout of Service Determination Requests by Type
------------------------------------------------------------------------
Number or
Row ID Formula Item percentage
------------------------------------------------------------------------
(1).............. ............... Average enrollment 42,800
PACE, 2017, 2018,
2019.
(2).............. ............... Total unduplicated 30,173
service
determination
requests (SDR) 2017-
2019.
(3).............. (2)/(1) * 1000. Number of SDR per 705.0
1000 enrollees.
(4).............. ............... Percentage of SDR 77.53
Approved.
(5).............. 100%-(4)....... Percentage of SDR 22.47
with denial.
(6).............. ............... Percentage of 50
approved SDR,
easily approved.
(7).............. (3) * (4)...... Total approved SDR 547
per 1000 enrollees.
(8).............. (3) * (5)...... Total SR with denial 158
per 1000 enrollees.
(9).............. (7) * (6)...... Total easily 273
approved SDR per
1000 enrollees.
(10)............. (7)-(9)........ Total not-easily 273
approved SDR per
1000 enrollees.
(11)............. (8) + (9) + Aggregate SDR per 705.0
(10). 1000 enrollees per
year.
------------------------------------------------------------------------

We are finalizing the relevant PACE service determination request
proposals without substantive modification, and our burden estimates
for the final provisions are based on the following assumptions:
Service determination requests that an IDT member is able
to approve in full at the time the request is made under Sec.
460.121(e)(2) will not require full IDT review, assessment, or a
separate notification. Although some work is involved in such
approvals, we are estimating the cost as $0 since: (i) No reassessment
is needed consistent with Sec. 460.121(e)(2)(ii), (ii) no separate
notification will generally be needed under Sec. 460.121(j)(1), (iii)
review by the full IDT is not required under Sec. 460.121(e)(2)(ii)
and (iv) the estimated time for an IDT member to approve an easily
approved service determination request in full is small and hence the
total cost is negligible and can be done as a part of the PACE
organization's routine day to day activities.
Denied service determination requests require review by
the full IDT under Sec. 460.121(f), an in-person assessment pursuant
to 460.121(h)(1), and notification.
Service determination requests that are approved, but
cannot be approved in full at the time the request is made, will
require review by the full IDT under Sec. 460.121(f) and notification
pursuant to Sec. 460.121(j)(1) but would not require an assessment.
In section VIII.B. of this final rule, we identified eight
requirements across five provisions anticipated to increase burden for
PACE organizations. These eight requirements, their projected first
year costs, and their projected annual costs after the first year are
summarized in Table I7.

Table I7--Paperwork Costs Associated With This Final Rule
------------------------------------------------------------------------
Cost for years
Item 1st year cost 2-10 if
* applicable
------------------------------------------------------------------------
Extension notification.................. 133,997 133,997
Update for extension notification....... 18,636 ..............
Update Appeal Notices................... 46,590 ..............
Develop written materials for tracking.. 374,661 ..............
Tracking services....................... 374,661 374,661
Medical record documentation training... 93,180 ..............
Medical record documentation............ 634,530 634,530
Update for patients' rights............. 18,636 ..............
-------------------------------
Totals (in Millions $).............. 1.7 1.1
------------------------------------------------------------------------

To estimate the total savings over 10 years we proceed as follows:
We estimate the total savings without additional paperwork
for 2017-2019 by subtracting the projected cost under the proposed
provisions from the actual cost under the current provisions. Table I8
presents these calculations, showing a $15.2 million savings, without
considering paperwork, for 2017-2019.
For any year between 2022 and 2031, we divide the
projected enrollment for that year by the actual enrollment for 2017-
2019. Since costs are per 1000 enrollees, this quotient when multiplied
by 15.2 million will give the savings for that year without considering
paperwork requests.
Finally, since paperwork requests are an additional
burden, we subtract paperwork costs from the savings to ascertain the
projected savings for that year. In subtracting paperwork costs, we
must subtract an annual cost in all years and a special one-time first
year cost in 2022. Table I9 presents this 10-year projection.
We illustrate these calculations by deriving the $15.2 million
savings estimated based upon the data 2017 through 2019, and presented
in Table I9. That is, if the provisions of this rule had

[[Page 6082]]

been adopted between 2017 and 2019, there would have been a savings of
$15.2 million. This can be shown as follows:
Actual Cost (without paperwork) for 2017-2019: 33.2
million.
Cost (without paperwork) if these provisions were adopted:
18.0 million.
Total savings (Difference of the last two rows): 15.2
million.
As we explained previously, in order to arrive at the 33.2 million
and the 18.0 million, we considered the following:

$33.2 = 42,800 enrollees * 705.0 service determination
requests/1,000 enrollees * $1,100.75 (IDT + assessment + notification)
$18.0 = $10.6 (10.56) + $7.5 (7.44) + $0
$10.6 = 42,800 enrollees * 273 service determination requests/
1,000 enrollees x ($1,100.75-$197.25)
$7.4 = 42,800 enrollees * 158 service determination requests/
1,000 enrollees x ($1,100.75)
$0 = 42,800 enrollees * 273 service determination requests/
1,000 enrollees x $0

As can be seen, the savings comes from the fact that whereas
current regulations require that all 705.0 service determination
requests/1,000 enrollees be processed by the IDT (at a cost of
$1,100.75), the draft final regulations only require that 431 service
determination requests (158 service determination requests/1,000
enrollees that are denied and 273 service determination requests/1,000
enrollees that are approved but not routine) would go to the full IDT
for processing, but another 273 service determination requests would be
approved and routine and therefore would not impose any administrative
cost on the PACE organization. Additionally, the 273 approved but not
routine requests that would go to the IDT would be a reduced cost of
$1,100.75-$197.25 since assessments would not be done for all of those
approvals. We anticipate this final rule will reduce administrative
burden on the PACE organization, and allow IDT members to focus more
time on providing participant care.
[GRAPHIC] [TIFF OMITTED] TR19JA21.050

[[Page 6083]]

[GRAPHIC] [TIFF OMITTED] TR19JA21.051

To clarify Table I9, consider the following:
As noted previously, the actual non-paper savings for the
base year, had this provision been implemented between 2017 and 2019,
would have been $15.2 million for the 42,800 enrollees.
The OACT projects 52,181 PACE enrollees for 2022.
Since enrollment is projected to increase by a factor of
1.2191 (52,181/42,800), and we are estimating service determination
requests per 1,000 enrollees, we project the non-paper savings for 2022
to be 1.2191 x $15.2 = $18.5 million. In other words, the 2017-2019
costs under the current regulation and proposed regulation would
involve a product of 2017-2019 enrollment (about 42,800) times the
number of service requests per 1,000. The 2022 costs use the same
formula, however the 42,800 is replaced by 52,181. It follows that
multiplying the 2017-2019 savings by 52,181/42,800 gives us the correct
2022 savings. Since the difference between the current cost and the
proposed cost is savings, it follows that multiplying this difference
by the ratio of 52,181/42,800 gives the updated savings).
However, these are savings without paperwork costs. Table
I7 indicates an ongoing $1.1 million cost in all years. The extra cost
in the first year $0.6 million (in addition to the $1.1 ongoing cost)
is derived from Table I7 as the total first year cost of $1.7 million
minus the ongoing cost in subsequent years of $1.1 million.
Therefore, the total savings for 2022 would be $18.5-(1.1
+ 0.6) = $16.8 million.
The other rows are calculated similarly.
Accordingly, the finalized provisions streamline the processes for
addressing service determination requests in PACE are projected to save
PACE organizations $16.8 million in 2022 with a gradual increase in
savings to $21.5 million by 2031. The aggregate savings from 2022-2031
is $193.8 million. These savings are to industry (PACE organizations)
because administrative burden is being reduced. Additionally, each
blank cell in Table I8 corresponds to a proposal to eliminate an
unnecessary burden.
We received no comments regarding the impact related to the
proposed PACE provisions however we have revised our estimate in the
following ways: (1) We updated our projected costs for Sec. Sec.
460.121, 460.122, 460.124, 460.98, 460.210, and 460.112, (2) we
adjusted estimates to account for an increase in wages according to the
May 2019 BLS, (3) we included 2019 PACE audit data which was not
available at the time these estimates were published in the proposed
rule, (4) we updated enrollment data based on data from OACT and (5) we
updated PACE organization contract data based on data from HPMS.
Specifically, the projected costs for documenting and tracking the
provision of services under PACE (Sec. 460.98), appeals requirements
under PACE (Sec. 460.122), and participant rights (Sec. 460.112)
provisions were updated to account for: (1) An increase in wages
according to the May 2019 BLS, (2) updated enrollment data from OACT,
and (3) updated PACE organization

[[Page 6084]]

contract data based on data from HPMS. Projected costs and savings
associated with service determination request (Sec. 460.121) were
updated to account for: (1) An increase in wages according to the May
2019 BLS, (2) updated enrollment data based on data from OACT, (3)
updated PACE organization contract data based data from HPMS, and (4)
updated service determination request data from PACE audits conducted
from 2017 through 2019. As a result of comments, we also revised costs
for documentation in medical records under PACE (Sec. 460.210), which
accounts for: (1) An increase in wages according to the May 2019 BLS,
(2) updated enrollment data based on data from OACT, (3) updated PACE
organization contract data based on data from HPMS, and (4) revisions
to the proposed requirements for maintaining all written communications
received from a participant or other parties in their original form, as
discussed in section VIII.B.10. of this final rule.
7. Beneficiaries With Sickle Cell Disease (Sec. 423.100)
Based on analysis of 2018 data, we found that about 683
beneficiaries (1.3 percent) who met the minimum OMS criteria or who had
a history of an opioid-related overdose had sickle cell disease and
would be affected by the finalized exemption. Since we estimate that
less than 10 percent of these 683 beneficiaries would have been
targeted for case management, the resulting savings is $0.0 million (10
percent x 683 enrollees x $542.46 for each case management).

E. Alternatives Considered

CMS did not develop Alternatives Considered sections for most of
the provisions in this final rule as they generally are direct
implementations of federal laws or codifications of existing policy for
the Part C and D programs. In this section, CMS includes discussions of
Alternatives Considered for the provisions to which they are
applicable.
1. Beneficiaries With History of Opioid-Related Overdose Included in
Drug Management Programs (DMPs) (Sec. 423.153)
As the Medicare Part D program is a prescription drug benefit and
opioid-related overdoses can be due to both prescription opioids, which
may be covered under Part D, and illicit opioids, this raises a
question of how CMS should define history of opioid-related overdose.
CMS considered two options for defining history of an opioid-related
overdose plus two alternatives.
Opioid overdose codes (ICD-10) were identified using Medicare FFS
Claims data and Part C Encounter data. When considering overdose, we
noted that prescription opioids can also be obtained through illegal or
illicit means. The available overdose diagnosis codes describe the type
of drug involved in the poisoning but do not specify how the drugs were
obtained. There is also an unspecified opioid overdose code. Therefore,
assumptions were made to classify an overdose code as prescription or
illicit. For example, code 40.4 (other synthetic opioids) was
classified as illicit opioid overdose but in some cases fentanyl may
have been obtained by prescription. Conversely, code 40.2 (other
opioids) may include poisoning due to oxycodone which was classified as
prescription opioid overdose but may have been obtained illegally.
Option 1: Include beneficiaries with either prescription or illicit
opioid-related overdoses. This option would allow CMS to proactively
identify the most potential at-risk beneficiaries with a history of
opioid-related overdoses, regardless whether the opioid is prescription
or illicit, so that they can be reported to the Part D sponsor and
reviewed through a DMP. This option represents the largest program size
of all of the options. Based on data between July 2017 and June 2018,
CMS estimates that there were about 28,891 beneficiaries with
prescription or illicit opioid-related overdoses who would have been
identified and reported as potential at-risk beneficiaries through the
OMS.
Option 2: The program size for this option, as a subset of Option
1, decreases by 37 percent to 18,268 if we were to identify only those
beneficiaries reported to have at least one opioid prescription drug
claim during the 6-month OMS measurement period (approximately 63
percent had opioid Part D claim(s)), which means that they have at
least one relatively current opioid prescriber.
Option 3: Identify beneficiaries with only prescription opioid-
related overdoses. This approach would utilize a 12-month lookback
period to identify beneficiaries with a history of prescription opioid
overdoses. Based on data between July 2017 and June 2018, CMS estimates
that there were about 21,037 beneficiaries with prescription opioid-
related overdoses who would be identified and reported by OMS.
Option 4: Since about 72 percent of beneficiaries had at least one
Part D opioid claim in the 6-month OMS measurement period, this option,
as a subset of Option 3, decreases the program size to 15,217
beneficiaries if we were to require beneficiaries reported to have at
least one opioid prescription drug claim, which means that they have at
least one relatively current opioid prescriber.
As noted, the primary impact will result from needing to case
manage the additional beneficiaries identified as meeting the proposed
definition. At the proposed hour and skill levels defined, this
introduces a projected cost of $547.74 per additional beneficiary
undergoing case management. The various economic impacts for the
alternatives considered are summarized in Table I10.

Table I10--Economic Impact of Alternatives Considered
------------------------------------------------------------------------
Number of
Alternative (criteria) enrollees Total cost
affected (millions $)
------------------------------------------------------------------------
Option 1................................ 28,891 15.8
Option 2 (finalized).................... 18,268 10.0
Option 3................................ 21,037 11.5
Option 4................................ 15,217 8.3
------------------------------------------------------------------------

CMS is finalizing the proposal to define history of opioid-related
overdose as defined in Option 2. This option incorporates the risk
factor most predictive for another overdose or suicide-related event
and is commensurate with the Administration's commitment to vigorously
address the opioid epidemic. However, this approach keeps a clear tie
between opioid-related overdoses and the Part D program by requiring a
recent

[[Page 6085]]

prescription opioid prescriber, which simultaneously increases the
likelihood for successful provider outreach through case management by
the sponsor. We received no comments on this proposal and therefore are
finalizing this provision without modification.
2. Eligibility for Medication Therapy Management Programs (MTMPs)
(Sec. 423.153)
We initially contemplated requiring that each plan as part of its
MTM program develop educational materials regarding the safe disposal
of prescription drugs that are controlled substances for its
beneficiaries. Though each plan would have had a greater cost to
develop such materials, the information might have included more local
resources specific to individual plans. However, for the sake of
consistency, and to reduce burden on MTM programs, we proposed that
Part D plans would be required to furnish materials in their MTM
programs that meet criteria specified in Sec. 422.111(j) as part of a
CMR, TMR, or other MTM correspondence or service.
We also considered whether we should extend MTM eligibility to
potential at-risk beneficiaries (PARBs) instead of to just those
determined to be at risk. We believe that providing MTM to PARBs might
have been beneficial for this population. However, the SUPPORT Act is
clear that the extended MTM eligibility criteria should apply only to
at-risk beneficiaries.
After careful consideration of all comments received, and for the
reasons set forth in section III.E. of this final rule, we are
finalizing our proposal to add a requirement that Part D sponsors
target ARBs for enrollment in their MTM programs. Part D plan sponsors
will be required to comply with this new requirement by January 1,
2022. We are also finalizing the requirement that plans furnish
information on safe disposal of prescription drugs that are controlled
substances to MTM program enrollees at Sec. 423.153(d)(1)(vii)(E),
with a modification to clarify that plans may do so through use of a
CMR, TMR or other MTM correspondence or service. We did not receive any
comments on our impact analysis.
3. Beneficiaries' Education on Opioid Risks and Alternative Treatments
(Sec. 423.128)
The provision regarding educating MA and Part D beneficiaries on
opioid risks and alternative treatments is discussed in section III.D.
of this final rule. In section IX.B.6. of this final rule, we estimated
a maximum impact assuming that all plans would want to send all Part D
enrollees information and that 75 percent of enrollees would request
paper versus electronic communication.
However, we emphasize that the SUPPORT Act does not require CMS to
set a standard as to which enrollees receive the required information.
As indicated in section III.D. of this final rule, the SUPPORT Act
gives plans flexibility to choose which enrollees to send the
information. To facilitate plan choice, we have provided a wide range
of alternatives in Table I11. The alternatives are based on the number
of days the enrollee has been on opioids, the possible gaps in opioid
treatment, as well as the cause of the opioid treatment; we, for
example, think it very reasonable that sponsors would not want to send
notices to opioid users in hospice or with cancer as this could unduly
alarm them; therefore, one alternative is to carve these populations
out. Although not a policy alternative, we also consider two
alternatives for paper estimates; a conservative approach is that only
half (50 percent) of enrollees would request paper while the more
aggressive approach assumes 75 percent so request. As can be seen,
despite the wide range of differences, costs vary only between $0.1 and
$0.5 million.

[[Page 6086]]

[GRAPHIC] [TIFF OMITTED] TR19JA21.052

Comment: A few commenters suggested that sponsors send information
on opioid alternatives to all Part D beneficiaries.
Response: As noted earlier in this rule, the SUPPORT Act gives plan
sponsors flexibility to choose which enrollees to send the information
and sponsors have the most accurate beneficiary information and may
wish to select a specific subset to send this information to.

[[Page 6087]]

We are finalizing this provision with modification. As explained in
section A of this final rule, while the statutory requirement begins
with coverage year 2021, this regulation will be applicable beginning
January 1, 2022 rather than January 1, 2021 as initially proposed.
Although implementation will be delayed until coverage year 2022, we
are finalizing without modification for our proposal to permit Part D
sponsors to send information on opioid alternatives to all
beneficiaries, or to a specific subset as determined by the sponsor.
4. Permitting a Second, ``Preferred'', Specialty Tier in Part D
(Sec. Sec. 423.104, 423.560, and 423.578)
We would allow Part D sponsors to have two specialty tiers, under
the existing policy at Sec. 423.578(c)(3)(ii), Part D sponsors would
be required to permit tiering exceptions between the two specialty
tiers. We also considered permitting Part D sponsors to exempt tiering
exceptions between the two specialty tiers, but we are concerned that
removing the Part D enrollee protection requiring exceptions between
the two specialty tiers could negate benefits that might otherwise have
accrued to Part D enrollees under a two specialty-tier policy when
there is a therapeutic alternative on the preferred specialty tier that
a Part D enrollee is unable to take.
Additionally, although we proposed to codify at Sec.
423.104(d)(2)(iv)(E) the maximum allowable cost sharing under current
policy, because we note that the deductible applies to all tiers and it
is unclear that we should continue to differentiate the specialty tier
from other tiers on the basis of the deductible, we also considered
decreasing the maximum permissible cost sharing to the 25 percent
Defined Standard coinsurance for Part D plans with decreased or no
deductibles. As a result, we would anticipate that Part D sponsors
would need to raise cost sharing on non-specialty-tier drugs to
maintain actuarial equivalence. If this applies to all plans, then
there should be no budget impact, as they must still return to a basic
benefit design that is actuarially equivalent to the Defined Standard
benefit, and there will be no adverse selection. Additionally, we do
not expect impacts from this proposal to the private sector, as
additional specialty tiers already exist in that market. Plans with a
high proportion of dual-eligible enrollees are less likely to offer a
second specialty tier, because the lower cost sharing would be less
impactful for those beneficiaries. As a result, we don't expect
material impacts to Medicaid costs.
Finally, although we proposed at Sec. 423.104(d)(2)(iv)(B) to
increase the specialty-tier cost threshold for all plan years in which
CMS determines that no less than a ten percent increase in the
specialty-tier cost threshold, before rounding ``to'' the nearest $10
increment, in order to reestablish the 1 percent outlier threshold, CMS
is also considering a change in this methodology such that CMS would
always round ``up'' to the nearest $10 increment. This rounding up
methodology would: (a) Ensure that the new specialty-tier cost
threshold actually meets the 1 percent outlier threshold, and (b)
provide more stability to the specialty-tier cost threshold. Although
the $780 30-day equivalent ingredient cost we determined to be the
specialty-tier cost threshold for this final rule did not require
rounding, had we arrived at a 30-day equivalent ingredient cost of, for
example, $772, rounding up to $780 30-day equivalent ingredient cost
would have an insignificant impact on the number of drugs meeting the
specialty-tier cost threshold.
As noted above, because of conflicting forces, we have not
estimated a quantitative cost to this provision and acknowledged at
most a possible qualitative savings. Similarly, these alternatives
would not change costs.
Comment: We did not receive any comments regarding the alternative
on which we solicited comment to always round ``up'' to the nearest $10
increment.
Response: Due to the balance of other comments, we are not
finalizing this alternative.
Comment: Some commenters preferred that CMS permit Part D sponsors
to impose cost sharing on the higher-cost sharing, specialty tier
higher than the current maximum allowable cost sharing of 25/33
percent.
Response: As discussed in section IV.E. of this final rule, we
continue to have concerns that permitting Part D sponsors to impose
cost sharing on the higher-cost sharing, specialty tier higher than the
current maximum allowable cost sharing of 25/33 percent is
discriminatory.
Comment: Some commenters preferred CMS's option to permit Part D
sponsors to exempt both specialty tiers from tiering exceptions, even
between the two tiers.
Response: As discussed in section IV.E. of this final rule,
although we believe reasonable arguments can be made with regard to our
statutory authority relative to both our proposal and the alternative,
we are concerned that the alternative could make the preferred
specialty tier vulnerable to tiering exceptions to the non-specialty
tiers, which could impede the ability of Part D sponsors to offer
actuarially equivalent benefit designs.
Although implementation will be delayed until coverage year 2022,
we are finalizing as proposed our proposals to permit a second
specialty tier, except we are not finalizing our proposal to specify a
specialty tier threshold of $780. Additionally, in response to
comments, we are finalizing new paragraph Sec. 423.104(d)(2)(iv)(A)(6)
which describes the eligibility for placement on the specialty tier of
newly-FDA-approved Part D drugs.
To retain the policies in effect before coverage year 2022, we are
amending the definition of specialty tier at Sec. 423.560 by adding
paragraph (i) to clarify that the existing definition will apply before
coverage year 2022, and paragraph (ii) to cross reference the
definition which appears in Sec. 423.104(d)(2)(iv), which will apply
beginning coverage year 2022. Additionally, as discussed in section
IV.E.2. of this final rule, we are amending Sec. 423.578(a)(6)(iii) by
adding paragraph (A) to cross reference the definition of specialty
tier which will apply before coverage year 2022, and paragraph (B) to
cross reference placement of the definition of specialty tier at Sec.
423.104(d)(2)(iv) which will apply beginning coverage year 2022.
Additionally, paragraph (A) will remove the phrase ``and biological
products,'' and paragraph (B) will (1) reflect the possibility of a
second specialty tier, and (2) clarify that Part D sponsors may design
their exception processes so that Part D drugs on the specialty tier(s)
are not eligible for a tiering exception to non-specialty tiers.
5. Beneficiary Real Time Benefit Tool (RTBT) (Sec. 423.128)
We are requiring that each Part D plan adopt a beneficiary RTBT by
January 1, 2023. We had considered requiring that this regulatory
action occur by January 1, 2021 to coincide with the requirement of a
prescriber RTBT and the other regulatory actions in this rule. However,
we wanted to ensure that plans had adequate time to focus on
implementing the prescriber RTBT by the currently mandated January 1,
2021 deadline.
This option would probably not change the cost impact which, in
section H8 of this final rule, was estimated as $4 million for
implementation and $0.4 million for policy development and ongoing
maintenance. The major driver of change in cost would be changes in

[[Page 6088]]

wages. We have already updated the 2018 wages in the NPRM to the
current 2019 wages. The wages for general operations manager have
decreased while the wages for compliance officer have increased. If we
assume this continues for next year there would be no change in the
$0.4 million estimate. Computer programmer wages are increased by about
3 percent per year which would increase the $4 million implementation
cost by about $0.1 million.
We also considered requiring that plans display this information
via a third party website or web application. However, since we
discovered that plans already have patient portals that provide some of
the mandated information, we believe it would be less confusing for
beneficiaries to keep this information on the plan portal. In addition,
it would be less of a burden on plans for them to put the information
on the portals, rather than supply the information to a third party.
Another variation that we considered was to require that Part D
sponsors clarify to enrollees that medications listed in the
beneficiary RTBT are based on the formulary and that options may exist
outside of the formulary. However, we ultimately decided that this
requirement was not necessary, since Part D formularies already provide
a robust array of options for Part D enrollees and we believe that Part
D sponsors are in the best positon to judge whether such a statement is
necessary. As a result, we declined to adopt this requirement.
We received no comments on our estimated impacts and are therefore
finalizing it as proposed.
6. Service Determination Request Processes Under PACE (Sec. 460.121)
As we drafted this provision we considered several alternatives.
Alternative 1: First, we considered requiring that requests that
can be immediately approved by a member of the IDT would still require
a reassessment. We rejected this approach because the IDT member, based
on their knowledge of the participant, would know quickly that the
services were appropriate and would therefore not need to conduct a
reassessment to make that determination.
Alternative 2: Second, we considered continuing to require that all
requests that go to the full IDT would require a reassessment even if
the service can be approved. We also rejected this approach because we
do not believe it would be necessary to require a reassessment if the
IDT can approve a service based on their knowledge of the participant.
The alternatives, the finalized approach, as well as the current
approach are listed in Table I12 with total 10-year impact over 10
years.
[GRAPHIC] [TIFF OMITTED] TR19JA21.053

[[Page 6089]]

F. Accounting Statement and Table

The following table summarizes savings, costs, and transfers by
provision. As required by OMB Circular A-4 (available at https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/), in Table I13, we
have prepared an accounting statement showing the savings and costs
associated with the provisions of this final rule for calendar years
2022 through 2031. Table I13 is based on Tables I14A, I14B, and I14C
which lists savings and costs by provision. Table I13 is expressed in
millions of dollars with both costs and savings listed as positive
numbers; aggregate impact is expressed as a positive number since the
aggregate impact is savings. As can be seen, the net annualized savings
of this rule is about $2.9 to $3.4 million per year. The net raw
savings over 10 years is $36.9 million. Minor seeming discrepancies in
totals in Tables I14A, I14B, and I14C reflects use of underlying
spreadsheets, rather than intermediate rounded amounts. A breakdown of
these savings from various perspectives may be found in Table I14.
[GRAPHIC] [TIFF OMITTED] TR19JA21.054

The following Table I14 summarizes savings, costs, and transfers by
provision and forms a basis for the accounting table. For reasons of
space, Table I14 is broken into Table I14A (2022 through 2025), Table
I14B (2026 through 2029), and Table I14C (2030 through 2031, as well as
raw totals). In these tables, all numbers are positive; positive
numbers in the savings columns indicate actual dollars saved while
positive numbers in the costs columns indicate actual dollars spent;
the aggregate row indicates savings less costs. All numbers are in
millions. Tables I14A, I14B, and I14C form the basis for Table I13. The
savings in these tables are true savings reflecting reduced consumption
of services and goods.

[[Page 6090]]

[GRAPHIC] [TIFF OMITTED] TR19JA21.055

[[Page 6091]]

[GRAPHIC] [TIFF OMITTED] TR19JA21.056

[[Page 6092]]

[GRAPHIC] [TIFF OMITTED] TR19JA21.057

The following information supplements Table I14 and also identifies
how impacts calculated in section VIII of this final rule affect the
calculations of this section and the tables.
For two provisions, DMP and PACE, this Regulatory Impact
Analysis provides tables summarizing a variety of impacts with line
items for the paperwork burdens of section VIII of this final rule.
Thus the section VIII impacts are reflected both in Table I14 (summary
table) and Table I13 (monetized table) as well as in special tables in
this section.
For six provisions (MTMP, RTBT, SNP MOCs, pharmacy
performance measures, educating at risk enrollees, and Fraud and
Abuse), the only impacts are calculated in section VIII of this final
rule. These six provisions have those section VIII impacts listed in
Table I14.
We received comments on impacts in certain individual provisions.
These comments as well as our responses, including changes to impacts,
have been addressed in the appropriate provision sections, with many of
these discussions presented in section VIII.D. of this final rule.
Additionally, we did not receive any comments on the summary or
monetized table per se and are therefore finalizing these numbers as
proposed with appropriate adjustments for provisions not included in
this first final rule, the updated impacts, and updated wage estimates.

G. Conclusion

As indicated in Table I13, we estimate that this final rule
generates annualized cost savings of approximately $3 to $3.5 million
(depending on the discount factor used) per year over 2022 through
2031.
As indicated in Table I14, the primary drivers of savings are (1)
revisions to the PACE program resulting in greater efficiencies and (2)
increased vigilance for at-risk beneficiaries with a consequent
reduction in drug costs. These savings are offset by costs from fraud
and abuse efforts and a variety of outreach efforts to at-risk
beneficiaries.
The net savings are true savings since they reflect reductions in
consumption of goods and services. These savings by plans arising from
reduction of services and consumptions of goods are ultimately passed
back to the Medicare Trust Fund which reduce the dollar spending needed
for plans.

[[Page 6093]]

The savings for the federal government are $75.4 million over 10
years, arising exclusively from DMP savings on reduced prescription
drug spending. Administrative savings such as those from the PACE
provisions may not accrue directly to the Medicare Trust Fund.

H. Reducing Regulation and Controlling Regulatory Costs

Executive Order 13771, titled Reducing Regulation and Controlling
Regulatory Costs, was issued on January 30, 2017, and requires that the
costs associated with significant new regulations ``shall, to the
extent permitted by law, be offset by the elimination of existing costs
associated with at least two prior regulations.'' This final rule is a
deregulatory action under Executive Order 13771. At a 7 percent rate,
this rule is estimated to save $3.7 million a year in 2016 dollars over
an infinite time horizon.

List of Subjects

42 CFR Part 405

Administrative practice and procedure, Diseases, Health facilities,
Health professions, Medical devices, Medicare, Reporting and
recordkeeping requirements, Rural areas, and X-rays.

42 CFR Part 417

Administrative practice and procedure, Grant programs--health,
Health care, Health insurance, Health maintenance organizations (HMO),
Loan programs--health, Medicare, and Reporting and recordkeeping
requirements.

42 CFR Part 422

Administrative practice and procedure, Health facilities, Health
maintenance organizations (HMO), Medicare, Penalties, Privacy,
Reporting and recordkeeping requirements.

42 CFR Part 423

Administrative practice and procedure, Emergency medical services,
Health facilities, Health maintenance organizations (HMO), Medicare,
Penalties, Privacy, Reporting and recordkeeping requirements.

42 CFR Part 455

Fraud, Grant programs--health, Health facilities, Health
professions, Investigations, Medicaid, Reporting and recordkeeping
requirements.

42 CFR Part 460

Aged, Health care, Health records, Medicaid, Medicare, Reporting
and recordkeeping requirements.

For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

0
1. The authority citation for part 405 continues to reads as follows:

Authority: 42 U.S.C. 263a, 405(a), 1302, 1320b-12, 1395x,
1395y(a), 1395ff, 1395hh, 1395kk, 1395rr, and 1395ww(k).

0
2. Section 405.370(a) is amended by--
0
a. Revising paragraph (1) of the definition of ``Credible allegation of
fraud''; and
0
b. Adding the definition for ``Fraud hotline tip'' in alphabetical
order.
The revision and addition read as follows:

Sec. 405.370 Definitions.

(a) * * *
Credible allegation of fraud. * * *
(1) Fraud hotline tips verified by further evidence.
* * * * *
Fraud hotline tip. A complaint or other communications that are
submitted through a fraud reporting phone number or a website intended
for the same purpose, such as the Federal Government's HHS OIG Hotline
or a health plan's fraud hotline.
* * * * *

PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL
PLANS, AND HEALTH CARE PREPAYMENT PLANS

0
3. The authority citation for part 417 continues to read as follows:

Authority: 42 U.S.C. 1302 and 1395hh, 42 U.S.C. 300e, 300e-5,
and 300e-9, and 31 U.S.C. 9701.

0
4. Section 417.496 is added to read as follows:

Sec. 417.496 Cost plan crosswalk.

