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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

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AGENCY:

Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION:

Final rule.

SUMMARY:

This final rule will revise the Medicare Advantage (MA) program (Part C) regulations and Prescription Drug Benefit program (Part D) regulations to implement certain provisions of the Comprehensive Addiction and Recovery Act (CARA) to further reduce the number of beneficiaries who may potentially misuse or overdose on opioids while still having access to important treatment options; implement certain provisions of the 21st Century Cures Act; support innovative approaches to improve program quality, accessibility, and affordability; offer beneficiaries more choices and better care; improve the CMS customer experience and maintain high beneficiary satisfaction; address program integrity policies related to payments based on prescriber, provider and supplier status in MA, Medicare cost plan, Medicare Part D and the PACE programs; provide an update to the official Medicare Part D electronic prescribing standards; and clarify program requirements and certain technical changes regarding treatment of Medicare Part A and Part B appeal rights related to premiums adjustments.

DATES:

Effective Date: This rule is effective June 15, 2018.

The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of June 15, 2018.

Applicability Dates: The applicability date of the provisions of this rule is January 1, 2019 except for the provisions in §§ 422.100(f)(4) and (5) and 422.101(d) (discussed in section II.A.4. of this final rule (Maximum Out-of-Pocket Limit for Medicare Parts A and B Services)) and § 422.100(f)(6) (discussed in section II.A.5. of this final rule (Cost Sharing Limits for Medicare Parts A and B Services)). Those provisions are applicable for contract year 2020 (January 1, 2020). E-Prescribing and the Part D Prescription Drug Program; Updating Part D E Prescribing Standards discussed in section II.D.8. of this final rule is applicable January 1, 2020 conditioned on The Office of the National Coordinator for Health Information Technology (ONC) adopting the same standard for use in its Electronic Health Record Certification Program by that date.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Theresa Wachter, (410) 786-1157, Part C Issues.

Marie Manteuffel, (410) 786-3447, Part D Issues.

Kristy Nishimoto, (206) 615-2367, Beneficiary Enrollment and Appeals Issues.

Raghav Aggarwal, (410) 786-0097, Part C and D Payment Issues.

Vernisha Robinson-Savoy, (443) 826-9925, Compliance Program Training Issues.

Frank Whelan, (410) 786-1302, Preclusion List Issues.

Shelly Winston, (410) 786-3694, Part D E-Prescribing Program.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

I. Executive Summary and Background

A. Executive Summary

1. Purpose

The primary purpose of this final rule is to make revisions to the Medicare Advantage (MA) program (Part C) and Prescription Drug Benefit Program (Part D) regulations based on our continued experience in the administration of the Part C and Part D programs and to implement certain provisions of the Comprehensive Addiction and Recovery Act and the 21st Century Cures Act. The changes are necessary to—

  • Support Innovative Approaches to Improving Quality, Accessibility, and Affordability;
  • Improve the CMS Customer Experience; and
  • Implement Other Changes.

In addition, this final rule makes technical changes related to treatment of Part A and Part B premium adjustments and updates the NCPDP SCRIPT standard used for Part D electronic prescribing. While the Part C and Part D programs have high satisfaction among enrollees, we continually evaluate program policies and regulations to remain responsive to current trends and newer technologies, and provide increased flexibility to serve patients. Specifically, this regulation meets the Administration's priorities to reduce burden and provide the regulatory framework to develop MA and Part D products that better meet the individual patient's health care needs. These changes being finalized will empower MA and Part D plans to meet the needs of enrollees at the local level, and should result in more enrollee choice and more affordable options. Additionally, this regulation includes a number of provisions that will help address the opioid epidemic and mitigate the impact of increasing drug prices in the Part D program.

2. Summary of the Major Provisions

a. Implementation of the Comprehensive Addiction and Recovery Act of 2016 (CARA) Provisions

In line with the agency's response to the President's call to end the scourge of the opioid epidemic, this final rule implements statutory provisions of the Comprehensive Addiction and Recovery Act of 2016 (CARA), which amended the Social Security Act and was enacted into law on July 22, 2016. CARA includes new authority for Medicare Part D plans to establish drug management programs effective on or after January 1, 2019. Through this final rule, CMS has established a framework under which Part D plan sponsors may establish a drug management program for beneficiaries at risk for prescription drug abuse or misuse, or “at-risk beneficiaries.” Specifically, under drug management programs, Part D plans will engage in case management of potential at-risk beneficiaries, through contact with their prescribers, when such beneficiary is found to be taking a specific dosage of opioids and/or obtaining them from multiple prescribers and multiple pharmacies who may not know about each other. Sponsors may then limit at-risk beneficiaries' access to coverage of controlled substances that CMS determines are “frequently abused drugs” to a selected prescriber(s) and/or network pharmacy(ies) after case management with the prescribers for the safety of the enrollee. CMS also limits the use of the special enrollment period (SEP) for dually- or other low income subsidy (LIS)-eligible beneficiaries by those LIS-eligible beneficiaries who are identified as at-risk or potentially at-risk for prescription drug abuse under such a drug management program. Finally, these provisions will codify the current Part D Opioid Drug Utilization Review (DUR) Policy and Overutilization Monitoring System (OMS) by integrating this current policy with drug management program provisions. Start Printed Page 16441Through the adoption of this policy, from 2011 through 2017, there was a 76 percent decrease (almost 22,500 beneficiaries) in the number of Part D beneficiaries identified as potential very high risk opioid overutilizers. Thus, drug management programs will expand upon an existing, innovative, successful approach to reduce opioid overutilization in the Part D program by improving quality of care through coordination while maintaining access to necessary pain medications, and will be an important next step in addressing the opioid epidemic and safeguarding the health and safety of our nation's seniors.

b. Revisions to Timing and Method of Disclosure Requirements

Consistent with agency efforts supporting innovative approaches to improve quality, accessibility, and affordability and reduce burden, we are finalizing changes to align the MA and Part D regulations in authorizing CMS to set the manner of delivery for mandatory disclosures in both the MA and Part D programs. CMS will use this authority to allow MA 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 Evidence of Coverage (EOC), had to be provided in hard copy. Additionally, we are changing the timeframe for delivery of the MA and Part D EOC to the first day of the Annual Election Period (AEP), rather than 15 days prior to that date. Allowing Part C and Part D plans to provide the EOC electronically will alleviate plan burden related to printing and mailing and reduce the number of paper documents that enrollees receive from plans. Changing the date by which plans must provide the EOC to enrollees will allow plans more time to finalize the formatting and ensure the accuracy of the information in the EOC. Changing the date will also separate the mailing and receipt of the EOC from the Annual Notice of Change (ANOC), which describes the important changes in a patient's plan from one year to the next. The ANOC must be delivered 15 days prior to the AEP and will be received by enrollees ahead of the EOC, thus allowing enrollees to focus on materials that drive decision-making during the AEP. We see this final change as an overall reduction of burden that our regulations have on plans and enrollees. In aggregate, we estimate a savings (to plans for not producing and mailing hardcopy EOCs) of approximately $54.7 million each year, 2019 through 2023.

c. Preclusion List Requirements for Prescribers in Part D and Individuals and Entities in MA, Cost Plans, and PACE

This final rule will rescind current regulatory provisions that require prescribers of Part D drugs and providers of MA services and items to enroll in Medicare in order for the Part D drug or MA service or item to be covered. As a replacement, a Part D plan sponsor will be required to reject, or require its pharmacy benefit manager to reject, a pharmacy claim for a Part D drug if the individual who prescribed the drug is included on the “preclusion list.” Similarly, an MA service or item will not be covered if the provider that furnished the service or item is on the preclusion list. The preclusion list will consist of certain individuals and entities that are currently revoked from the Medicare program under 42 CFR 424.535 and are under an active reenrollment bar, or have engaged in behavior for which CMS could have revoked the individual or entity to the extent applicable if they had been enrolled in Medicare, and CMS determines that the underlying conduct that led, or would have led, to the revocation is detrimental to the best interests of the Medicare program. We believe that this change from an enrollment requirement to a preclusion list requirement will reduce the burden on Part D prescribers and MA providers without compromising our program integrity efforts.

3. Summary of Costs, Savings and Benefits of the Major Provisions

ProvisionSavings and benefitsCosts
Implementation of the Comprehensive Addiction and Recovery Act of 2016The purpose of this provision is to create a lock-in status for certain at-risk beneficiaries. In addition to the benefits of preventing opioid and benzodiazepine dependency in beneficiaries, we estimate, in 2019, a reduction of $19 million in Trust Fund expenditures because of reduced opioid scripts. This $19 million reduction modestly increases to a $20 million reduction in 2023The creation of lock in-status is a burden to plans. The cost to industry is estimated at about $2.8 million per year. This $2.8 million cost arises from (i) the uploading and preparing of additional notices to enrollees ($101,721), (ii) the re-negotiation of contracts between Part D sponsors and pharmacies ($547,415), (iii) the programming of edits about lock-ins into the systems of Part D sponsors ($2,152,332), and (iv) the right of enrollees to appeal a status of lock-in ($35,183).
Revisions to Timing and Method of Disclosure RequirementsWe estimate 67% of the current 47.8 million beneficiaries will prefer use of the internet versus hard copies. This will result in a savings to the industry of $54.7 million each year, 2019 through 2023. This is due to a reduction in printing and mailing costs
Preclusion List Requirements for Prescribers in Part D and Individuals and Entities in MA, Cost Plans, and PACEFor 2019, this provision saves providers $34.4 million. For 2020 and future years, there are no savings. The $34.4 million in savings to providers arises because of removal of the requirement of MA providers and suppliers and Part D prescribers to enroll in Medicare as a prerequisite for furnishing health care items and services. Part C providers and suppliers save $24.1 million in reduced costs while Part D providers save $10.3 million in reduced costsFor 2019, this provision costs Part D sponsors or their PBMs $9.3 million. For 2020 and future years, costs are negligible (below $50,000). The $9.3 million cost arises because of programming and staff resources needed to produce and send required notifications to enrollees and prescribers.
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Physician Incentive Plans—Update Stop-Loss Protection RequirementsFor 2019, this provision reduces required reinsurance resources by $204.6 million. The $204.6 million savings increases yearly because of expected enrollment increases and medical inflation; the savings is $281.8 million in 2023. The savings arise because we are replacing the current insurance schedule in the regulation with updated stop-loss insurance requirements that will allow insurance with higher deductibles. This updated schedule will result in a significant reduction to the cost of obtaining stop-loss insurance. The higher deductibles are consistent with the increase in medical costs due to inflation. Through transfers, the 2019 $204.6 million savings results in $71.6 savings to the Medicare Trust Fund and $133 million savings (in the form of rebates) to Medicare Advantage (MA) organizations. It is likely that some of the savings to MA organizations will result in increased health care benefits to MA enrollees

B. Background

In the proposed rule 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” which appeared in the November 28, 2017 Federal Register (82 FR 56336), we proposed to revise the Medicare Advantage program (Part C) regulations and Prescription Drug Benefit program (Part D) regulations to implement certain provisions of the Comprehensive Addiction and Recovery Act (CARA) and the 21st Century Cures Act; improve program quality, accessibility, and affordability; improve the CMS customer experience; address program integrity policies related to payments based on prescriber, provider and supplier status in Medicare Advantage, Medicare cost plan, Medicare Part D and the PACE programs; provide a proposed update to the official Medicare Part D electronic prescribing standards; clarify program requirements; and make certain technical changes regarding treatment of Medicare Part A and Part B appeal rights related to premium adjustments.

We received approximately 1,669 timely pieces of correspondence containing multiple comments on the CY 2019 proposed rule. While we are finalizing several of the provisions from the proposed rule, there are a number of provisions from the proposed rule that we intend to address later and a few that we do not intend to finalize. We also note that some of the public comments were outside of the scope of the proposed rule. These out-of-scope public comments are not addressed in this final rule. Summaries of the public comments that are within the scope of the proposed rule and our responses to those public comments are set forth in the various sections of this final rule under the appropriate heading. However, we note that in this final rule we are not addressing comments received with respect to the provisions of the proposed rule that we are not finalizing at this time. Rather, we will address them at a later time, in a subsequent rulemaking document, as appropriate.

II. Provisions of the Proposed Rule and Analysis of and Responses to Public Comments

A. Supporting Innovative Approaches to Improving Quality, Accessibility, and Affordability

1. Implementation of the Comprehensive Addiction and Recovery Act of 2016 (CARA) Provisions

a. Medicare Part D Drug Management Programs

The Comprehensive Addiction and Recovery Act of 2016 (CARA), enacted into law on July 22, 2016, amended the Social Security Act and includes new authority for the establishment of drug management programs in Medicare Part D, effective on or after January 1, 2019. In accordance with section 704(g)(3) of CARA and revised section 1860D-4(c) of the Act, CMS must establish through notice and comment rulemaking a framework under which Part D plan sponsors may establish a drug management program for beneficiaries at-risk for prescription drug abuse, or “at-risk beneficiaries.” Under such a Part D drug management program, sponsors may limit at-risk beneficiaries' access to coverage of controlled substances that CMS determines are “frequently abused drugs” to a selected prescriber(s) and/or pharmacy(ies). While such programs, commonly referred to as “lock-in programs,” have been a feature of many state Medicaid programs for some time, prior to the enactment of CARA, there was no statutory authority to allow Part D plan sponsors to require beneficiaries to obtain controlled substances from a certain pharmacy or prescriber in the Medicare Part D program. Thus, although drug management programs are voluntary, this rule codifies a framework that will place requirements upon such programs when established by Part D sponsors.

This final rule implements the CARA Part D drug management program provisions by integrating them with the current Part D Opioid Drug Utilization Review (DUR) Policy and Overutilization Monitoring System (OMS) (“current policy”).[1] This integration will mean that Part D plan sponsors implementing a drug management program could limit an at-risk beneficiary's access to coverage of frequently abused drugs beginning 2019 through a beneficiary-specific point-of-sale (POS) claim edit and/or by requiring the beneficiary to obtain frequently abused drugs from a selected Start Printed Page 16443pharmacy(ies) and/or prescriber(s) after case management and notice to the beneficiary. To do so, the beneficiary will have to meet clinical guidelines that factor in that the beneficiary is taking opioids over a sustained time period and that the beneficiary is obtaining them from multiple prescribers and/or multiple pharmacies. This final rule also implements a limitation on the use of the special enrollment period (SEP) for low income subsidy (LIS)-eligible beneficiaries who are identified as potential at-risk beneficiaries or at-risk beneficiaries.

We received the following general comments and our responses follow:

Comment: Commenters were overall supportive of our proposal. Some commenters found it to be a conservative and uniform approach to implementing the CARA drug management program provisions. Other commenters included specific suggestions for improvements with their overall supportive or neutral comments.

Response: We thank the commenters for their comments. We summarize and respond to specific recommendations later in this preamble.

Comment: We received a request that we confirm that nothing in the final rule impacts PACE organizations' waivers of Part D requirements in § 423.153. This commenter also asked that existing waivers of § 423.153 be extended to include § 423.153(f) unless such a waiver is not needed due to the voluntary nature of drug management programs.

Response: PACE organizations are not excluded from OMS reporting under the current policy. Additionally, because of the voluntary nature of the provisions under § 423.153(f), a waiver is not necessary for PACE organizations. However, to the extent that PACE organizations commence drug utilization management activities covered under § 423.153(f), PACE organizations must comply with the requirements of 423.153(f).

Comment: We received comments that expressed concern about the time needed for Part D plan sponsors to make the necessary systems changes to implement compliant drug management programs.

Response: Section 704(g)(1) of CARA states that the amendments made by this section shall apply to prescription drug plans (and MA-PD plans) for plan years beginning on or after January 1, 2019. However, given the current national opioid epidemic, we expect that Part D sponsors will diligently implement fully-functional drug management programs in 2019. Moreover, as the new requirements for drug management programs build from and are integrated with existing policy, we expect sponsors will be able to implement them expeditiously.

Comment: We received one suggestion that CMS pilot different approaches for implementing the CARA drug management program provisions, specifically the “lock-in” provisions, as we did before implementing our current policy.

Response: Because the CARA drug management provisions will be integrated with our current policy, albeit with some modifications to that policy, we are not persuaded that an additional pilot is necessary since plan sponsors already have experience with addressing potential opioid overutilization.

Comment: A commenter requested that CMS acknowledge the work it will take for Standard Development Organizations (SDOs) to implement the finalized CARA provisions. In particular, the commenter noted that development of any codes and messaging associated with the new CARA-related requirements will take time to implement.

Response: We understand that any modifications to existing standards to accurately achieve the desired functionalities to further the electronic exchange of information between healthcare stakeholders about the final CARA provisions may require time. We rely on SDOs to coordinate these efforts, and CMS is committed to working with the SDOs during this process, if needed.

Comment: A commenter requested clarification on how to handle concurrent DUR edits, such as formulary-level cumulative opioid MME safety edits, and the drug management program. Specifically, the comment sought clarification on whether the drug management program beneficiary-specific POS claim edits or lock-in limitations would take precedence over an approved exception to a cumulative opioid MME safety edit.

Response: A plan sponsor may implement formulary-level coverage rules for opioids (that is, prior authorization, quantity limits or step therapy) or safety edits, and implement a drug management program. The formulary and coverage rules would apply to all enrollees (unless they obtain an exception), and the drug management program would apply to potential at-risk and at-risk beneficiaries. A Part D sponsor's concurrent and retrospective DUR programs should be closely coordinated. In certain circumstances, it may be appropriate for a sponsor to make an at-risk determination through the drug management program for a beneficiary who received an approved exception to a cumulative opioid MME safety edit, and as part of the at-risk determination, may determine that continuing the approved exception is no longer appropriate.

For example, a plan implemented a hard formulary-level cumulative MME opioid edit at 200 MME with 2 or more opioid prescribers. A beneficiary received their opioids from 2 prescribers and has a cumulative MME that exceeds 200 MME. They trigger the edit and request a coverage determination. The prescriber attests to medical necessity and the exception request is approved. At a later time, the beneficiary seeks opioids from 3 additional prescribers, and meets the CARA/OMS criteria. Through case management, the prescriber verifies the beneficiary is at-risk and agrees to prescriber lock-in due to care coordination issues.

b. Integration of CARA and the Current Part D Opioid DUR Policy and OMS

Our proposal was to integrate the CARA Part D drug management program provisions with our current policy and codify them both. Specifically, under this regulatory framework, we proposed that Part D plan sponsors may voluntarily adopt drug management programs through which they address potential overutilization of frequently abused drugs identified retrospectively through the application of clinical guidelines/OMS criteria that identify potential at-risk beneficiaries and conduct case management which incorporates clinical contact and prescriber verification that a beneficiary is an at-risk beneficiary. If deemed necessary, a sponsor could limit at-risk beneficiaries' access to coverage for such drugs through pharmacy lock-in, prescriber lock-in, and/or a beneficiary-specific point-of-sale (POS) claim edit. Finally, sponsors would report to CMS the status and results of their case management through OMS and any beneficiary coverage limitations they have implemented through MARx, CMS' system for payment and enrollment transactions. Thus, although drug management programs are voluntary, our proposal was to codify a framework that will place requirements upon such programs when established by Part D sponsors.