(a) General rules--(1) Definition. Crosswalk means the movement of
enrollees from one plan (or plan benefit package (PBP)) to another plan
(or PBP) under a cost plan contract between the CMP or HMO and CMS. To
crosswalk enrollees from one PBP to another is to change the enrollment
from the first PBP to the second.
(2) Prohibition. (i) Crosswalks are prohibited between different
contracts.
(ii) Crosswalks are prohibited between different plan IDs unless
the crosswalk to a different plan ID meets the requirements in
paragraph (c)(1)(i) of this section.
(3) Compliance with renewal/nonrenewal rules. The cost plan must
comply with renewal and nonrenewal rules in Sec. Sec. 417.490 and
417.492 in order to complete plan crosswalks.
(b) Allowable crosswalk types. All cost plans may perform a
crosswalk in the following circumstances:
(1) Renewal. A plan in the following contract year that links to a
current contract year plan and retains the entire service area from the
current contract year. The following contract year plan must retain the
same plan ID as the current contract year plan.
(2) Consolidated renewal. A plan in the following contract year
that combines 2 or more PBPs. The plan ID for the following contract
year must retain one of the current contract year plan IDs.
(3) Renewal with a service area expansion (SAE). A plan in the
following contract year plan that links to a current contract year plan
and retains all of its plan service area from the current contract
year, but also adds one or more new counties. The following year
contract plan must retain the same plan ID as the current contract year
plan.
(4) Renewal with a service area reduction (SAR). A plan in the
following contract year that links to a current contract year plan and
only retains a portion of its plan service area. The following contract
year plan must retain the same plan ID as the current contract year
plan. The crosswalk is limited to the enrollees in the remaining
service area.
(c) Exception. (1) In order to perform a crosswalk that is not
specified in paragraph (b) of this section, a cost organization must
request an exception. CMS reviews requests and may permit a crosswalk
exception in the following circumstance:
(i) Except as specified in paragraph (c)(1)(ii) of this section,
terminating cost plans offering optional benefits may transfer
enrollees from one of the PBPs under its contract to another PBP under
its contract, including new PBPs that have no optional benefits or
optional benefits different than those in the terminating PBP.
(ii) A terminating cost plan cannot move an enrollee from a PBP
that does not include Part D to a PBP that does include Part D.
(iii) If the terminated supplemental benefit includes Part D and
the new PBP does not, enrollees must receive written notification about
the following:
(A) That they are losing Part D coverage;
(B) The options for obtaining Part D; and

[[Page 6094]]

PART 422--MEDICARE ADVANTAGE PROGRAM

0
5. The authority citation for part 422 continues to read as follows:

Authority: 42 U.S.C. 1302 and 1395hh.

Section 422.2 is amended by--
0
a. Revising the definition of ``Institutionalized'';
0
b. Adding the definition of ``Parent organization'' in alphabetical
order to read; and
0
c. Revising the definition of ``Special needs individual''.
The revisions and addition read as follows:

Sec. 422.2 Definitions.

* * * * *
Institutionalized means, for the purposes of defining a special
needs individual and for the open enrollment period for
institutionalized individuals at Sec. 422.62(a)(4), an MA eligible
individual who continuously resides or is expected to continuously
reside for 90 days or longer in one of the following long-term care
facility settings:
(1) Skilled nursing facility (SNF) as defined in section 1819 of
the Act (Medicare).
(2) Nursing facility (NF) as defined in section 1919 of the Act
(Medicaid).
(3) Intermediate care facility for individuals with intellectual
and developmental disabilities as defined in section 1905(d) of the
Act.
(4) Psychiatric hospital or unit as defined in section 1861(f) of
the Act.
(5) Rehabilitation hospital or unit as defined in section
1886(d)(1)(B) of the Act.
(6) Long-term care hospital as defined in section 1886(d)(1)(B) of
the Act.
(7) Hospital which has an agreement under section 1883 of the Act
(a swing-bed hospital).
(8) Subject to CMS approval, a facility that is not listed in
paragraphs (1) through (7) of this definition but meets both of the
following:
(i) Furnishes similar long-term, healthcare services that are
covered under Medicare Part A, Medicare Part B, or Medicaid; and
(ii) Whose residents have similar needs and healthcare status as
residents of one or more facilities listed in paragraphs (1) through
(7) of this definition.
* * * * *
Parent organization means the legal entity that exercises a
controlling interest, through the ownership of shares, the power to
appoint voting board members, or other means, in a Part D sponsor or MA
organization, directly or through a subsidiary or subsidiaries, and
which is not itself a subsidiary of any other legal entity.
* * * * *
Special needs individual means an MA eligible individual who is
institutionalized or institutionalized-equivalent, as those terms are
defined in this section, is entitled to medical assistance under a
State plan under title XIX, or has a severe or disabling chronic
condition(s) and would benefit from enrollment in a specialized MA
plan.
* * * * *

0
6. Section 422.100 is amended by--
0
a. Revising paragraphs (c)(1) and (2);
0
b. Redesignating paragraph (d)(2) as paragraph (d)(2)(i);
0
c. Adding paragraph (d)(2)(ii);
0
d. Revising paragraph (m)(5)(iii).
The revisions and additions read as follows:

Sec. 422.100 General requirements.

* * * * *
(c) * * *
(1) Basic benefits are all items and services (other than hospice
care or, beginning in 2021, coverage for organ acquisitions for kidney
transplants) for which benefits are available under Parts A and B of
Medicare, including additional telehealth benefits offered consistent
with the requirements at Sec. 422.135.
(2) Supplemental benefits are benefits offered under Sec. 422.102.
(i) Supplemental benefits consist of--
(A) Mandatory supplemental benefits are services not covered by
Medicare that an MA enrollee must purchase as part of an MA plan that
are paid for in full, directly by (or on behalf of) Medicare enrollees,
in the form of premiums or cost sharing.
(B) Optional supplemental benefits are health services not covered
by Medicare that are purchased at the option of the MA enrollee and
paid for in full, directly by (or on behalf of) the Medicare enrollee,
in the form of premiums or cost sharing. These services may be grouped
or offered individually.
(ii) Supplemental benefits must meet the following requirements:
(A) Except in the case of special supplemental benefit for the
chronically ill (SSBCI) offered in accordance with Sec. 422.102(f)
that are not primarily health related, the benefits diagnose, prevent,
or treat an illness or injury; compensate for physical impairments; act
to ameliorate the functional/psychological impact of injuries or health
conditions; or reduce avoidable emergency and health care utilization;
(B) The MA organization incurs a non-zero direct medical cost,
except that in the case of a SSBCI that is not primarily health related
that is offered in accordance with Sec. 422.102, the MA organization
may instead incur a non-zero direct non-administrative cost; and
(C) The benefits are not covered by Medicare (This specifically
includes Medicare Parts A, B, and D).
(d) * * *
(2) * * *
(ii) MA plans may provide supplemental benefits (such as specific
reductions in cost sharing or additional services or items) that are
tied to disease state or health status in a manner that ensures that
similarly situated individuals are treated uniformly; there must be
some nexus between the health status or disease state and the specific
benefit package designed for enrollees meeting that health status or
disease state.
* * * * *
(m) * * *
(5) * * *
(iii) Provide the information described in paragraphs (m)(1), (2),
and (3) and (m)(5)(i) of this section on its website.

0
7. Section 422.101 by--
0
a. Revising paragraphs (f)(1) introductory text and (f)(1)(i) and
(iii); and
0
b. Adding paragraph (f)(1)(iv);
0
c. Revising paragraph (f)(2) introductory text; and
0
d. Adding paragraph (f)(3).
The revisions and additions read as follows:

Sec. 422.101 Requirements relating to basic benefits.

* * * * *
(f) * * *
(1) MA organizations offering special needs plans (SNP) must
implement an evidence-based model of care with appropriate networks of
providers and specialists designed to meet the specialized needs of the
plan's targeted enrollees. The MA organization must, with respect to
each individual enrolled, do all of the following:
(i) Conduct a comprehensive initial health risk assessment of the
individual's physical, psychosocial, and functional needs as well as
annual health risk reassessment, using a comprehensive risk assessment
tool that CMS may review during oversight activities, and ensure that
results from the initial assessment and annual reassessment conducted
for each individual enrolled in the plan are addressed in the
individual's

[[Page 6095]]

individualized care plan as required under paragraph (f)(1)(ii) of this
section.
* * * * *
(iii) In the management of care, use an interdisciplinary team that
includes a team of providers with demonstrated expertise and training,
and, as applicable, training in a defined role appropriate to their
licensure in treating individuals similar to the targeted population of
the plan.
(iv) Provide, on at least an annual basis, beginning within the
first 12 months of enrollment, as feasible and with the individual's
consent, for face-to-face encounters for the delivery of health care or
care management or care coordination services and be between each
enrollee and a member of the enrollee's interdisciplinary team or the
plan's case management and coordination staff, or contracted plan
healthcare providers. A face-for-face encounter must be either in
person or through a visual, real-time, interactive telehealth
encounter.
(2) MA organizations offering SNPs must also develop and implement
the following model of care components to assure an effective care
management structure:
* * * * *
(3)(i) All MA organizations wishing to offer or continue to offer a
SNP will be required to be approved by the National Committee for
Quality Assurance (NCQA) effective January 1, 2012 and subsequent
years. All SNPs must submit their model of care (MOC) to CMS for NCQA
evaluation and approval in accordance with CMS guidance.
(ii) As part of the evaluation and approval of the SNP model of
care, NCQA must evaluate whether goals were fulfilled from the previous
model of care.
(A) Plans must provide relevant information pertaining to the MOC's
goals as well as appropriate data pertaining to the fulfillment the
previous MOC's goals.
(B) Plans submitting an initial model of care must provide relevant
information pertaining to the MOC's goals for review and approval.
(C) If the SNP model of care did not fulfill the previous MOC's
goals, the plan must indicate in the MOC submission how it will achieve
or revise the goals for the plan's next MOC.
(iii) Each element of the model of care of a plan must meet a
minimum benchmark score of 50 percent, and a plan's model of care will
only be approved if each element of the model of care meets the minimum
benchmark.

0
8. Section 422.102 is amended--
0
a. In paragraph (a)(4) by removing the phrase ``only as a mandatory''
and adding in its place the phrase ``for Part A and B benefits only as
a mandatory''; and
0
b. Adding paragraphs (a)(5) and (6).
The revisions and additions read as follows:

Sec. 422.102 Supplemental benefits.

(a) * * *
(5) An MA plan may reduce the cost sharing for items and services
that are not basic benefits only as a mandatory supplemental benefit
(reductions or payment of cost sharing for Part D drugs is not
permissible as a Part C supplemental benefit).
(6) An MA plan may offer mandatory supplemental benefits in the
following forms:
(i) Reductions in cost sharing through the use of reimbursement,
through a debit card or other means, for cost sharing paid for covered
benefits. Reimbursements must be limited to the specific plan year.
(ii) Use of a uniform dollar amount as a maximum plan allowance for
a package of supplemental benefits, including reductions in cost
sharing or coverage of specific items and services, available to
enrollees on a uniform basis for enrollee use for any supplemental
benefit in the package. Allowance must be limited to the specific plan
year.
* * * * *

0
9. Section 422.111 is amended by--
0
a. Removing paragraph (b)(12);
0
b. Redesignating paragraph (h)(1)(i) as paragraph (h)(1)(i)(A);
0
c. Adding paragraph (h)(1)(i)(B);
0
d. Adding paragraphs (h)(1)(ii)(A) through (C);
0
e. Redesignating paragraph (h)(1)(iii) as (h)(1)(iii)(A);
0
f. Adding paragraph (h)(1)(iii)(B);
0
g. Adding paragraphs (h)(1)(iv), (j), and (k).
The revisions and additions read as follows:

Sec. 422.111 Disclosure requirements.

* * * * *
(h) * * *
(1) * * *
(i)(A) * * *
(B) For coverage beginning on and after January 1, 2022, is open at
least from 8:00 a.m. to 8:00 p.m. in all service areas served by the
Part C plan, with the following exceptions:
(1) From October 1 through March 31 of the following year, a
customer call center may be closed on Thanksgiving Day and Christmas
Day so long as the interactive voice response (IVR) system or similar
technology records messages from incoming callers and such messages are
returned within one (1) business day.
(2) From April 1 through September 30, a customer call center may
be closed any Federal holiday, Saturday, or Sunday, so long as the
interactive voice response (IVR) system or similar technology records
messages from incoming callers and such messages are returned within
one (1) business day.
(ii) * * *
(A) For coverage beginning on and after January 1, 2022, limits
average hold time to no longer than 2 minutes. The hold time is defined
as the time spent on hold by callers following the interactive voice
response (IVR) system, touch-tone response system, or recorded
greeting, before reaching a live person.
(B) For coverage beginning on and after January 1, 2022, answers 80
percent of incoming calls within 30 seconds after the interactive voice
response (IVR), touch-tone response system, or recorded greeting
interaction.
(C) For coverage beginning on and after January 1, 2022, limits the
disconnect rate of all incoming calls to no higher than 5 percent. The
disconnect rate is defined as the number of calls unexpectedly dropped
divided by the total number of calls made to the customer call center.
(iii) (A) * * *
(B) For coverage beginning on and after January 1, 2022,
interpreters must be available for 80 percent of incoming calls
requiring an interpreter within 8 minutes of reaching the customer
service representative and be made available at no cost to the caller.
(iv) At a minimum, for coverage beginning on and after January 1,
2022:
(A) Provides effective real-time communication with individuals
using auxiliary aids and services, including TTYs and all forms of
Federal Communication Commission-approved telecommunications relay
systems, when using automated-attendant systems. See 28 CFR 35.161 and
36.303(d).
(B) Connects 80 percent of incoming calls requiring TTY services to
a TTY operator within 7 minutes.
* * * * *
(j) Safe disposal of certain prescription drugs. Information
regarding the safe disposal of prescription drugs that are controlled
substances and drug takeback programs must be provided in the case of
an individual enrolled under an MA plan who is furnished an in-home
health risk assessment on or after January 1, 2022. For purposes of
this paragraph (j), a health risk assessment furnished to an individual
who is residing in an institutional setting, such as a nursing
facility, that has the primary

[[Page 6096]]

responsibility for the disposal of unused medications, is not
considered an in-home health risk assessment. As part of the in-home
health risk assessment, the enrollee must be furnished written
supporting materials describing how to safely dispose of medications
that are controlled substances as well as a verbal summary of the
written information as described at paragraphs (j)(1) through (6) of
this section when possible. The written information furnished to
enrollees about the safe disposal of medications and takeback programs
must include the following information for enrollees:
(1) Unused medications should be disposed of as soon as possible.
(2) The U.S. Drug Enforcement Administration (DEA) allows unused
prescription medications to be mailed back to pharmacies and other
authorized sites using packages made available at such pharmacies or
other authorized sites. Include a web link to the information available
on the DEA website at www.deatakeback.com and the web link to the DEA
search engine which enables beneficiaries to identify drug take back
sites in their community at the following web address: https://
apps2.deadiversion.usdoj.gov/pubdispsearch/spring/main?execution=e2s1.
(3) Community take back sites are the preferred method of disposing
of unused controlled substances.
(4) The location of two or more drug take back sites that are
available in the community where the enrollee resides.
(5) Instructions on how to safely dispose of medications in
household trash or of cases when a medication can be safely flushed.
Include instructions on removing personal identification information
when disposing of prescription containers. If applicable, the
instructions may also include information on the availability of in-
home drug deactivation kits in the enrollee's community.
(6) Include a web link to the information available on the United
States Department of Health and Human Services website identifying
methods for the safe disposal of drugs available at the following web
address: www.hhs.gov/opioids/prevention/safely-dispose-drugs/index.html
(k) Claims information. MA organizations must furnish directly to
enrollees, in the manner specified by CMS and in a form easily
understandable to such enrollees, a written explanation of benefits,
when benefits are provided under this part.
(1) Information requirements for the reporting period. Claims data
elements presented on the explanation of benefits must include all of
the following for the reporting period:
(i) The descriptor and billing code for the item or service billed
by the provider, and the corresponding amount billed.
(ii) The total cost approved by the plan for reimbursement.
(iii) The share of total cost paid for by the plan.
(iv) The share of total cost for which the enrollee is liable.
(2) Information requirements for year-to-date totals. Claims data
elements presented on the explanation of benefits must include specific
year-to-date totals as follows:
(i) The cumulative amount billed by all providers.
(ii) The cumulative total costs approved by the plan.
(iii) The cumulative share of total cost paid for by the plan.
(iv) The cumulative share of total cost for which the enrollee is
liable.
(v) The amount an enrollee has incurred toward the MOOP limit, as
applicable.
(vi) The amount an enrollee has incurred toward the deductible, as
applicable.
(3) Additional information requirements. (i) Each explanation of
benefits must include clear contact information for enrollee customer
service.
(ii) Each explanation of benefits must include instructions on how
to report fraud.
(iii) Each EOB that includes a denied claim must clearly identify
the denied claim and provide information about enrollee appeal rights,
but the EOB does not replace the notice required by Sec. Sec. 422.568
and 422.570.
(4) Reporting cycles for explanation of benefits. MA organizations
must send an explanation of benefits on either a monthly cycle or a
quarterly cycle with per-claim notifications.
(i) A monthly explanation of benefits must include all claims
processed in the prior month and, for each claim, the information in
paragraphs (k)(1) and (2) of this section as of the last day of the
prior month.
(A) The monthly explanation of benefits must be sent before the end
of each month that follows the month a claim was filed.
(B) [Reserved]
(ii) A quarterly explanation of benefits must include all claims
processed in the quarter and, for each claim, the information in
paragraphs (k)(1) and (2) of this section as of the last day of the
quarter; a per-claim notification must include all claims processed in
the prior month and, for each claim, the information specified in
paragraph (k)(1) of this section as of the last day of the prior month.
(A) MA organizations that send the explanation of benefits on a
quarterly cycle with per-claim notifications must send the quarterly
explanation of benefits before the end of each month that follows the
quarter in which a claim was filed.
(B) MA organizations that send the explanation of benefits on a
quarterly cycle with per-claim notifications must send the per-claim
notification before the end of each month that follows the month in
which a claim was filed.
(5) Exceptions. MA organizations are not required to send the
explanation of benefits to dual-eligible enrollees.

0
10. Section 422.134 is revised to read as follows:

Sec. 422.134 Reward and incentive programs.

(a) Definitions. As used in this section, the following definitions
are applicable:
Incentive item means the same things as reward item.
Incentive(s) program, reward(s) program, and R&I program mean the
same thing as rewards and incentives program.
Incentive(s), R&I, and rewards and incentives mean the same things
as reward(s).
Qualifying individual in the context of a plan-covered health
benefit means any plan enrollee who would qualify for coverage of the
benefit. In the context of a non-plan-covered health benefit,
qualifying individual means any plan enrollee.
Reward and incentive program is a program offered by an MA plan to
qualifying individuals to voluntarily perform specified target
activities in exchange for reward items.
Reward item (or incentive item) means the item furnished to a
qualifying individual who performs a target activity as specified by
the plan in the reward program.
Target activity means the activity for which the reward is provided
to the qualifying individual by the MA plan.
(b) Offering an R&I program. An MA plan may offer R&I program(s)
consistent with the requirements of this section.
(c) Target activities. (1) A target activity in an R&I program must
meet all of the following:
(i) Directly involve the qualifying individual and performance by
the qualifying individual.
(ii) Be specified, in detail, as to the level of completion needed
in order to qualify for the reward item.
(iii) Be health-related by doing at least one of the following:

[[Page 6097]]

(A) Promoting improved health.
(B) Preventing injuries and illness,
(C) Promoting the efficient use of health care resources.
(iv) Uniformly offer any qualifying individual the opportunity to
participate in the target activity.
(v) Be provided with accommodations consistent with the goal of the
target activity to otherwise qualifying individuals who are unable to
perform the target activity in a manner that satisfies the intended
goal of the target activity.
(2) The target activity in an R&I program must not do any of the
following:
(i) Be related to Part D benefits.
(ii) Discriminate against enrollees. To ensure that anti-
discrimination requirements are met, an MA organization, in providing a
rewards and incentives program, must comply with paragraph (g)(1) of
this section and must not design a program based on the achievement of
a health status measurement.
(d) Reward items. (1) The reward item for a target activity must
meet all of the following:
(i) Be offered identically to any qualifying individual who
performs the target activity.
(ii) Be a direct tangible benefit to the qualifying individual who
performs the target activity.
(iii) Be provided, to the enrollee, such as through transfer of
ownership or delivery, for a target activity completed in the contract
year during which this R&I program was offered, regardless if the
enrollee is likely to use the reward item after the contract year.
(2) The reward item for a target activity must not:
(i) Be offered in the form of cash, cash equivalents, or other
monetary rebates (including reduced cost sharing or premiums). An item
is classified as a cash equivalent if it either:
(A) Is convertible to cash (such as a check); or
(B) Can be used like cash (such as a general purpose debit card).
(ii) Have a value that exceeds the value of the target activity
itself.
(iii) Involve elements of chance.
(3) Permissible reward items for a target activity may be reward
items that:
(i) Consist of ``points'' or ``tokens'' that can be used to acquire
tangible items.
(ii) Are offered in the form of a gift card that can be redeemed
only at specific retailers or retail chains or for a specific category
of items or services.
(e) Marketing and communication requirements. An MA organization
that offers an R&I program must comply with all marketing and
communications requirements in subpart V of this part.
(f) R&I disclosure. MA organization must make information available
to CMS upon request about the form and manner of any rewards and
incentives programs it offers and any evaluations of the effectiveness
of such programs.
(g) Miscellaneous. (1) The MA organization's reward and incentive
program must comply with all relevant fraud and abuse laws, including,
when applicable, the anti-kickback statute and civil monetary penalty
prohibiting inducements to beneficiaries. Additionally, all MA program
anti-discrimination prohibitions continue to apply. The R&I program may
not discriminate against enrollees based on race, color, national
origin, including limited English proficiency, sex, age, disability,
chronic disease, whether a person resides or receives services in an
institutional setting, frailty, health status, or other prohibited
basis.
(2) Failure to comply with R&I program requirements may result in a
violation of one or more of the basis for sanction at Sec. 422.752(a).
(3) The reward and incentive program is classified as a non-benefit
expense in the plan bid.
(i) If offering a reward and incentive program, the MA organization
must include all costs associated with the reward and incentive program
as an administrative cost and non-benefit expense in the bid for the
year in which the reward and incentive program operates.
(ii) Disputes on rewards and incentives must be treated as a
grievance under Sec. 422.564.

0
11. Section 422.162 is amended--
0
a. By revising paragraphs (b)(3)(iv)(A) and (B); and
0
b. By adding paragraph (b)(4).
The additions and revisions read as follows:

Sec. 422.162 Medicare Advantage Quality Rating System.

* * * * *
(b) * * *
(3) * * *
(iv) * * *
(A)(1) For the first year after consolidation, CMS uses enrollment-
weighted measure scores using the July enrollment of the measurement
period of the consumed and surviving contracts for all measures, except
survey-based measures and call center measures. The survey-based
measures would use enrollment of the surviving and consumed contracts
at the time the sample is pulled for the rating year. The call center
measures would use average enrollment during the study period.
(2) For contract consolidations approved on or after January 1,
2022, if a measure score for a consumed or surviving contract is
missing due to a data integrity issue as described in Sec.
422.164(g)(1)(i) and (ii), CMS assigns a score of zero for the missing
measure score in the calculation of the enrollment-weighted measure
score.
(B)(1) For the second year after consolidation, CMS uses the
enrollment-weighted measure scores using the July enrollment of the
measurement year of the consumed and surviving contracts for all
measures except for HEDIS, CAHPS, and HOS. HEDIS and HOS measure data
are scored as reported. CMS ensures that the CAHPS survey sample
includes enrollees in the sample frame from both the surviving and
consumed contracts.
(2) For contract consolidations approved on or after January 1,
2022, for all measures except HEDIS, CAHPS, and HOS if a measure score
for a consumed or surviving contract is missing due to a data integrity
issue as described in Sec. 422.164(g)(1)(i) and (ii), CMS assigns a
score of zero for the missing measure score in the calculation of the
enrollment-weighted measure score.
* * * * *
(4) Quality bonus payment ratings. (i) For contracts that receive a
numeric Star Rating, the final quality bonus payment (QBP) rating for
the contract is released in April of each year for the following
contract year. The QBP rating is the contract's highest rating from the
Star Ratings published by CMS in October of the calendar year that is 2
years before the contract year to which the QBP rating applies.
(ii) The contract QBP rating is applied to each plan benefit
package offered under the contract.
* * * * *

0
12. Section 422.164 is amended by revising paragraph (g)(1)(iii)(A) to
read as follows:

Sec. 422.164 Adding, updating, and removing measures.

* * * * *
(g) * * *
(1) * * *
(iii) * * *
(A)(1) The data submitted for the Timeliness Monitoring Project
(TMP) or audit that aligns with the Star Ratings year measurement
period is used to determine the scaled reduction.
(2) For contract consolidations approved on or after January 1,
2022, if there is a contract consolidation as described at Sec.
422.162(b)(3), the TMP or audit data are combined for the consumed and
surviving contracts

[[Page 6098]]

before the methodology provided in paragraphs (g)(1)(iii)(B) through
(O) of this section is applied.
* * * * *

0
13. Section 422.166 is amended--
0
a. By adding paragraph (d)(2)(vi); and
0
b. By adding a sentence to the end of paragraph (i)(8).
The additions read as follows:

Sec. 422.166 Calculation of Star Ratings.

* * * * *
(d) * * *
(2) * * *
(vi) The QBP ratings for contracts that do not have sufficient data
to calculate and assign ratings and do not meet the definition of low
enrollment or new MA plans at Sec. 422.252 are assigned as follows:
(A) For a new contract under an existing parent organization that
has other MA contract(s) with numeric Star Ratings in November when the
preliminary QBP ratings are calculated for the contract year that
begins 14 months later, the QBP rating assigned is the enrollment-
weighted average highest rating of the parent organization's other MA
contract(s) that are active as of the April when the final QBP ratings
are released under Sec. 422.162(b)(4). The Star Ratings used in this
calculation are the rounded stars (to the whole or half star) that are
publicly displayed on www.medicare.gov. The enrollment figures used in
the enrollment-weighted calculations are the November enrollment in the
year the Star Ratings are released.
(B) For a new contract under a parent organization that does not
have other MA contract(s) with numeric Star Ratings in November when
the preliminary QBP ratings are calculated for the contract year that
begins 14 months later, the MA Star Ratings for the previous 3 years
are used and the QBP rating is the enrollment-weighted average of the
MA contract(s)'s highest ratings from the most recent year rated for
that parent organization.
(1) The Star Ratings had to be publicly reported on
www.medicare.gov.
(2) The Star Ratings used in this calculation are rounded to the
whole or half star.
(C) The enrollment figures used in the enrollment-weighted
calculations are the November enrollment in the year the Star Ratings
are released.
(D) The QBP ratings are updated for any changes in a contract's
parent organization that are reflected in CMS records prior to the
release of the final QBP ratings in April of each year.
(E) Once the QBP ratings are finalized in April of each year for
the following contract year, no additional parent organization changes
are used for purposes of assigning QBP ratings.
* * * * *
(i) * * *
(8) * * * Missing data includes data where there is a data
integrity issue as defined at Sec. 422.164(g)(1).
* * * * *

0
14. Section 422.220 is revised to read as follows:

Sec. 422.220 Exclusion of payment for basic benefits furnished under
a private contract.

(a) Unless otherwise authorized in paragraph (b) or (c) of this
section, an MA organization may not pay, directly or indirectly, on any
basis, for basic benefits furnished to a Medicare enrollee by a
physician (as defined in paragraphs (1), (2), (3), and (4) of section
1861(r) of the Act) or other practitioner (as defined in section
1842(b)(18)(C) of the Act) who has filed with the Medicare contractor
an affidavit promising to furnish Medicare-covered services to Medicare
beneficiaries only through private contracts under section 1802(b) of
the Act with the beneficiaries.
(b) An MA organization must pay for emergency or urgently needed
services furnished by a physician or practitioner described in
paragraph (a) of this section who has not signed a private contract
with the beneficiary.
(c) An MA organization may make payment to a physician or
practitioner described in paragraph (a) of this section for services
that are not basic benefits but are provided to a beneficiary as a
supplemental benefit consistent with Sec. 422.102.

0
15. Section 422.252 is amended by revising the definition of ``New MA
plan'' to read as follows:

Sec. 422.252 Terminology.

* * * * *
New MA plan means a plan that meets the following:
(1) Offered under a new MA contract.
(2) Offered under an MA contract that is held by a parent
organization defined at Sec. 422.2 that has not had an MA contract in
the prior 3 years. For purposes of this definition, the parent
organization is identified as of April of the calendar year before the
payment year to which the final QBP rating applies, and contracts
associated with that parent organization are also evaluated using
contracts in existence as of April of the 3 calendar years before the
payment year to which the final QBP rating applies. For purposes of
2022 quality bonus payments based on 2021 Star Ratings only, new MA
plan means an MA contract offered by a parent organization that has not
had another MA contract in the previous 4 years.
* * * * *

0
16. Section 422.500 is amended in paragraph (b) by adding the
definitions of ``Fraud hotline tip'', ``Inappropriate prescribing'',
and ``Substantiated or suspicious activities of fraud, waste, or
abuse'' in alphabetical order to read as follows:

Sec. 422.500 Scope and definitions.

* * * * *
(b) * * *
Fraud hotline tip is a complaint or other communications that are
submitted through a fraud reporting phone number or a website intended
for the same purpose, such as the Federal Government's HHS OIG Hotline
or a health plan's fraud hotline.
* * * * *
Inappropriate prescribing means that, after consideration of all
the facts and circumstances of a particular situation identified
through investigation or other information or actions taken by MA
organizations and Part D plan sponsors, there is an established pattern
of potential fraud, waste, and abuse related to prescribing of opioids,
as reported by the plan sponsors. Beneficiaries with cancer and sickle-
cell disease, as well as those patients receiving hospice and long term
care (LTC) services are excluded, when determining inappropriate
prescribing. Plan sponsors may consider any number of factors
including, but not limited to the following:
(1) Documentation of a patient's medical condition.
(2) Identified instances of patient harm or death.
(3) Medical records, including claims (if available).
(4) Concurrent prescribing of opioids with an opioid potentiator in
a manner that increases risk of serious patient harm.
(5) Levels of morphine milligram equivalent (MME) dosages
prescribed.
(6) Absent clinical indication or documentation in the care
management plan or in a manner that may indicate diversion.
(7) State-level prescription drug monitoring program (PDMP) data.
(8) Geography, time, and distance between a prescriber and the
patient.
(9) Refill frequency and factors associated with increased risk of
opioid overdose.
* * * * *
Substantiated or suspicious activities of fraud, waste, or abuse
means and

[[Page 6099]]

includes, but is not limited to, allegations that a provider of
services (including a prescriber) or supplier--
(1) Engaged in a pattern of improper billing;
(2) Submitted improper claims with suspected knowledge of their
falsity;
(3) Submitted improper claims with reckless disregard or deliberate
ignorance of their truth or falsity; or
(4) Is the subject of a fraud hotline tip verified by further
evidence.

0
17. Section 422.502 is amended by adding paragraphs (b)(1)(i) and (ii)
to read as follows:

Sec. 422.502 Evaluation and determination procedures.

* * * * *
(b) * * *
(1) * * *
(i) An applicant may be considered to have failed to comply with a
contract for purposes of an application denial under paragraph (b)(1)
if during the applicable review period the applicant does any of the
following:
(A) Was subject to the imposition of an intermediate sanction under
subpart O of this part, with the exception of a sanction imposed under
Sec. 422.752(d) or a determination by CMS to prohibit the enrollment
of new enrollees pursuant to Sec. 422.2410(c).
(B) Failed to maintain a fiscally sound operation consistent with
the requirements of Sec. 422.504(b)(14).
(ii) CMS may deny an application submitted by an organization that
does not hold a Part C contract at the time of the submission when the
applicant's parent organization or another subsidiary of the parent
organization meets the criteria for denial stated in paragraph
(b)(1)(i) of this section. This paragraph does not apply when the
parent organization completed the acquisition of the subsidiary that
meets the criteria within the 24 months preceding the application
submission deadline.
* * * * *

0
18. Section 422.503 is amended by adding paragraphs (b)(4)(vi)(G)(4)
through (7) and (b)(5)(i) and (ii) to read as follows:

Sec. 422.503 General provisions.