We stated that we foresee that all plan sponsors will implement such drug management programs based on our experience that all plan sponsors are complying with the current policy; the fact that our proposal largely incorporates the CARA drug management provisions into existing Start Printed Page 16444CMS and sponsor operations; and especially, in light of the national opioid epidemic and the declaration that the opioid crisis is a nationwide Public Health Emergency.

Comment: Commenters expressed strong support for integrating the drug management program provisions of CARA with the current policy. Commenters expressed that our proposal is reasonable, thoughtful, thorough, practical, and comprehensive; that it builds on a successful existing Medicare Part D program; that it will involve a common set of procedures and help ensure a streamlined and efficient process rather than creating a separate one that would require additional oversight and add administrative burden. We did not receive comments that opposed integrating the drug management program provisions of CARA with the current policy.

Response: We thank the commenters for their supportive comments and are finalizing this integration approach to our proposal.

(1) Requirements for Part D Drug Management Programs (§§ 423.100 and 423.153)

We proposed the following definitions in establishing requirements for Part D drug management programs.

(i) Definitions (§ 423.100)

(A) Definition of “Potential At-Risk Beneficiary” and “At-Risk Beneficiary” (§ 423.100)

Section 1860D-4(c)(5)(C) of the Act contains a definition for “at-risk beneficiary” that we proposed to codify at § 423.100. In addition, although the section 1860D-4(c)(5) of the Act does not explicitly define a “potential at-risk beneficiary,” it refers to a beneficiary who is potentially at-risk in several subsections.

Accordingly, we proposed to define these two terms at § 423.100 as follows: Potential at-risk beneficiary means a Part D eligible individual—(1) Who is identified using clinical guidelines (as defined in § 423.100); or (2) With respect to whom a Part D plan sponsor receives a notice upon the beneficiary's enrollment in such sponsor's plan that the beneficiary was identified as a potential at-risk beneficiary (as defined in paragraph (1) of this definition) under the prescription drug plan in which the beneficiary was most recently enrolled, such identification had not been terminated upon disenrollment, and the new plan has adopted the identification.

At-risk beneficiary means a Part D eligible individual—(1) who is—(i) Identified using clinical guidelines (as defined in § 423.100); (ii) Not an exempted beneficiary; and (iii) Determined to be at-risk for misuse or abuse of such frequently abused drugs under a Part D plan sponsor's drug management program in accordance with the requirements of § 423.153(f); or (2) With respect to whom a Part D plan sponsor receives a notice upon the beneficiary's enrollment in such sponsor's plan that the beneficiary was identified as an at-risk beneficiary (as defined in paragraph (1) of this definition) under the prescription drug plan in which the beneficiary was most recently enrolled, such identification had not been terminated upon disenrollment, and the new plan has adopted the identification. We noted that we included the phrase, “and the new plan has adopted the identification” to both definitions for cases where a beneficiary has been identified as a potential at-risk or at-risk beneficiary by the immediately prior plan to indicate that the beneficiary's status in the subsequent plan is not automatic.

We received the following comments and our response follows:

Comment: A commenter did not believe that a definition for a “potential at-risk beneficiary” was needed, nor the additional prescriber verification the commenter associated with the definition.

Response: We disagree. Although as we noted above, section 1860D-4(c)(5) of the Act does not explicitly define a “potential at-risk beneficiary,” it refers to a beneficiary who is potentially at-risk in section 1860D-4(c)(5)(B)(ii), which addresses initial notices; in 1860D-4(c)(5)(H)(i) which addresses data disclosures; and in section 1860D-4(c)(5)(I) which addresses the sharing of information for subsequent plan enrollments. Therefore, we proposed to define a potential at-risk beneficiary in § 423.100, as the CARA drug management program provisions clearly contemplate this status for a beneficiary.

With respect to additional prescriber verification of a potential at-risk beneficiary, we believe this comment is based on a misunderstanding of our proposal, as we did not propose that a beneficiary's status as a potential at-risk beneficiary must be verified. Rather, we proposed and are finalizing a requirement, as we discuss later in this preamble, that a prescriber must verify that a beneficiary is at-risk, which serves as his or her professional opinion that a Part D plan sponsor takes into account during case management.

Comment: We received a question whether an individual who is subject to lock-in under his or her Medicaid program and then becomes dually-eligible constitutes a potential or at-risk beneficiary under our proposed definitions.

Response: Such a beneficiary would not automatically be considered to be a potential at-risk or an at-risk beneficiary under a Part D sponsor's drug management program. Rather, whether such a beneficiary is a potential at-risk or at-risk beneficiary would depend upon whether he or she meets the clinical guidelines and is determined to be an at-risk beneficiary under the process set forth in this rule. An automatic determination based on a beneficiary's inclusion and status in a Medicaid drug management program would not be appropriate because each Medicaid drug management program has its own criteria and requirements for reviewing and addressing recipients who may be at-risk for prescription drug abuse or misuse and its own interventions. We also note that Medicaid programs are not required to comply with section 1860D-4(c)(5) as Part D drug management programs are.

To the extent a Part D sponsor is aware or discovers based on reliable information that a beneficiary who meets the clinical guidelines was locked-in under a Medicaid drug management program, that sponsor may consider that information in deciding whether to determine that a beneficiary is an at-risk beneficiary under the requirements of this final rule. Also, any beneficiary entering the Part D program will be immediately subject to their plan's formulary-level controls to address opioid overutilization before they may be identified as potentially at-risk, so any opioid overutilization by the beneficiary in his or her new Part D plan may be addressed by these controls.

Comment: We received a comment requesting clarification with regard to a person who is locked-in under an employer plan and then becomes eligible for a Part D EGWP, if the EGWP can continue the lock-in in the Part D plan or at least consider the prior lock-in as part of a new determination.

Response: Beginning with plan year 2019, Part D sponsors, including sponsors of EGWPs, may adopt drug management programs that meet the requirements we are finalizing in this rule. Under a Part D prescription drug management program, sponsors may implement a prescriber and/or pharmacy lock-in or beneficiary-specific POS claim edit for frequently abused drugs with respect to an at-risk beneficiary. Similar to a Medicaid beneficiary who becomes newly eligible for Medicare and enrolls in Part D, a person who is locked-in under a Start Printed Page 16445commercial plan does not automatically meet the definition of an at-risk beneficiary we are finalizing in § 423.100. Rather, such a person first must be determined to be an at-risk beneficiary in accordance with the requirements we are finalizing at § 423.153(f).

In other words, in order for a beneficiary to be eligible to be immediately locked-in to a prescriber or pharmacy in a Part D plan in which they are newly enrolled, the plan from which they most recently disenrolled must be a Part D plan in which he or she was determined to be an at-risk beneficiary under that plan's drug management program. When a new enrollee comes from a non-Part D plan in which the beneficiary was subject to lock-in, however, the sponsor can consider the prior lock-in if it learns or knows of it based upon reliable information which is legally available to the sponsor in conjunction with the information it gathers from the case management process, the beneficiary, and the sponsor's other relevant internal sources and data.

Comment: A commenter asked if a Part D sponsor may consider opioid utilization information from external sources during case management, such as a state prescription drug monitoring program (PDMP) in making the determination if a beneficiary is at-risk.

Response: As noted above with respect to beneficiaries who were locked-in under an employer or Medicaid plan before enrolling in Medicare Part D, we encourage sponsors to use all reliable sources legally available to them to obtain an accurate account of a potential at-risk or at-risk beneficiary's utilization of frequently abused drugs.

After considering the comments, we are finalizing the definition of potential at-risk beneficiary and at-risk beneficiary with minor modifications for clarity. First, we are removing the phrase “and the new plan adopted the identification” from paragraph (2) of both definitions. As we noted above, the purpose of this language was to indicate that the beneficiary's at-risk status in the subsequent plan is not automatic, which we meant for purposes of the limitation on the special enrollment period (SEP) for LIS beneficiaries with an at-risk status. However, as we discuss later in this preamble, this limitation will be triggered or continued by Part D sponsors sending the initial and second notices to such beneficiaries, as applicable, so we no longer believe this phrase is necessary in these definitions.

Second, we also are making a minor clarifying change in the definition of at-risk beneficiary to explicitly acknowledge that it is the Part D sponsor that determines which beneficiaries are at-risk beneficiaries under its drug management program.

The definition of potential at-risk beneficiary will read: A Part D eligible individual—(1) Who is identified using clinical guidelines (as defined in § 423.100); or (2) With respect to whom a Part D plan sponsor receives a notice upon the beneficiary's enrollment in such sponsor's plan that the beneficiary was identified as a potential at-risk beneficiary (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. The definition of at-risk beneficiary will read: At-risk beneficiary means a Part D eligible individual—(1) Who is—(i) Identified using clinical guidelines (as defined in § 423.100); (ii) Not an exempted beneficiary; and (iii) Determined to be at-risk for misuse or abuse of such frequently abused drugs by a Part D plan sponsor under its drug management program in accordance with the requirements of § 423.153(f); or (2) With respect to whom a Part D plan sponsor receives a notice upon the beneficiary's enrollment in such sponsor's plan that the beneficiary was identified as an at-risk beneficiary (as defined in the 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.

(B) Definition of “Frequently Abused Drug”, “Clinical Guidelines”, “Program Size”, and “Exempted Beneficiary” (§ 423.100)

Because we use these terms in the proposed definitions of “potential at-risk beneficiary” and “at-risk beneficiary,” we proposed to define “frequently abused drug”, “clinical guidelines”, “program size”, and “exempted beneficiary” at § 423.100 as follows:

• Frequently Abused Drug

Section 1860D-4(c)(5)(G) of the Act defines “frequently abused drug” as a drug that is a controlled substance that the Secretary determines to be frequently abused or diverted. Consistent with the statutory definition, we proposed to define “Frequently abused drug” at § 423.100 to mean a controlled substance under the Federal Controlled Substances Act that the Secretary determines is frequently abused or diverted, taking into account the following factors: (1) The drug's schedule designation by the Drug Enforcement Administration; (2) Government or professional guidelines that address that a drug is frequently abused or misused; and (3) An analysis of Medicare or other drug utilization or scientific data. This definition is intended to provide enough specificity for stakeholders to know how the Secretary will determine a frequently abused drug, while preserving flexibility to update which drugs CMS considers to be frequently abused drugs based on relevant factors, such as actions by the Drug Enforcement Administration and/or trends observed in Medicare or scientific data. Since we did not receive any specific comments to change this definition, we are finalizing it as proposed.

Comment: A commenter requested that CMS include the criteria, resources, and the evidence basis upon which it will rely to determine that a drug is a frequently abused drug for purposes of a drug management program.

Response: The definition of frequently abused drug that we are finalizing indicates that criteria, resources, and evidence basis will be the DEA schedule designation, government, and professional drug guidelines, and analyses of drug utilization or scientific data.

We did not receive any further comment on the definition of “frequently abused drug” and are therefore finalizing it as proposed.

Consistent with current policy, we proposed that opioids are frequently abused drugs, except buprenorphine for medication-assisted treatment (MAT) and injectables. As we stated in the preamble to the proposed rule, we plan to publish and update a list of frequently abused drugs for purposes of Part D drug management programs.

Comment: All commenters agreed that the Secretary should determine that opioids are frequently abused drugs, many referencing the national opioid overuse epidemic.

Response: We appreciate that stakeholders are focused on the opioid public health emergency.

Comment: Some of these commenters agreed with our proposal to determine only opioids, except buprenorphine for medication-assisted treatment (MAT) and injectables, as frequently abused drugs, at least in the initial implementation of Part D drug management programs, in order to allow CMS and stakeholders to focus on opioid overuse and gain experience with the use of lock-in as a tool to address overutilization in the Part D program, before potentially determining other controlled substances as Start Printed Page 16446frequently abused drugs. These commenters urged CMS to wait until drug management programs were established, and testing and monitoring indicate that the program can be administered in a manner that does not limit beneficiary access to needed medications before expanding the programs further. Some of these commenters were concerned that an at-risk beneficiary would have to obtain all frequently abused drugs from one pharmacy or one prescriber and that this could disrupt patient care if the pharmacy did not carry all frequently abused drugs.

However, some commenters urged us to determine that all controlled substances are frequently abused drugs. These commenters were particularly focused on a determination as to benzodiazepines, and to a lesser extent, muscle relaxants. Due to this focus, these commenters referred to the CDC Guideline that specifically recommends that clinicians avoid prescribing opioid pain medication and benzodiazepines concurrently whenever possible due to increased risk for overdose. They also referred to CMS work in this area: (1) The fact that CMS added a concurrent benzodiazepine-opioid flag to OMS in October 2016 in response to the CDC Guideline and after our own research on the use of benzodiazepines among Medicare beneficiaries [2] to alert Part D sponsors that concurrent use may be an issue that should be addressed during case management; [3] and (2) the fact that we have stated that a sponsor may implement a beneficiary-specific claim edit at POS for non-opioid medications under the current policy.[4] They further referred to a statistic from the National Institute on Drug Abuse that 30 percent of overdoses involving opioids also involve benzodiazepines.[5] Finally, these commenters pointed out that the FDA has found that the growing combined use of opioid medicines with benzodiazepines or other drugs that depress the central nervous system has resulted in serious side effects, including slowed or difficult breathing and deaths. These commenters further noted that in an effort to decrease the use of opioids and benzodiazepines, and opioids and other such depressants, the FDA added Boxed Warnings— its strongest warnings—to the drug labeling of prescription opioid pain and cough medicines, and benzodiazepines.[6] Given these developments, these commenters stressed the importance of Part D plan sponsors being able to use the tools that will be available to them under drug management programs to address the dangers of concurrent opioid and benzodiazepine use.

Response: In light of these comments, we are persuaded that it is appropriate that drug management programs are able to address concurrent opioid and benzodiazepine use. Such a determination is consistent with the definition of frequently abused drugs that we are finalizing. First, the Secretary determines benzodiazepines are frequently abused or diverted, taking into account that they are controlled substances under the Controlled Substances Act (CSA) and that prescription benzodiazepines are on Schedule IV, where the DEA places substances that have a potential for abuse. In addition, the Secretary takes into account that the FDA has issued a warning about the risks associated with using opioids and benzodiazepines concurrently. Further, the CDC included in its evidence-based opioid prescribing guideline a caution to co-prescribe opioids and benzodiazepines. Finally, CMS' own statistics reveal that 51 percent of Part D beneficiaries that will be identified as potentially at-risk under the 2019 clinical guidelines we are finalizing are using opioids and benzodiazepines concurrently compared to 24 percent across all Part D opioid users. This statistic is indicative that concurrent use is even more of a danger among potential at-risk beneficiaries than Medicare Part D beneficiaries generally. Therefore, the Secretary determines that benzodiazepines are a frequently abused drug for purposes of Part D drug management programs beginning in 2019. However, the clinical guidelines will still only consider a beneficiary's opioid use, as we explain just below.

Comment: A commenter agreed with our statement in the proposed rule that there is difficulty in establishing overuse guidelines for non-opioid substances. The commenter stated that this underscores the need for a robust evidence base to support determining that additional types of drugs are frequently abused drugs.

Response: We agree with the commenter's concern, and for this reason we are not modifying the clinical guidelines for 2019 to include benzodiazepine use, even though benzodiazepines will be considered a frequently abused drug for 2019. This means that a beneficiary who is determined to be at-risk based on clinical guidelines that look at the beneficiary's opioid use could have a coverage limitation applied under a drug management program to both opioids and benzodiazepines to manage current and future concurrent use. For example, a sponsor could require an at-risk beneficiary to obtain both opioids and benzodiazepines from one selected pharmacy.

We believe that this is appropriate based on the robust evidence that concurrent benzodiazepine use with opioids results in an even higher risk of an adverse health event than use of opioids alone. We will expect to rarely see a sponsor apply a limitation only to an at-risk beneficiary's access to coverage for benzodiazepines, since to do so, the beneficiary would have to have met the clinical guidelines which look at opioid use that is potentially risky. However, we acknowledge that prescriber agreement during case management could rarely lead to such an outcome. For example, no opioid prescriber agrees to a beneficiary-specific POS claim edit for opioids, but rather, all but one states they will no longer prescriber opioids to coordinate the beneficiary's use. However, the benzodiazepine prescriber agrees to such an edit for benzodiazepines. We discuss prescriber agreement in more detail later in this preamble.

Given that we are finalizing two categories of drugs as frequently abused drugs for 2019, depending upon what a plan sponsor learns during case management, we reiterate that the sponsor may have to permit a beneficiary to obtain frequently abused drugs from more than one pharmacy and/or more than one prescriber in order to provide reasonable access, if the sponsor applies lock-in as a coverage limitation, which we discuss later in this preamble.

Comment: A few commenters suggested that Part D sponsors be able to expand their drug management programs to include additional frequently abused drugs based on their experience with their enrollees. One suggested that a sponsor be required to submit such an expansion to CMS for approval.

Response: We disagree with this comment. Section 1860D-4(c)(5)(G) of the Act defines “frequently abused Start Printed Page 16447drug” as a drug that is a controlled substance that the Secretary determines to be frequently abused or diverted. Consistent with this statutory provision, we believe it is appropriate that the determination of frequently abused drugs not be plan-specific, but rather be consistent across Part D plans, as this will permit better oversight and promote consistency across all Part D drug management programs.

We proposed that future determinations of frequently abused drugs by the Secretary primarily be included in the annual Medicare Parts C&D Call Letter or in similar guidance, if necessary, to address midyear entries to the drug market or evolving government or professional guidelines or relevant data analysis, which will be subject to public comment. We proposed that this approach would be consistent with our approach under the current policy and necessary for Part D drug management programs to be responsive to changing public health issues over time.

Comment: We received comments supportive of our proposal to apply the standards we are establishing in rulemaking to future determinations of frequently abused drugs through the annual Medicare Parts C&D Call Letter, or in similar guidance. We did not receive any comments that opposed this proposed approach.

Response: We appreciate the comments.

Comment: A commenter asked us to confirm that we would use the same process to determine that a drug is no longer a frequently abused drug.