* * * * *
(b) * * *
(4) * * *
(vi) * * *
(G) * * *
(4) The MA organization must have procedures to identify, and must
report to CMS or its designee either of the following, in the manner
described in paragraphs (b)(4)(vi)(G)(4) through (6) of this section:
(i) Any payment suspension implemented by a plan, pending
investigation of credible allegations of fraud by a pharmacy, which
must be implemented in the same manner as the Secretary does under
section 1862(o)(1) of the Act.
(ii) Any information concerning investigations, credible evidence
of suspicious activities of a provider of services (including a
prescriber) or supplier, and other actions taken by the plan related to
the inappropriate prescribing of opioids.
(5) The MA organization must submit data, as specified in this
section, in the program integrity portal when reporting payment
suspensions pending investigations of credible allegations of fraud by
pharmacies; information related to the inappropriate prescribing of
opioids and concerning investigations and credible evidence of
suspicious activities of a provider of services (including a
prescriber) or supplier, and other actions taken by the MA
organization; or if the plan reports a referral, through the portal, of
substantiated or suspicious activities of a provider of services
(including a prescriber) or a supplier related to fraud, waste, or
abuse to initiate or assist with investigations conducted by CMS, or
its designee, a Medicare program integrity contractor, or law
enforcement partners. The data categories, as applicable, include
referral information and actions taken by the MA organization on the
referral.
(6)(i) The MA organization is required to notify the Secretary, or
its designee, of a payment suspension described in paragraph
(b)(4)(vi)(G)(4)(i) of this section 7 days prior to implementation of
the payment suspension. The MA organization may request an exception to
the 7-day prior notification to the Secretary, or its designee, if
circumstances warrant a reduced reporting time frame, such as potential
beneficiary harm.
(ii) The MA organization is required to submit the information
described in paragraph (b)(4)(vi)(G)(4)(ii) of this section no later
than January 30, April 30, July 30, and October 30 of each year for the
preceding periods, respectively, of October 1 through December 31,
January 1 through March 31, April 1 through June 30, and July 1 through
September 30. For the first reporting period (January 30, 2022), the
reporting will reflect the data gathered and analyzed for the previous
quarter in the calendar year (October 1-December 31).
(7)(i) CMS will provide MA organizations with data report(s) or
links to the information described in paragraphs (b)(4)(vi)(G)(4)(i)
and (ii) of this section no later than April 15, July 15, October 15,
and January 15 of each year based on the information in the portal,
respectively, as of the preceding October 1 through December 31,
January 1 through March 31, April 1 through June 30, and July 1 through
September 30.
(ii) Include administrative actions, pertinent information related
to opioid overprescribing, and other data determined appropriate by the
Secretary in consultation with stakeholders.
(iii) Are anonymized information submitted by plans without
identifying the source of such information.
(iv) For the first quarterly report (April 15, 2022), that the
report reflect the data gathered and analyzed for the previous quarter
submitted by the plan sponsors on January 30, 2022.
(5) * * *
(i) Not accept, or share a corporate parent organization owning a
controlling interest in an entity that accepts, new enrollees under a
section 1876 reasonable cost contract in any area in which it seeks to
offer an MA plan.
(ii) Not accept, or be either the parent organization owning a
controlling interest of or subsidiary of an entity that accepts, new
enrollees under a section 1876 reasonable cost contract in any area in
which it seeks to offer an MA plan.
* * * * *

0
19. Section 422.504 is amended by revising paragraph (a)(15) to read as
follows:

Sec. 422.504 Contract provisions.

* * * * *
(a) * * *
(15) Through the CMS complaint tracking system, to address and
resolve complaints received by CMS against the MA organization.
* * * * *

0
20. Section 422.530 is added to subpart K to read as follows:

Sec. 422.530 Plan crosswalks.

(a) General rules--(1) Definition of crosswalk. A crosswalk is the
movement of enrollees from one plan (or plan benefit package (PBP)) to
another plan (or PBP) under a contract between the MA organization and
CMS. To crosswalk enrollees from one PBP to another is to change the
enrollment from the first PBP to the second.
(2) Prohibitions. Except as described in paragraph (c) of this
section, crosswalks are prohibited between different contracts or
different plan types (for example, HMO to PPO).
(3) Compliance with renewal/nonrenewal rules. The MA organization

[[Page 6100]]

must comply with renewal and nonrenewal rules in Sec. Sec. 422.505 and
422.506 in order to complete plan crosswalks.
(4) Eligibility. Enrollees must be eligible for enrollment under
Sec. Sec. 422.50 through 422.54 in order to be moved from one PBP to
another PBP.
(5) Types of MA plans. For purposes of crosswalk policy in this
section, CMS considers the following plans as different plan types:
(i) Health maintenance organizations coordinated care plans.
(ii) Provider-sponsored organizations coordinated care plans.
(iii) Regional or local preferred provider organizations
coordinated care plans.
(iv) Special needs plans.
(v) Private Fee-for-service plans.
(vi) MSA plans.
(b) Allowable crosswalk types--(1) All MA plans. An MA organization
may perform a crosswalk in the following circumstances:
(i) Renewal. A plan in the following contract year that links to a
current contract year plan and retains the entire service area from the
current contract year. The following contract year plan must retain the
same plan ID as the current contract year plan.
(ii) Consolidated renewal. A plan in the following contract year
that combines 2 or more complete current contract year plans of the
same plan type but not including when a current PBP is split among more
than one PBP for the following contract year. The plan ID for the
following contract year must be the same as one of the current contract
year plan IDs.
(iii) Renewal with a service area expansion (SAE). A plan in the
following contract year that links to a current contract year plan and
retains all of its plan service area from the current contract year,
but also adds one or more new counties. The following year contract
plan must retain the same plan ID as the current contract year plan.
(iv) Renewal with a service area reduction (SAR). (A) A plan in the
following contract year that links to a current contract year plan and
only retains a portion of its plan service area. The following contract
year plan must retain the same plan ID as the current contract year
plan. The crosswalk is limited to the enrollees in the remaining
service area.
(B) While the MA organization may not affirmatively crosswalk
enrollees in the locations that will no longer be part of the service
area, the MA organization may offer those affected enrollees in the
reduced portion of the service area a continuation in accordance with
Sec. 422.74(b)(3)(ii), provided that there are no other MA plan
options in the reduced service area.
(C) If the MA organization offers another PBP in the locations that
will no longer be part of the service area, current enrollees in the
locations that will no longer be part of the service area must be
disenrolled and the MA organization must send a non-renewal notice that
includes notification of a special enrollment period under Sec. 422.62
and, for applicable enrollees, Medigap guaranteed issue rights.
(D) The MA organization may offer current enrollees in the
locations that will no longer be part of the service area the option of
enrolling in the other plan(s) the MA organization offers in the
location that is no longer part of the service area, however, no
specific plan information for the following contract year may be shared
with any beneficiaries prior to the plan marketing period for the next
contract year, consistent with 42 CFR 422.2263 and 423.2263.
(2) Special needs plans (SNPs). In addition to those described in
paragraph (b)(1) of this section, SNPs may also perform the following
types of crosswalks:
(i) Chronic SNPs (C-SNPs). (A) Renewing C-SNP with one chronic
condition that transitions eligible enrollees into another C-SNP with a
grouping that contains that same chronic condition.
(B) Non-renewing C-SNP with one chronic condition that transitions
eligible enrollees into another C-SNP with a grouping that contains
that same chronic condition.
(C) Non-renewing C-SNP with a grouping that is transitioning
eligible enrollees into a different grouping C-SNP if the new grouping
contains at least one condition that the prior C-SNP contained.
(ii) Institutional SNP. (A) Renewing Institutional SNP that
transitions enrollees to an Institutional/Institutional Equivalent SNP.
(B) Renewing Institutional Equivalent SNP that transitions
enrollees to an Institutional/Institutional Equivalent SNP.
(C) Renewing Institutional/Institutional Equivalent SNP that
transitions eligible enrollees to an Institutional SNP.
(D) Renewing Institutional/Institutional Equivalent SNP that
transitions eligible enrollees to an Institutional Equivalent SNP.
(E) Non-renewing Institutional/Institutional Equivalent SNP that
transitions eligible enrollees to another Institutional/Institutional
Equivalent SNP.
(c) Exceptions. In order to perform a crosswalk that is not
specified in paragraph (b) of this section, an MA organization must
request an exception. Crosswalk exceptions are prohibited between
different plan types. CMS reviews exception requests and may permit a
crosswalk exception in the following circumstances:
(1) When a non-network or partial network Private Fee-For-Service
(PFFS) plan changes to either a partial network or to a full network
PFFS plan, enrollees may be moved to the new plan when CMS determines
it is in the interest of beneficiaries, considering whether the risks
to enrollees are such that they would be better served by remaining in
the plan, whether there are other suitable managed care plans
available, and whether the enrollees are particularly medically
vulnerable, such as institutionalized enrollees. Crosswalks from a
network based PFFS plan to a non-network or partial network PFFS plan
will not be permitted.
(2) When MA contracts offered by two different MA organizations
that share the same parent organization are consolidated such that the
separate contracts are consolidated under one surviving contract, the
enrollees from the consolidating contracts may be crosswalked to an MA
plan under the surviving contract.
(3) When a renewing D-SNP with a multi-state service area reduces
its service area or, in the case of a D-SNP in an MA regional plan
contract, nonrenews and creates state-specific local preferred provider
organization plans in its place to accommodate state contracting
efforts in the service area, enrollees who are no longer in the service
area may be moved into one or more new or renewing D-SNPs, offered
under the same parent organization (even if the D-SNPs are offered by
two different MA organizations), and for which the enrollees are
eligible, as CMS determines is necessary to accommodate changes to the
contracts between the state and D-SNP under Sec. 422.107. For this
crosswalk exception, CMS will permit enrollees to be moved between
different contracts.
(4) When a renewing D-SNP has another new or renewing D-SNP, and
the two D-SNPs are offered to different populations, enrollees who are
no longer eligible for their current D-SNP may be moved into the other
new or renewing D-SNP offered by the same MA organization if they meet
the eligibility criteria for the new or renewing D-SNP and CMS
determines it

[[Page 6101]]

is in the best interest of the enrollees to move to the new or renewing
D-SNP in order to promote access to and continuity of care for
enrollees relative to the absence of a crosswalk exception. For this
crosswalk exception, CMS will not permit enrollees to be moved between
different contracts.
(5) Renewing C-SNP with a grouping of multiple conditions that is
transitioning eligible enrollees into another C-SNP with one of the
chronic conditions from that grouping.
(d) Procedures. (1) An MA organization must submit all crosswalks
in paragraph (b) of this section in writing through the bid submission
process in HPMS by the bid submission deadline announced by CMS.
(2) An MA organization must submit all crosswalk exception requests
in paragraph (c)(1) of this section in writing through the crosswalk
exceptions process in HPMS by the crosswalk exception request deadline
announced by CMS annually. CMS verifies the requests and notifies
requesting MA organizations of the approval or denial after the
crosswalk exception request deadline.

0
21. Section 422.550 is amended by adding paragraph (f) to read as
follows:

Sec. 422.550 General provisions.

* * * * *
(f) Sale of beneficiaries not permitted. (1) CMS only recognizes
the sale or transfer of an organization's entire MA line of business,
consisting of all MA contracts held by the MA organization with the
exception of the sale or transfer of a full contract between wholly
owned subsidiaries of the same parent organization, which is permitted.
(2) CMS does not recognize or allow a sale or transfer that
consists solely of the sale or transfer of individual beneficiaries or
groups of beneficiaries enrolled in a plan benefit package.

0
22. Section 422.562 is amended by adding paragraph (d)(3) to read as
follows:

Sec. 422.562 General provisions.

* * * * *
(d) * * *
(3) For the sole purpose of applying the regulations at Sec.
405.1038(c) of this chapter, an MA organization is included in the
definition of ``contractors'' as it relates to stipulated decisions.

0
23. Section 422.568 is amended by adding paragraphs (g) through (k) to
read as follows:

Sec. 422.568 Standard timeframes and notice requirements for
organization determinations.

* * * * *
(g) Dismissing a request. The MA organization dismisses an
organization determination request, either entirely or as to any stated
issue, under any of the following circumstances:
(1) The individual or entity making the request is not permitted to
request an organization determination under Sec. 422.566(c).
(2) The MA organization determines the party failed to make out a
valid request for an organization determination that substantially
complies with paragraph (a) of this section.
(3) An enrollee or the enrollee's representative files a request
for an organization determination, but the enrollee dies while the
request is pending, and both of the following apply:
(i) The enrollee's surviving spouse or estate has no remaining
financial interest in the case.
(ii) No other individual or entity with a financial interest in the
case wishes to pursue the organization determination.
(4) A party filing the organization determination request submits a
timely request for withdrawal of their request for an organization
determination with the MA organization.
(h) Notice of dismissal. The MA organization must mail or otherwise
transmit a written notice of the dismissal of the organization
determination request to the parties. The notice must state all of the
following:
(1) The reason for the dismissal.
(2) The right to request that the MA organization vacate the
dismissal action.
(3) The right to request reconsideration of the dismissal.
(i) Vacating a dismissal. If good cause is established, the MA
organization may vacate its dismissal of a request for an organization
determination within 6 months from the date of the notice of dismissal.
(j) Effect of dismissal. The dismissal of a request for an
organization determination is binding unless it is modified or reversed
by the MA organization upon reconsideration or vacated under paragraph
(i) of this section.
(k) Withdrawing a request. A party that requests an organization
determination may withdraw its request at any time before the decision
is issued by filing a request with the MA organization.

0
24. Section 422.570 is amended by adding paragraph (g) to read as
follows:

Sec. 422.570 Expediting certain organization determinations.

* * * * *
(g) Dismissing a request. The MA organization dismisses an
expedited organization request in accordance with Sec. 422.568.

0
25. Section 422.582 is amended--
0
a. In paragraph (e) by removing the word ``written''; and
0
b. By adding paragraphs (f) through (i).
The additions to read as follows:

Sec. 422.582 Request for a standard reconsideration.

* * * * *
(f) Dismissing a request. The MA organization dismisses a
reconsideration request, either entirely or as to any stated issue,
under any of the following circumstances:
(1) The person or entity requesting a reconsideration is not a
proper party under Sec. 422.578.
(2) The MA organization determines the party failed to make a valid
request for a reconsideration that substantially complies with
paragraph (a) of this section.
(3) The party fails to file the reconsideration request within the
proper filing time frame in accordance with paragraph (b) of this
section.
(4) The enrollee or the enrollee's representative files a request
for a reconsideration, but the enrollee dies while the request is
pending, and both of the following criteria apply:
(i) The enrollee's surviving spouse or estate has no remaining
financial interest in the case.
(ii) No other individual or entity with a financial interest in the
case wishes to pursue the reconsideration.
(5) A party filing the reconsideration request submits a timely
request for withdrawal of the request for a reconsideration with the MA
organization.
(g) Notice of dismissal. The MA organization must mail or otherwise
transmit a written notice of the dismissal of the reconsideration
request to the parties. The notice must state all of the following:
(1) The reason for the dismissal.
(2) The right to request that the MA organization vacate the
dismissal action.
(3) The right to request review of the dismissal by the independent
entity.
(h) Vacating a dismissal. If good cause is established, the MA
organization may vacate its dismissal of a request for reconsideration
within 6 months from the date of the notice of dismissal.
(i) Effect of dismissal. The MA organization's dismissal is binding
unless the enrollee or other party requests review by the independent
entity in accordance with Sec. 422.590(h) or the decision is vacated
under paragraph (h) of this section.

[[Page 6102]]

0
26. Section 422.584 is amended by adding paragraph (g) to read as
follows:

Sec. 422.584 Expediting certain reconsiderations.

* * * * *
(g) Dismissing a request. The MA organization dismisses an
expedited reconsideration request in accordance with Sec. 422.582(f)
through (i).

0
27. Section 422.590 is amended by adding paragraph (i) to read as
follows:

Sec. 422.590 Timeframes and responsibility for reconsiderations.

* * * * *
(i) Requests for review of a dismissal by the independent entity.
If the MA organization dismisses a request for a reconsideration in
accordance with Sec. Sec. 422.582(f) and 422.584(g), the enrollee or
other proper party under Sec. 422.578 has the right to request review
of the dismissal by the independent entity. A request for review of a
dismissal must be filed in writing with the independent entity within
60 calendar days from the date of the MA organization's dismissal
notice.

0
28. Section 422.592 is amended--
0
a. In paragraph (a) by adding a sentence at the end of the paragraph;
and
0
b. By adding paragraphs (d) through (i).
The additions to read as follows:

Sec. 422.592 Reconsideration by an independent entity.

(a) * * * In accordance with Sec. 422.590(i), the independent
entity is responsible for reviewing MA organization dismissals of
reconsideration requests.
* * * * *
(d) The independent entity dismisses a reconsideration request,
either entirely or as to any stated issue, under any of the following
circumstances:
(1) The person or entity requesting a reconsideration is not a
proper party under Sec. 422.578.
(2) The independent entity determines the party failed to make out
a valid request for a reconsideration that substantially complies with
Sec. 422.582(a) or (b).
(3) The enrollee or the enrollee's representative files a request
for a reconsideration, but the enrollee dies while the request is
pending, and both of the following criteria apply:
(i) The enrollee's surviving spouse or estate has no remaining
financial interest in the case.
(ii) No other individual or entity with a financial interest in the
case wishes to pursue the reconsideration.
(4) The party filing the reconsideration request submits with the
independent review entity a timely request for withdrawal of the
request for reconsideration.
(e) The independent entity mails or otherwise transmits a written
notice of the dismissal of the reconsideration request to the parties.
The notice must state the following:
(1) The reason for the dismissal.
(2) That there is a right to request that the independent entity
vacate the dismissal action.
(3) The right to a review of the dismissal under Sec. Sec. 422.600
and 422.602.
(f) If good cause is established, the independent entity may vacate
its dismissal of a request for reconsideration within 6 months from the
date of the notice of dismissal.
(g) The independent entity's dismissal is binding and not subject
to further review unless a party meets the requirements in Sec.
422.600 and files a proper and timely request under Sec. 422.602 or
the dismissal is vacated under paragraph (f) of this section.
(h) The party or physician acting on behalf of an enrollee who
files a request for reconsideration may withdraw the request by filing
a request for withdrawal with the independent entity.
(i) If the independent entity determines that the MA organization's
dismissal was in error, the independent entity vacates the dismissal
and remands the case to the plan for reconsideration consistent with
Sec. 422.590. The independent entity's decision regarding an MA
organization's dismissal, including a decision to deny a request for
review of a dismissal, is binding and not subject to further review.

0
29. Section 422.600 is amended in paragraph (b) by adding a new
sentence at the end of the paragraph to read as follows:

Sec. 422.600 Right to a hearing.

* * * * *
(b) * * * For purposes of calculating the amount remaining in
controversy under this section, references to coinsurance in Sec.
405.1006(d) of this chapter should be read to include coinsurance and
copayment amounts.
* * * * *

0
30. Section 422.629 is amended by revising paragraph (k)(4)(ii) to read
as follows:

Sec. 422.629 General requirements for applicable integrated plans.

* * * * *
(k) * * *
(4) * * *
(ii) If deciding an appeal of a denial that is based on lack of
medical necessity (or any substantively equivalent term used to
describe the concept of medical necessity), are a physician or other
appropriate health care professional who have the appropriate clinical
expertise in treating the enrollee's condition or disease, and
knowledge of Medicare and Medicaid coverage criteria, before the
applicable integrated plan issues the integrated organization
determination decision.
* * * * *

0
31. Section 422.631 is amended by adding paragraphs (e) through (i) to
read as follows:

Sec. 422.631 Integrated organization determinations.

* * * * *
(e) Dismissing a request. The applicable integrated plan dismisses
a standard or expedited integrated organization determination request,
either entirely or as to any stated issue, under any of the following
circumstances:
(1) The individual or entity making the request is not permitted to
request an integrated organization determination under Sec.
422.629(l).
(2) The applicable integrated plan determines the party failed to
make out a valid request for an integrated organization determination
that substantially complies with paragraph (b) of this section.
(3) An enrollee or the enrollee's representative files a request
for an integrated organization determination, but the enrollee dies
while the request is pending, and both of the following apply:
(i) The enrollee's surviving spouse or estate has no remaining
financial interest in the case.
(ii) No other individual or entity with a financial interest in the
case wishes to pursue the integrated organization determination.
(4) A party filing the integrated organization determination
request submits a timely request for withdrawal of their request for an
integrated organization determination with the applicable integrated
plan.
(f) Notice of dismissal. The applicable integrated plan must mail
or otherwise transmit a written notice of the dismissal of the
integrated organization determination request to the parties. The
notice must state all of the following:
(1) The reason for the dismissal.
(2) The right to request that the applicable integrated plan vacate
the dismissal action.
(3) The right to request reconsideration of the dismissal.

[[Page 6103]]

(g) Vacating a dismissal. If good cause is established, the
applicable integrated plan may vacate its dismissal of a request for an
integrated organization determination within 6 months from the date of
the notice of dismissal.
(h) Effect of dismissal. The dismissal of a request for an
integrated organization determination is binding unless it is modified
or reversed by the applicable integrated plan or vacated under
paragraph (g) of this section.
(i) Withdrawing a request. A party that requests an integrated
organization determination may withdraw its request at any time before
the decision is issued by filing a request with the applicable
integrated plan.

0
32. Section 422.632 is amended in paragraph (b)(1) by removing the
reference ``Sec. 422.633(e)'' and adding in its place the reference
``Sec. 422.633(d)''.

Sec. 422.632 [Amended]

0
33. Section 422.633 is amended by adding paragraphs (g) through (k) to
read as follows:

Sec. 422.633 Integrated reconsideration.

* * * * *
(g) Withdrawing a request. The party or physician acting on behalf
of an enrollee who files a request for integrated reconsideration may
withdraw it by filing a request for withdrawal with the applicable
integrated plan.
(h) Dismissing a request. The applicable integrated plan dismisses
an expedited or standard integrated reconsideration request, either
entirely or as to any stated issue, under any of the following
circumstances:
(1) The person or entity requesting an integrated reconsideration
is not a proper party to request an integrated reconsideration under
Sec. 422.629(l).
(2) The applicable integrated plan determines the party failed to
make a valid request for an integrated reconsideration that
substantially complies with Sec. 422.629(l) of this section.
(3) The party fails to file the integrated reconsideration request
within the proper filing timeframe in accordance with paragraph (d) of
this section.
(4) The enrollee or the enrollee's representative files a request
for an integrated reconsideration, but the enrollee dies while the
request is pending, and both of the following criteria apply:
(i) The enrollee's surviving spouse or estate has no remaining
financial interest in the case.
(ii) No other individual or entity with a financial interest in the
case wishes to pursue the integrated reconsideration.
(5) A party filing the reconsideration request submits a timely
request for withdrawal of their request for an integrated
reconsideration with the applicable integrated plan.
(i) Notice of dismissal. The applicable integrated plan must mail
or otherwise transmit a written notice of the dismissal of the
integrated reconsideration request to the parties. The notice must
state all of the following:
(1) The reason for the dismissal.
(2) The right to request that the applicable integrated plan vacate
the dismissal action.
(3) The right to request review of the dismissal by the independent
entity.
(j) Vacating a dismissal. If good cause is established, the
applicable integrated plan may vacate its dismissal of a request for
integrated reconsideration within 6 months from the date of the notice
of dismissal.
(k) Effect of dismissal. The applicable integrated plan's dismissal
is binding unless the enrollee or other party requests review by the
independent entity in accordance with Sec. 422.590(h) or the dismissal
is vacated under paragraph (j) of this section.

0
34. Section 422.760 is amended by redesignating paragraphs (b)(3) and
(4) as paragraphs (b)(4) and (5), respectively, and adding a new
paragraph (b)(3) to read as follows:

Sec. 422.760 Determinations regarding the amount of civil money
penalties and assessment imposed by CMS.

* * * * *
(b) * * *
(3) CMS calculates the minimum penalty amounts under paragraphs
(b)(1) and (2) of this section using the following criteria:
(i) Definitions for calculating penalty amounts--(A) Per
determination. The penalty amounts calculated under paragraph (b)(1) of
this section.
(B) Per enrollee. The penalty amounts calculated under paragraph
(b)(2) of this section.
(C) Standard minimum penalty. The per enrollee or per determination
penalty amount that is dependent on the type of adverse impact that
occurred.
(D) Aggravating factor(s). Specific penalty amounts that may
increase the per enrollee or per determination standard minimum penalty
and are determined based on criteria under paragraph (a) of this
section.
(E) Cost-of-living multiplier. The percent change between each
year's published October consumer price index for all urban consumers
(United States city average), which is released by The Office of
Management and Budget (OMB) annually.
(ii) Calculation of minimum penalty amounts. (A) Per determination
and per enrollee minimum penalty amounts increases by multiplying the
current standard minimum penalty and aggravating factor amounts by the
cost-of-living multiplier.
(B) The minimum penalty and aggravating factor amounts is updated
no more often than every 3 years.
(C) CMS does the following:
(1) Tracks the calculation and accrual of the standard minimum
penalty and aggravating factor amounts.
(2) Announces the penalties and amounts described in paragraph (b)
of this section on an annual basis.
* * * * *

0
35. Section 422.2260 is revised to read as follows:

Sec. 422.2260 Definitions.

The definitions in this section apply for this subpart unless the
context indicates otherwise.
Advertisement (Ad) means a read, written, visual, oral, watched, or
heard bid for, or call to attention. Advertisements can be considered
communications or marketing based on the intent and content of the
message.
Alternate format means a format used to convey information to
individuals with visual, speech, physical, hearing, and intellectual
disabilities (for example, braille, large print, audio).
Banner means a type of advertisement feature typically used in
television ads that is intended to be brief, and flashes limited
information across a screen for the sole purpose of enticing a
prospective enrollee to contact the MA plan (for example, obtain more
information) or to alert the viewer that information is forthcoming.
Banner-like advertisement is an advertisement that uses a banner-
like feature, that is typically found in some media other than
television (for example, outdoors and on the internet).
Communications means activities and use of materials created or
administered by the MA organization or any downstream entity to provide
information to current and prospective enrollees. Marketing is a subset
of communications.
Marketing means communications materials and activities that meet
both the following standards for intent and content:
(1) Intended, as determined under paragraph (1)(ii) of this
definition, to do any of the following:

[[Page 6104]]

(i)(A) Draw a beneficiary's attention to a MA plan or plans.
(B) Influence a beneficiary's decision-making process when making a
MA plan selection.
(C) Influence a beneficiary's decision to stay enrolled in a plan
(that is, retention-based marketing).
(ii) In evaluating the intent of an activity or material, CMS will
consider objective information including, but not limited to, the
audience of the activity or material, other information communicated by
the activity or material, timing, and other context of the activity or
material and is not limited to the MA organization's stated intent.
(2) Include or address content regarding any of the following:
(i) The plan's benefits, benefits structure, premiums, or cost
sharing.
(ii) Measuring or ranking standards (for example, Star Ratings or
plan comparisons).
(iii) Rewards and incentives as defined under Sec. 422.134(a).
Outdoor advertising (ODA) means outdoor material intended to
capture the attention of a passing audience (for example, billboards,
signs attached to transportation vehicles). ODA may be communications
or marketing material.

0
36. Section 422.2261 is added to read as follows:

Sec. 422.2261 Submission, review, and distribution of materials.

(a) General requirements. MA organizations must submit all
marketing materials, all election forms, and certain designated
communications materials for CMS review.
(1) The Health Plan Management System (HPMS) Marketing Module is
the primary system of record for the collection, review, and storage of
materials that must be submitted for review.
(2) Materials must be submitted to the HPMS Marketing Module by the
MA organization.
(3) Unless specified by CMS, third party and downstream entities
are not permitted to submit materials directly to CMS.
(b) CMS review of marketing materials and election forms. MA
organizations may not distribute or otherwise make available any
marketing materials or election forms unless one of the following
occurs:
(1) CMS has reviewed and approved the material.
(2) The material has been deemed approved; that is, CMS has not
rendered a disposition for the material within 45 days (or 10 days if
using CMS model or standardized marketing materials as outlined in
Sec. 422.2267(e) of this chapter) of submission to CMS; or
(3) The material has been accepted under File and Use, as follows:
(i) The MA organization may distribute certain types of marketing
materials, designated by CMS based on the material's content, audience,
and intended use, as they apply to potential risk to the beneficiary, 5
days following the submission.
(ii) The MA organization must certify that the material meets all
applicable CMS communications and marketing requirements in Sec. Sec.
422.2260 through 422.2267.
(c) CMS review of non-marketing communications materials. CMS does
not require submission, or submission and approval, of communications
materials prior to use, other than the following exceptions.
(1) Certain designated communications materials that are critical
to beneficiaries understanding or accessing their benefits (for
example, the Evidence of Coverage (EOC).
(2) Communications materials that, based on feedback such as
complaints or data gathered through reviews, warrant additional
oversight as determined by CMS, to ensure the information being
received by beneficiaries is accurate.
(d) Standards for CMS review. CMS reviews materials to ensure the
following:
(1) Compliance with all applicable requirements under Sec. Sec.
422.2260 through 422.2267.
(2) Benefit and cost information is an accurate reflection of what
is contained in the MA organization's bid.
(3) CMS may determine, upon review of such materials, that the
materials must be modified, or may no longer be used.

0
37. Section 422.2262 is revised to read as follows:

Sec. 422.2262 General communications materials and activities
requirements.

MA organizations may not mislead, confuse, or provide materially
inaccurate information to current or potential enrollees.
(a) General rules. MA organizations must ensure their statements
and the terminology used in communications activities and materials
adhere to the following requirements:
(1) MA organizations may not do any of the following:
(i) Provide information that is inaccurate or misleading.
(ii) Make unsubstantiated statements, except when used in logos or
taglines.
(iii) Engage in activities that could mislead or confuse Medicare
beneficiaries, or misrepresent the MA organization.
(iv) Engage in any discriminatory activity such as attempting to
recruit Medicare beneficiaries from higher income areas without making
comparable efforts to enroll Medicare beneficiaries from lower income
areas, or vice versa.
(v) Target potential enrollees based on income levels, unless it is
a dual eligible special needs plan or comparable plan as determined by
the Secretary.
(vi) Target potential enrollees based on health status, unless it
is a special needs plan or comparable plan as determined by the
Secretary.
(vii) State or imply plans are only available to seniors rather
than to all Medicare beneficiaries.
(viii) Employ MA plan names that suggest that a plan is not
available to all Medicare beneficiaries, unless it is a special needs
plan or comparable plan as determined by the Secretary. This
prohibition does not apply to MA plan names in effect prior to July 31,
2000.
(ix) Display the names or logos or both of co-branded network
providers on the organization's member identification card, unless the
provider names or logos or both are related to the member selection of
specific provider organizations (for example, physicians or hospitals).
(x) Use a plan name that does not include the plan type. The plan
type should be included at the end of the plan name, for example,
``Super Medicare Advantage (HMO).'' MA organizations are not required
to repeat the plan type when the plan name is used multiple times in
the same material.
(xi) Claim they are recommended or endorsed by CMS, Medicare, the
Secretary, or HHS.
(xii) Convey that a failure to pay premium will not result in
disenrollment, except for factually accurate descriptions of the MA
organization's policies adopted in accordance with Sec. 422.74(b)(1)
and (d)(1) of this chapter.
(xiii) Use the term ``free'' to describe a $0 premium, any type of
reduction in premium, reduction in deductibles or cost sharing, low-
income subsidy, or cost sharing pertaining to dual eligible
individuals.
(xiv) Imply that the plan operates as a supplement to Medicare.
(xv) State or imply a plan is available only to or is designed for
beneficiaries who are dually eligible for Medicare and Medicaid, unless
it is a dual-eligible special needs plan or comparable plan as
determined by the Secretary.
(xvi) Market a non-dual eligible special needs plan as if it were a
dual-eligible special needs plan.

[[Page 6105]]

(xvii) Target marketing efforts primarily to dual eligible
individuals, unless the plan is a dual eligible special needs plan or
comparable plan as determined by the Secretary.
(xviii) Claim a relationship with the state Medicaid agency, unless
a contract to coordinate Medicaid services for enrollees in that plan
is in place.
(2) MA organizations may do the following:
(i) State that the MA organization is approved to participate in
Medicare programs or is contracted to administer Medicare benefits or
both.
(ii) Use the term ``Medicare-approved'' to describe benefits or
services in materials or both.
(iii) Use the term ``free'' in conjunction with mandatory,
supplemental, and preventative benefits provided at a zero cost share
for all enrollees.
(b) Product endorsements and testimonials. (1) Product endorsements
and testimonials may take any of the following forms:
(i) Television or video ads.
(ii) Radio ads.
(iii) Print ads.
(iv) Social media ads. In cases of social media, the use of a
previous post, whether or not associated with or originated by the MA
organization, is considered a product endorsement or testimonial.
(v) Other types of ads.
(2) MA organizations may use individuals to endorse the MA
organization's product provided the endorsement or testimonial adheres
to the following requirements:
(i) The speaker must identify the MA organization's product or
company by name.
(ii) Medicare beneficiaries endorsing or promoting the MA
organization must have been an enrollee at the time the endorsement or
testimonial was created.
(iii) The endorsement or testimonial must clearly state that the
individual was paid for the endorsement or testimonial, if applicable.
(iv) If an individual is used (for example, an actor) to portray a
real or fictitious situation, the endorsement or testimonial must state
that it is an actor portrayal.
(c) Requirements when including certain telephone numbers in
materials. (1) MA organizations must adhere to the following
requirements for including certain telephone numbers in materials:
(i) When a MA organization includes its customer service number,
the hours of operation must be prominently included at least once.
(ii) When a MA organization includes its customer service number,
it must provide a toll-free TTY number in conjunction with the customer
service number in the same font size.
(iii) On every material where 1-800-MEDICARE or Medicare TTY
appears, the MA organization must prominently include, at least once,
the hours and days of operation for 1-800-MEDICARE (that is, 24 hours a
day/7 days a week).
(2) The following advertisement types are exempt from these
requirements:
(i) Outdoor advertising.
(ii) Banners or banner-like ads.
(iii) Radio advertisements and sponsorships.
(d) Standardized material identification (SMID). (1) MA
organizations must use a standardized method of identification for
oversight and tracking of materials received by beneficiaries.
(2) The SMID consists of the following three parts:
(i) The MA organization contract or Multi-Contract Entity (MCE)
number (that is, ``H'' for MA or Section 1876 Cost Plans, ``R'' for
Regional PPO plans (RPPOs), or ``Y'' for MCE, a means of identification
available for Plans/Part D sponsors that have multiple MA contracts)
followed by an underscore, except that the SMID for multi-plan
marketing materials must begin with the word ``MULTI-PLAN'' instead of
the MA organization's contract number (for example, H1234_abc123_C or
MULTI-PLAN_efg456_M).
(ii) A series of alpha numeric characters (chosen at the MA
organization's discretion) unique to the material followed by an
underscore.
(iii) An uppercase ``C'' for communications materials or an
uppercase ``M'' for marketing materials (for example, H1234_abc123_C or
H5678_efg456_M).
(3) The SMID is required on all materials except the following:
(i) Membership ID card.
(ii) Envelopes, radio ads, outdoor advertisements, banners, banner-
like ads, and social media comments and posts.
(iii) OMB-approved forms/documents, except those materials
specified in Sec. 422.2267.
(iv) Corporate notices or forms (that is, not MA/Part D specific)
meeting the definition of communications (see Sec. 422.2260) such as
privacy notices and authorization to disclose protected health
information (PHI).
(v) Agent-developed communications materials that are not
marketing.
(4) Non-English and alternate format materials, based on previously
created materials, may have the same SMID as the material on which they
are based.

0
38. Section 422.2263 is added to read as follows:

Sec. 422.2263 General marketing requirements.

Marketing is a subset of communications and therefore must follow
the requirements outlined in Sec. 422.2262 as well as this section.
Marketing (as defined in Sec. 422.2260) must additionally meet the
following requirements:
(a) MA organizations may begin marketing prospective plan year
offerings on October 1 of each year for the following contract year. MA
organizations may market the current and prospective year
simultaneously provided materials clearly indicate what year is being
discussed.
(b) In marketing, MA organizations may not do any of the following:
(1) Provide cash or other monetary rebates as an inducement for
enrollment or otherwise.
(2) Offer gifts to beneficiaries, unless the gifts are of nominal
value (as governed by guidance published by the HHS OIG), are offered
to similarly situated beneficiaries without regard to whether or not
the beneficiary enrolls, and are not in the form of cash or other
monetary rebates.
(3) Provide meals to potential enrollees regardless of value.
(4) Market non-health care related products to prospective
enrollees during any MA sales activity or presentation. This is
considered cross-selling and is prohibited.
(5) Compare their plan to other plans, unless the information is
accurate, not misleading, and can be supported by the MA organization
making the comparison.
(6) Display the names or logos or both of provider co-branding
partners on marketing materials, unless the materials clearly indicate
via a disclaimer or in the body that ``Other providers are available in
the network.''
(7) Knowingly target or send unsolicited marketing materials to any
MA enrollee during the Open Enrollment Period (OEP).
(i) During the OEP, an MA organization may do any of the following:
(A) Conduct marketing activities that focus on other enrollment
opportunities, including but not limited to marketing to age-ins (who
have not yet made an enrollment decision), marketing by 5-star plans
regarding their continuous enrollment special election period (SEP),
and marketing to dual-eligible and LIS beneficiaries who, in general,
may make changes once per calendar quarter during the first 9 months of
the year;

[[Page 6106]]

(B) Send marketing materials when a beneficiary makes a proactive
request;
(C) At the beneficiary's request, have one-on-one meetings with a
sales agent;
(D) At the beneficiary's request, provide information on the OEP
through the call center; and
(E) Include educational information, excluding marketing, on the MA
organization's website about the existence of OEP.
(ii) During the OEP, an MA organization may not:
(A) Send unsolicited materials advertising the ability or
opportunity to make an additional enrollment change or referencing the
OEP;
(B) Specifically target beneficiaries who are in the OEP because
they made a choice during Annual Enrollment Period (AEP) by purchase of
mailing lists or other means of identification;
(C) Engage in or promote agent or broker activities that intend to
target the OEP as an opportunity to make further sales; or
(D) Call or otherwise contact former enrollees who have selected a
new plan during the AEP.
(c) The following requirements apply to how MA organizations must
display CMS-issued Star Ratings:
(1) References to individual Star Rating measure(s) must also
include references to the overall Star Rating for MA-PDs and the
summary rating for MA-only plans.
(2) May not use an individual underlying category, domain, or
measure rating to imply overall higher Star Ratings.
(3) Must be clear that the rating is out of 5 stars.
(4) Must clearly identify the Star Ratings contract year.
(5) May only market the Star Ratings in the service area(s) for
which the Star Rating is applicable, unless using Star Ratings to
convey overall MA organization performance (for example, ``Plan X has
achieved 4.5 stars in Montgomery, Chester, and Delaware Counties), in
which case the MA organization must do so in a way that is not
confusing or misleading.
(6) The following requirements apply to all 5 Star MA contracts:
(i) May not market the 5-star special enrollment period, as defined
in Sec. 422.62(b)(15), after November 30 of each year if the contract
has not received an overall 5 star for the next contract year.
(ii) May use CMS' 5-star icon or may create their own icon.
(7) The following requirements apply to all Low Performing MA
contracts:
(i) The Low Performing Icon must be included on all materials about
or referencing the specific contract's Star Ratings.
(ii) Must state the Low Performing Icon means that the MA
organization's contract received a summary rating of 2.5 stars or below
in Part C or Part D or both for the last 3 years.
(iii) May not attempt to refute or minimize Low Performing Status.

0
39. Section 422.2264 is revised to read as follows:

Sec. 422.2264 Beneficiary contact.

For the purpose of this section, beneficiary contact means any
outreach activities to a beneficiary or a beneficiary's caregivers by
the MA organization or its agents and brokers.
(a) Unsolicited contact. Subject to the rules for contact for plan
business in paragraph (b) of this section, the following rules apply
when materials or activities are given or supplied to a beneficiary or
their caregiver without prior request:
(1) MA organizations may make unsolicited direct contact by
conventional mail and other print media (for example, advertisements
and direct mail) or email (provided every email contains an opt-out
option).
(2) MA organizations may not do any of the following if
unsolicited:
(i) Use door to door solicitation, including leaving information of
any kind, except that information may be left when an appointment is
pre-scheduled but the beneficiary is not home.
(ii) Approach enrollees in common areas such as parking lots,
hallways, and lobbies.
(iii) Send direct messages from social media platforms.
(iv) Use telephone solicitation (that is, cold calling), robocalls,
text messages, or voicemail messages, including, but not limited to,
the following:
(A) Calls based on referrals.
(B) Calls to former enrollees who have disenrolled or those in the
process of disenrolling, except to conduct disenrollment surveys for
quality improvement purposes.
(C) Calls to beneficiaries who attended a sales event, unless the
beneficiary gave express permission to be contacted.
(D) Calls to prospective enrollees to confirm receipt of mailed
information.
(3) Calls are not considered unsolicited if the beneficiary
provides consent or initiates contact with the plan. For example,
returning phone calls or calling an individual who has completed a
business reply card requesting contact is not considered unsolicited.
(b) Contact for plan business. MA organizations may contact
current, and to a more limited extent, former members, including those
enrolled in other products offered by the parent organization, to
discuss plan business, in accordance with the following requirements:
(1) An MA organization may conduct the following activities as plan
business:
(i) Call current enrollees, including those in non-Medicare
products, to discuss Medicare products. Examples of such calls include,
but are not limited to the following:
(A) Enrollees aging into Medicare from commercial products.
(B) Existing enrollees, including Medicaid enrollees, to discuss
other Medicare products or plan benefits.
(C) Members in a Part D plan to discuss other Medicare products.
(ii) Call beneficiaries who submit enrollment applications to
conduct business related to enrollment.
(iii) With prior CMS approval, call LIS enrollees that a plan is
prospectively losing due to reassignment. CMS decisions to approve
calls are for limited circumstances based on the following:
(A) The proximity of cost of the losing plan as compared to the
national benchmark; and
(B) The selection of plans in the service area that are below the
benchmark.
(iv) Agents/brokers calling clients who are enrolled in other
products they may sell, such as automotive or home insurance.
(v) MA organizations may not make unsolicited calls about other
lines of business as a means of generating leads for Medicare plans.
(2) When reaching out to a beneficiary regarding plan business, as
outlined in this section, MA organizations must offer the beneficiary
the ability to opt out of future calls regarding plan business.
(c) Events with beneficiaries. MA organizations and their agents or
brokers may hold educational events, marketing or sales events, and
personal marketing appointments to meet with Medicare beneficiaries,
either face-to-face or virtually. The requirements for each type of
event are as follows:
(1) Educational events must be advertised as such and be designed
to generally inform beneficiaries about Medicare, including Medicare
Advantage, Prescription Drug programs, or any other Medicare program.
(i) At educational events, MA organizations and agents/brokers may
not market specific MA plans or benefits.
(ii) MA organizations holding or participating in educational
events may do any of the following:

[[Page 6107]]

(A) Distribute communications materials.
(B) Answer beneficiary-initiated questions pertaining to MA plans.
(C) Set up future personal marketing appointments.
(D) Distribute business cards.
(E) Obtain beneficiary contact information, including Scope of
Appointment forms.
(iii) MA organizations holding or participating in educational
events may not conduct sales or marketing presentations or distribute
or accept plan applications.
(iv) MA organizations may schedule appointments with residents of
long-term care facilities (for example, nursing homes, assisted living
facilities, board and care homes) upon a resident's request. If a
resident did not request an appointment, any visit by an agent or
broker is prohibited as unsolicited door-to-door marketing.
(2) Marketing or sales events are group events that fall within the
definition of marketing at Sec. 422.2260.
(i) If a marketing event directly follows an educational event, the
beneficiary must be made aware of the change and given the opportunity
to leave prior to the marketing event beginning.
(ii) MA organizations holding or participating in marketing events
may do any of the following:
(A) Provide marketing materials.
(B) Distribute and accept plan applications.
(C) Collect Scope of Appointment forms for future personal
marketing appointments.
(D) Conduct marketing presentations.
(iii) MA organizations holding or participating in marketing events
may not do any of the following:
(A) Require sign-in sheets or require attendees to provide contact
information as a prerequisite for attending an event.
(B) Conduct activities, including health screenings, health
surveys, or other activities that are used for or could be viewed as
being used to target a subset of members (that is, ``cherry-picking'').
(C) Use information collected for raffles or drawings for any
purpose other than raffles or drawings.
(3) Personal marketing appointments are those appointments that are
tailored to an individual or small group (for example, a married
couple). Personal marketing appointments are not defined by the
location.
(i) Prior to the personal marketing appointment beginning, the MA
plan (or agent or broker, as applicable) must agree upon and record the
Scope of Appointment with the beneficiary(ies).
(ii) MA organizations holding a personal marketing appointment may
do any of the following:
(A) Provide marketing materials.
(B) Distribute and accept plan applications.
(C) Conduct marketing presentations.
(D) Review the individual needs of the beneficiary including, but
not limited to, health care needs and history, commonly used
medications, and financial concerns.
(iii) MA organizations holding a personal marketing appointment may
not do any of the following:
(A) Market any health care related product during a marketing
appointment beyond the scope agreed upon by the beneficiary, and
documented by the plan, prior to the appointment.
(B) Market additional health related lines of plan business not
identified prior to an individual appointment without a separate Scope
of Appointment identifying the additional lines of business to be
discussed.
(C) Market non-health related products, such as annuities.

0
40. Section 422.2265 is added to read as follows:

Sec. 422.2265 Websites.

As required under Sec. 422.111(h)(2), MA organizations must have a
website.
(a) General website requirements. (1) MA organization websites must
meet all of the following requirements:
(i) Maintain current year contract content through December 31 of
each year.
(ii) Notify users when they will leave the MA organization's
Medicare site.
(iii) Include or provide access to (for example, through a
hyperlink) applicable notices, statements, disclosures, or disclaimers
with corresponding content. Overarching disclaimers, such as the
Federal Contracting Statement, are not required on every page.
(iv) Reflect the most current information within 30 days of any
material change.
(v) Keep MA content separate and distinct from other lines of
business, including Medicare Supplemental Plans.
(2) MA organization websites may not do any of the following:
(i) Require beneficiaries to enter any information other than zip
code, county, or state for access to non-beneficiary-specific website
content.
(ii) Provide links to foreign drug sales, including advertising
links.
(iii) State that the MA organization is not responsible for the
content of their social media pages or the website of any first tier,
downstream, or related entity that provides information on behalf of
the MA organization.
(b) Required content. MA organization's websites must include the
following content:
(1) A toll-free customer service number, TTY number, and days and
hours of operation.
(2) A physical or Post Office Box address.
(3) A PDF or copy of a printable provider directory.
(4) A searchable provider directory.
(5) When applicable, a searchable pharmacy directory combined with
a provider directory.
(6) Information on enrollees' and MA organizations' rights and
responsibilities upon disenrollment. MA organizations may either post
this information or provide specific information on where it is located
in the Evidence of Coverage together with a link to that document.
(7) A description of and information on how to file a grievance,
request an organization determination, and an appeal.
(8) Prominently displayed link to the Medicare.gov electronic
complaint form.
(9) Disaster and emergency policy consistent with Sec.
422.100(m)(5)(iii).
(10) A Notice of Privacy Practices as required under the HIPAA
Privacy Rule (45 CFR 164.520).
(11) For PFFS plans, a link to the PFFS Terms and Conditions of
Payment.
(12) For MSA plans, the following statements:
(i) ``You must file Form 1040, `US Individual Income Tax Return,'
along with Form 8853, `Archer MSA and Long-Term Care Insurance
Contracts' with the Internal Revenue Service (IRS) for any
distributions made from your Medicare MSA account to ensure you aren't
taxed on your MSA account withdrawals. You must file these tax forms
for any year in which an MSA account withdrawal is made, even if you
have no taxable income or other reason for filing a Form 1040. MSA
account withdrawals for qualified medical expenses are tax free, while
account withdrawals for non-medical expenses are subject to both income
tax and a fifty (50) percent tax penalty.''
(ii) ``Tax publications are available on the IRS website at http://www.irs.gov or from 1-800-TAX-FORM (1-800-829-3676).''
(c) Required posted materials. MA organization's website must
provide access to the following materials, in a printable format,
within the timeframes specified in paragraphs (c)(1) and (2) of this
section.
(1) The following materials for each plan year must be posted on
the website

[[Page 6108]]

by October 15 prior to the beginning of the plan year:
(i) Evidence of Coverage.
(ii) Annual Notice of Change (for renewing plans).
(iii) Summary of Benefits.
(iv) Provider Directory.
(v) Provider/Pharmacy Directory.
(2) The following materials must be posted on the website
throughout the year and be updated as required:
(i) Prior Authorization Forms for physicians and enrollees.
(ii) When applicable, Part D Model Coverage Determination and
Redetermination Request Forms.
(iii) Exception request forms for physicians (which must be posted
by January 1 for new plans).
(iv) CMS Star Ratings document, which must be posted within 21 days
after its release on the Medicare Plan Finder.

0
41. Section 422.2266 is added to read as follows:

Sec. 422.2266 Activities with healthcare providers or in the
healthcare setting.

(a) Where marketing is prohibited. The requirements in paragraphs
(c) through (e) of this section apply to activities in the health care
setting. Marketing activities and materials are not permitted in areas
where care is being administered, including but not limited to the
following:
(1) Exam rooms.
(2) Hospital patient rooms.
(3) Treatment areas where patients interact with a provider and
clinical team (including such areas in dialysis treatment facilities).
(4) Pharmacy counter areas.
(b) Where marketing is permitted. Marketing activities and
materials are permitted in common areas within the health care setting,
including the following:
(1) Common entryways.
(2) Vestibules.
(3) Waiting rooms.
(4) Hospital or nursing home cafeterias.
(5) Community, recreational, or conference rooms.
(c) Provider-initiated activities. Provider-initiated activities
are activities conducted by a provider at the request of the patient,
or as a matter of a course of treatment, and occur when meeting with
the patient as part of the professional relationship between the
provider and patient. Provider-initiated activities do not include
activities conducted at the request of the MA organization or pursuant
to the network participation agreement between the MA organization and
the provider. Provider-initiated activities that meet the definition in
this paragraph (c) fall outside of the definition of marketing in Sec.
422.2260. Permissible provider-initiated activities include:
(1) Distributing unaltered, printed materials created by CMS, such
as reports from Medicare Plan Finder, the ``Medicare & You'' handbook,
or ``Medicare Options Compare'' (from https://www.medicare.gov),
including in areas where care is delivered.
(2) Providing the names of MA organizations with which they
contract or participate or both.
(3) Answering questions or discussing the merits of a MA plan or
plans, including cost sharing and benefit information, including in
areas where care is delivered.
(4) Referring patients to other sources of information, such as
State Health Insurance Assistance Program (SHIP) representatives, plan
marketing representatives, State Medicaid Office, local Social Security
Offices, CMS' website at https://www.medicare.gov, or 1-800-MEDICARE.
(5) Referring patients to MA plan marketing materials available in
common areas;
(6) Providing information and assistance in applying for the LIS.
(7) Announcing new or continuing affiliations with MA
organizations, once a contractual agreement is signed. Announcements
may be made through any means of distribution.
(d) Plan-initiated provider activities. Plan-initiated provider
activities are those activities conducted by a provider at the request
of an MA organization. During a plan-initiated provider activity, the
provider is acting on behalf of the MA organization. For the purpose of
plan-initiated activities, the MA organization is responsible for
compliance with all applicable regulatory requirements.
(1) During plan-initiated provider activities, MA organizations
must ensure that the provider does not:
(i) Accept or collect Scope of Appointment forms.
(ii) Accept Medicare enrollment applications.
(iii) Make phone calls or direct, urge, or attempt to persuade
their patients to enroll in a specific plan based on financial or any
other interests of the provider.
(iv) Mail marketing materials on behalf of the MA organization.
(v) Offer inducements to persuade patients to enroll in a
particular MA plan or organization.
(vi) Conduct health screenings as a marketing activity.
(vii) Distribute marketing materials or enrollment forms in areas
where care is being delivered.
(viii) Offer anything of value to induce enrollees to select the
provider.
(ix) Accept compensation from the MA organization for any marketing
or enrollment activities performed on behalf of the MA organization.
(2) During plan-initiated provider activities, the provider may do
any of the following:
(i) Make available, distribute, and display communications
materials, including in areas where care is being delivered.
(ii) Provide or make available marketing materials and enrollment
forms in common areas.
(e) MA organization activities in the health care setting. MA
organization activities in the health care setting are those
activities, including marketing activities that are conducted by MA
organization staff or on behalf of the MA organization, or by any
downstream entity, but not by a provider. All marketing must comply
with the requirements in paragraphs (a) and (b) of this section.
However, during MA organization activities, the following is permitted:
(1) Accepting and collect Scope of Appointment forms.
(2) Accepting enrollment forms.
(3) Making available, distributing, and displaying communications
materials, including in areas where care is being delivered.
(f) Activities of Institutional Special Needs Plans (I-SNPs)
Serving Long-Term Care Facility Residents (1) Depending on the context
of a given situation, I-SNP contracted with a long-term care facility
can be viewed as both a provider and a plan.
(2) I-SNPs may use staff operating in a social worker capacity to
provide information, including marketing materials (excluding
enrollment forms), to residents of a long term care facility.
(3) Social workers of the I-SNP (whether employees, agents, or
contracted providers) may not accept or collect a scope of appointment
or enrollment form on behalf of the I-SNP.
(4) Unless the beneficiary or the beneficiary's authorized
representative initiates additional contact with or by the plan, all
other marketing and outreach activities in the beneficiary's room must
follow the requirements for beneficiary contact under Sec. 422.2264
(5) All other activities with healthcare providers or in the
healthcare setting must comply with Sec. Sec. 422.2266(a), (b), (c),
(d), and (e).

0
42. Section 422.2267 is added to read as follows:

[[Page 6109]]

Sec. 422.2267 Required materials and content.

For information CMS deems to be vital to the beneficiary, including
information related to enrollment, benefits, health, and rights, the
agency may develop materials or content that are either standardized or
provided in a model form. Such materials and content are collectively
referred to as required.
(a) Standards for required materials and content. All required
materials and content, regardless of categorization as standardized in
paragraph (b) of this section or model in paragraph (c) of this
section, must meet the following:
(1) Be in a 12pt font, Times New Roman or equivalent.
(2) For markets with a significant non-English speaking population,
be in the language of these individuals. Specifically, MA organizations
must translate required materials into any non-English language that is
the primary language of at least 5 percent of the individuals in a plan
benefit package (PBP) service area.
(3) Be provided to the beneficiary within CMS's specified
timeframes.
(b) Standardized materials. Standardized materials and content are
required materials and content that must be used in the form and manner
provided by CMS.
(1) When CMS issues standardized material or content, an MA
organization must use the document without alteration except for the
following:
(i) Populating variable fields.
(ii) Correcting grammatical errors.
(iii) Adding customer service phone numbers.
(iv) Adding plan name, logo, or both.
(v) Deleting content that does not pertain to the plan type (for
example, removing Part D language for a MA-only plan).
(vi) Adding the SMID.
(vii) A Notice of Privacy Practices as required under the HIPAA
Privacy Rule (45 CFR 164.520).
(2) The MA organization may develop accompanying language for
standardized material or content, provided that language does not
conflict with the standardized material or content. For example, CMS
may issue standardized content associated with an appeal notification
and MA organizations may draft a letter that includes the standardized
content in the body of the letter; the remaining language in the letter
is at the plan's discretion, provided it does not conflict with the
standardized content or other regulatory standards.
(c) Model materials. Model materials and content are those required
materials and content created by CMS as an example of how to convey
beneficiary information. When drafting required materials or content
based on CMS models, MA organizations:
(1) Must accurately convey the vital information in the required
material or content to the beneficiary, although the MA organization is
not required to use CMS model materials or content verbatim; and
(2) Must follow CMS's specified order of content, when specified.
(d) Delivery of required materials. MA organizations must mail
required materials in hard copy or provide them electronically,
following the requirements in paragraphs (d)(1) and (2) of this
section.
(1) For hard copy mailed materials, each enrollee must receive his
or her own copy, except in cases of non-beneficiary-specific
material(s) where the MA organization has determined multiple enrollees
are living in the same household and it has reason to believe the
enrollees are related. In that case, the MA organization may mail one
copy to the household. The MA organization must provide all enrollees
an opt-out process so the enrollees can each receive his or her own
copy, instead of a copy to the household. Materials specific to an
individual beneficiary must always be mailed to that individual.
(2) Materials may be delivered electronically following the
requirements in paragraphs (d)(2)(i) and (ii) of this section.
(i) Without prior authorization from the enrollee, MA organizations
may mail new and current enrollees a notice informing enrollees how to
electronically access the following required materials: the Evidence of
Coverage, Provider and Pharmacy Directories, and Formulary. The
following requirements apply:
(A) The MA organization may mail one notice for all materials or
multiple notices.
(B) Notices for prospective year materials may not be mailed prior
to September 1 of each year, but must be sent in time for an enrollee
to access the specified materials by October 15 of each year.
(C) The MA organization may send the notice throughout the year to
new enrollees.
(D) The notice must include the website address to access the
materials, the date the materials will be available if not currently
available, and a phone number to request that hard-copy materials be
mailed.
(E) The notice must provide the enrollee with the option to request
hardcopy materials. Requests may be material specific, and must have
the option of a one-time request or a permanent request that must stay
in place until the enrollee chooses to receive electronic materials
again.
(F) Hard copies of requested materials must be sent within three
business days of the request.
(ii) With prior authorization from the enrollee, MA organizations
may provide any required material or content electronically. To do so,
MA organizations must:
(A) Obtain prior consent from the enrollee. The consent must
specify both the media type and the specific materials being provided
in that media type.
(B) Provide instructions on how and when enrollees can access the
materials.
(C) Have a process through which an enrollee can request hard
copies be mailed, providing the beneficiary with the option of a one-
time request or a permanent request (which must stay in place until the
enrollee chooses to receive electronic materials again), and with the
option of requesting hard copies for all or a subset of materials. Hard
copies must be mailed within three business days of the request.
(D) Have a process for automatic mailing of hard copies when
electronic versions or the chosen media type is undeliverable.
(e) CMS required materials and content. The following are required
materials that must be provided to current and prospective enrollees,
as applicable, in the form and manner outlined in this section. Unless
otherwise noted or instructed by CMS and subject to Sec. 422.2263(a)
of this chapter, required materials may be sent once a fully executed
contract is in place, but no later than the due dates listed for each
material in this section.
(1) Evidence of Coverage (EOC). The EOC is a standardized
communications material through which certain required information
(under Sec. 422.111(b)) must be provided annually and must be
provided:
(i) To current enrollees of the plan by October 15, prior to the
year to which the EOC applies.
(ii) To new enrollees within 10 calendars days from receipt of CMS
confirmation of enrollment or by last day of month prior to effective
date, whichever is later.
(2) Part C explanation of benefits (EOB). The EOB is a model
communications material through which plans must provide the
information required under Sec. 422.111(k). MA organizations may send
this monthly or per claim with a quarterly summary.

[[Page 6110]]

(3) Annual notice of change (ANOC). The ANOC is a standardized
marketing material through which plans must provide the information
required under Sec. 422.111(d)(2) annually.
(i) Must send for enrollee receipt no later than September 30 of
each year.
(ii) Enrollees with an October 1, November 1, or December 1
effective date must receive within 10 calendar days from receipt of CMS
confirmation of enrollment or by last day of month prior to effective
date, whichever is later.
(4) Pre-Enrollment checklist (PECL). The PECL is a standardized
communications material that plans must provide to prospective
enrollees with the enrollment form, so that the enrollees understand
important plan benefits and rules. It references information on the
following:
(i) The EOC.
(ii) Provider directory.
(iii) Pharmacy directory.
(iv) Formulary.
(v) Premiums/copayments/coinsurance.
(vi) Emergency/urgent coverage.
(vii) Plan-type rules.
(5) Summary of Benefits (SB). MA organizations must disseminate a
summary of highly utilized coverage that include benefits and cost
sharing to prospective enrollees, known as the SB. The SB is a model
marketing material. It must be in a clear and accurate form.
(i) The SB must be provided with an enrollment form as follows:
(A) In hard copy with a paper enrollment form.
(B) For online enrollment, the SB must be made available
electronically (for example, via a link) prior to the completion and
submission of enrollment request.
(C) For telephonic enrollment, the beneficiary must be verbally
told where the SB can be accessed.
(ii) The SB must include the following information:
(A) Information on medical benefits, including:
(1) Monthly Plan Premium.
(2) Deductible/Out-of-pocket limits.
(3) Inpatient/Outpatient Hospital coverage.
(4) Ambulatory Surgical Center (ASC).
(5) Doctor Visits (Primary Care Providers and Specialists).
(6) Preventive Care.
(7) Emergency Care/Urgently Needed Services.
(8) Diagnostic Services/Labs/Imaging.
(9) Hearing Services/Dental Services/Vision Services.
(10) Mental Health Services.
(B) Information on prescription drug expenses, including:
(1) Deductible, the initial coverage phase, coverage gap, and
catastrophic coverage.
(2) A statement that costs may differ based on pharmacy type or
status (for example, preferred/non-preferred, mail order, long-term
care (LTC) or home infusion, and 30-or 90-day supply), when applicable.
(C) For Medicare Medical Savings Account Plans (MSAs), the SB must
include the following:
(1) The amount Medicare deposits into the beneficiaries MSA
account.
(2) A statement that the beneficiary pays nothing once the
deductible is met.
(D) For dual eligible special needs plan (D-SNP)s, the SB must
identify or describe the Medicaid benefits to prospective enrollees.
This may be done by either of the following:
(1) Including the Medicaid benefits in the SB.
(2) Providing a separate document identifying the Medicaid benefits
that accompanies the SB.
(E) For D-SNPs open to dually eligible enrollees with differing
levels of cost, the SB must:
(1) State how cost sharing and benefits differ depending on the
level of Medicaid eligibility.
(2) Describe the Medicaid benefits, if any, provided by the plan.
(F) Fully integrated dual eligible SNPs (FIDE SNPs) and highly
integrated D-SNPs, as defined in Sec. 422.2, that provide Medicaid
benefits have the option to display integrated Medicare and Medicaid
benefits in the SB.
(G) MA organizations may describe or identify other health related
benefits in the SB.
(6) Enrollment/Election form. This is a model communications
material through which plans must provide the information required
under Sec. 422.60(c).
(7) Enrollment Notice. This is a model communications material
through which plans must provide the information required under Sec.
422.60(e)(3).
(8) Disenrollment Notice. This is a model communications material
through which plans must provide the information required under Sec.
422.74(b).
(9) Mid-Year Change Notification. This is a model communications
material through which plans must provide a notice to enrollees when
there is a mid-year change in benefits or plan rules, under the
following timelines:
(i) Notices of changes in plan rules, unless otherwise addressed
elsewhere in this part, must be provided 30 days in advance.
(ii) For National Coverage Determination (NCD) changes announced or
finalized less than 30 days before their effective date, a notification
is required as soon as possible.
(iii) Mid-year NCD or legislative changes must be provided no later
than 30 days after the NCD is announced or the legislative change is
effective.
(A) Plans may include the change in next plan mass mailing (for
example, newsletter), provided it is within 30 days.
(B) The notice must also appear on the MA organization's website.
(10) Non-renewal Notice. This is a model communications material
through which plans must provide the information required under Sec.
422.506.
(i) The Non-renewal Notice must be provided at least 90 calendar
days before the date on which the nonrenewal is effective. For
contracts ending on December 31, the notice must be dated October 2 to
ensure national consistency in the application of Medigap Guaranteed
Issue (GI) rights to all enrollees, except for those enrollees in
special needs plans (SNPs). Information about non-renewals or service
area reductions may not be released to the public, including the Non-
renewal Notice, until CMS provides notification to the plan.
(ii) The Non-renewal Notice must do all of the following:
(A) Inform the enrollee that the plan will no longer be offered and
the date the plan will end.
(B) Provide information about any applicable open enrollment
periods or special election periods or both (for example, Medicare open
enrollment, non-renewal special election period), including the last
day the enrollee has to make a Medicare health plan selection.
(C) Explain what the enrollee must do to continue receiving
Medicare coverage and what will happen if the enrollee chooses to do
nothing.
(D) As required under Sec. 422.506(a)(2)(ii)(A), provide a CMS-
approved written description of alternative MA plan, MA-PD plan, and
PDP options available for obtaining qualified Medicare services within
the beneficiary's' region in the enrollee's notice.
(E) Specify when coverage will start after a new Medicare plan is
chosen.
(F) List 1-800-MEDICARE contact information together with other
organizations that may be able to assist with comparing plans (for
example, SHIPs).
(G) Explain Medigap to applicable enrollees and the special right
to buy a Medigap policy, and include a Medigap fact sheet with the non-
renewal notice that explains Medigap coverage, policy,