Response: We will apply the same regulatory standards and use the same process that we use to determine that a drug is a frequently abused drug when determining that a drug no longer is a frequently abused drug for purposes of Part D drug management programs.

Comment: A few commenters urged CMS to exclude abuse-deterrent (AD) opioids from this definition of “frequently abused drug” as there is no evidentiary data to support the thesis that AD opioids are frequently abused and existing observation data supports their exclusion from this broad standard.

Response: The FDA requires a boxed warning on opioid abuse-deterrent formulations (ADFs), because even with these formulations there is still potential for addiction, abuse, misuse, and diversion. The FDA has also noted [7] that “abuse-deterrent technologies have not yet proven successful at deterring the most common form of abuse—swallowing a number of intact capsules or tablets to achieve a feeling of euphoria. Moreover, the fact that a product has abuse-deterrent properties does not mean that there is no risk of abuse. It means, rather, that the risk of abuse is lower than it would be without such properties.” Also, ADFs do not prevent patients who may be using opioids for therapeutic reasons from taking higher doses than prescribed or diverting the opioid. For these reasons, we disagree that abuse-deterrent formulations should be excluded from the determination of frequently abused drugs.

Comment: A few commenters asked CMS to clarify whether methadone, a Part D drug when indicated for pain, would be included in the definition of a frequently abused drug under the drug management program. Other commenters agreed with excluding buprenorphine for MAT from the definition of frequently abused drug as not to limit patient access to treatment and noted that removing buprenorphine as a frequently abused drug is consistent with the CDC's approach to exclude buprenorphine from the determination of a person's daily opioid MME.

Response: Yes, methadone for pain is included in the definition of a frequently abused drug for purposes of Part D drug management programs, consistent with current policy/OMS. Although buprenorphine is recognized by the DEA as a drug of abuse, we thank the commenters that agreed with excluding buprenorphine for MAT from the definition of frequently abused drug so that access to MAT, such as buprenorphine, is not impacted. However, the commenters' reference to the CDC's exclusion of buprenorphine from the determination of a person's daily opioid MME made us believe that commenters may be conflating the definition of a frequently abused drug with the clinical guidelines and associated opioid dosage thresholds. Therefore, we realize that we need to be more specific about what opioid use, opioid prescribers, and opioid dispensing pharmacies means in the clinical guidelines, which we also discuss later.

Since the publication of the proposed rule, the CDC removed the conversion factors for all formulations of buprenorphine, for pain and for MAT, from the most recent CDC MME conversion factor file (https://www.cdc.gov/​drugoverdose/​data-files/​CDC_​Oral_​Morphine_​Milligram_​Equivalents_​Sept_​2017.xlsx). Therefore, CMS cannot determine the MME. As such, buprenorphine products are not used to determine the beneficiary's average daily MME. However, we will still use prescription opioids, including all formulations of buprenorphine for pain and MAT, to determine opioid prescribers and opioid dispensing pharmacies in the clinical guidelines.

• Clinical Guidelines & Program Size

Section 1860D-4(c)(5)(C)(i)(I) of the Act requires at-risk beneficiaries to be identified using clinical guidelines that indicate misuse or abuse of frequently abused drugs and that are developed by the Secretary in consultation with stakeholders. We proposed to include a definition of “clinical guidelines” that cross references standards that we proposed at § 423.153(f) for how the guidelines will be established and updated. Specifically, we proposed to define clinical guidelines for purposes of a Part D drug management program in § 423.100 as criteria to identify potential at-risk beneficiaries who may be determined to be at-risk beneficiaries under such programs, and that are developed in accordance with the standards in § 423.153(f)(16) and beginning with contract year 2020, will be published in guidance annually.

We also proposed to add § 423.153(f)(16) to state that potential at-risk beneficiaries and at-risk beneficiaries are identified by CMS or a Part D sponsor using clinical guidelines that: (1) Are developed with stakeholder consultation; (2) Are based on the acquisition of frequently abused drugs from multiple prescribers, multiple pharmacies, the level of frequently abused drugs, or any combination of these factors; (3) Are derived from expert opinion and an analysis of Medicare data; and (4) Include a program size estimate. This proposed approach to developing and updating the clinical guidelines is intended to provide enough specificity for stakeholders to know how CMS will determine the guidelines by identifying the standards we will apply in determining them.

This proposed approach also indicated that the program size will be determined as part of the process to develop the clinical guidelines—a process into which stakeholders will provide input. Section 1860D-4(c)(5)(C)(iii) of the Act states that the Secretary shall establish policies, including the guidelines and exemptions, to ensure that the population of enrollees in drug management programs could be effectively managed by plans. We proposed to define “program size” in Start Printed Page 16448§ 423.100 to mean the estimated population of potential at-risk beneficiaries in drug management programs (described in § 423.153(f)) operated by Part D plan sponsors that the Secretary determines, as part of the process to develop clinical guidelines, can be effectively managed by such sponsors.

Comment: We did not receive any specific comments about the definition we proposed for clinical guidelines in § 423.100, nor the standards we proposed in § 423.153(f)(16).

Response: We are therefore finalizing the definition and standards as proposed, with one modification adding language so that the guidelines will be published in guidance annually beginning with contract year 2020 guidance, since we are publishing the 2019 clinical guidelines in this final rule.

Comment: We received comments supportive of our proposal to apply the standards we are establishing in rulemaking for clinical guidelines in § 423.153(f)(16) to develop future OMS criteria through the annual Medicare Parts C&D Call Letter process beginning with plan year 2020.

We did not receive comments that specifically opposed this proposed approach.

Response: We appreciate these comments.

Because Part D drug management programs will be integrated with the current policy/OMS beginning in 2019, there will be no separate OMS criteria in 2019 and beyond. For plan year 2019, we proposed the clinical guidelines to be the OMS criteria established for plan year 2018. The clinical guidelines for use in drug management programs we proposed for 2019 are: Use of opioids with an average daily MME greater than or equal to 90 mg for any duration during the most recent 6 months and either: 4 or more opioid prescribers and 4 or more opioid dispensing pharmacies OR 6 or more opioid prescribers, regardless of the number of opioid dispensing pharmacies.

We estimated that these criteria would identify approximately 33,053 potential at-risk beneficiaries in the Part D program based on 2015 data, whom we believe are at the highest risk of death or overdose due to their opioid use. Also, under our proposal, we stated that Part D plan sponsors will not be able to vary the criteria of the guidelines to include more or fewer beneficiaries in their drug management programs, as they may under the current policy, except that we proposed to continue to permit plan sponsors to apply the criteria more frequently than CMS will apply them through OMS in 2018, which can result in sponsors identifying beneficiaries earlier. This is because CMS evaluates enrollees quarterly using a 6-month look back period, whereas sponsors may evaluate enrollees more frequently (for example, monthly).

We also described other clinical guidelines that we considered in the Regulatory Impact Analysis section of the proposed rule. Stakeholders were invited to comment on those options and any others that would identify more or fewer potential at-risk beneficiaries.

Comment: We received comments that were overall supportive of the clinical guidelines/criteria we proposed for 2019 with the estimated program size of 33,053. However we did receive a few comments suggesting criteria for the clinical guidelines that were not among the alternate options we included in the RIA. Some of these supportive comments supported the guidelines without reservation, making statements such as noting the guidelines align with the CDC Guideline or that they understood or supported CMS' desire to gain experience with the use of lock-in as a drug management tool before adopting clinical guidelines with flexibility and/or that would identify more potential at-risk beneficiaries. These commenters want CMS to adopt a clear and universal set of guidelines which minimizes customer and provider confusion, as well as administrative burden when submitting and receiving OMS quarterly reports. These commenters assert that voluntary plan guidelines would increase confusion and fragmentation across the Medicare landscape. However, some commenters urged that Part D plan sponsors should have complete flexibility to identify potential at-risk beneficiaries, or at least some flexibility to identify additional ones consistent with our current policy. These commenters emphasized that sponsors should be able to establish and update targeting criteria and program features based on evolving clinical evidence and feedback and the specific needs of their members. Some of these commenters referred to the experience Part D sponsors and their PBMs have gained in identifying opioid overutilization among their plan members over the last several years and the need to be able to do more to address the opioid overuse crisis. Some commenters referred in particular to beneficiaries who do not have an average daily MME of greater or equal to 90 mg but who are filling opioids prescriptions from many different prescribers or pharmacies that they may currently address but would not be able to under our proposal. These commenters pointed out that such beneficiaries benefit from better coordination of care, which case management and coverage limitations on frequently abused drugs can support. Another commenter referred to beneficiaries with high dose utilization regardless of the number of prescribers as appropriate for review by drug management programs.

As to program size, a commenter stated that the proposed clinical guidelines would identify a reasonable number of potential at-risk beneficiaries. Another commenter proposed alternative criteria involving a lower MME level that it stated would identify more than 300,000 Part D beneficiaries as potentially at-risk, whereas the other commenters (including those commenters that requested increased flexibility) did not provide a program size estimate. On the other hand, we did not receive comments that the clinical guidelines we proposed would identify a potential at-risk beneficiary population that cannot be effectively managed by Part D plan sponsors, and because the proposed guidelines are the same as the OMS criteria for 2018 that were established through the 2018 Parts C&D Call Letter process, we did not expect such comments.

We received a few comments that the proposed clinical guidelines appear to be aimed at primarily limiting the program size arbitrarily rather than permitting scientific evidence and clinical research to dictate the most appropriate guidelines.