[[Page 6111]]

options to compare Medigap policies, and options to buy a Medigap
policy.
(H) Include the MA organization's call center telephone number, TTY
number, and hours and days of operation.
(11) Provider Directory. This is a model communications material
through which plans must provide the information under Sec.
422.111(b)(3). The Provider Directory must:
(i) Be provided to current enrollees of the plan by October 15 of
the year prior to the applicable year.
(ii) Be provided to new enrollees within 10 calendar days from
receipt of CMS confirmation of enrollment or by last day of month prior
to effective date, whichever is later.
(iii) Be provided to current enrollees upon request, within three
business days of the request.
(iv) Be updated any time the MA organization becomes aware of
changes.
(A) Updates to the online provider directories must be completed
within 30 days of receiving information requiring update.
(B)(1) Updates to hardcopy provider directories must be completed
within 30 days.
(2) Hard copy directories that include separate updates via addenda
are considered up-to-date.
(12) Provider Termination Notice. This is a model communications
material through which plans must provide the information required
under Sec. 422.111(e). The provider termination notice must be both of
the following:
(i) Provided in hard copy.
(ii) Sent via U.S. mail (first class postage is recommended, but
not required).
(13) Star Ratings Document. This is a standardized marketing
material through which Star Ratings information is conveyed to
prospective enrollees.
(i) The Star Ratings Document is generated through HPMS.
(ii) The Star Ratings Document must be provided with an enrollment
form, as follows:
(A) In hard copy with a paper enrollment form.
(B) For online enrollment, made available electronically (for
example, via a link) prior to the completion and submission of
enrollment request.
(C) For telephonic enrollment, the beneficiary must be verbally
told where they can access the Star Ratings Document.
(iii) New MA organizations that have no Star Ratings are not
required to provide the Star Ratings Document until the following
contract year.
(iv) Updated Star Ratings must be used within 21 calendar days of
release of updated information on Medicare Plan Finder.
(v) Updated Star Ratings must not be used until CMS releases Star
Ratings on Medicare Plan Finder.
(14) Organization Determination Notice. This is a model
communications material through which plans must provide the
information under Sec. 422.568.
(15) Excluded Provider Notice. This is a model communications
material through which plans must notify enrollees when a provider they
visit or consult has been excluded from participating in the Medicare
program based on an OIG exclusion or the CMS preclusion list.
(16) Notice of Denial of Medical Coverage or Payment (NDMCP) (also
known as the Integrated Denial Notice (IDN)). This is a standardized
communications material used to convey beneficiary appeal rights when a
plan has denied a service as non-covered or excluded from benefits.
(17) Notice of Medicare Non-Coverage (NOMNC). This is a
standardized communications material used to convey beneficiary appeal
rights when a plan is terminating previously-approved coverage in a
Skilled Nursing Facility (SNF), Comprehensive Outpatient Rehabilitation
Facility (CORF), or Home Health setting (HHA).
(18) Detailed Explanation of Non-Coverage (DENC). This is a
standardized communications material used to convey to a beneficiary
why their current Medicare covered SNF, CORF or HHA services should
end.
(19) Appointment of Representative (AOR). This is a standardized
communications material used to authorize or appoint an individual to
act on behalf of a beneficiary for the purpose of a specific appeal,
grievance, or organization determination.
(20) An Important Message From Medicare About Your Rights (IM).
This is a standardized communications material used to convey a
beneficiary's rights as a hospital inpatient and appeal rights when
their covered inpatient hospital stay is ending.
(21) Detailed Notice of Discharge Form (DND). This is a
standardized communications material, as required under Sec.
422.622(e), used to convey to a beneficiary why their current Medicare
covered inpatient hospital stay should end.
(22) Medicare Outpatient Observation Notice (MOON). This is a
standardized communications material used to inform a beneficiary that
he or she is an outpatient receiving observation services.
(23) Appeal and Grievance Data Form. This is a standardized
communications material used to convey organization-specific grievance
and appeals data.
(24) Request for Administrative Law Judge (ALJ) Hearing. This is a
standardized communications material used to formally request a
reconsideration of the independent review entity's determination.
(25) Attorney Adjudicator Review in Lieu of ALJ Hearing. This is a
standardized communications material used to request that an attorney
adjudicator review a previously determined decision rather than having
an ALJ do so.
(26) Notice of Right to an Expedited Grievance. This is a model
communications material used to convey a Medicare enrollee's rights to
request that a decision be made on a grievance or appeal within a
shorter timeframe.
(27) Waiver of Liability Statement. This is a model communications
material used by non-contracted providers to waive beneficiary
liability for payment for denied services while utilizing the enrollee
appeals process under subpart M of part 422.
(28) Notice of Appeal Status. This is a model communications
material used to inform a beneficiary of the denial of an appeal and
additional appeal rights.
(29) Notice of Dismissal of Appeal. This is a model communications
material used to convey the rationale by an MA organization to dismiss
beneficiary's appeal.
(30) Federal Contracting Statement. This is model content through
which plans must convey that they have a contract with Medicare and
that enrollment in the plan depends on contract renewal.
(i) The Federal Contracting Statement must include all of the
following:
(A) Legal or marketing name of the organization.
(B) Type of plan (for example, HMO, HMO SNP, PPO, PFFS, PDP).
(C) A statement that the organization has a contract with Medicare
(when applicable, MA organizations may incorporate a statement that the
organization has a contract with the state/Medicaid program).
(D) A statement that enrollment depends on contract renewal.
(ii) MA organizations must include the Federal Contracting
Statement on all marketing materials with the exception of the
following:
(A) Banners and banner-like advertisements.
(B) Outdoor advertisements.
(C) Text messages.
(D) Social media.
(E) Envelopes

[[Page 6112]]

(31) Star Ratings Disclaimer. This is model content through which
plans must:
(i) Convey that MA organizations are evaluated yearly by Medicare.
(ii) Convey that the ratings are based on a 5-star rating system.
(iii) Include the model content in disclaimer form or within the
material whenever Star Ratings are mentioned in marketing materials,
with the exception of when Star Ratings are published on small objects
(that is, a give-away items such as a pens or rulers).
(32) SSBCI Disclaimer. This is model content through which MA
organizations must:
(i) Convey the benefits mentioned are a part of special
supplemental benefits.
(ii) Convey that not all members will qualify.
(iii) Include the model content in the material copy which mentions
SSBCI benefits.
(33) Accommodations Disclaimer. This is model content through which
MA organizations must:
(i) Convey that accommodations for persons with special needs are
available.
(ii) Provide a telephone number and TTY number.
(iii) Include the model content in disclaimer form or within the
body of the material on any advertisement of invitation to all events
described under Sec. 422.2264(c).
(34) Mailing Statements. This is standardized content. It consists
of statements on envelopes that MA organizations must include when
mailing information to current members, as follows:
(i) MA organizations must include the following statement when
mailing information about the enrollee's current plan: ``Important
[Insert Plan Name] information.''
(ii) MA organizations must include the following statement when
mailing health and wellness information: ``Health and wellness or
prevention information.''
(iii) The MA organization must include the plan name; however, if
the plan name is elsewhere on the envelope, the plan name does not need
to be repeated in the disclaimer.
(iv) Delegated or sub-contracted entities and downstream entities
that conduct mailings on behalf of a multiple MA organizations must
also comply with this requirement; however, they do not have to include
a plan name.
(35) Promotional Give-Away Disclaimer. This is model content. The
disclaimer consists of a statement that must make clear that there is
no obligation to enroll in a plan, and must be included when offering a
promotional give-away such as a drawing, prizes, or a free gift.
(36) Provider Co-branded Material Disclaimer. This is model content
through which MA organizations must:
(i) Convey, as applicable, that other pharmacies, physicians or
providers are available in the plan's network.
(ii) Include the model content in disclaimer form or within the
material whenever co-branding relationships with network provider are
mentioned, unless the co-branding is with a provider network or health
system that represents 90 percent or more of the network as a whole.
(37) Out of Network Non-Contracted Provider Disclaimer. This is
standardized content. The disclaimer consists of the statement: ``Out-
of-network/non-contracted providers are under no obligation to treat
Plan members, except in emergency situations. Please call our customer
service number or see your Evidence of Coverage for more information,
including the cost-sharing that applies to out-of-network services,''
and must be included whenever materials reference out-of-network/non-
contracted providers.
(38) NCQA SNP Approval Statement. This is model content and must be
used by SNPs who have received NCQA approval. MA organizations must:
(i) Convey that MA organization has been approved by the National
Committee for Quality Assurance (NCQA) to operate as a Special Needs
Plan (SNP).
(ii) Include the last contract year of NCQA approval.
(iii) Convey that the approval is based on a review of [insert Plan
Name's] Model of Care.
(iv) Not include numeric SNP approval scores.

Sec. 422.2268 [Removed]

0
43. Section 422.2268 is removed.

0
44. Section 422.2274 is revised to read as follows:

Sec. 422.2274 Agent, broker, and other third party requirements.

If an MA organization uses agents and brokers to sell its Medicare
plans, the requirements in paragraphs (a) through (e) of this section
are applicable. If an MA organization makes payments to third parties,
the requirements in paragraph (f) of this section are applicable.
(a) Definitions. For purposes of this section, the following
definitions are applicable:
Compensation. (i) Includes monetary or non-monetary remuneration of
any kind relating to the sale or renewal of a plan or product offered
by an MA organization including, but not limited to the following:
(A) Commissions.
(B) Bonuses.
(C) Gifts.
(D) Prizes or Awards.
(ii) Does not include any of the following:
(A) Payment of fees to comply with State appointment laws,
training, certification, and testing costs.
(B) Reimbursement for mileage to, and from, appointments with
beneficiaries.
(C) Reimbursement for actual costs associated with beneficiary
sales appointments such as venue rent, snacks, and materials.
Fair market value (FMV) means, for purposes of evaluating agent or
broker compensation under the requirements of this section only, the
amount that CMS determines could reasonably be expected to be paid for
an enrollment or continued enrollment into an MA plan. Beginning
January 1, 2021, the national FMV is $539, the FMV for Connecticut,
Pennsylvania, and the District of Columbia is $607, the FMV for
California and New Jersey is $672, and the FMV for Puerto Rico and the
U.S. Virgin Islands is $370. For subsequent years, FMV is 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 rate announcement issued pursuant to
Sec. 422.312.
Initial enrollment year means the first year that a beneficiary is
enrolled in a plan versus subsequent years (c.f., renewal year) that a
beneficiary remains enrolled in a plan.
Like plan type means one of the following:
(i) PDP replaced with another PDP.
(ii) MA or MA-PD replaced with another MA or MA-PD.
(iii) Cost plan replaced with another cost plan.
Plan year and enrollment year mean the year beginning January 1 and
ending December 31.
Renewal year means all years following the initial enrollment year
in the same plan or in different plan that is a like plan type.
Unlike plan type means one of the following:
(i) An MA or, MA-PD plan to a PDP or Section 1876 Cost Plan.
(ii) A PDP to a Section 1876 Cost Plan or an MA or MA-PD plan.
(iii) A Section 1876 Cost Plan to an MA or MA-PD plan or PDP.
(b) Agent/broker requirements. Agents and brokers who represent MA

[[Page 6113]]

organizations must follow the requirements in paragraphs (b)(1) through
(3) of this section. Representation includes selling products
(including Medicare Advantage plans, Medicare Advantage-Prescription
Drug plans, Medicare Prescription Drug plans, and section 1876 Cost
plans) as well as outreach to existing or potential beneficiaries and
answering or potentially answering questions from existing or potential
beneficiaries.
(1) Be licensed and appointed under State law (if required under
applicable State law).
(2) Be trained and tested annually as required under paragraph
(c)(4) of this section, and achieve an 85 percent or higher on all
forms of testing.
(3) Secure and document a Scope of Appointment prior to meeting
with potential enrollees.
(c) MA organization oversight. MA organizations must oversee first
tier, downstream, and related entities that represent the MA
organization to ensure agents and brokers abide by all applicable State
and Federal laws, regulations, and requirements. MA organizations must
do all of the following:
(1) As required under applicable State law, employ as marketing
representatives only individuals who are licensed by the State to
conduct marketing (as defined in this subpart) of health insurance in
that State, and whom the MA organization has informed that State it has
appointed, consistent with the appointment process for agents and
brokers provided for under State law.
(2) As required under applicable State law, report the termination
of an agent or broker to the State and the reason for termination.
(3) Report to CMS all enrollments made by unlicensed agents or
brokers and for-cause terminations of agents or brokers.
(4) On an annual basis, provide training and testing to agents and
brokers on Medicare rules and regulations, the plan products that
agents and brokers will sell, including any details specific to each
plan product, and relevant State and Federal requirements.
(5) On an annual basis by the last Friday in July, report to CMS
whether the MA organization intends to use employed, captive, or
independent agents or brokers in the upcoming plan year and the
specific rates or range of rates the plan will pay independent agents
and brokers. Following the reporting deadline, MA organizations may not
change their decisions related to agent or broker type, or their
compensation rates and ranges, until the next plan year.
(6) On an annual basis by October 1, have in place full
compensation structures for the following plan year. The structure must
include details on compensation dissemination, including specifying
payment amounts for initial enrollment year and renewal year
compensation.
(7) Submit agent or broker marketing materials to CMS through HPMS
prior to use, following the requirements for marketing materials in
this subpart.
(8) Ensure beneficiaries are not charged marketing consulting fees
when considering enrollment in MA plans.
(9) Establish and maintain a system for confirming that:
(i) Beneficiaries enrolled by agents or brokers understand the
product, including the rules applicable under the plan.
(ii) Agents and brokers appropriately complete Scope of Appointment
records for all marketing appointments (including telephonic and walk-
in).
(10) Demonstrate that marketing resources are allocated to
marketing to the disabled Medicare population as well as to Medicare
beneficiaries age 65 and over.
(11) Must comply with State requests for information about the
performance of a licensed agent or broker as part of a state
investigation into the individual's conduct. CMS will establish and
maintain a memorandum of understanding (MOU) to share compliance and
oversight information with States that agree to the MOU.
(d) Compensation requirements. MA organizations must ensure they
meet the requirements in paragraphs (d)(1) through (5) of this section
in order to pay compensation. These compensation requirements only
apply to independent agents and brokers.
(1) General rules. (i) MA organizations may only pay agents or
brokers who meet the requirements in paragraph (b) of this section.
(ii) MA organizations may determine, through their contracts, the
amount of compensation to be paid, provided it does not exceed
limitations outlined in this section.
(iii) MA organizations may determine their payment schedule (for
example, monthly or quarterly). Payments (including payments for AEP
enrollments) must be made during the year of the beneficiary's
enrollment.
(iv) MA organizations may only pay compensation for the number of
months a member is enrolled.
(2) Initial enrollment year compensation. For each enrollment in an
initial enrollment year, MA organizations may pay compensation at or
below FMV.
(i) MA organizations may pay either a full or pro-rated initial
enrollment year compensation for:
(A) A beneficiary's first year of enrollment in any plan; or
(B) A beneficiary's move from an employer group plan to a non-
employer group plan (either within the same parent organization or
between parent organizations).
(ii) MA organizations must pay pro-rated initial enrollment year
compensation for:
(A) A beneficiary's plan change(s) during their initial enrollment
year.
(B) A beneficiary's selection of an ``unlike plan type'' change. In
that case, the new plan would only pay the months that the beneficiary
is enrolled, and the previous plan would recoup the months that the
beneficiary was not in the plan.
(3) Renewal compensation. For each enrollment in a renewal year, MA
plans may pay compensation at an amount up to 50 percent of FMV.
(i) MA plans may pay compensation for a renewal year:
(A) In any year following the initial enrollment year the
beneficiary remains in the same plan; or
(B) When a beneficiary enrolls in a new ``like plan type''.
(ii) [Reserved]
(4) Other compensation scenarios. (i) When a beneficiary enrolls in
an MA-PD, MA organizations may pay only the MA compensation (and not
compensation for Part D enrollment under Sec. 423.2274 of this
chapter).
(ii) When a beneficiary enrolls in both a section 1876 Cost Plan
and a stand-alone PDP, the 1876 Cost Plan sponsor may pay compensation
for the cost plan enrollment and the Part D sponsor must pay
compensation for the Part D enrollment.
(iii) When a beneficiary enrolls in a MA-only plan and a PDP plan,
the MA plan sponsor may pay for the MA plan enrollment and the Part D
plan may pay for the PDP plan enrollment.
(iv) When a beneficiary changes from two plans (for example, a MA
plan and a stand-alone PDP) (dual enrollments) to one plan (MA-PD), the
MA organization may only pay compensation at the renewal rate for the
MA-PD product.
(5) Additional compensation, payment, and compensation recovery
requirements (Charge-backs). (i) MA organizations must retroactively
pay or recoup funds for retroactive beneficiary changes for the current
and previous calendar years. MA organizations may choose to recoup or
pay compensation

[[Page 6114]]

for years prior to the previous calendar year, but they must do both
(recoup amounts owed and pay amounts due) during the same year.
(ii) Compensation recovery is required when:
(A) A beneficiary makes any plan change (regardless of the parent
organization) within the first three months of enrollment (known as
rapid disenrollment), except as provided in paragraph (d)(5)(iii) of
this section.
(B) Any other time period a beneficiary is not enrolled in a plan,
but the plan paid compensation based on that time period.
(iii) Rapid disenrollment compensation recovery does not apply
when:
(A) A beneficiary enrolls effective October 1, November 1, or
December 1 and subsequently uses the Annual Election Period to change
plans for an effective date of January 1.
(B) A beneficiary's enrollment change is not in the best interests
of the Medicare program, including for the following reasons:
(1) Other creditable coverage (for example, an employer plan).
(2) Moving into or out of an institution.
(3) Gain or loss of employer/union sponsored coverage.
(4) Plan termination, non-renewal, or CMS imposed sanction.
(5) To coordinate with Part D enrollment periods or the State
Pharmaceutical Assistance Program.
(6) Becoming LIS or dually eligible for Medicare and Medicaid.
(7) Qualifying for another plan based on special needs.
(8) Due to an auto, facilitated, or passive enrollment.
(9) Death.
(10) Moving out of the service area.
(11) Non-payment of premium.
(12) Loss of entitlement or retroactive notice of entitlement.
(13) Moving into a 5-star plan.
(14) Moving from an LPI plan into a plan with three or more stars.
(iv)(A) When rapid disenrollment compensation recovery applies, the
entire compensation must be recovered.
(B) For other compensation recovery, plans must recover a pro-rated
amount of compensation (whether paid for an initial enrollment year or
renewal year) from an agent or broker equal to the number of months not
enrolled.
(1) If a plan has paid full initial compensation, and the enrollee
disenrolls prior to the end of the enrollment year, the total number of
months not enrolled (including months prior to the effective date of
enrollment) must be recovered from the agent or broker.
(2) Example: A beneficiary enrolls upon turning 65 effective April
1 and disenrolls September 30 of the same year. The plan paid full
initial enrollment year compensation. Recovery is equal to 6/12ths of
the initial enrollment year compensation (for January through March and
October through December).
(e) Payments other than compensation (administrative payments). (1)
Payments made for services other than enrollment of beneficiaries (for
example, training, customer service, agent recruitment, operational
overhead, or assistance with completion of health risk assessments)
must not exceed the value of those services in the marketplace.
(2) Administrative payments can be based on enrollment provided
payments are at or below the value of those services in the
marketplace.
(f) Payments for referrals. Payments may be made to individuals for
the referral (including a recommendation, provision, or other means of
referring beneficiaries) to an agent, broker or other entity for
potential enrollment into a plan. The payment may not exceed $100 for a
referral into an MA or MA-PD plan and $25 for a referral into a PDP
plan.

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
45. The authority citation for part 423 continues to read as follows:

Authority: 42 U.S.C. 1302, 1395w-101 through 1395w-152, and
1395hh.

0
46. Section 423.4 is amended by adding definitions for ``Credible
allegation of fraud'', ``Fraud hotline tip'', ``Inappropriate
prescribing'', ``Parent organization'', and ``Substantiated or
suspicious activities of fraud, waste, or abuse'' in alphabetical order
to read as follows:

Sec. 423.4 Definitions.

* * * * *
Credible allegation of fraud means an allegation from any source,
including but not limited to the following:
(1) Fraud hotline tips verified by further evidence.
(2) Claims data mining.
(3) Patterns identified through provider audits, civil false claims
cases, and law enforcement investigations. Allegations are considered
to be credible when they have indicia of reliability.
* * * * *
Fraud hotline tip is a complaint or other communications that are
submitted through a fraud reporting phone number or a website intended
for the same purpose, such as the Federal Government's HHS OIG Hotline
or a health plan's fraud hotline.
* * * * *
Inappropriate prescribing means that, after consideration of all
the facts and circumstances of a particular situation identified
through investigation or other information or actions taken by Medicare
Advantage (MA) organizations and Part D plan sponsors, there is an
established pattern of potential fraud, waste, and abuse related to
prescribing of opioids, as reported by the plan sponsors. Beneficiaries
with cancer and sickle-cell disease, as well as those patients
receiving hospice and long term care (LTC) services are excluded, when
determining inappropriate prescribing. Plan sponsors may consider any
number of factors including, but not limited, to the following:
(1) Documentation of a patient's medical condition.
(2) Identified instances of patient harm or death.
(3) Medical records, including claims (if available).
(4) Concurrent prescribing of opioids with an opioid potentiator in
a manner that increases risk of serious patient harm.
(5) Levels of morphine milligram equivalent (MME) dosages
prescribed.
(6) Absent clinical indication or documentation in the care
management plan or in a manner that may indicate diversion.
(7) State-level prescription drug monitoring program (PDMP) data.
(8) Geography, time, and distance between a prescriber and the
patient.
(9) Refill frequency and factors associated with increased risk of
opioid overdose.
* * * * *
Parent organization means the legal entity that exercises a
controlling interest, through the ownership of shares, the power to
appoint voting board members, or other means, in a Part D sponsor or MA
organization, directly or through a subsidiary or subsidiaries, and
which is not itself a subsidiary of any other legal entity.
* * * * *
Substantiated or suspicious activities of fraud, waste, or abuse
means and includes, but is not limited to, allegations that a provider
of services (including a prescriber) or supplier;
(1) Engaged in a pattern of improper billing;
(2) Submitted improper claims with suspected knowledge of their
falsity;
(3) Submitted improper claims with reckless disregard or deliberate
ignorance of their truth or falsity; or

[[Page 6115]]

(4) Is the subject of a fraud hotline tip verified by further
evidence.
* * * * *

0
47. Section 423.100 is amended--
0
a. In the definition of ``Applicable drug'' by revising paragraph
(1)(ii);
0
b. In the definition of ``Exempted beneficiary'' by:
0
i. Removing the word ``or'' at the end of paragraph (2);
0
ii. Removing the period at the end of paragraph (3) and adding ``; or''
in its place; and
0
iii. Adding paragraph (4); and
0
c. By revising the introductory text in the definition of ``Potential
at-risk beneficiary''.
The revisions and addition read as follows:

Sec. 423.100 Definitions.

* * * * *
Applicable drug * * *
(1) * * *
(ii) In the case of a biological product, licensed under section
351 of the Public Health Service Act (other than, with respect to a
plan year before 2019, a product licensed under subsection (k) of such
section 351); and
* * * * *
Exempted beneficiary * * *
(4) Has sickle cell disease.
* * * * *
Potential at-risk beneficiary means a Part D eligible individual
who is not an exempted beneficiary (as defined in this section) and--
* * * * *

0
48. Section 423.104 is amended by adding paragraph (d)(2)(iv) to read
as follows:

Sec. 423.104 Requirements related to qualified prescription drug
coverage.

* * * * *
(d) * * *
(2) * * *
(iv) Specialty tier means a formulary cost sharing tier dedicated
to high-cost Part D drugs with ingredient costs for a 30-day equivalent
supply (as described in paragraph (d)(2)(iv)(A)(2) of this section)
that are greater than the specialty tier cost threshold specified in
paragraph (d)(2)(iv)(A) of this section.
(A) Specialty-tier cost threshold. CMS sets the specialty-tier cost
threshold for a plan year in accordance with this paragraph
(d)(2)(iv)(A), using the following steps:
(1) 30-day equivalent ingredient cost. Using the PDE data as
specified in paragraph (d)(2)(iv)(C) of this section, CMS uses the
ingredient cost reflected on the prescription drug event (PDE) to
determine the ingredient cost in dollars for a 30-day equivalent supply
of the Part D drug.
(2) 30-day equivalent supply. CMS determines the 30-day equivalent
supply as follows: If the days' supply reported on a PDE is less than
or equal to 34, the number of 30-day equivalent supplies equals one. If
the days' supply reported on a PDE is greater than 34, the number of
30-day equivalent supplies is equal to the number of days' supply
reported on each PDE divided by 30.
(3) Top 1 percent. CMS determines the amount that equals the lowest
30-day equivalent ingredient cost that is within the top 1 percent of
all 30-day equivalent ingredient costs reflected in the PDE data.
(4) Determination. Except as provided in paragraph (d)(2)(iv)(B) of
this section, the amount determined in paragraph (d)(2)(iii) of this
section is the specialty-tier cost threshold for the plan year.
(5) Claims history. Except for newly FDA-approved Part D drugs only
recently available on the market for which Part D sponsors would have
little or no claims data, CMS approves placement of a Part D drug on a
specialty tier when that Part D sponsor's claims data from the time
period specified in paragraph (d)(2)(iv)(C) of this section
demonstrates that greater than 50 percent of the Part D sponsor's PDEs
for a given Part D drug, when adjusted for 30-day equivalent supplies,
have ingredient costs for 30-day equivalent supplies, as described in
paragraph (d)(2)(iv)(A)(2) of this section, that exceed the specialty-
tier cost threshold.
(6) No claims history. For newly FDA-approved Part D drugs only
recently available on the market for which Part D sponsors would have
little or no claims data, CMS approves placement of a Part D drug on a
specialty tier when that Part D sponsor estimates that ingredient cost
portion of their negotiated prices for a 30-day equivalent supply, as
defined in subparagraph (d)(2)(iv)(A)(2), is anticipated to exceed the
specialty-tier cost threshold more than 50 percent of the time, subject
to the requirements at Sec. 423.120(b).
(B) Limit on specialty-tier cost threshold adjustment. (1) CMS
increases the specialty-tier cost threshold for a plan year only if the
amount determined in paragraph (d)(2)(iv)(A)(3) of this section for a
plan year is at least 10 percent above the specialty tier cost
threshold for the prior plan year.
(2) If an increase is made in accordance with this paragraph
(d)(2)(iv)(B), CMS rounds the amount determined in paragraph
(d)(2)(iv)(A)(3) of this section to the nearest $10, and the resulting
dollar amount is the specialty-tier cost threshold for the plan year.
(C) Data used to determine the specialty-tier cost threshold. CMS
uses PDEs from the plan year that ended 12 months prior to the
applicable plan year.
(D) Maximum number of specialty tiers and maximum allowable cost
sharing. A Part D plan may maintain up to two specialty tiers. CMS sets
the maximum allowable cost sharing for a single specialty tier, or, in
the case of a plan with two specialty tiers, the higher cost sharing
specialty tier as follows:
(1) For Part D plans with the full deductible provided under the
Defined Standard benefit, as specified in paragraph (d)(1) of this
section, 25 percent coinsurance.
(2) For Part D plans with no deductible, 33 percent coinsurance.
(3) For Part D plans with a deductible that is greater than $0 and
less than the deductible provided under the Defined Standard benefit, a
coinsurance percentage that is determined by subtracting the plan's
deductible from 33 percent of the initial coverage limit (ICL) under
section 1860D-2(b)(3) of the Act, dividing this difference by the
difference between the ICL and the plan's deductible, and rounding to
the nearest 1 percent.
* * * * *

0
49. Section 423.128 is amended by--
0
a. Revising paragraph (a)(1);
0
b. Adding paragraph (b)(11);
0
c. Adding paragraphs (d)(1)(i)(A) and (B), and (ii)(A) through (C);
0
d. Redesignating paragraph (d)(1)(iii) as (d)(1)(iii)(A);
0
e. Adding paragraph (d)(1)(iii)(B); and
0
f. Adding paragraphs (d)(1)(v) and (vi) and (d)(4) and (5).
The revisions and additions read as follows:

Sec. 423.128 Dissemination of Part D plan information.

(a) * * *
(1) To each enrollee of a Part D plan offered by the Part D sponsor
under this part, except as provided in paragraph (b)(11)(ii) of this
section;
* * * * *
(b) * * *
(11) Opioid information. (i) Beginning January 1, 2022, and subject
to paragraph (b)(11)(ii) of this section, a Part D sponsor must
disclose to each enrollee at least once per year the following:
(A) The risks associated with prolonged opioid use.
(B) Coverage of non-pharmacological therapies, devices, and non-
opioid medications--
(1) In the case of an MA-PD, under such plan; and

[[Page 6116]]

(2) In the case of a PDP, under such plan and Medicare Parts A and
B.
(ii) The Part D sponsor may elect to, in lieu of disclosing the
information described in paragraph (b)(11)(i) of this section to each
enrollee under each plan offered by the Part D sponsor under this part,
disclose such information to a subset of enrollees, such as enrollees
who have been prescribed an opioid in the previous 2-year period.
* * * * *
(d) * * *
(1) * * *
(i) * * *
(A) For coverage beginning on and after January 1, 2022, is open at
least from 8:00 a.m. to 8:00 p.m. in all regions served by the Part D
plan, with the following exceptions:
(1) From October 1 through March 31 of the following year, a
customer call center may be closed on Thanksgiving Day and Christmas
Day so long as the interactive voice response (IVR) system or similar
technology records messages from incoming callers and such messages are
returned within one (1) business day.
(2) From April 1 through September 30, a customer call center may
be closed any Federal holiday, Saturday, or Sunday, so long as the
interactive voice response (IVR) system or similar technology records
messages from incoming callers and such messages are returned within
one (1) business day.
(B) For coverage beginning on and after January 1, 2022, any call
center serving pharmacists or pharmacies must be open so long as any
network pharmacy in that region is open.
(ii) * * *
(A) For coverage beginning on and after January 1, 2022, limits
average hold time to 2 minutes. The hold time is defined as the time
spent on hold by callers following the interactive voice response (IVR)
system, touch-tone response system, or recorded greeting, before
reaching a live person.
(B) For coverage beginning on and after January 1, 2022, answers 80
percent of incoming calls within 30 seconds after the interactive voice
response (IVR), touch-tone response system, or recorded greeting
interaction.
(C) For coverage beginning on and after January 1, 2022, limits the
disconnect rate of all incoming calls to 5 percent. The disconnect rate
is defined as the number of calls unexpectedly dropped divided by the
total number of calls made to the customer call center.
(iii)(A) * * *.
(B) For coverage beginning on and after January 1, 2022,
interpreters must be available for 80 percent of incoming calls
requiring an interpreter within 8 minutes of reaching the customer
service representative and be made available at no cost to the caller.
* * * * *
(v) At a minimum, for coverage beginning on and after January 1,
2022:
(A) Provides effective real-time communication with individuals
using auxiliary aids and services, including TTYs and all forms of
Federal Communication Commission-approved telecommunications relay
systems, when using automated-attendant systems. See 28 CFR 35.161 and
36.303(d).
(B) Connects 80 percent of incoming calls requiring TTY services to
a TTY operator within 7 minutes.
(vi) For coverage beginning on and after January 1, 2022, provides
the information described in paragraph (d)(4) of this section to
enrollees who call the customer service call center.
* * * * *
(4) Beginning on January 1, 2023, a Part D sponsor must implement,
and make available directly to enrollees, in an easy to understand
manner, the following complete, accurate, timely, clinically
appropriate, patient-specific formulary and benefit real-time
information in their beneficiary-specific portal or computer
application:
(i) Enrollee cost sharing amounts.
(ii) Formulary medication alternatives for a given condition.
(iii) Formulary status, including utilization management
requirements applicable to each alternative medication, as appropriate
for each enrollee and medication presented.
(5) The Part D sponsor may provide rewards and incentives to
enrollees who use the beneficiary real time benefit tool (RTBT)
described in paragraph (d)(4) of this section, provided the rewards and
incentives comply with the requirements in paragraphs (d)(5)(i) through
(vi) of this section, and the rewards and incentives information is
made available to CMS upon request. Use is defined as logging into the
RTBT, via portal or computer application, or calling the customer
service call center to obtain the information described in paragraph
(d)(4) of this section. The rewards and incentives must meet the
following:
(i) Be of reasonable value, both individually and in the aggregate.
(ii) Be designed so that all enrollees are eligible to earn rewards
and incentives, and that there is no discrimination based on race,
color, national origin, including limited English proficiency, sex,
age, disability, chronic disease, health status, or other prohibited
basis.
(iii) Not be offered in the form of cash or other cash equivalents.
(iv) Not be used to target potential enrollees.
(v) Be earned solely for logging onto the beneficiary RTBT and not
for any other purpose.
(vi) Otherwise comply with all relevant fraud and abuse laws,
including, when applicable, the anti-kickback statute and civil money
penalty prohibiting inducements to beneficiaries.
* * * * *

0
50. Section 423.153 is amended by--
0
a. Revising the section heading;
0
b. Revising paragraph (a);
0
c. By adding paragraphs (d)(1)(vii)(E) and (F);
0
d. By revising paragraph (d)(2);
0
e. By revising paragraph (f)(1) introductory text;
0
f. In paragraph (f)(3)(ii) introductory text by removing the phrase
``paragraphs (f)(10) and (11) of this section'' and adding its place
the phrase ``paragraphs (f)(9) through (13) of this section'';
0
g. In paragraph (f)(4)(ii)(A) by removing the phrase ``paragraph
(f)(2)(ii)(B) of this section'' and adding its place the phrase
``paragraph (f)(3)(ii)(A) of this section'';
0
h. In paragraph (f)(4)(ii)(A) by removing the phrase ``paragraph
(f)(4)(i)(B) of this section'' and adding in its place the phrase
``paragraph (f)(2)(i)(B) of this section'';
0
i. Revising paragraphs (f)(5)(ii)(C)(3), (f)(6)(ii)(C)(4), and
(f)(8)(i);
0
j. In paragraph (f)(15)(ii)(C) by removing the phrase ``any potential
at-risk beneficiary'' and adding in its place the phrase ``any
potential at-risk beneficiary or at-risk beneficiary'' and changing
``definition'' to ``definitions'';
0
k. In paragraph (f)(15)(ii)(D) by changing ``no later than 7 days of
the date'' to ``no later than 7 days from the date'';
0
l. By revising paragraph (f)(16); and
0
m. By revising the heading of paragraph (g).
The revisions and additions read as follows:

Sec. 423.153 Drug utilization management, quality assurance,
medication therapy management programs (MTMPs), drug management
programs, and access to Medicare Parts A and B claims data extracts.

(a) General rule. Each Part D sponsor must have established, for
covered Part D drugs furnished through a Part D plan, a drug
utilization management program, quality assurance measures and systems,
and an MTMP as described in

[[Page 6117]]

paragraphs (b), (c), and (d) of this section. No later than January 1,
2022, a Part D plan sponsor must have established a drug management
program for at-risk beneficiaries enrolled in their prescription drug
benefit plans to address overutilization of frequently abused drugs, as
described in paragraph (f) of this section.
* * * * *
(d) * * *
(1) * * *
(vii) * * *
(E) Beginning January 1, 2022, for enrollees targeted in paragraph
(d)(2) of this section, provide at least annually as part of the
comprehensive medication review, a targeted medication review, or other
MTM correspondence or service, information about safe disposal of
prescription drugs that are controlled substances, drug take back
programs, in-home disposal and cost-effective means to safely dispose
of such drugs.
(F) The information to be provided under paragraph (d)(1)(vii)(E)
of this section must comply with all requirements of Sec. 422.111(j)
of this chapter.
(2) Targeted beneficiaries. Targeted beneficiaries for the MTMP
described in paragraph (d)(1) of this section are enrollees in the
sponsor's Part D plan who meet the characteristics of at least one of
the following two groups:
(i)(A) Have multiple chronic diseases, with three chronic diseases
being the maximum number a Part D plan sponsor may require for targeted
enrollment;
(B) Are taking multiple Part D drugs, with eight Part D drugs being
the maximum number of drugs a Part D plan sponsor may require for
targeted enrollment; and
(C) Are likely to incur the following annual Part D drug costs:
(1) For 2011, costs for covered Part D drugs greater than or equal
to $3,000.
(2) For 2012 and subsequent years, costs for covered Part D drugs
in an amount greater than or equal to $3,000 increased by the annual
percentage specified in Sec. 423.104(d)(5)(iv); or
(ii) Beginning January 1, 2022, are at-risk beneficiaries as
defined in Sec. 423.100.
* * * * *
(f) * * *
(1) Written policies and procedures. A sponsor must document its
drug management program in written policies and procedures that are
approved by the applicable P&T committee and reviewed and updated as
appropriate. In the case of a Part D sponsor, including a PACE
organization, without its own or a contracted P&T committee because it
does not use a formulary, the written policies and procedures described
in this section must be approved by the Part D sponsor's medical
director as described at Sec. 423.562(a)(5) (or, for a PACE
organization, at Sec. 460.60(b)) and applicable clinical and other
staff or contractors as determined appropriate by the medical director.
These policies and procedures must address all aspects of the sponsor's
drug management program, including but not limited to the following:
* * * * *
(3) * * *
(ii) In accordance with paragraphs (f)(9) through (13) of this
section, limit an at-risk beneficiary's access to coverage for
frequently abused drugs to those that are--
* * * * *
(4) * * *
(A) Except as provided in paragraph (f)(3)(ii)(A) of this section
regarding a prescriber limitation, if the sponsor has complied with the
requirement of paragraph (f)(2)(i)(C) of this section about attempts to
reach prescribers, and the prescribers were not responsive after 3
attempts by the sponsor to contact them within 10 business days, then
the sponsor has met the requirement of paragraph (f)(2)(i)(B) of this
section for eliciting information from the prescribers.
(5) * * *
(ii) * * *
(C) * * *
(3) An explanation of the beneficiary's right to a redetermination
if the sponsor issues a determination that the beneficiary is an at-
risk beneficiary and the standard and expedited redetermination
processes described at Sec. Sec. 423.582 and 423.584, including notice
that if on redetermination the plan sponsor affirms its denial, in
whole or in part, the case must be automatically forwarded to the
independent review entity contracted with CMS for review and
resolution.
* * * * *
(6) * * *
(ii) * * *
(C) * * *
(4) An explanation of the beneficiary's right to a redetermination
under Sec. 423.580, including all of the following:
(i) A description of both the standard and expedited
redetermination processes.
(ii) The beneficiary's right to, and conditions for, obtaining an
expedited redetermination.
(iii) Notice that if on redetermination the plan sponsor affirms
its denial, in whole or in part, the case must be automatically
forwarded to the independent review entity contracted with CMS for
review and resolution.
* * * * *
(8) * * *
(i) Subject to paragraph (f)(8)(ii) of this section, a Part D
sponsor must provide the second notice described in paragraph (f)(6) of
this section or the alternate second notice described in paragraph
(f)(7) of this section, as applicable, on a date that is not less than
30 days after the date of the initial notice described in paragraph
(f)(5) of this section and not more than the earlier of the following
two dates:
(A) The date the sponsor makes the relevant determination.
(B) Sixty days after the date of the initial notice described in
paragraph (f)(5) of this section.
* * * * *
(15) * * *
(ii) * * *
(C) Provide information to CMS about any potential at-risk
beneficiary or at-risk beneficiary that meets paragraph (2) of the
definitions in Sec. 423.100 that a sponsor identifies within 30 days
from the date of the most recent CMS report identifying potential at-
risk beneficiaries.
(D) Provide information to CMS as soon as possible but no later
than 7 days from the date of the initial notice or second notice that
the sponsor provided to a beneficiary, or as soon as possible but no
later than 7 days from a termination date, as applicable, about a
beneficiary-specific opioid claim edit or a limitation on access to
coverage for frequently abused drugs.
* * * * *
(16) Clinical guidelines. Potential at-risk beneficiaries and at-
risk beneficiaries are identified by CMS or a Part D sponsor using
clinical guidelines that--
(i) Are developed with stakeholder consultation;
(ii) Are based on:
(1) The acquisition of frequently abused drugs from multiple
prescribers, multiple pharmacies, the level of frequently abused drugs
used, or any combination of these factors; or
(2) Beginning January 1, 2022, a history of opioid-related overdose
as determined by at least one recent claim that contains a principal
diagnosis indicating opioid overdose, and at least one recent claim for
an opioid medication other than an opioid used for medication assisted
therapy (MAT).
(iii) Are derived from expert opinion and an analysis of Medicare
data; and
(iv) Include a program size estimate.

[[Page 6118]]

(g) Prescription drug plan sponsors' access to Medicare Parts A and
B claims data extracts-- * * *
* * * * *

0
51. Section 423.182 is amended by revising paragraphs (b)(3)(ii)(A) and
(B) to read as follows:

Sec. 423.182 Part D Prescription Drug Plan Quality Rating System.

* * * * *
(b) * * *
(3) * * *
(ii) * * *
(A)(1) For the first year after consolidation, CMS uses enrollment-
weighted measure scores using the July enrollment of the measurement
period of the consumed and surviving contracts for all measures, except
survey-based measures and call center measures. The survey-based
measures would use enrollment of the surviving and consumed contracts
at the time the sample is pulled for the rating year. The call center
measures would use average enrollment during the study period.
(2) For contract consolidations approved on or after January 1,
2022, if a measure score for a consumed or surviving contract is
missing due to a data integrity issue as described in Sec.
423.184(g)(1)(i) and (ii), CMS assigns a score of zero for the missing
measure score in the calculation of the enrollment-weighted measure
score.
(B)(1) For the second year after consolidation, CMS uses the
enrollment-weighted measure scores using the July enrollment of the
measurement year of the consumed and surviving contracts for all
measures except for CAHPS. CMS ensures that the CAHPS survey sample
includes enrollees in the sample frame from both the surviving and
consumed contracts.
(2) For contract consolidations approved on or after January 1,
2022, for all measures except CAHPS if a measure score for a consumed
or surviving contract is missing due to a data integrity issue as
described in Sec. 423.184(g)(1)(i) and (ii), CMS assigns a score of
zero for the missing measure score in the calculation of the
enrollment-weighted measure score.
* * * * *

0
52. Section 423.184 is amended by revising paragraph (g)(1)(ii)(A) to
read as follows:

Sec. 423.184 Adding, updating, and removing measures.

* * * * *
(g) * * *
(1) * * *
(ii) * * *
(A)(1) The data submitted for the Timeliness Monitoring Project
(TMP) or audit that aligns with the Star Ratings year measurement
period is used to determine the scaled reduction.
(2) For contract consolidations approved on or after January 1,
2022, if there is a contract consolidation as described at Sec.
423.182(b)(3), the TMP or audit data are combined for the consumed and
surviving contracts before the methodology provided in paragraphs
(g)(1)(ii)(B) through (M) of this section is applied.
* * * * *

0
53. Section 423.186 is amended by adding a sentence to the end of
paragraph (i)(6) to read as follows:

Sec. 423.186 Calculation of Star Ratings.

* * * * *
(i) * * *
(6) * * * Missing data includes data where there is a data
integrity issue as defined at Sec. 423.184(g)(1).
* * * * *

0
54. Section 423.265 is amended by revising paragraph (b)(2) to read as
follows:

Sec. 423.265 Submission of bids and related information.

* * * * *
(b) * * *
(2) Limit on number of plan offerings. Potential Part D sponsors'
bid submissions may include no more than three stand-alone prescription
drug plan offerings in a service area and must include only one basic
prescription drug plan offering.
* * * * *

0
55. Section 423.286 is amended by revising paragraph (d)(4)(ii) to read
as follows:

Sec. 423.286 Rules regarding premiums.

* * * * *
(d) * * *
(4) * * *
(ii) Calculating the income-related monthly adjustment amount. The
income-related monthly adjustment is equal to the product of the
standard base beneficiary premium, as determined under paragraph (c) of
this section, and the ratio of the applicable premium percentage
specified in 20 CFR 418.2120, reduced by 25.5 percent; divided by 25.5
percent (that is, premium percentage-25.5 percent)/25.5 percent).
* * * * *

0
56. Section 423.503 is amended by adding paragraphs (b)(1)(i) and (ii)
to read as follows:

Sec. 423.503 Evaluation and determination procedures for applications
to be determined qualified to act as a sponsor.

* * * * *
(b) * * *
(1) * * *
(i) An applicant may be considered to have failed to comply with a
contract for purposes of an application denial under paragraph (b)(1)
of this section if during the applicable review period the applicant
does any of the following:
(A) Was subject to the imposition of an intermediate sanction under
to subpart O of this part or a determination by CMS to prohibit the
enrollment of new enrollees pursuant to Sec. 423.2410(c).
(B) Failed to maintain a fiscally sound operation consistent with
the requirements of Sec. 423.505(b)(23).
(ii) CMS may deny an application submitted by an organization that
does not hold a Part D contract at the time of the submission when the
applicant's parent organization or another subsidiary of the parent
organization meets the criteria for denial stated in paragraph
(b)(1)(i) of this section. This paragraph does not apply when the
parent completed the acquisition of the subsidiary that meets the
criteria within the 24 months preceding the application submission
deadline.
* * * * *

0
57. Section 423.503 is amended by revising paragraph (a)(3) to read as
follows:

Sec. 423.503 Evaluation and determination procedures for applications
to be determined qualified to act as a sponsor.

(a) * * *
(3) CMS does not approve an application when it would result in the
applicant's parent organization, directly or through its subsidiaries,
holding more than one PDP sponsor contract in the PDP Region for which
the applicant is seeking qualification as a PDP sponsor.
* * * * *

0
58. Section 423.504 is amended by adding paragraphs (b)(4)(vi)(G)(4)
through (7) to read as follows:

Sec. 423.504 General provisions.

* * * * *
(b) * * *
(4) * * *
(vi) * * *
(G) * * *
(4) The Part D plan sponsor must have procedures to identify, and
must report to CMS or its designee either of the following, in the
manner described in paragraphs (b)(4)(vi)(G)(4) through (6) of this
section:
(i) Any payment suspension implemented by a plan, pending
investigation of credible allegations of fraud by a pharmacy, which
must be implemented in the same manner as the

[[Page 6119]]

Secretary does under section 1862(o)(1) of the Act.
(ii) Any information concerning investigations, credible evidence
of suspicious activities of a provider of services (including a
prescriber) or supplier, and other actions taken by the plan related to
the inappropriate prescribing of opioids.
(5) The Part D plan sponsor must submit data, as specified in this
section, in the program integrity portal when reporting payment
suspensions pending investigations of credible allegations of fraud by
pharmacies; information related to the inappropriate prescribing of
opioids and concerning investigations and credible evidence of
suspicious activities of a provider of services (including a
prescriber) or supplier, and other actions taken by the plan sponsor;
or if the plan reports a referral, through the portal, of substantiated
or suspicious activities of a provider of services (including a
prescriber) or a supplier related to fraud, waste or abuse to initiate
or assist with investigations conducted by CMS, or its designee, a
Medicare program integrity contractor, or law enforcement partners. The
data categories, as applicable, include referral information and
actions taken by the Part D plan sponsor on the referral. (6)(i) The
plan sponsor is required to notify the Secretary, or its designee, of a
payment suspension described in paragraph (b)(4)(vi)(G)(4) of this
section 7 days prior to implementation of the payment suspension. The
MA organization may request an exception to the 7day prior notification
to the Secretary, or its designee, if circumstances warrant a reduced
reporting time frame, such as potential beneficiary harm.
(ii) The plan sponsor is required to submit the information
described in paragraph (b)(4)(vi)(G)(4)(ii) of this section no later
than January 30, April 30, July 30, and October 30 of each year for the
preceding periods, respectively, of October 1 through December 31,
January 1 through March 31, April 1 through June 30, and July 1 through
September 30. For the first reporting period (January 30, 2022), the
reporting will reflect the data gathered and analyzed for the previous
quarter in the calendar year (October 1-December 31).
(7)(i) CMS provides plan sponsors with data report(s) or links to
the information described in paragraphs (b)(4)(vi)(G)(4)(i) and (ii) of
this section no later than April 15, July 15, October 15, and January
15 of each year based on the information in the portal, respectively,
as of the preceding October 1 through December 31, January 1 through
March 31, April 1 through June 30, and July 1 through September 30.
(ii) Include administrative actions, pertinent information related
to opioid overprescribing, and other data determined appropriate by the
Secretary in consultation with stakeholders.
(iii) Are anonymized information submitted by plans without
identifying the source of such information.
(iv) For the first quarterly report (April 15, 2022), that the
report reflect the data gathered and analyzed for the previous quarter
submitted by the plan sponsors on January 30, 2022.
* * * * *

0
59. Section 423.505 is amended by revising paragraph (b)(22) to read as
follows:

Sec. 423.505 Contract provisions.

* * * * *
(b) * * *
(22) Through the CMS complaint tracking system, address and resolve
complaints received by CMS against the MA organization.
* * * * *

0
60. Section 423.514 is amended by redesignating paragraph (a)(5) as
paragraph (a)(6) and adding a new paragraph (a)(5) to read as follows:

Sec. 423.514 Validation of Part D reporting requirements.

(a) * * *
(5) Pharmacy performance measures.
* * * * *

0
61. Section 423.551 is amended by revising paragraph (g)(2) to read as
follows:

Sec. 423.551 General provisions.

* * * * *
(g) * * *
(2) CMS does not recognize or allow a sale or transfer that
consists solely of the sale or transfer of individual beneficiaries or
groups of beneficiaries enrolled in a plan benefit package.
* * * * *

0
62. Section 423.560 is amended by--
0
a. Removing the definition of ``Appointed representative'';
0
b. Adding the definition of ``Representative'' in alphabetical order;
and
0
c. Revising the definition of ``Specialty tier''.
The addition and revision read as follows:

Sec. 423.560 Definitions.

* * * * *
Representative means an individual either appointed by an enrollee
or authorized under State or other applicable law to act on behalf of
the enrollee in filing a grievance, obtaining a coverage determination,
or in dealing with any of the levels of the appeals process. Unless
otherwise stated in this subpart, the representative has all of the
rights and responsibilities of an enrollee in filing a grievance,
obtaining a coverage determination, or in dealing with any of the
levels of the appeals process, subject to the rules described in part
422, subpart M, of this chapter.
Specialty tier: (1) Before January 1, 2022, means a formulary cost-
sharing tier dedicated to very high cost Part D drugs that exceed a
cost threshold established by the Secretary; and
(2) Beginning January 1, 2022, has the meaning given the term in
Sec. 423.104.

0
63. Section 423.566 is amended by revising paragraph (c)(2) to read as
follows:

Sec. 423.566 Coverage determinations.

* * * * *
(c) * * *
(2) The enrollee's representative, on behalf of the enrollee; or
* * * * *

0
64. Section 423.568 is amended by adding paragraphs (i) through (m) to
read as follows:

Sec. 423.568 Standard timeframe and notice requirements for coverage
determinations.

* * * * *
(i) Dismissing a request. The Part D plan sponsor dismisses a
coverage determination request, either entirely or as to any stated
issue, under any of the following circumstances:
(1) When the individual making the request is not permitted to
request a coverage determination under Sec. 423.566(c).
(2) When the Part D plan sponsor determines the party failed to
make out a valid request for a coverage determination that
substantially complies with paragraph (a) of this section.
(3) When an enrollee or the enrollee's representative files a
request for a coverage determination, but the enrollee dies while the
request is pending, and both of the following criteria apply:
(i) The enrollee's surviving spouse or estate has no remaining
financial interest in the case.
(ii) The enrollee's representative, if any, does not wish to pursue
the request for coverage.
(4) When a party filing the coverage determination request submits
a timely request for withdrawal of the request for a coverage
determination with the Part D plan sponsor.
(j) Notice of dismissal. The Part D plan must mail or otherwise
transmit a written notice of the dismissal of the

[[Page 6120]]

coverage determination request to the parties. The notice must state
all of the following:
(1) The reason for the dismissal.
(2) The right to request that the MA organization vacate the
dismissal action.
(3) The right to request reconsideration of the dismissal.
(k) Vacating a dismissal. If good cause is established, the Part D
plan sponsor may vacate its dismissal of a request for redetermination
within 6 months from the date of the notice of dismissal.
(l) Effect of dismissal. The Part D plan sponsor's dismissal is
binding unless it is modified or reversed by the Part D plan sponsor or
vacated under paragraph (k) of this section.
(m) Withdrawing a request. A party that requests a coverage
determination may withdraw its request at any time before the decision
is issued by filing a request with the Part D plan sponsor.

0
65. Section 423.570 is amended by adding paragraph (f) to read as
follows:

Sec. 423.570 Expediting certain coverage determinations.

* * * * *
(f) Dismissing a request. The Part D plan sponsor dismisses an
expedited coverage determination in accordance with Sec. 423.568.

0
66. Section 423.578 is amended--
0
a. By revising paragraph (a)(6)(iii); and
0
b. In paragraph (b)(4) by removing the phrase ``the enrollee's
appointed representative'' and adding in its place the phrase ``the
enrollee's representative''.
The revision reads as follows:

Sec. 423.578 Exceptions process.

(a) * * *
(6) * * *
(iii)(A) Before January 1, 2022, if a Part D plan sponsor maintains
a specialty tier, as defined in Sec. 423.560, the Part D sponsor may
design its exception process so that Part D drugs on the specialty tier
are not eligible for a tiering exception.
(B) Beginning January 1, 2022, if a Part D sponsor maintains one or
two specialty tiers, as defined in Sec. 423.104, the Part D sponsor
may design its exception process so that Part D drugs on the specialty
tier(s) are not eligible for tiering exception(s) to non-specialty
tiers.
* * * * *

0
67. Section 423.582 is amended--
0
a. In paragraph (d) by removing the word ``written'' and
0
b. By adding paragraphs (e) through (h).
The additions read as follows:

Sec. 423.582 Request for a standard redetermination.

* * * * *
(e) Dismissing a request. A Part D plan sponsor dismisses a
redetermination request, either entirely or as to any stated issue,
under any of the following circumstances:
(1) When the person or entity requesting a redetermination is not a
proper party under Sec. 423.580.
(2) When the Part D plan sponsor determines the party failed to
make out a valid request for redetermination that substantially
complies with paragraph (a) of this section.
(3) When the party fails to file the redetermination request within
the proper filing time frame in accordance with paragraph (b) of this
section.
(4) When the enrollee or the enrollee's representative files a
request for redetermination, but the enrollee dies while the request is
pending, and both of the following criteria apply:
(i) The enrollee's surviving spouse or estate has no remaining
financial interest in the case.
(ii) The enrollee's representative, if any, does not wish to pursue
the request for coverage.
(5) When a party filing the redetermination request submits a
timely request for withdrawal of the request for a redetermination with
the Part D plan sponsor.
(f) Notice of dismissal. The Part D plan sponsor must mail or
otherwise transmit a written notice of the dismissal of the
redetermination request to the parties. The notice must state all of
the following:
(1) The reason for the dismissal.
(2) The right to request that the Part D plan sponsor vacate the
dismissal action.
(3) The right to request review of the dismissal by the independent
entity.
(g) Vacating a dismissal. If good cause is established, a Part D
sponsor may vacate its dismissal of a request for redetermination
within 6 months from the date of the notice of dismissal.
(h) Effect of dismissal. The dismissal of a request for
redetermination is binding unless the enrollee or other party requests
review by the IRE or the decision is vacated under paragraph (g) of
this section.

0
68. Section 423.584 is amended by adding paragraph (f) to read as
follows:

Sec. 423.584 Expediting certain redeterminations.

* * * * *
(f) Dismissing a request. The Part D plan sponsor dismisses an
expedited redetermination in accordance with Sec. 423.582.

0
69. Section 423.590 is amended by adding paragraphs (i) and (j) to read
as follows:

Sec. 423.590 Timeframes and responsibility for making
redeterminations.

* * * * *
(i) Automatic forwarding of redeterminations made under a drug
management program. If on redetermination the plan sponsor affirms, in
whole or in part, its denial related to an at-risk determination under
a drug management program in accordance with Sec. 423.153(f), the Part
D plan sponsor must forward the case to the IRE contracted with CMS
within 24 hours of the expiration of the applicable adjudication
timeframe under paragraph (a)(2), (b)(2), or (d)(1) of this section.
(j) Requests for review of a dismissal by the independent entity.
If the Part D plan sponsor dismisses a request for a reconsideration in
accordance with Sec. 423.582(e) or Sec. 423.584(f), the enrollee or
other proper party has the right to request review of the dismissal by
the independent entity. A request for review of a dismissal must be
filed in writing with the independent entity within 60 calendar days
from the date of the Part D plan sponsor's dismissal notice.

0
70. Section 423.600 is amended by--
0
a. Revising paragraph (b); and
0
b. Adding paragraphs (f) through (k).
The revision and additions read as follows:

Sec. 423.600 Reconsideration by an independent review entity (IRE).

* * * * *
(b) When an enrollee, or an enrollee's prescribing physician or
other prescriber (acting on behalf of the enrollee), files an appeal or
a determination is forwarded to the IRE by a Part D plan sponsor, the
IRE is required to solicit the views of the prescribing physician or
other prescriber.
(1) The IRE may solicit the views of the prescribing physician or
other prescriber orally or in writing.
(2) A written account of the prescribing physician's or other
prescriber's views (prepared by either the prescribing physician, other
prescriber, or IRE, as appropriate) must be contained in the IRE
record.
* * * * *
(f) The party who files a request for reconsideration may withdraw
it by filing a request with the IRE.
(g) The independent entity dismisses a reconsideration request,
either entirely or as to any stated issue, under any of the following
circumstances:
(1) When the person or entity requesting a reconsideration is not a

[[Page 6121]]

proper party under paragraph (a) of this section.
(2) When the IRE determines the party failed to make out a valid
request for reconsideration that substantially complies with paragraph
(a) of this section.
(3) When the party fails to file the reconsideration request within
the proper filing time frame in accordance with paragraph (a) of this
section.
(4) When an enrollee or the enrollee's representative files a
request for reconsideration, but the enrollee dies while the request is
pending, and both of the following criteria apply:
(i) The enrollee's surviving spouse or estate has no remaining
financial interest in the case.
(ii) The enrollee's representative, if any, does not wish to
continue the appeal.
(5) When a party filing the reconsideration request submits a
timely request for withdrawal of the request for a reconsideration with
the IRE.
(h) The IRE mails or otherwise transmits a written notice of the
dismissal of the reconsideration request to the parties. The notice
must state all of the following:
(1) The reason for the dismissal.
(2) That there is a right to request that the IRE vacate the
dismissal action.
(3) The right to a review of the dismissal in accordance with Sec.
423.2004.
(i) If good cause is established, the IRE may vacate its dismissal
of a request for redetermination within 6 months from the date of the
notice of dismissal.
(j) An enrollee has a right to have an IRE's dismissal reconsidered
in accordance with Sec. 423.2004.
(k) If the IRE determines that the Part D plan sponsor's dismissal
was in error, the IRE vacates the dismissal and remands the case to the
Part D plan sponsor for reconsideration consistent with Sec. 423.590.
The IRE's decision regarding an Part D plan sponsor's dismissal,
including a decision to deny a request for review of a dismissal, is
binding and not subject to further review.

0
71. Section 423.760 is amended by--
0
a. Redesignating paragraphs (b)(3) and (4) as paragraphs (b)(4) and
(5); and
0
b. Adding a new paragraph (b)(3).
The addition reads as follows:

Sec. 423.760 Determinations regarding the amount of civil money
penalties and assessments imposed by CMS.

* * * * *
(b) * * *
(3) CMS calculates the minimum penalty amounts under paragraphs
(b)(1) and (2) of this section using the following criteria:
(i) Definitions for calculating penalty amounts--(A) Per
determination. The penalty amounts calculated under paragraph (b)(1) of
this section.
(B) Per enrollee. The penalty amounts calculated under paragraph
(b)(2) of this section.
(C) Standard minimum penalty. The per enrollee or per determination
amount that is dependent on the type of adverse impact that occurred.
(D) Aggravating factor(s). Specific penalty amounts that may
increase the per enrollee or per determination standard minimum penalty
and are determined based on criteria under paragraph (a) of this
section.
(E) Cost-of-living multiplier. The percent change between each
year's published October consumer price index for all urban consumers
(United States city average), which is released by the Office of
Management and Budget (OMB) annually.
(ii) Calculation of penalty amounts. (A) Per determination and per
enrollee penalty amounts are increased by multiplying the current
standard minimum penalty and aggravating factor amounts by the cost-of-
living multiplier.
(B) The minimum penalty and aggravating factor amounts will be
updated no more often than every 3 years.
(C) CMS tracks the calculation and accrual of the standard minimum
penalty and aggravating factor amounts and announce them on an annual
basis.
* * * * *

0
72. Section 423.2006 is amended by redesignating paragraphs (c)(1) and
(2) as paragraphs (c)(2) and (3) and adding a new paragraph (c)(1) to
read as follows:

Sec. 423.2006 Amount in controversy required for an ALJ hearing and
judicial review.

* * * * *
(c) * * *
(1) The amount remaining in controversy is computed as the
projected value described in paragraph (c)(2) or (3) of this section,
reduced by any cost sharing amounts, including deductible, coinsurance,
or copayment amounts that may be collected from the enrollee for the
Part D drug(s).
* * * * *

Sec. 423.2014 [Amended]

0
73. Section 423.2014 is amended in paragraph (a)(1)(ii) by removing the
phrase ``appointed representative'' and adding in its place the phrase
``representative''.

Sec. 423.2036 [Amended]

0
74. Section 423.2036 is amended in paragraphs (c) and (d) by removing
the phrase ``appointed representative'' and adding in its place the
phrase ``representative'' each time it appears.

0
75. Section 423.2260 is revised to read as follows:

Sec. 423.2260 Definitions.

The definitions in this section apply for this subpart unless the
context indicates otherwise.
Advertisement (Ad) means a read, written, visual, oral, watched, or
heard bid for, or call to attention. Advertisements can be considered
communication or marketing based on the intent and content of the
message.
Alternate format means used to convey information to individuals
with visual, speech, physical, hearing, and intellectual disabilities
(for example, braille, large print, audio).
Banner means a type of advertisement feature typically used in
television ads that is intended to be brief, and flashes limited
information across a screen for the sole purpose of enticing a
prospective enrollee to contact the Part D sponsor (for example, obtain
more information) or to alert the viewer that information is
forthcoming.
Banner-like advertisement is an advertisement that uses a banner-
like feature, that is typically found in some media other than
television (for example, outdoors and on the internet).
Communications means activities and use of materials created or
administered by the Part D sponsor or any downstream entity to provide
information to current and prospective enrollees. Marketing is a subset
of communications.
Marketing means communications materials and activities that meet
both the following standards for intent and content:
(1) Intended, as determined under paragraph (1)(ii) of this
definition, to do any of the following:
(i)(A) Draw a beneficiary's attention to a Part D plan or plans.
(B) Influence a beneficiary's decision making process when making a
Part D plan selection.
(C) Influence a beneficiary's decision to stay enrolled in a Part D
plan (that is, retention-based marketing).
(ii) In evaluating the intent of an activity or material, CMS will
consider objective information including, but not limited to, the
audience of the activity or material, other information communicated by
the activity or material, timing, and other context of the activity or
material and is not

[[Page 6122]]

limited to the Part D sponsor's stated intent.
(2) Include or address content regarding any of the following:
(i) The plan's benefits, benefits structure, premiums or cost
sharing.
(ii) Measuring or ranking standards (for example, Star Ratings or
plan comparisons).
Outdoor advertising (ODA) means outdoor material intended to
capture the attention of a passing audience (for example, billboards,
signs attached to transportation vehicles). ODA may be a communication
or marketing material.

0
76. Section 423.2261 is added to read as follows:

Sec. 423.2261 Submission, review, and distribution of materials.

(a) General requirements. Part D sponsors must submit all marketing
materials, all election forms, and certain designated communications
materials for CMS review.
(1) The Health Plan Management System (HPMS) Marketing Module is
the primary system of record for the collection, review, and storage of
materials that must be submitted for review.
(2) Materials must be submitted to the HPMS Marketing Module by the
Part D sponsor.
(3) Unless specified by CMS, third party and downstream entities
are not permitted to submit materials directly to CMS.
(b) CMS review of marketing materials and election forms. Part D
sponsors may not distribute or otherwise make available any marketing
materials or election forms unless one of the following occurs:
(1) CMS has reviewed and approved the material.
(2) The material has been deemed approved; that is, CMS has not
rendered a disposition for the material within 45 days (or 10 days if
using CMS model or standardized marketing materials as outlined in
Sec. 422.2267(e) of this chapter) of submission to CMS.
(3) The material has been accepted under File and Use, as follows:
(i) The Part D sponsor may distribute certain types of marketing
materials, designated by CMS based on the material's content, audience,
and intended use, as they apply to potential risk to the beneficiary, 5
days following the submission.
(ii) The Part D sponsor must certify that the material meets all
applicable CMS communications and marketing requirements in Sec. Sec.
423.2260 through 423.2267.
(c) CMS review of non-marketing communications materials. CMS does
not require submission, or submission and approval, of communications
materials prior to use, other than the following exceptions.
(1) Certain designated communications materials that are critical
to beneficiaries understanding or accessing their benefits (for
example, the Evidence of Coverage (EOC).
(2) Communications materials that, based on feedback such as
complaints or data gathered through reviews, warrant additional
oversight as determined by CMS, to ensure the information being
received by beneficiaries is accurate.
(d) Standards for CMS review. CMS reviews materials to ensure the
following:
(1) Compliance with all applicable requirements under Sec. Sec.
423.2260 through 423.2267.
(2) Benefit and cost information is an accurate reflection of what
is contained in the Part D sponsor's bid.
(3) CMS may determine, upon review of such materials, that the
materials must be modified, or may no longer be used.

0
77. Section 423.2262 is revised to read as follows:

Sec. 423.2262 General communications materials and activity
requirements.