Response: We appreciate the commenters that provided a specific suggestion for criteria; however, these criteria were not among the alternate options we included in the RIA. Therefore, we decline to adopt these suggestions, as the clinical guidelines are to be developed by the Secretary in consultation with stakeholders.

We were persuaded by the commenters that Part D sponsors should have some flexibility in adopting targeting criteria for potential at-risk beneficiaries in order to be able to identify more such beneficiaries, which in turn enables sponsors to be able to do more to address the opioid overuse public health emergency. In addition, flexibility in adopting targeting criteria for potential at-risk beneficiaries is consistent with the current policy, and we wish to be more conservative in varying from that policy for the same reasons. However, we still believe it prudent to place certain parameters around the beneficiaries who may be identified as potentially at-risk by sponsors for their drug management programs, particularly as we gain Start Printed Page 16449experience with the use of lock-in as a drug management tool.

Given that no other commenter recommended a specific program size, there is no discernible consensus that a population of more than 300,000 would be manageable for Part D sponsors. We therefore decline to adopt these criteria as the clinical guidelines for that reason, and also because we want sponsors to focus on the Part D population that is at the highest risk. Also, as we noted previously, the statute requires us to establish policies to ensure that the populations of enrollees in a prescription drug management program can be effectively managed by plans. Therefore, we disagree that the clinical guidelines arbitrarily limit the size of these programs.

After publication of the proposed rule, we conducted an analysis of the clinical guidelines/OMS criteria for 2019 that we proposed using 2017 PDE data, as the original estimates were based on 2015 data. We were pleased to confirm that the current policy, which will be integrated into Part D drug management programs, continues to make substantial progress in reducing potential opioid overutilization in the Part D program. The reduction in the number of beneficiaries meeting the OMS criteria between 2015 and 2017 far outpaced previous trends. We thank the Part D sponsors that have executed the current policy, the providers who have participated, and the various stakeholders who have provided helpful input over the years.

According to this analysis, the 2019 clinical guidelines/OMS criteria we proposed would identify an estimated 11,753 potential at-risk beneficiaries rather than the 33,053 we originally estimated. Given the incremental approach we have taken with the current policy over the years since its inception, this revised estimate provides an opportunity to adjust the clinical guidelines/OMS criteria downward in terms of prescriber and pharmacy thresholds which will incorporate more potential at-risk beneficiaries in 2019.

Therefore, after considering the comments and this updated data, we are doing two things with respect to our clinical guidelines proposal, which we will identify a similar program size as the one we proposed, as well as strike a balance between those commenters wanting complete flexibility to adopt criteria to identify potential at-risk beneficiaries and those urging no flexibility. First, we are finalizing alternative criteria that we considered in the RIA as Option 3 as minimum criteria. These minimum criteria are: Use of opioids with an average daily MME greater than or equal to 90 mg for any duration during the most recent 6 months and either: 3 or more opioid prescribers and 3 or more opioid dispensing pharmacies OR 5 or more opioid prescribers, regardless of the number of opioid dispensing pharmacies.

This means that beneficiaries meeting these criteria will be reported to sponsors by OMS and sponsors with drug management programs must review each case and report their findings back to OMS as they do today consistent with how they have operated under the current policy. In addition, sponsors may not vary these minimum criteria. However, as we previously stated, sponsors will be permitted to apply the minimum criteria more frequently using their own prescription claims data than CMS will apply them through OMS quarterly. According to our analysis of 2017 PDE data, these minimum criteria would identify 44,332 potential at-risk beneficiaries and is the option based on 90 MME in the RIA that has a revised program size estimate which is closest to our original estimate of 33,053 but that would not identify fewer at-risk beneficiaries. Given the scope of the opioid crisis, and current data showing significant reduction in the number of beneficiaries meeting the OMS criteria, finalizing criteria that would have resulted in a smaller program size could undermine the increasing momentum in addressing opioid overutilization in the Medicare Part D program.

Second, we are finalizing supplemental criteria to provide sponsors with some flexibility in adopting criteria for their drug management programs. This means that sponsors may continue to report additional beneficiaries to OMS—as they do today under the current policy. However, unlike the current policy, such beneficiaries must meet the following supplemental criteria: Use of opioids (regardless of average daily MME) during the most recent 6 months with 7 or more opioid prescribers OR 7 or more opioid dispensing pharmacies.

These supplemental criteria were included in the additional criteria options that we considered and are included in a options chart in the Regulatory Impact Analysis (RIA) of the proposed rule; specifically, in Row 2 of option 6. Using 2017 data, we estimate that these supplemental criteria would identify an additional 22,841 potential at-risk beneficiaries. We believe these criteria would be responsive to the concern of the commenters who, in urging us to allow flexibility for sponsors to adopt targeting criteria, expressed concerns about not being able to continue to address plan members who are receiving opioids from a large number of prescribers or pharmacies but who do not meet a particular MME threshold.

We note that we do not anticipate that OMS will report beneficiaries meeting these supplemental criteria to sponsors; however, Part D sponsors may review beneficiaries who meet them—and must report them to OMS if they do—at a level that is manageable for their drug management programs in conjunction with the potential at-risk beneficiaries reported by OMS minimum criteria, whom they must address.

Thus, the final clinical guidelines for 2019 will result in an estimated program size of approximately 67,173 beneficiaries—44,332 of whom Part D sponsors with drug management programs must review and 22,841 of whom such sponsors may review. We believe this program size can be effectively managed by plans because we have already received feedback from Part D sponsors through the final 2018 Medicare Parts C&D Call Letter process that 33,000 beneficiaries are manageable. Thus, we conclude that 44,332 beneficiaries are associated with the option included in the RIA of the proposed rule that is the closest in number without identifying fewer potential at-risk beneficiaries and is consistent with historical program size under the current policy. Moreover, we received no comments that 33,053 beneficiaries is the largest program size Part D sponsors can manage. Finally, as we stated above, sponsors may review the additional 22,841 beneficiaries at a level that is manageable for their drug management programs.

These final criteria for 2019 meet the definition of clinical guidelines that we are finalizing. They are criteria to identify potential at-risk beneficiaries who may be determined to be at-risk beneficiaries under drug management programs, and they were developed in accordance with the standards we are finalizing in § 423.153(f)(16) and beginning for 2020, will be published in guidance annually. These criteria also adhere to the standards we proposed in § 423.153(f)(16) because: (1) They were developed with stakeholder consultation in that we solicited comment on them in the proposed rule; (2) they are based on the acquisition of frequently abused drugs from multiple prescribers, multiple pharmacies, and the level of frequently abused drugs in that they identify potential at-risk beneficiaries taking opioids and obtaining them from 7 or more prescribers or 7 or more pharmacies; (3) Start Printed Page 16450they are derived from our and commenters' expert opinion that obtaining opioids from many prescribers or many pharmacies is a potentially dangerous utilization pattern of frequently abused drugs due to an apparent lack of coordination of care that warrants further review and this opinion is supported by the fact that this pattern is highly unusual in the Part D program as it represents 0.11 percent of beneficiaries; and (4) they include a program size estimate.

We have consolidated the clinical guidelines/OMS criteria in Table 1 for easier reference. We note that we were not persuaded by the commenter who urged us to adopt criteria that would address high opioid use regardless of the number of prescribers or pharmacies, as one purpose of drug management programs, and lock-in tools specifically, is to promote better care coordination among multiple providers.

Comment: Some commenters suggested that if we have concerns with allowing Part D sponsors flexibility in adopting targeting criteria for potential at-risk beneficiaries, that we establish a process through which a sponsor could submit their guidelines to CMS.

Response: We thank these commenters for their idea, but we prefer the approach we have taken as providing consistency across the entire Part D program and a program size, as required by CARA.

Comment: A few commenters urged caution in the use of policies determining access to medications based upon thresholds such as MME, which the commenters viewed as a potentially problematic type of one-size-fits all approach. These commenters noted that scientific literature does not support the establishment of a recommended maximum dose for opioids. These commenters also pointed out that the use of such thresholds may result in a false impression of a superior safety profile, which we interpreted to mean that referring to a specific MME level as potentially dangerous may give the impression that a level below that amount is universally safe.

Response: We agree with the commenter that the CDC Guideline—and our clinical guidelines for Part D drug management programs that refer to it—are not intended as a maximum threshold for prescribing, as we noted in the preamble to the proposed rule. In the absence of dosing limits in the FDA-approved labeling for opioids, we are using the CDC guideline to establish a threshold to identify potentially high-risk beneficiaries who may benefit from closer monitoring and to create alignment between Government programs.

Moreover, our implementation of the CARA drug management program provisions focuses on beneficiaries who are receiving opioids from multiple prescribers and/or multiple pharmacies, not just at a certain MME level. In addition, our finalized requirements for drug management programs require Part D sponsors to engage in case management with prescribers, obtain their verification that the beneficiary is at-risk and their agreement before implementing a prescriber lock-in or beneficiary-specific claim edit, as long as the prescribers are responsive to case management. This means that decisions about the amount of frequently abused drugs an at-risk beneficiary should receive are made by the beneficiary's prescriber(s) if they are responsive and not based on the targeting threshold for review of the beneficiary's utilization. Thus, this approach is aimed at addressing overutilization of frequently abused drugs while maintaining access to such drugs when medically necessary in the Part D program.

Comment: A commenter proposed modifying “for any duration” in the clinical guidelines to permit beneficiaries a reasonable overlap time to refill medications and suggested that CMS set a reasonable overlap period of no more than 3 days for the purposes of identifying potential at-risk beneficiaries.

Response: CMS performed an extensive analysis of the OMS criteria using 2015 data (https://www.cms.gov/​Medicare/​Prescription-Drug-Coverage/​PrescriptionDrugCovContra/​Downloads/​Revised-OMS-Criteria-Modification-Analysis.pdf). Adjusting the clinical guideline MME calculation for each beneficiary to account for overlapping fills would be difficult to operationalize from a data analysis perspective since it would be dependent on the number of fills and the opioids dispensed, including strength each beneficiary received. For this reason, CMS chose to calculate the MME daily dose using the average daily dose during the opioid usage. We included “for any duration” in the clinical guidelines since this means that these beneficiaries reached or exceeded the MME level in a short period of time, and received their opioids from multiple prescribers and pharmacies. This indicates potential coordination of care issues or misuse. We found that the number of additional overutilizers with an episode length less than 90 days for any of the MME dose thresholds analyzed ranged from only 57 to 320 beneficiaries, or 1 to 2 percent of the 90+ day episode opioid overutilizer count. Therefore, we included these beneficiaries as potential opioid overutilizers under the current policy, and we will continue to utilize this methodology for OMS reporting of potential at-risk beneficiaries for drug management programs.

If a sponsor performs case management for a potential at-risk beneficiary who was reported through OMS and discovers that the high use was a result of appropriate prescription overlap and not misuse, we would expect the sponsor to stop conducting case management for that beneficiary, and to not send the initial notice to the beneficiary.

Comment: A commenter requested that CMS clarify that the language “for any duration during the most recent 6 months” means that the opioid use occurred during the most recent 6 months and not 6 months of consistent use.

Response: We confirm that this language means that the opioid use occurred during the most recent 6 months.

Comment: A commenter suggested that CMS apply path analysis to develop clinical guidelines to identify potential at-risk beneficiaries using the Integrated Data Repository (IDR), which is a data warehouse that integrates multiple data sources and supports analytics across CMS.

Response: We thank the commenter for suggesting an approach in the IDR to improve identification of potential at-risk beneficiaries for CMS to consider.

We proposed that under the clinical guidelines, prescribers associated with the same single Tax Identification Number (TIN) be counted as a single prescriber, because we have found under the current policy that such prescribers are typically in the same group practice that is coordinating the care of the patients served by it, and failing to do so would result in a high volume of false positives reported through OMS. Thus, it is appropriate to count such prescribers as one, so as not to identify beneficiaries through OMS who are not potentially at-risk.

In this regard, in applying the clinical guidelines criteria, CMS proposed to count prescribers with the same TIN as one prescriber, unless any of the prescribers are associated with multiple TINs. We also proposed that when a pharmacy has multiple locations that share real-time electronic data, all locations of the pharmacy collectively be treated as one pharmacy under the clinical guidelines. For example, under the criteria we are finalizing, a beneficiary who meets the 90 MME criterion and received opioid Start Printed Page 16451prescriptions from 3 prescribers in the same group practice and 2 independent opioid prescribers (1 group practice + 2 prescribers = 3 prescribers) and filled the prescriptions at 4 opioid dispensing pharmacies that do not share real-time electronic data, will still meet the criteria, which is appropriate. However, a beneficiary who meets that 90 MME criterion and received opioid prescriptions from 3 prescribers in the same group practice and 1 independent opioid prescriber (1 group practice + 1 prescriber = 2 prescribers) and filled the prescriptions at 4 opioid dispensing pharmacies that do not share real-time electronic data will not meet the criteria.

Comment: Several commenters supported the proposal conceptually to count prescribers associated with the same single TIN as a single prescriber, but many of these commenters noted that some Part D plans sponsors and PBMs do not have access to prescriber TIN information. A few commenters recommended that CMS count prescribers with the same National Provider Identifier (NPI) as a single prescriber, and a commenter suggested that CMS require prescribers to share real-time electronic data through an electronic health record (EHR).

Response: We appreciate the support for this proposal as well as the information on the operational challenges. After considering these comments, we are finalizing this aspect of the clinical guidelines for 2019. Part D plan sponsors without the ability to group prescribers using the TIN through data analysis will have to make these determinations during case management. If a sponsor finds that the multiple opioid prescribers for the beneficiary are from a single group practice, and therefore, the beneficiary does not meet the clinical guidelines, the sponsor could stop conducting case management for that beneficiary, and would not send the initial notice to the beneficiary. We will issue guidance and updated OMS technical user guides to plan sponsors at a later time, including data sources and standard responses used in OMS reporting, which may include providing such feedback to CMS.

In addition, this information may be discovered after the sponsor provided the beneficiary the initial notice. In such an event, the sponsor would send the beneficiary an alternate second notice that the beneficiary is not at-risk. To the comments about grouping by NPI, we clarify that under the current policy/OMS we use the NPI to first identify single prescribers, and then we further group single prescribers with the same single TIN. We will continue this methodology for the clinical guidelines under the drug management program. We appreciate the comment regarding real-time prescriber data, but we did not propose such a system for Part D prescribers.

Comment: We received several comments supporting our proposal that when a pharmacy has multiple locations that share real-time electronic data, all locations of the pharmacy collectively be treated as one pharmacy under the clinical guidelines. We also received many comments that Part D plan sponsors and their PBMs do not have the systems capabilities to account for pharmacies that have multiple locations that share real-time electronic data, in order to treat all locations of the pharmacy collectively as one pharmacy. We received one comment that they are able to, but that there are operational challenges to synthesizing the data to be useful for drug management programs.

Response: As we stated in the proposed rule, section 1860D-4(c)(5)(D) of the Act specifies that for purposes of limiting access to coverage of frequently abused drugs to those obtained from a selected pharmacy, if the pharmacy has multiple locations that share real-time electronic data, all such locations of the pharmacy collectively are treated as one pharmacy. Because of this statutory requirement, it makes sense to us to consider such multiple locations as one pharmacy for purposes of the clinical guidelines, similar to how we account for group practices, to reduce false positives, particularly because the purpose of the guidelines is to identify when a beneficiary may be at risk for overutilization because they use multiple pharmacies. Therefore, we are finalizing this aspect of the clinical guidelines for 2019.

We understand that we, and apparently most sponsors and their PBMs, do not have the systems capability to automatically determine when a pharmacy is part of a chain. Therefore, Part D plan sponsors without this capability will have to make these determinations during case management. If through such case management, a plan sponsor finds that multiple locations of a pharmacy used by the beneficiary share real-time electronic data, the sponsor will be required to treat those locations as one pharmacy. This may result in the sponsor not or no longer conducting case management for a beneficiary because the beneficiary does not meet the clinical guidelines, or in the sponsor sending the beneficiary an alternate second notice that the beneficiary is not at-risk if the sponsor discovers this information after it provided the beneficiary with the initial notice.

We note that group practices and chain pharmacies are discussed later in this preamble in the context of the selection of a prescriber(s) and pharmacy(ies) in cases when a Part D plan limits a beneficiary's access to coverage of frequently abused drugs to selected pharmacy(ies) and/or prescriber(s).

As noted above, Table 1 shows that in 2017 approximately 44,332 beneficiaries would have met the minimum criteria of the 2019 clinical guidelines that we are finalizing, which is approximately 0.10 percent of the 45 million beneficiaries enrolled in Part D in 2017. Approximately, 22,841 additional beneficiaries will have met the supplemental criteria that we are finalizing, which is approximately 0.05 percent. To derive this estimated population of potential at-risk beneficiaries, we analyzed prescription drug event data (PDE) from 2017,[8] using the CDC opioid drug list and MME conversion factors, and applying the criteria we are finalizing as the clinical guidelines. This estimate is over-inclusive because we did not exclude beneficiaries in long-term care (LTC) facilities who will be exempted from drug management programs, as we discuss later in this section.

However, based on similar analyses we have conducted, this exclusion will not result in a noteworthy reduction to our estimate. Also, we were unable to count all locations of a pharmacy that has multiple locations that share real-time electronic data as one, which is a topic we discussed earlier and will return to later. Thus, there likely are beneficiaries counted in our estimate who will not be identified as potential at-risk beneficiaries because they are in an LTC facility or only use multiple locations of a retail chain pharmacy that share real-time electronic data.

Start Printed Page 16452

As clarified above, since the CDC removed all formulations of buprenorphine, for pain and for MAT, from the most recent CDC MME conversion factor file, buprenorphine products are not used to determine the beneficiary's average daily MME. However, we will use prescription opioids, including all buprenorphine products for pain and MAT, to determine opioid prescribers and opioid dispensing pharmacies under the minimum criteria. Similarly, sponsors must include all prescription opioids, including all buprenorphine products, to determine opioid prescribers and opioid dispensing pharmacies under the supplemental criteria.

• Exempted Beneficiary

We proposed that an exempted beneficiary, with respect to a drug management program, would mean an enrollee who: (1) Has elected to receive hospice care; (2) Is a resident of a long-term care facility, of a facility described in section 1905(d) of the Act, or of another facility for which frequently abused drugs are dispensed for residents through a contract with a single pharmacy; or (3) Has a cancer diagnosis. While the first two exceptions are required under CARA, we proposed to exercise the authority in section 1860D-4(c)(5)(C)(ii)(III) of the Act to treat a beneficiary who has a cancer diagnosis as an exempted individual. We did not propose to exempt additional categories of beneficiaries.