Part D sponsors may not mislead, confuse, or provide materially
inaccurate information to current or potential enrollees.
(a) General rules. Part D sponsors must ensure their statements and
the terminology used in communications activities and materials adhere
to the following requirements:
(1) Part D sponsors may not do any of the following:
(i) Provide information that is inaccurate or misleading.
(ii) Make unsubstantiated statements except when used in logos or
taglines.
(iii) Engage in activities that could mislead or confuse Medicare
beneficiaries, or misrepresent the Part D sponsor.
(iv) Engage in any discriminatory activity such as attempting to
recruit Medicare beneficiaries from higher income areas without making
comparable efforts to enroll Medicare beneficiaries from lower income
areas, or vice versa.
(v) Target potential enrollees based on higher or lower income
levels.
(vi) Target potential enrollees based on health status.
(vii) State or imply plans are only available to seniors rather
than to all Medicare beneficiaries.
(viii) Employ Part D plan names that suggest that a plan is not
available to all Medicare beneficiaries.
(ix) Display the names or logos or both of co-branded network
pharmacies on the sponsor's member identification card, unless the
pharmacy names or logos or both are related to the member selection of
specific pharmacies.
(x) Use a plan name that does not include the plan type. The plan
type should be included at the end of the plan name, for example,
``Super Medicare Drug Plan (PDP)''. Part D sponsors are not required to
repeat the plan type when the plan name is used multiple times in the
same material.
(xi) Claim they are recommended or endorsed by CMS, Medicare, the
Secretary, or HHS.
(xii) Convey that a failure to pay premium will not result in
disenrollment except for factually accurate descriptions of the PDP
sponsor's policies adopted in accordance with Sec. 423.44(b)(1) and
(d)(1) of this chapter.
(xiii) Use the term ``free'' to describe a $0 premium, any type of
reduction in premium, reduction in deductibles or cost sharing, low-
income subsidy, or cost sharing pertaining to dual eligible
individuals.
(xiv) State or imply a plan is available only to or is designed for
Medicaid beneficiaries.
(xv) Market a Part D plan not designed to serve dual eligible
beneficiaries as if it were a plan designed to serve dual eligible
beneficiaries.
(xvi) Target marketing efforts primarily to dual eligible
individuals.
(xvii) Claim a relationship with the state Medicaid agency, unless
a contract to coordinate Medicaid services for enrollees in that plan
is in place.
(2) Part D sponsors may do the following:
(i) State that the Part D sponsor is approved to participate in
Medicare programs or is contracted to administer Medicare benefits or
both.
(ii) Use the term ``Medicare-approved'' to describe benefits or
services in materials or both.
(b) Product endorsements and testimonials. (1) Product endorsements
and testimonials may take any of the following forms:
(i) Television or video ads.
(ii) Radio ads.
(iii) Print ads.
(iv) Social media ads. In cases of social media, the use of a
previous post, whether or not associated with or originated by the Part
D sponsor, is considered a product endorsement or testimonial.
(v) Other types of ads.
(2) Part D sponsors may use individuals to endorse the Part D
sponsor's product provided the

[[Page 6123]]

endorsement or testimonial adheres to the following requirements:
(i) The speaker must identify the Part D sponsor's product or
company by name.
(ii) Medicare beneficiaries endorsing or promoting the Part D
sponsor must have been an enrollee at the time the endorsement or
testimonial was created.
(iii) The endorsement or testimonial must clearly state that the
individual was paid for the endorsement or testimonial, if applicable.
(iv) If an individual is used (for example, an actor) to portray a
real or fictitious situation, the advertisement must state that it is
an actor portrayal.
(c) Requirements when including certain telephone numbers in
materials. (1) Part D sponsors must adhere to the following
requirements for including certain telephone numbers in materials:
(i) When a Part D sponsor includes its customer service number, the
hours of operation must be prominently included at least once.
(ii) When a Part D sponsor includes its customer service number, it
must provide a toll-free TTY number in conjunction with the customer
service number in the same font size.
(iii) On every material where 1-800-MEDICARE or Medicare TTY
appears, the Part D sponsor must prominently include, at least once,
the hours and days of operation for 1-800-MEDICARE (that is, 24 hours a
day/7 days a week).
(2) The following advertisement types are exempt from these
requirements:
(i) Outdoor advertising.
(ii) Banners or banner-like ads.
(iii) Radio advertisements and sponsorships.
(d) Standardized material identification (SMID). (1) Part D
sponsors must use a standardized method of identification for oversight
and tracking of materials received by beneficiaries.
(2) The SMID consists of the following three parts:
(i) The Part D sponsor's contract or Multi-Contract Entity (MCE)
number, (that is, ``S'' for PDPs, or ``Y'' for MCE, a means of
identification available for Plans/Part D sponsors that have multiple
PDP contracts) followed by an underscore, except that the SMID for
multi-plan marketing materials must begin with the word ``MULTI-PLAN''
instead of the Part D sponsor's contract number (for example,
S1234_abc123_C or MULTI-PLAN_efg456_M).
(ii) A series of alpha numeric characters (at the Part D sponsor's
discretion) unique to the material followed by an underscore.
(iii) An uppercase ``C'' for communication materials or an
uppercase ``M'' for marketing materials (for example, S1234_abc123_C or
S5678_efg456_M).
(3) The SMID is required on all materials except the following:
(i) Membership ID card.
(ii) Envelopes, radio ads, outdoor advertisements, banners, banner-
like ads, and social media comments and posts.
(iii) OMB-approved forms/documents, except those materials
specified in Sec. 423.2267.
(iv) Corporate notices or forms (that is, not Part D-specific)
meeting the definition of communications such as privacy notices and
authorization to disclose protected health information (PHI).
(v) Agent-developed communications materials that are not
marketing.
(4) Non-English and alternate format materials, based on previously
created materials, may have the same SMID as the material on which they
are based.

0
78. Section 423.2263 is added to read as follows.

Sec. 423.2263 General marketing requirements.

Marketing is a subset of communications and therefore must follow
the requirements outlined in Sec. 423.2262 as well as this section.
Marketing (as defined in Sec. 423.2260) must additionally meet the
following requirements:
(a) Part D sponsors may begin marketing prospective plan year
offerings on October 1 of each year for the following contract year.
Part D sponsors may market the current and prospective year
simultaneously provided materials clearly indicate what year is being
discussed.
(b) In marketing, Part D sponsors may not do any of the following:
(1) Provide cash or other monetary rebates as an inducement for
enrollment or otherwise.
(2) Offer gifts to beneficiaries, unless the gifts are of nominal
value (as governed by guidance published by the HHS OIG), are offered
to similarly situated beneficiaries without regard to whether or not
the beneficiary enrolls, and are not in the form of cash or other
monetary rebates.
(3) Provide meals to potential enrollees regardless of value.
(4) Market non-health care related products to prospective
enrollees during any Part D sales activity or presentation. This is
considered cross-selling and is prohibited.
(5) Compare their plan to other plans, unless the information is
accurate, not misleading, and can be supported by the Part D sponsor
making the comparison.
(6) Display the names or logos or both of pharmacy co-branding
partners on marketing materials, unless the materials clearly indicate
via a disclaimer or in the body that ``Other pharmacies are available
in the network.''
(7) Knowingly target or send unsolicited marketing materials to any
Part D enrollee during the Open Enrollment Period (OEP).
(i) During the OEP, a Part D sponsors may do any of the following:
(A) Conduct marketing activities that focus on other enrollment
opportunities, including but not limited to marketing to age-ins (who
have not yet made an enrollment decision), marketing by 5-star plans
regarding their continuous enrollment special election period (SEP),
and marketing to dual-eligible and LIS beneficiaries who, in general,
may make changes once per calendar quarter during the first nine months
of the year;
(B) Send marketing materials when a beneficiary makes a proactive
request;
(C) At the beneficiary's request, have one-on-one meetings with a
sales agent;
(D) At the beneficiary's request, provide information on the OEP
through the call center; and
(E) Include educational information, excluding marketing, on the
Part D sponsor's website about the existence of OEP.
(ii) During the OEP, a Part D sponsors may not:
(A) Send unsolicited materials advertising the ability or
opportunity to make an additional enrollment change or referencing the
OEP;
(B) Specifically target beneficiaries who are in the OEP because
they made a choice during Annual Enrollment Period (AEP) by purchase of
mailing lists or other means of identification;
(C) Engage in or promote agent or broker activities that intend to
target the OEP as an opportunity to make further sales; or
(D) Call or otherwise contact former enrollees who have selected a
new plan during the AEP.
(c) The following requirements apply to how Part D sponsors must
display CMS-issued Star Ratings:
(1) References to individual Star Rating measure(s) must also
include references to the overall Star Rating for MA-PDs and the
summary rating for PDP plans.
(2) May not use an individual underlying category, domain, or
measure rating to imply overall higher Star Ratings.
(3) Must be clear that the rating is out of 5 stars.
(4) Must clearly identify the Star Ratings contract year.

[[Page 6124]]

(5) May only market the Star Ratings in the service area(s) for
which the Star Rating is applicable unless using Star Ratings to convey
overall Part D sponsor performance (for example, ``Plan X has achieved
4.5 stars in Montgomery, Chester, and Delaware Counties), in which case
the Part D sponsor must do so in a way that is not confusing or
misleading.
(6) The following requirements apply to all 5 Star PDP contracts:
(i) May not market the 5-star special enrollment period, as defined
in Sec. 423.38(c)(20), after November 30 of each year if the contract
has not received an overall 5 star for the next contract year.
(ii) May use CMS' 5- star icon or may create their own icon.
(7) The following requirements apply to all Low Performing MA
contracts:
(i) The Low Performing Icon must be included on all materials about
or referencing the specific contract's Star Ratings.
(ii) Must state the Low Performing Icon means that the Part D
sponsor's contract received a summary rating of 2.5 stars or below in
Part D for the last 3 years.
(iii) May not attempt to refute or minimize Low Performing Status.

0
79. Section 423.2264 is revised to read as follows:

Sec. 423.2264 Beneficiary contact.

For the purpose of this section, beneficiary contact means any
outreach activities to a beneficiary or a beneficiary's caregivers by
the Part D sponsor or its agents and brokers.
(a) Unsolicited contact. Subject to the rules for contact for plan
business in paragraph (b) of this section, the following rules apply
when materials or activities are given or supplied to a beneficiary or
their caregiver without prior request:
(1) Part D sponsors may make unsolicited direct contact by
conventional mail and other print media (for example, advertisements
and direct mail) or email (provided every email contains an opt-out
option).
(2) Part D sponsors may not do any of the following if unsolicited:
(i) Use door to door solicitation, including leaving information of
any kind, except that information may be left when an appointment is
pre-scheduled but the beneficiary is not home.
(ii) Approach enrollees in common areas such as parking lots,
hallways, lobbies.
(iii) Send direct messages from social media platforms.
(iv) Use telephone solicitation (that is, cold calling), robocalls,
text messages, or voicemail messages, including, but not limited to,
the following:
(A) Calls based on referrals.
(B) Calls to former enrollees who have disenrolled or those in the
process of disenrolling, except to conduct disenrollment surveys for
quality improvement purposes.
(C) Calls to beneficiaries who attended a sales event, unless the
beneficiary gave express permission to be contacted.
(D) Calls to prospective enrollees to confirm receipt of mailed
information.
(3) Calls are not considered unsolicited if the beneficiary
provides consent or initiates contact with the plan. For example,
returning phone calls or calling an individual who has completed a
business reply card requesting contact is not considered unsolicited.
(b) Contact for plan business. Part D sponsors may contact current,
and to a more limited extent, former members, including those enrolled
in other products offered by the parent organization, to discuss plan
business, in accordance with the following requirements:
(1) A Part D sponsor may conduct the following activities as plan
business:
(i) Call current enrollees, including those in non-Medicare
products, to discuss Medicare products. Examples of such calls include,
but are not limited to the following:
(A) Enrollees aging into Medicare from commercial products.
(B) Existing enrollees, including Medicaid enrollees, to discuss
other Medicare products or plan benefits.
(C) Members in an MA or cost plan to discuss other Medicare
products.
(ii) Call beneficiaries who submit enrollment applications to
conduct business related to enrollment.
(iii) With prior CMS approval, call LIS enrollees that a plan is
prospectively losing due to reassignment. CMS decisions to approve
calls are for limited circumstances based on the following:
(A) The proximity of cost of the losing plan as compared to the
national benchmark; and
(B) The selection of plans in the service area that are below the
benchmark.
(iv) Agents/brokers calling clients who are enrolled in other
products they may sell, such as automotive or home insurance.
(v) Part D sponsors may not make unsolicited calls about other
lines of business as a means of generating leads for Medicare plans.
(2) When reaching out to a beneficiary regarding plan business, as
outlined in this section, Part D sponsor must offer the beneficiary the
ability to opt out of future calls regarding plan business.
(c) Events with beneficiaries. Part D sponsors and their agent or
brokers may hold educational events, marketing or sales events, and
personal marketing appointments to meet with Medicare beneficiaries,
either face-to-face or virtually. The requirements for each type of
event are as follows:
(1) Educational events must be advertised as such and be designed
to generally inform beneficiaries about Medicare, including Medicare
Advantage, Prescription Drug programs, or any other Medicare program.
(i) At educational events, Part D sponsors and agents/brokers may
not market specific Part D sponsors or benefits.
(ii) Part D sponsors holding or participating in educational events
may do any of the following:
(A) Distribute communication materials.
(B) Answer beneficiary initiated questions pertaining to Part D
plans.
(C) Set up future personal marketing appointments.
(D) Distribute business cards.
(E) Obtain beneficiary contact information, including Scope of
Appointment forms.
(iii) Part D sponsors holding or participating in educational
events may not conduct sales or marketing presentations or distribute
or accept plan applications.
(iv) Part D sponsors may schedule appointments with residents of
long-term care facilities (for example, nursing homes, assisted living
facilities, board and care homes) upon a resident's request. If a
resident did not request an appointment, any visit by an agent or
broker is prohibited as unsolicited door-to-door marketing.
(2) Marketing or sales events are group events that fall within the
definition of marketing at Sec. 423.2260.
(i) If a marketing event directly follows an educational event, the
beneficiary must be made aware of the change and given the opportunity
to leave prior to the marketing event beginning.
(ii) Part D sponsors holding or participating in marketing events
may do any of the following:
(A) Provide marketing materials.
(B) Distribute and accept plan applications.
(C) Collect Scope of Appointment forms for future personal
marketing appointments.
(D) Conduct marketing presentations.
(iii) Part D sponsors holding or participating in marketing events
may not do any of the following:

[[Page 6125]]

(A) Require sign in sheets or require attendees to provide contact
information as a prerequisite for attending an event.
(B) Conduct activities, including health screenings, health
surveys, or other activities that are used for or could be viewed as
being used to target a subset of members (that is ``cherry-picking'').
(C) Use information collected for raffles or drawings for any
purpose other than raffles or drawings.
(3) Personal marketing appointments are those appointments that are
tailored to an individual or small group (for example, a married
couple). Personal marketing appointments are not defined by the
location.
(i) Prior to the personal marketing appointment beginning, the Part
D sponsor (or the agent or broker, as applicable) must agree upon and
record the Scope of Appointment with the beneficiary(ies).
(ii) Part D sponsors holding a personal marketing appointment may
do any of the following:
(A) Provide marketing materials.
(B) Distribute and accept plan applications.
(C) Conduct marketing presentations.
(D) Review the individual needs of the beneficiary including, but
not limited to, health care needs and history, commonly used
medications, and financial concerns.
(iii) Part D sponsors holding a personal marketing appointment may
not do any of the following:
(A) Market any health care related product during a marketing
appointment beyond the scope agreed upon by the beneficiary, and
documented by the plan, prior to the appointment.
(B) Market additional health related lines of plan business not
identified prior to an individual appointment without a separate scope
of appointment identifying the additional lines of business to be
discussed.
(C) Market non-health related products such as annuities.

0
80. Section 423.2265 is added to read as follows:

Sec. 423.2265 Websites.

As required under Sec. 423.128(d)(2), Part D sponsors must have a
website.
(a) General website requirements. (1) Part D sponsor websites must
meet all of the following requirements:
(i) Maintain current year contract content through December 31 of
each year.
(ii) Notify users when they will leave the Part D sponsor's
Medicare site.
(iii) Include or provide access to (for example, through a
hyperlink) applicable notices, statements, disclosures, or disclaimers
with corresponding content. Overarching disclaimers, such as the
Federal Contracting Statement, are not required on every page.
(iv) Reflect the most current information within 30 days of any
material change
(v) Keep PDP content separate and distinct from other lines of
business, including Medicare Supplemental Plans.
(2) Part D sponsor websites may not do any of the following:
(i) Require beneficiaries to enter any information other than zip
code, county, or state for access to non-beneficiary-specific website
content.
(ii) Provide links to foreign drug sales, including advertising
links.
(iii) State that the Part D sponsor is not responsible for the
content of their social media pages or the website of any first tier,
downstream, or related entity that provides information on behalf of
the Part D sponsor.
(b) Required content. A Part D sponsor's websites must include the
following content:
(1) A toll-free customer service number, TTY number, and days and
hours of operation.
(2) A physical or Post Office Box address.
(3) A PDF or copy of a printable pharmacy directory.
(4) A searchable pharmacy directory.
(5) A searchable formulary.
(6) Information on enrollees' and Part D sponsors' rights and
responsibilities upon disenrollment. Part D sponsors may either post
this information or provide specific information on where it is located
in the Evidence of Coverage together with a link to that document.
(7) A description of and information on how to file a grievance,
request an organization determination, and an appeal.
(8) Prominently displayed link to the Medicare.gov electronic
complaint.
(9) A Notice of Privacy Practices as required under the HIPAA
Privacy Rule (45 CFR 164.520).
(10) Prescription Drug Transition Policy.
(11) LIS Premium Summary Chart.
(12) Prescription Drug Transition Policy.
(13) A separate section or page about MTM programs providing the
following:
(i) Explanation of MTM program, including eligibility requirements,
the purpose and benefits of MTM, how to obtain MTM service documents
including the Medication list, that the service is free, and a summary
of services.
(ii) Information on how to obtain information about the MTM
program, including how the member will know they are eligible and
enrolled into the MTM program, the comprehensive medication review and
targeted medication reviews, a description of how reviews are conducted
and delivered, including time commitments and materials beneficiaries
will receive.
(c) Required posted materials. A Part D sponsor's website must
provide access to the following materials, in a printable format,
within the timeframes specified in paragraphs (c)(1) and (2) of this
section.
(1) The following materials for each plan year must be posted on
the website by October 15 prior to the beginning of the plan year:
(i) Evidence of Coverage.
(ii) Annual Notice of Change (for renewing plans).
(iii) Summary of Benefits.
(iv) Pharmacy Directory.
(v) Formulary.
(vi) Utilization Management Forms for physicians and enrollees.
(2) The following materials must be posted on the website
throughout the year and be updated as required:
(i) Prior Authorization Forms for Physicians and Enrollees.
(ii) Part D Model Coverage Determination and Redetermination
Request Forms.
(iii) Exception request forms for physicians (which must be posted
by January 1 for new plans).
(iv) CMS Star Ratings document, which must be posted within 21 days
after its release on the Medicare Plan Finder.

0
81. Section 423.2266 is added to read as follows:

Sec. 423.2266 Activities with healthcare providers or in the
healthcare setting.

[[Page 6126]]

(1) Common entryways.
(2) Vestibules.
(3) Waiting rooms.
(4) Hospital or nursing home cafeterias.
(5) Community, recreational, or conference rooms.
(c) Provider-initiated activities. Provider-initiated activities
are activities conducted by a provider at the request of the patient,
or as a matter of a course of treatment, and occur when meeting with
the patient as part of the professional relationship between the
provider and patient. Provider-initiated activities do not include
activities conducted at the request of the Part D sponsor or pursuant
to the network participation agreement between the Part D sponsor and
the provider. Provider-initiated activities that meet this definition
in this paragraph (c) fall outside of the definition of marketing in
Sec. 423.2260. Permissible provider-initiated activities include:
(1) Distributing unaltered, printed materials created by CMS, such
as reports from Medicare Plan Finder, the ``Medicare & You'' handbook,
or ``Medicare Options Compare'' (from https://www.medicare.gov)
including in areas where care is delivered.
(2) Providing the names of Part D sponsors with which they contract
or participate or both.
(3) Answering questions or discussing the merits of a Part D plan
or plans, including cost sharing and benefit information including in
areas where care is delivered.
(4) Referring patients to other sources of information, such as
State Health Insurance Assistance Program (SHIP) representatives, plan
marketing representatives, State Medicaid Office, local Social Security
Offices, CMS' website at https://www.medicare.gov, or 1-800-MEDICARE.
(5) Referring patients to Part D marketing materials available in
common areas.
(6) Providing information and assistance in applying for the LIS.
(7) Announcing new or continuing affiliations with Part D sponsors,
once a contractual agreement is signed. Announcements may be made
through any means of distribution.
(d) Plan-initiated provider activities. Plan-initiated provider
activities are those activities conducted by a provider at the request
of a Part D sponsor. During a plan-initiated provider activity, the
provider is acting on behalf of the Part D sponsor. For the purpose of
plan-initiated activities, the Part D sponsor is responsible for
compliance with all applicable regulatory requirements.
(1) During plan-initiated provider activities, Part D sponsors must
ensure that the provider does not:
(i) Accept/collect scope of appointment forms.
(ii) Accept Medicare enrollment applications.
(iii) Make phone calls or direct, urge, or attempt to persuade
their patients to enroll in a specific plan based on financial or any
other interests of the provider.
(iv) Mail marketing materials on behalf of a Part D sponsor.
(v) Offer inducements to persuade patients to enroll with a
particular Part D plan or sponsor.
(vi) Conduct health screenings as a marketing activity.
(vii) Distribute marketing materials or enrollment forms in areas
where care is being delivered.
(viii) Offer anything of value to induce enrollees to select the
provider.
(ix) Accept compensation from the Part D sponsor for any marketing
or enrollment activities performed on behalf of the Part D sponsor.
(2) During plan-initiated provider activities, the provider may do
any of the following:
(i) Make available, distribute, and display communications
materials, including in areas where care is being delivered.
(ii) Provide or make available marketing materials and enrollment
forms in common areas.
(e) Part D sponsor activities in the healthcare setting. Part D
sponsor activities in the health care setting are those activities,
including marketing activities that are conducted by Part D sponsor or
on behalf of the Part D sponsor, or by any downstream entity, but not
by a provider. All marketing must comply with the requirements in
paragraphs (a) and (b) of this section. However, during Part D sponsor
activities, the following is permitted:
(1) Accepting and collect Scope of Appointment forms.
(2) Accepting enrollment forms.
(3) Making available, distributing, and displaying communications
materials, including in areas where care is being delivered.

0
82. Section 423.2267 is added to read as follows:

Sec. 423.2267 Required materials and content.

[[Page 6127]]

CMS model materials or content verbatim; and
(2) Must follow CMS's specified order of content, when specified.
(d) Delivery of required materials. Part D sponsors must mail
required materials in hard copy or provide them electronically,
following the requirements in paragraphs (d)(1) and (2) of this
section.
(1) For hard copy mailed materials, each enrollee must receive his
or her own copy, except in cases of non-beneficiary-specific
material(s) where the Part D sponsor has determined multiple enrollees
are living in the same household and it has reason to believe the
enrollees are related. In that case, the Part D sponsor may mail one
copy to the household. The Part D sponsor must provide all enrollees an
opt-out process so the enrollees can each receive his or her own copy,
instead of a copy to the household. Materials specific to an individual
beneficiary must always be mailed to that individual.
(2) Materials may be delivered electronically following the
requirements in paragraphs (d)(2)(i) and (ii) of this section.
(i) Without prior authorization from the enrollee, Part D sponsors
may mail new and current enrollees a notice informing enrollees how to
electronically access the following required materials: the Evidence of
Coverage, Provider and Pharmacy Directories, and Formulary. The
following requirements apply:
(A) The Part D sponsor may mail one notice for all materials or
multiple notices.
(B) Notices for prospective year materials may not be mailed prior
to September 1 of each year, but must be sent in time for an enrollee
to access the specified materials by October 15 of each year.
(C) The Part D sponsor may send the notice throughout the year to
new enrollees.
(D) The notice must include the website address to access the
materials, the date the materials will be available if not currently
available, and a phone number to request that hard copy materials be
mailed.
(E) The notice must provide the enrollee with the option to request
hardcopy materials. Requests may be material specific, and must have
the option of a one-time request or a permanent request that must stay
in place until the enrollee chooses to receive electronic materials
again.
(F) Hard copies of requested materials must be sent within three
business days of the request.
(ii) With prior authorization from the enrollee, the Part D sponsor
may provide any required material or content electronically. To do so,
the Part D sponsor must do all of the following:
(A) Obtain prior consent from the enrollee. The consent must
specify both the media type and the specific materials being provided
in that media type.
(B) Provide instructions on how and when enrollees can access the
materials.
(C) Have a process through which an enrollee can request hard
copies be mailed, providing the beneficiary with the option of a one-
time request or a permanent request (which must stay in place until the
enrollee chooses to receive electronic materials again), and with the
option of requesting hard copies for all or a subset of materials. Hard
copies must be mailed within three business days of the request.
(D) Have a process for automatic mailing of hard copies when
electronic versions or the chosen media type is undeliverable.
(e) CMS required materials and content. The following are required
materials that must be provided to current and prospective enrollees,
as applicable, in the form and manner outlined in this section. Unless
otherwise noted or instructed by CMS and subject to Sec. 423.2263(a)
of this chapter, required materials may be sent once a fully executed
contract is in place, but no later than the due dates listed for each
material in this section.
(1) Evidence of Coverage (EOC). The EOC is a standardized
communications material through which certain required information
(under Sec. 423.128(b)) must be provided annually and must be
provided:
(i) To current enrollees of plan by October 15, prior to the year
to which the EOC applies.
(ii) To new enrollees within 10 calendar days from receipt of CMS
confirmation of enrollment or by last day of month prior to effective
date, whichever is later.
(2) Part D explanation of benefits (EOB). The EOB is a model
communications material through which plans must provide the
information required under Sec. 423.128(e). Part D sponsors must
provide enrollees with an EOB no later than the end of the month
following any month in which the enrollee utilized their prescription
drug benefit.
(3) Annual Notice of Change (ANOC). The ANOC is a standardized
marketing material through which plans must provide the information
required under Sec. 423.128(g)(2) annually.
(i) Must send for enrollee receipt no later than September 30 of
each year.
(ii) Enrollees with an October 1, November 1, or December 1
effective date must receive within 10 calendar days from receipt of CMS
confirmation of enrollment or by last day of month prior to effective
date, whichever is later.
(4) Pre-Enrollment Checklist (PECL). The PECL is a standardized
communications material that plans must provide to prospective
enrollees with the enrollment form so that the enrollees understand
important plan benefits and rules. The PECL references information on
the following:
(i) The EOC.
(ii) Provider directory.
(iii) Pharmacy directory.
(iv) Formulary.
(v) Premiums/copayments/coinsurance.
(vi) Emergency/urgent coverage.
(vii) Plan-type rules.
(5) Summary of Benefits (SB). Part D sponsors must disseminate a
summary of highly utilized coverage that include benefits and cost
sharing to prospective enrollees, known as the SB. The SB is a model
marketing material. It must be in a clear and accurate format.
(i) The SB must be provided with an enrollment form as follows:
(A) In hardcopy with a paper enrollment form.
(B) For online enrollment, the SB must be made available
electronically (for example, via a link) prior to the completion and
submission of enrollment request.
(C) For telephonic enrollment, the beneficiary must be verbally
told where the SB can be accessed.
(ii) The SB must include the following information:
(A) Information on prescription drug expenses, including:
(1) Monthly plan premium
(2) Deductible, the initial coverage phase, coverage gap, and
catastrophic coverage.
(3) A statement that costs may differ based on pharmacy type or
status (for example, preferred/non-preferred, mail order, long-term
care (LTC) or home infusion, and 30- or 90-day supply), when
applicable.
(4) For dual eligible enrollees with differing levels of cost must
state how cost sharing and benefits differ depending on the level of
Medicaid eligibility.
(B) Plan sponsors may describe or identify other health related
benefits in the SB.
(6) Enrollment/Election form. This is the model communications
material through which plans must provide the information required
under Sec. 423.32(b).

[[Page 6128]]

(7) Enrollment Notice. This is a model communications material
through which plans must provide the information required under Sec.
423.32(d).
(8) Disenrollment Notice. This is a model communications material
through which plans must provide the information required under Sec.
423.36(b)(2).
(9) Formulary. This is a model communications material through
which Part D sponsors must provide information required under Sec.
423.128(b)(4).
(i) Must be provided to current enrollees of plan by October 15 of
each year.
(ii) Must also provide to new enrollees within 10 calendar days
from receipt of CMS confirmation of enrollment or by last day of month
prior to effective date, whichever is later.
(10) Low Income Subsidy (LIS) Notice. This is a model
communications content through which Part D sponsors must notify
potential enrollees of what their plan premium will be once they are
eligible for Extra Help and receive the low-income subsidy.
(11) Low Income Subsidy (LIS) Rider. This is a model communications
material provided to all enrollees who qualify for Extra Help. In the
LIS Rider, the Part D sponsors must convey how much help the
beneficiary will receive in the benefit year toward their Part D
premium, deductible, and copayments provide to all beneficiaries who
qualify for Extra Help.
(i) The LIS Rider must be provided at least once per year by
September 30.
(ii) The LIS Rider must be sent to enrollees who qualify for Extra
Help or have a change in LIS levels within 30 days of receiving
notification from CMS.
(12) Midyear Change Notification. This is a model communications
material through which plans must provide a notice to enrollees when
there is a midyear change in benefits or plan rules, under the
following timelines:
(i) Notices of changes in plan rules, unless otherwise addressed
elsewhere in the regulation, must be provided 30 days in advance.
(ii) National Coverage Determination (NCD) changes announced or
finalized less than 30 days before effective date, a notification is
required as soon as possible.
(iii) Midyear NCD or legislative changes must be provided no later
than 30 days after the NCD is announced or the legislative change is
effective.
(A) Plans may include the change in next plan mass mailing (for
example, newsletter), provided it is within 30 days.
(B) The notice must also appear on the MA organization's website.
(13) Non-renewal Notice. This is a model communications material
through which plans must provide the information required under Sec.
423.507.
(i) The Non-renewal Notice must be provided at least 90 calendar
days before the date on which the nonrenewal is effective. For
contracts ending on December 31, the notice must be dated October 2 to
ensure national consistency in the application of Medigap Guaranteed
Issue (GI) rights to all enrollees, except for those enrollees in
Medicare-Medicaid Plans (MMPs) and special needs plans (SNPs).
Information about non-renewals or service area reductions may not be
released to the public, including the Non-renewal Notice in this
section, until CMS provides notification to the plan.
(ii) The Non-renewal Notice must do all of the following:
(A) Inform the enrollee that the plan will no longer be offered and
the date the plan will end.
(B) Provide information about any applicable open enrollment
periods or special election periods or both (for example, Medicare open
enrollment, non-renewal special election period), including the last
day the enrollee has to make a Medicare prescription drug plan
selection.
(C) Explain what the enrollee must do to continue receiving
Medicare coverage and what will happen if the enrollee chooses to do
nothing.
(D) As required under Sec. 423.507(a)(2)(ii)(A), provide a CMS-
approved written description of alternative MA plan, MA-PD plan, and
PDP options available for obtaining qualified Medicare services within
the beneficiary's region in the enrollee's notice.
(E) Specify when coverage will start after a new Medicare plan is
chosen.
(F) List 1-800-MEDICARE contact information together with other
organizations that may be able to assist with comparing plans (for
example, SHIPs).
(H) Include the Part D sponsor's call center telephone number, TTY
number, and hours and days of operation.
(14) Part D Transition Letter. This is a model communications
material that must be provided to the beneficiary when they receive a
transition fill for a nonformulary drug. The Part D Transition Letter
must be sent within three days of adjudication of temporary transition
fill.
(15) Pharmacy Directory. This is a model communications material
through which Part D sponsors must provide the information required
under Sec. 423.128. The pharmacy directory must meet all of the
following:
(i) Be provided to current enrollees by October 15 of the year
prior to the applicable year.
(ii) Be provided to new enrollees within 10 calendars days from
receipt of CMS confirmation of enrollment or by last day of month prior
to effective date, whichever is later.
(iii) Be provided to current enrollees upon request, within three
business days of the request.
(iv) Be updated any time the Part D sponsor becomes aware of
changes.
(A) All updates to the online pharmacy directories must be
completed within 30 days of receiving information requiring update.
(B)(1) Updates to hardcopy provider directories must be completed
within 30 days.
(2) Hardcopy directories that include separate updates via addenda
are considered up-to-date.
(16) Prescription transfer letter. This is a model communications
material that must be sent when a Part D sponsor requests permission
from an enrollee to fill a prescription at a different network pharmacy
than the one currently being used by enrollee.
(17) Star Ratings Document. This is a standardized marketing
material through which Star Ratings information is conveyed to
prospective enrollees.
(i) The Star Ratings Document is generated through HPMS.
(ii) The Star Ratings Document must be provided with an enrollment
form as follows:
(A) In hardcopy with a paper enrollment form.
(B) For online enrollment, made available electronically (for
example, via a link) prior to the completion and submission of
enrollment request.
(C) For telephonic enrollment, the beneficiary must be verbally
told where they can access the Star Ratings Document.
(iii) New Part D sponsors that have no Star Ratings are not
required to provide the Star Ratings Document until the following
contract year.
(iv) Updated Star Ratings must be used within 21 calendar days of
release of updated information on Medicare Plan Finder.
(v) Updated Star Ratings must not be used until CMS releases Star
Ratings on Medicare Plan Finder.
(18) Coverage Determination Notices. This is a model communications
material through which plans must provide the information under Sec.
423.568.
(19) Excluded Provider Notices. This is a model communications
material

[[Page 6129]]

through which plans must notify enrollees when a provider they use has
been excluded from participating in the Medicare program based on an
OIG exclusion or the CMS preclusion list.
(20) Notice of Denial of Medicare Prescription Drug Coverage. This
is a standardized material used to convey detailed descriptions of
denied drug coverage and appeal rights.
(21) Medicare Prescription Drug Coverage and Your Rights. This is a
standardized communications material used to convey a beneficiary's
appeal rights when a drug cannot be filled at point-of-sale.
(22) Medicare Part D Coverage Determination Request Form. This is a
model communications material used to collect additional information
from a prescriber.
(23) Request for Additional Information. This is a standardized
communications material used by the Part D sponsor to request a
beneficiary obtain additional information from the prescriber regarding
a beneficiary's exception request.
(24) Notice of Right to an Expedited Grievance. This is a model
communications material used to convey a Medicare beneficiary's rights
to request that a decision be made on a grievance or appeal within a
shorter timeframe.
(25) Notice of Inquiry. This is a model communications material
from a prescription drug plan informing a beneficiary if a drug is
covered by the formulary.
(26) Notice of Case Status. This is a model communications material
used to inform a beneficiary of the denial of an appeal and additional
appeal rights.
(27) Request for Reconsideration of Medicare Prescription Drug
Denial. This is a model communications material used to inform the
beneficiary of rights to an independent review of a Part D sponsor's
decision.
(28) Notice of Redetermination. This is a model communications
material used to convey instructions for requesting an appeal of an
adverse coverage determination.
(29) LEP Reconsideration Request Form. This is a model
communication used to request an appeal of a decision on an LEP by the
independent review entity.
(30) Request for Administrative Law Judge (ALJ) Hearing or Review
of Dismissal. This is a model communication used by an enrollee to
request a hearing by the ALJ or a review of the IRE dismissal.
(31) Appointment of Representative (AOR). This is a standardized
material used to assign an individual to act on behalf of a beneficiary
for the purpose of an appeal, grievance, or coverage determination.
(32) Federal Contracting Statement. This is model content through
which plans must convey that they have a contract with Medicare and
that enrollment in the plan depends on contract renewal.
(i) The Federal Contracting Statement must include all of the
following:
(A) Legal or marketing name of the organization.
(B) Type of plan (for example PDP).
(C) A statement that the organization has a contract with Medicare
(when applicable, Part D sponsors may incorporate a statement that the
organization has a contract with the State/Medicaid program).
(D) A statement that enrollment depends on contract renewal.
(ii) Part D sponsors must include the Federal Contracting Statement
on all marketing materials with the exception of the following:
(A) Banner and banner-like advertisements.
(B) Outdoor advertisements.
(C) Text messages.
(D) Social media.
(E) Envelopes
(33) Star Ratings Disclaimer. This is model content through which
plans must:
(i) Convey that plan sponsors are evaluated yearly by Medicare
(ii) Convey that the ratings are based on a 5-star rating system
(iii) Include the model content in disclaimer form or within the
material whenever Star Ratings are mentioned in marketing materials,
with the exception of when Star Ratings are published on small objects
(that is, a give-away items such as a pens or rulers).
(34) Accommodations Disclaimer. This is model content through which
plans must:
(i) Convey that accommodations for persons with special needs is
available
(ii) Provide a telephone number and TTY number
(iii) Include the model content in disclaimer form or within the
body of the material on any advertisement of invitation to all events
as described under Sec. 423.2264(c).
(35) Mailing Statements. This is standardized content. It consists
of statements on envelopes that Part D sponsor must include when
mailing information to current members, as follows:
(i) Part D sponsors must include the following statement when
mailing information about the enrollee's current plan: ``Important
[Insert Plan Name] information.''
(ii) Part D sponsors must include the following statement when
mailing health and wellness information ``Health and wellness or
prevention information.''
(iii) The Part D sponsor must include the plan name; however, if
the plan name is elsewhere on the envelope, the plan name does not need
to be repeated in the disclaimer.
(iv) Delegated or sub-contracted entities and downstream entities
that conduct mailings on behalf of a multiple Part D sponsors must also
comply with this requirement, however, they do not have to include a
plan name.
(36) Promotional Give-Away Disclaimer. This is model content. The
disclaimer consists of a statement that must make clear that there is
no obligation to enroll in a plan, and must be included when offering a
promotional give-away such as a drawing, prizes, or a free gift.
(37) Provider Co-Branded Material Disclaimer. This is model content
through which Part D sponsors must:
(i) Convey, as applicable, that other pharmacies, physicians or
providers are available in the plan's network.
(ii) Include the model content in disclaimer form or within the
material whenever co-branding relationships with network provider are
mentioned.

Sec. 423.2268 [Removed]

0
83. Section 423.2268 is removed.

0
84. Section 423.2274 is revised to read as follows:

Sec. 423.2274 Agent, broker, and other third party requirements.

If a Part D sponsor uses agents and brokers to sell its Medicare
Part D plans, the requirements in paragraphs (a) through (e) of this
section are applicable. If a Part D sponsor makes payments to third
parties, the requirements in paragraph (f) of this section are
applicable.
(a) Definitions. For purposes of this section, the following
definitions are applicable:
Compensation. (i) Includes monetary or non-monetary remuneration of
any kind relating to the sale or renewal of a plan or product offered
by a Part D sponsor including, but not limited to the following:
(A) Commissions.
(B) Bonuses.
(C) Gifts.
(D) Prizes or Awards.
(ii) Does not include any of the following:
(A) Payment of fees to comply with State appointment laws,
training, certification, and testing costs.
(B) Reimbursement for mileage to, and from, appointments with
beneficiaries.

[[Page 6130]]

(C) Reimbursement for actual costs associated with beneficiary
sales appointments such as venue rent, snacks, and materials.
Fair market value (FMV) means, for purposes of evaluating agent/
broker compensation under the requirements of this section only, the
amount that CMS determines could reasonably be expected to be paid for
an enrollment or continued enrollment into a Part D plan. Beginning
January 1, 2021, the FMV is $81. For subsequent years, FMV is
calculated by adding the current year FMV and the product of the
current year FMV and the Annual Percentage Increase for Part D, which
is published for each year in the rate announcement issued pursuant to
Sec. 422.312 of this chapter.
Initial enrollment year means the first year that a beneficiary is
enrolled in a plan versus subsequent years (c.f., renewal year) that a
beneficiary remains enrolled in a plan.
Like plan type means one of the following:
(i) PDP replaced with another PDP.
(ii) MA or MA-PD replaced with another MA or MA-PD.
(iii) Cost plan replaced with another cost plan.
Plan year and enrollment year mean the year beginning January 1 and
ending December 31.
Renewal year means all years following the initial enrollment year
in the same plan or in different plan that is a like plan type.
Unlike plan type means one of the following:
(i) An MA or MA-PD plan to a PDP or Section 1876 Cost Plan.
(ii) A PDP to a Section 1876 Cost Plan or an MA or MA-PD plan.
(iii) A Section 1876 Cost Plan to an MA or MA-PD plan or PDP.
(b) Agent/broker requirements. Agents and brokers who represent
Part D sponsors must follow the requirements in paragraphs (b)(1)
through (3) of this section. Representation includes selling products
(including Medicare Advantage plans, Medicare Advantage-Prescription
Drug plans, Medicare Prescription Drug plans, and section 1876 Cost
plans) as well as outreach to existing or potential beneficiaries and
answering or potentially answering questions from existing or potential
beneficiaries.
(1) Be licensed and appointed under State law (if required under
applicable State law).
(2) Be trained and tested annually as required under paragraph
(c)(4) of this section, and achieve an 85 percent or higher on all
forms of testing.
(3) Secure and document a Scope of Appointment prior to meeting
with potential enrollees.
(c) Part D sponsor oversight. Part D sponsors must oversee first
tier, downstream, and related entities that represent Part D sponsor to
ensure agents and brokers abide by all applicable State and Federal
laws, regulations, and requirements. Part D sponsors must do all of the
following:
(1) As required under applicable State law, employ as marketing
representatives only individuals who are licensed by the State to
conduct marketing (as defined in this subpart) of health insurance in
that State, and whom the Part D sponsor has informed that State it has
appointed, consistent with the appointment process for agents and
brokers provided for under State law.
(2) As required under applicable State law, report the termination
of an agent or broker to the State and the reason for termination if
required by state law.
(3) Report to CMS all enrollments made by unlicensed agents or
brokers and for-cause terminations of agents or brokers.
(4) On an annual basis, provide training and testing to agents and
brokers on Medicare rules and regulations, the plan products that
agents and brokers will sell including any details specific to each
plan product, and relevant State and Federal requirements.
(5) On an annual basis by the last Friday in July, report to CMS
whether the Part D sponsor intends to use employed, captive, or
independent agents or brokers in the upcoming plan year and the
specific rates or range of rates the plan will pay independent agents
and brokers. Following the reporting deadline, Part D sponsor may not
change their decisions related to agent or broker type, or their
compensation rates and ranges, until the next plan year.
(6) On an annual basis by October 1, have in place full
compensation structures for the following plan year. The structure must
include details on compensation dissemination, including specifying
payment amounts for initial enrollment year and renewal year
compensation.
(7) Submit agent or broker marketing materials to CMS through HPMS
prior to use, following the requirements for marketing materials in
this subpart.
(8) Ensure beneficiaries are not charged marketing consulting fees
when considering enrollment in Part D plans.
(9) Establish and maintain a system for confirming that:
(i) Beneficiaries enrolled by agents or brokers understand the
product, including the rules applicable under the plan.
(ii) Agents and brokers appropriately complete Scope of Appointment
records for all marketing appointments (including telephonic and walk-
in).
(10) Demonstrate that marketing resources are allocated to
marketing to the disabled Medicare population as well as to Medicare
beneficiaries age 65 and over.
(11) Must comply with State requests for information about the
performance of a licensed agent or broker as part of a state
investigation into the individual's conduct. CMS will establish and
maintain a memorandum of understanding (MOU) to share compliance and
oversight information with States that agree to the MOU.
(d) Compensation requirements. Part D sponsors must ensure they
meet the requirements in paragraphs (d)(1) through (5) of this section
in order to pay compensation. These compensation requirements only
apply to independent agents and brokers.
(1) General rules. (i) MA organizations may only pay agents or
brokers who meet the requirements in paragraph (b) of this section.
(ii) Part D sponsors may determine, through their contracts, the
amount of compensation to be paid, provided it does not exceed
limitations outlined in this section.
(iii) Part D sponsors may determine their payment schedule (for
example, monthly or quarterly). Payments (including payments for AEP
enrollments) must be made during the year of the beneficiary's
enrollment.
(iv) Part D sponsors may only pay compensation for the number of
months a member is enrolled.
(2) Initial enrollment year compensation. For each enrollment in an
initial enrollment year, Part D sponsors may pay compensation at or
below FMV.
(i) Part D sponsors may pay either a full or pro-rated initial
enrollment year compensation for:
(A) A beneficiary's first year of enrollment in any plan; or
(B) A beneficiary's move from an employer group plan to a non-
employer group plan (either within the same parent organization or
between parent organizations).
(ii) Part D sponsors must pay pro-rated initial enrollment year
compensation for:
(A) A beneficiary's plan change(s) during their initial enrollment
year.
(B) A beneficiary's selection of an ``unlike plan type'' change. In
that case,

[[Page 6131]]

the new plan would only pay the months that the beneficiary is
enrolled, and the previous plan would recoup the months that the
beneficiary was not in the plan.
(3) Renewal compensation. For each enrollment in a renewal year,
Part D sponsors may pay compensation at an amount up to 50 percent of
FMV.
(i) Part D sponsors may pay compensation for a renewal year:
(A) In any year following the initial enrollment year the
beneficiary remains in the same plan; or
(B) When a beneficiary enrolls in a new ``like plan type''.
(ii) [Reserved]
(4) Other compensation scenarios. (i) When a beneficiary enrolls in
a PDP, the Part D sponsor may pay only the PDP compensation (and not
compensation for MA enrollment under Sec. 422.2274 of this chapter).
(ii) When a beneficiary enrolls in both a section 1876 Cost Plan
and a stand-alone PDP, the 1876 Cost Plan sponsor may pay compensation
for the cost plan enrollment and the Part D sponsor must pay
compensation for the Part D enrollment.
(iii) When a beneficiary enrolls in a MA-only plan and a PDP, the
MA plan may pay for the MA plan enrollment and the Part D sponsor may
pay for the PDP enrollment.
(5) Additional compensation, payment, and compensation recovery
requirements (Charge-backs). (i) Part D sponsors must retroactively pay
or recoup funds for retroactive beneficiary changes for the current and
previous calendar years. Part D sponsors may choose to recoup or pay
compensation for years prior to the previous calendar year, but they
must do both (recoup amounts owed and pay amounts due) during the same
year.
(ii) Compensation recovery is required when:
(A) A beneficiary makes any plan change (regardless of the parent
organization) within the first three months of enrollment (known as
rapid disenrollment), except as provided in paragraph (d)(5)(iii) of
this section.
(B) Any other time period a beneficiary is not enrolled in a plan,
but the plan paid compensation based on that time period.
(iii) Rapid disenrollment compensation recovery does not apply
when:
(A) A beneficiary enrolls effective October 1, November 1, or
December 1 and subsequently uses the Annual Election Period to change
plans for an effective date of January 1.
(B) A beneficiary's enrollment change is not in the best interests
of the Medicare program, including for the following reasons:
(1) Other creditable coverage (for example, an employer plan).
(2) Moving into or out of an institution.
(3) Gain or loss of employer/union sponsored coverage.
(4) Plan termination, non-renewal, or CMS imposed sanction.
(5) To coordinate with Part D enrollment periods or the State
Pharmaceutical Assistance Program.
(6) Becoming LIS or dually eligible for Medicare and Medicaid.
(7) Qualifying for another plan based on special needs.
(8) Due to an auto, facilitated, or passive enrollment.
(9) Death.
(10) Moving out of the service area.
(11) Non-payment of premium.
(12) Loss of entitlement or retroactive notice of entitlement.
(13) Moving into a 5-star plan.
(14) Moving from an LPI plan into a plan with three or more stars.
(iv)(A) When rapid disenrollment compensation recovery applies, the
entire compensation must be recovered.
(B) For other compensation recovery, plans must recover a pro-rated
amount of compensation (whether paid for an initial enrollment year or
renewal year) from an agent or broker equal to the number of months not
enrolled.
(1) If a plan has paid full initial compensation, and the enrollee
disenrolls prior to the end of the enrollment year, the total number of
months not enrolled (including months prior to the effective date of
enrollment) must be recovered from the agent or broker.
(2) Example: A beneficiary enrolls upon turning 65 effective April
1 and disenrolls September 30 of the same year. The plan paid full
initial enrollment year compensation. Recovery is equal to 6/12ths of
the initial enrollment year compensation (for January through March and
October through December).
(e) Payments other than compensation (administrative payments). (1)
Payments made for services other than enrollment of beneficiaries (for
example, training, customer service, agent recruitment, operational
overhead, or assistance with completion of health risk assessments)
must not exceed the value of those services in the marketplace.
(2) Administrative payments can be based on enrollment provided
payments are at or below the value of those services in the
marketplace.
(f) Payments for referrals. Payments may be made to individuals for
the referral (including a recommendation, provision, or other means of
referring beneficiaries), recommendation, provision, or other means of
referring beneficiaries to an agent, broker or other entity for
potential enrollment into a plan. The payment may not exceed $100 for a
referral into an MA or MA-PD plan and $25 for a referral into a PDP
plan.

0
85. Section 423.2305 is amended by revising the definition for
``Applicable discount'' to read as follows.

Sec. 423.2305 Definitions.

* * * * *
Applicable discount means 50 percent or, with respect to a plan
year after plan year 2018, 70 percent of the portion of the negotiated
price (as defined in this section) of the applicable drug of a
manufacturer that falls within the coverage gap and that remains after
such negotiated price is reduced by any supplemental benefits that are
available.
* * * * *

PART 455--PROGRAM INTEGRITY: MEDICAID

0
86. The authority citation for part 455 continues to read as follows:

Authority: 42 U.S.C. 1302.

0
87. Section 455.2 is amended by--
0
a. In the definition of ``Credible allegation of fraud,'' revising
paragraph (1); and
0
b. Adding the definition of ``Fraud hotline tip'' in alphabetical
order.
The revision and addition read as follows:

Sec. 455.2 Definitions.

* * * * *
Credible allegation of fraud. * * *
(1) Fraud hotline tips verified by further evidence.
* * * * *
Fraud hotline tip. A fraud hotline tip is a complaint or other
communications that are submitted through a fraud reporting phone
number or a website intended for the same purpose, such as the Federal
Government's HHS OIG Hotline or a health plan's fraud hotline.
* * * * *

PART 460--PROGRAMS OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE)

0
88. The authority citation for part 460 continues to read as follows:

Authority: 42 U.S.C. 1302, 1395, 1395eee(f), and 1396u-4(f).

0
89. Section 460.6 is amended by revising the definition of ``Services''
to read as follows:

[[Page 6132]]

Sec. 460.6 Definitions.

* * * * *
Service, as used in this part, means all services that could be
required under Sec. 460.92, including items and drugs.
* * * * *

0
90. Section 460.56 is added to subpart D to read as follows:

Sec. 460.56 Procedures for imposing sanctions and civil money
penalties.

CMS provides notice and a right to request a hearing according to
the procedures set forth in either of the following:
(a) Section 422.756(a) and (b) of this chapter if CMS imposes a
suspension of enrollment or payment under Sec. 460.42 or Sec.
460.48(b).
(b) Section 422.756(e)(2)(v) of this chapter if CMS imposes civil
money penalties under Sec. 460.46.

0
91. Section 460.92 is revised to read as follows:

Sec. 460.92 Required services.

(a) The PACE benefit package for all participants, regardless of
the source of payment, must include the following:
(1) All Medicare-covered services.
(2) All Medicaid-covered services, as specified in the State's
approved Medicaid plan.
(3) Other services determined necessary by the interdisciplinary
team to improve and maintain the participant's overall health status.
(b) Decisions by the interdisciplinary team to provide or deny
services under paragraph (a) of this section must be based on an
evaluation of the participant that takes into account:
(1) The participant's current medical, physical, emotional, and
social needs; and
(2) Current clinical practice guidelines and professional standards
of care applicable to the particular service.

Sec. 460.96 [Amended]

0
92. Section 460.96 is amended by--
0
a. Removing paragraphs (a) and (b); and
0
b. Redesignating paragraphs (c) through (e) as paragraphs (a) through
(c).

0
93. Section 460.98 is amended by--
0
a. Revising paragraph (a);
0
b. Adding a sentence to the end of paragraph (b)(1); and
0
c. Adding paragraphs (b)(4) and (5).
The revision and additions read as follows:

Sec. 460.98 Service delivery.

(a) Access to services. A PACE organization is responsible for
providing care that meets the needs of each participant across all care
settings, 24 hours a day, every day of the year, and must establish and
implement a written plan to ensure that care is appropriately
furnished.
(b) * * *
(1) * * * These services must be furnished in accordance with Sec.
460.70(a).
* * * * *
(4) Services must be provided as expeditiously as the participant's
health condition requires, taking into account the participant's
medical, physical, emotional, and social needs.
(5) The PACE organization must document, track and monitor the
provision of services across all care settings in order to ensure the
interdisciplinary team remains alert to the participant's medical,
physical, emotional, and social needs regardless of whether services
are formally incorporated into the participant's plan of care.
* * * * *

0
94. Section 460.102 is amended by revising paragraphs (d)(1) and
(d)(2)(ii) to read as follows:

Sec. 460.102 Interdisciplinary team.

* * * * *
(d) * * *
(1) The interdisciplinary team is responsible for the following:
(i) The initial assessment, periodic reassessments, plan of care,
and coordination of 24-hour care delivery.
(ii) Documenting all recommendations for care or services and the
reason(s) for not approving or providing recommended care or services,
if applicable, in accordance with Sec. 460.210(b).
(2) * * *
(ii) Remaining alert to pertinent input from any individual with
direct knowledge of or contact with the participant, including the
following:
(A) Other team members.
(B) Participants.
(C) Caregivers.
(D) Employees.
(E) Contractors.
(F) Specialists.
(G) Designated representatives.
* * * * *

0
95. Section 460.104 is amended by revising paragraph (d)(2) to read as
follows:

Sec. 460.104 Participant assessment.

* * * * *
(d) * * *
(2) In response to a service determination request. In accordance
with Sec. 460.121(h), the PACE organization must conduct an in-person
reassessment if it expects to deny or partially deny a service
determination request, and may conduct reassessments as determined
necessary for approved services.
* * * * *

0
96. Section 460.112 is amended by--
0
a. Adding paragraph (b)(4);
0
b. Redesignating paragraph (c)(3) as paragraph (c)(5); and
0
c. Adding new paragraphs (c)(3) and (4).
The additions read as follows:

Sec. 460.112 Specific rights to which a participant is entitled.

* * * * *
(b) * * *
(4) To contact 1-800-MEDICARE for information and assistance,
including to make a complaint related to the quality of care or the
delivery of a service.
(c) * * *
(3) To have reasonable and timely access to specialists as
indicated by the participant's health condition and consistent with
current clinical practice guidelines.
(4) To receive necessary care in all care settings, up to and
including placement in a long-term care facility when the PACE
organization can no longer provide the services necessary to maintain
the participant safely in the community.
* * * * *

0
97. Section 460.121 is added to read as follows:

Sec. 460.121 Service determination process.

(a) Written procedures. Each PACE organization must have formal
written procedures for identifying and processing service determination
requests in accordance with the requirements of this Part.
(b) What is a service determination request--(1) Requests that
constitute a service determination request. Except as provided in
paragraph (b)(2) of this section, the following requests constitute
service determination requests:
(i) A request to initiate a service.
(ii) A request to modify an existing service, including to
increase, reduce, eliminate, or otherwise change a service.
(iii) A request to continue coverage of a service that the PACE
organization is recommending be discontinued or reduced.
(2) Requests that do not constitute a service determination
request. Requests to initiate, modify, or continue a service do not
constitute a service determination request if the request is made prior
to completing the development of the initial plan of care.
(c) Who can make a service determination request. Any of the

[[Page 6133]]

following individuals can make a service determination request:
(1) The participant.
(2) The participant's designated representative.
(3) The participant's caregiver.
(d) Method for making a service determination request. An
individual may make a service determination request as follows:
(1) Either orally or in writing.
(2) To any employee or contractor of the PACE organization that
provides direct care to a participant in the participant's residence,
the PACE center, or while transporting participants.
(e) Processing a service determination request. (1) Except as
provided in paragraph (e)(2) of this section, the PACE organization
must bring a service determination request to the interdisciplinary
team as expeditiously as the participant's condition requires, but no
later than 3 calendar days from the time the request is made.
(2) If a member of the interdisciplinary team is able to approve
the service determination request in full at the time the request is
made, the PACE organization--
(i) Must fulfill all of the following:
(A) Notice of the decision to approve a service determination
request requirements specified in paragraph (j)(1) of this section.
(B) Effectuation requirements specified in paragraph (k) of this
section.
(C) Recordkeeping requirements specified in paragraph (m) of this
section.
(ii) Is not required to process the service determination request
in accordance with paragraphs (f) through (i), (j)(2), and (l) of this
section.
(f) Who must review a service determination request. The full
interdisciplinary team must review and discuss each service
determination request and decide to approve, deny, or partially deny
the request based on that review.
(g) Interdisciplinary team decision making. The interdisciplinary
team must consider all relevant information when evaluating a service
determination request, including, but not limited to, the findings and
results of any reassessments required in paragraph (h) of this section,
as well as the criteria specified in Sec. 460.92(b).
(h) Reassessments in response to a service determination request.
(1) If the interdisciplinary team expects to deny or partially deny a
service determination request, the appropriate members of the
interdisciplinary team, as identified by the interdisciplinary team,
must conduct an in-person reassessment before the interdisciplinary
team makes a final decision. The team members performing the
reassessment must evaluate whether the requested service is necessary
to meet the participant's medical, physical, emotional, and social
needs.
(2) The interdisciplinary team may conduct a reassessment prior to
approving a service determination request, either in-person or through
the use of remote technology, if the team determines that a
reassessment is necessary.
(i) Notification timeframe. Except as provided in paragraph (i)(1)
of this section, when the interdisciplinary team receives a service
determination request, it must make its decision and notify the
participant or their designated representative of its decision as
expeditiously as the participant's condition requires, but no later
than 3 calendar days after the date the interdisciplinary team receives
the request.
(1) Extensions. The interdisciplinary team may extend the timeframe
for review and notification by up to 5 calendar days if either of the
following occur:
(i) The participant or other requestor listed in paragraph (c)(2)
or (3) of this section requests the extension.
(ii) The extension is in the participant's interest because the
interdisciplinary team needs additional information from an individual
not directly employed by the PACE organization that may change the
interdisciplinary team's decision to deny a service. The
interdisciplinary team must document the circumstances that led to the
extension and demonstrate how the extension is in the participant's
best interest.
(2) Notice of extension. When the interdisciplinary team extends
the timeframe, it must notify the participant or their designated
representative in writing. The notice must explain the reason(s) for
the delay and must be issued as expeditiously as the participant's
condition requires, but no later than 24 hours after the IDT decides to
extend the timeframe.
(j) Notification requirements--(1) Notice of decisions to approve a
service determination request. If the interdisciplinary team makes a
determination to approve a service determination request, it must
provide the participant or the designated representative either oral or
written notice of the determination. Notice of any decision to approve
a service determination request must explain the conditions of the
approval in understandable language, including when the participant may
expect to receive the approved service.
(2) Notice of decisions to deny a service determination request. If
the interdisciplinary team decides to deny or partially deny a service,
it must provide the participant or the designated representative both
oral and written notice of the determination. Notice of any denial
must--
(i) State the specific reason(s) for the denial, including why the
service is not necessary to maintain or improve the participant's
overall health status, taking into account the participant's medical,
physical, emotional, and social needs, and the results of the
reassessment(s) in understandable language.
(ii) Inform the participant or designated representative of his or
her right to appeal the decision under Sec. 460.122.
(iii) Describe the standard and expedited appeals processes,
including the right to, and conditions for, obtaining expedited
consideration of an appeal of a denial of services as specified in
Sec. 460.122.
(iv) For a Medicaid participant, inform the participant of both of
the following, as specified in Sec. 460.122(e)(1):
(A) His or her right to continue receiving disputed services during
the appeals process until issuance of the final determination.
(B) The conditions for continuing to receive disputed services.
(k) Effectuation requirements. If the interdisciplinary team
approves a service determination request, in whole or in part, the PACE
organization must provide the approved service as expeditiously as the
participant's condition requires, taking into account the participant's
medical, physical, emotional, and social needs. The interdisciplinary
team must explain when the participant may expect to receive the
service in accordance with paragraph (j)(1) of this section.
(l) Effect of failure to meet the processing timeframes. If the
interdisciplinary team fails to provide the participant with timely
notice of the resolution of the request or does not furnish the
services required by the revised plan of care, this failure constitutes
an adverse decision, and the participant's request must be
automatically processed by the PACE organization as an appeal in
accordance with Sec. 460.122.
(m) Recordkeeping. The PACE organization must establish and
implement a process to document, track, and maintain records related to
all

[[Page 6134]]

processing requirements for service determination requests received
both orally and in writing. These records must be available to the
interdisciplinary team to ensure that all members remain alert to
pertinent participant information.

0
98. Section 460.122 is amended by--
0
a. Revising the introductory text and paragraphs (b) and (c)(1), (2),
and (4);
0
b. Redesignating paragraphs (c)(5) and (6) as paragraphs (c)(6) and
(7), respectively;
0
c. Adding a new paragraph (c)(5);
0
d. Revising paragraphs (d), (g) and (h);
The revisions and additions read as follows:

Sec. 460.122 PACE organization's appeals process.

For purposes of this section, an appeal is a participant's action
taken with respect to the PACE organization's noncoverage of, or
nonpayment for, a service including denials, reductions, or termination
of services. A request to initiate, modify or continue a service must
first be processed as a service determination request under Sec.
460.121 before the PACE organization can process an appeal under this
section.
* * * * *
(b) Notification of participants. Upon enrollment, at least
annually thereafter, and whenever the interdisciplinary team denies a
service determination request or request for payment, the PACE
organization must give a participant written information on the appeals
process.
(c) * * *
(1) Timely preparation and processing of a written denial of
coverage or payment as provided in Sec. Sec. 460.121(i) and (m).
(2) How a participant or their designated representative files an
appeal, including procedures for accepting oral and written appeal
requests.
* * * * *
(4) Review of an appeal by an appropriate third party reviewer or
committee. An appropriate third party reviewer or member of a review
committee must be an individual who meets all of the following:
(i) Appropriately credentialed in the field(s) or discipline(s)
related to the appeal.
(ii) An impartial third party who meets both of the following:
(A) Was not involved in the original action.
(B) Does not have a stake in the outcome of the appeal.
(5) The distribution of written or electronic materials to the
third party reviewer or committee that, at a minimum, explain all of
the following:
(i) Services must be provided in a manner consistent with the
requirements in Sec. Sec. 460.92 and 460.98.
(ii) The need to make decisions in a manner consistent with how
determinations under section 1862(a)(1)(A) of the Act are made.
(iii) The rules in Sec. 460.90(a) that specify that certain
limitations and conditions applicable to Medicare or Medicaid or both
benefits do not apply.
* * * * *
(d) Opportunity to submit evidence. A PACE organization must give
all parties involved in the appeal a reasonable opportunity to present
evidence related to the dispute, in person, as well as in writing.
* * * * *
(g) Notification. A PACE organization must give all parties
involved in the appeal appropriate written notification of the decision
to approve or deny the appeal.
(1) Notice of a favorable decision. Notice of any favorable
decision must explain the conditions of the approval in understandable
language.
(2) Notice of partially or fully adverse decisions. (i) Notice of
any denial must--
(A) State the specific reason(s) for the denial;
(B) Explain the reason(s) why the service would not improve or
maintain the participant's overall health status;
(C) Inform the participant of his or her right to appeal the
decision; and
(D) Describe the external appeal rights under Sec. 460.124.
(ii) At the same time the decision is made, the PACE organization
must also notify the following:
(A) CMS.
(B) The State administering agency.
(h) Actions following a favorable decision. A PACE organization
must furnish the disputed service as expeditiously as the participant's
health condition requires if a determination is made in favor of the
participant on appeal.
* * * * *

0
99. Section 460.124 is revised to read as follows:

Sec. 460.124 Additional appeal rights under Medicare or Medicaid.

A PACE organization must inform a participant in writing of his or
her appeal rights under Medicare or Medicaid managed care, or both,
assist the participant in choosing which to pursue if both are
applicable, and forward the appeal to the appropriate external entity.
(a) Appeal rights under Medicare. Medicare participants have the
right to a reconsideration by an independent review entity.
(1) A written request for reconsideration must be filed with the
independent review entity within 60 calendar days from the date of the
decision by the third party reviewer under Sec. 460.122.
(2) The independent outside entity must conduct the review as
expeditiously as the participant's health condition requires but must
not exceed the deadlines specified in the contract.
(3) If the independent review entity conducts a reconsideration,
the parties to the reconsideration are the same parties described in
Sec. 460.122(c)(2), with the addition of the PACE organization.
(b) Appeal rights under Medicaid. Medicaid participants have the
right to a State Fair Hearing as described in part 431, subpart E, of
this chapter.
(c) Appeal rights for dual eligible participants. Participants who
are eligible for both Medicare and Medicaid have the right to external
review by means of either the Independent Review Entity described in
paragraph (a) of this section or the State Fair Hearing process
described in paragraph (b) of this section.

0
100. Section 460.200 is amended by--
0
a. Redesignating paragraphs (b)(1) through (4) as paragraphs (b)(1)(i)
through (iv), respectively;
0
b. Adding a new paragraph (b)(2); and
0
c. Revising paragraph (d).
The addition and revision read as follows:

Sec. 460.200 Maintenance of records and reporting of data.

* * * * *
(b) * * *
(2) CMS and the State administering agency must be able to obtain,
examine or retrieve the information specified at paragraph (b)(1) of
this section, which may include reviewing information at the PACE site
or remotely. PACE organizations may also be required to upload or
electronically transmit information, or send hard copies of required
information by mail.
* * * * *
(d) Safeguarding data and records. A PACE organization must do all
of the following:
(1) Establish written policies and implement procedures to
safeguard all data, books, and records against loss, destruction,
unauthorized use, or inappropriate alteration.
(2) Maintain all written communications received from participants
or other parties in their

[[Page 6135]]

original form when the communications relate to a participant's care,
health, or safety in accordance with Sec. 460.210(b)(6).
* * * * *

0
101. Section 460.210 is amended by--
0
a. Redesignating paragraphs (b)(4) through (12) as (b)(7) through (15);
and
0
b. Adding new paragraphs (b)(4) through (6).
The additions read as follows:

Sec. 460.210 Medical records.

* * * * *
(b) * * *
(4) All recommendations for services made by employees or
contractors of the PACE organization, including specialists.
(5) If a service recommended by an employee or contractor of the
PACE organization, including a specialist, is not approved or provided,
the reason(s) for not approving or providing that service.
(6) Original documentation, or an unaltered electronic copy, of any
written communication the PACE organization receives relating to the
care, health or safety of a participant, in any format (for example,
emails, faxes, letters, etc.) and including, but not limited to the
following:
(i) Communications from the participant, his or her designated
representative, a family member, a caregiver, or any other individual
who provides information pertinent to a participant's health or safety
or both.
(ii) Communications from an advocacy or governmental agency such as
Adult Protective Services.
* * * * *

Dated: October 29, 2020.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: January 6, 2021.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2021-00538 Filed 1-15-21; 8:45 am]
BILLING CODE 4120-01-P