We received the following comments and our response follows:

Comment: Commenters were overall supportive of our proposal to exempt beneficiaries who have a cancer diagnosis. A few of the commenters noted that the CDC Guideline recommendations do not apply to active cancer treatment. Many of these commenters asked for more guidance on how this exemption, which is a feature of the current policy, would be operationalized. Others felt the exemption is too broad and could be applied to beneficiaries who have not been treated for cancer in years or who are being treated for non-terminal cancer but possibly do have an opioid overuse issue that needs to be addressed. A few commenters disagreed with the exemption as an inappropriate Start Printed Page 16453one-size-fits-all approach. Even the commenters who did not support the exemption noted that the cancer population is unique and must be handled delicately.

Response: We thank the commenters for their supportive comments as to the exemption for cancer. Our intent is to exempt beneficiaries who are currently being treated for active cancer-related pain from Part D drug management programs and this is the exemption we are finalizing based on the comments. While our current policy generally excludes beneficiaries with cancer diagnoses from OMS reporting,[9] we believe it is appropriate to be more specific with respect to regulatory parameters for Part D prescription drug management programs. Therefore, the comments have persuaded us that we need to be more precise with this codified exemption.

As we noted in the proposed rule, there are some limitations around this exemption under the current policy due to our current data sources which will remain when implementing the drug management program clinical guidelines. For example, there may be a lag in current year diagnosis data in CMS systems and the RxHCC codes from the risk adjustment processing system are based on diagnosis data from the past year. Therefore, Part D plan sponsors will have to identify such exempted beneficiaries through the case management process if they are inadvertently reported through OMS or when the sponsor is reviewing cases pursuant to applying the minimum clinical guidelines more frequently than CMS and the supplemental criteria of the clinical guidelines. Plan sponsors may have more recent cancer diagnosis information or learn this information through clinical contact with prescribers. Plan sponsors may currently refer to the CDC Guideline as a reference which distinguishes active cancer treatment from cancer survivors with chronic pain who have completed cancer treatment, are in clinical remission, or are under cancer surveillance only. We will monitor health care guidelines that address this topic and issue guidance as warranted to further refine the execution of the exemption for beneficiaries being treated for active cancer-related pain that we are finalizing.

While we understand the concerns of the commenters who did not support this exemption about potential inappropriate opioid use among this population, we note that this exemption is a feature of the current policy, which has reportedly been working well and we therefore believe it is appropriate to extend it to drug management programs. We agree that this population deserves heightened protection but we are finalizing an exemption that we believe is narrowly tailored to address the concerns of commenters who urged us to proceed with caution with respect to this exemption.

Comment: Many commenters supported the exemption for beneficiaries in the LTC setting. A few commenters recommended that we not exempt LTC beneficiaries from retrospective drug utilization review (DUR) processes. A commenter asked if it could still implement a beneficiary-specific claim edit at POS for frequently abused drugs if it independently determined an LTC resident to be at-risk.

Response: Section 1860D-4(c)(5)(C)(ii) exempts beneficiaries in the LTC setting, and we therefore do not have the authority to permit plans to include them in Part D drug management programs. We are finalizing this exemption as proposed. Because beneficiary-specific POS claim edits for frequently abused drugs are included in drug management programs through the integration approach we are finalizing, a sponsor may not implement such an edit for an exempt beneficiary.

However, while exempt beneficiaries are exempt from drug management programs, they are not exempt from retrospective DUR processes. Part D plan sponsors still must comply with its other utilization management obligations in § 423.153, and could implement a beneficiary-specific edit for drugs other than frequently abused drugs, for example, if necessary to comply with those obligations. In addition, sponsors may also still review the use of drugs that constitute frequently abused drugs by beneficiaries in LTC facilities and work with such facilities to identify patterns of inappropriate or medically unnecessary care among enrollees. However, as just stated, the sponsors cannot implement beneficiary-specific edits for drugs that constitute frequently abused drugs, nor prescriber or pharmacy lock-in for such drugs.

Comment: A commenter requested that CMS exempt any Part D claim submitted by a Network Long-Term Care Pharmacy (NLTCP), as defined in Chapter 5 of the Medicare Prescription Drug Benefit Manual, asserting that such pharmacies are required to meet minimum performance and service criteria, including performing drug utilization reviews and identifying inappropriate drug usage. Another asked for clarification on whether beneficiaries serviced by long-term care pharmacies are exempt or if the exemption is limited to beneficiaries in long-term care facilities.

Response: Section 1860D-4(c)(5)(C)(ii) of the Act exempts residents of a long-term care facility rather than pharmacy claims submitted by long-term care pharmacies. Therefore, we find it is appropriate to finalize an exemption that takes the same approach as the statute. However, we note that beneficiaries serviced by long-term care pharmacies may meet another exemption, such as the one for beneficiaries residing in facilities for which frequently abused drugs are dispensed for residents through a contract with a single pharmacy.

Comment: A few commenters stated that they will need the Long-Term Institution (LTI) report to be released on a monthly basis rather than the current quarterly basis.

Response: We thank the commenters for their comment and will explore if more frequent reporting is feasible.

Comment: Many commenters supported the proposed exemption for beneficiaries who are residents of a facility for which frequently abused drugs are dispensed for residents through a contract with a single pharmacy. Others urged us to propose one.

Response: We clarify for commenters that the proposed rule included an exemption for beneficiaries who are residents of a facility for which frequently abused drugs are dispensed for residents through a contract with a single pharmacy, as required by Section 1860D-4(c)(5)(C)(ii). Therefore, we are finalizing this exemption as proposed.

Comment: Many commenters urged us to extend an exemption to beneficiaries in assisted living facilities, asserting that such beneficiaries are at very low risk of substance abuse and that applying lock-in to them could be disruptive and undermine their care. Other commenters opposed such an exemption and urged us to proceed with caution in carving out multiple exemptions that could undermine the purpose of drug management programs. Other commenters referred to the difficulty in identifying such beneficiaries to exempt them.Start Printed Page 16454

Response: Based on the comments received, we are not persuaded that beneficiaries in assisted living facilities should be exempt from Part D drug management programs, because we do not believe that these facilities routinely dispense drugs to their residents through a contract with a single pharmacy, and therefore these beneficiaries could be identified by the clinical guidelines on this or another basis and be potentially at-risk. However, if a sponsor learned during case management that a beneficiary resides in an assisted living facility that does dispense drugs through a contract with a single pharmacy, then the sponsor must exempt such resident from its drug management program.

In addition, we are persuaded that many exemptions for certain group of beneficiaries or ones that are crafted too broadly would risk undermining the purpose of drug management programs. Therefore, we decline to establish a separate exemption for assisted living facility residents. We note that several required features of Part D drug management programs, such as case management, multiple written beneficiary notices, the right to appeal and our general oversight, will serve as beneficiary safeguards should a Part D sponsor inappropriately limit a beneficiary's coverage to frequently abused drugs through a drug management program.

Comment: A commenter questioned how a drug management program should handle at-risk beneficiaries who move in and out of an LTC facility.

Response: An at-risk beneficiary who moves into an LTC facility becomes an individual exempted from a drug management program and a sponsor must remove such beneficiary from such program as soon as it reliably learns that the beneficiary has moved into an LTC facility, whether that be via the beneficiary, the facility, a pharmacy, a prescriber, or an internal or external report. A beneficiary who moves out of an LTC facility is no longer exempted unless he or she meets another prong of the finalized definition of exempted beneficiary.

Comment: Several commenters suggested that an exemption for beneficiaries who are receiving non-hospice palliative and end-of-life care would be appropriate in light of the exemption for beneficiaries who have elected hospice care. A few of these commenters asserted that without an exemption in the regulation, beneficiaries could be included in a drug management program at a plan sponsor's discretion and experience restricted access to pain-control medication when they need them the most. Some commenters noted that the CDC Guideline exempts patients receiving palliative and end-of-life care. Others disagreed, asserting that we had put sufficient safeguards in place to protect such beneficiaries in drug management programs. Other commenters referred to the difficulty in identifying such beneficiaries in order to exempt them.

Response: We are persuaded that beneficiaries who are receiving non-hospice palliative and end-of-life care but have not elected hospice should be exempted from Part D drug management programs. While we wish to exercise caution and thoughtfulness in establishing regulatory exemptions versus clinical guidelines/criteria, as we noted above, we agree based on the multiple comments that such beneficiaries should be treated the same as beneficiaries who have elected hospice care for purposes of drug management programs, as they are very similar in their health care status, if not their health benefit plan status. While we expect that Part D plan sponsors and PBMs would not inappropriately place such beneficiaries in their drug management programs, an actual regulatory exemption from drug management programs would be more definitive. Furthermore, adding these exemptions would align the drug management programs with the CDC Guideline, which was developed by experts and specifically provides recommendations for primary care clinicians who are prescribing opioids for chronic pain outside of active cancer treatment, palliative care, and end-of-life care. Therefore for consistency with the CDC Guideline, beneficiaries who are receiving non-hospice palliative and end-of-life care but who have not elected hospice will be exempted from Part D drug management programs as well.

As discussed in the proposed rule, the data challenges to identify these Part D beneficiaries will still exist for CMS and we anticipate for Part D sponsors also. Therefore, we will explore options for refining OMS reporting in this regard, and sponsors will have to identify these exempted beneficiaries through the case management process.

We also remind Part D sponsors that drugs and biologicals covered under the Medicare Part A per-diem payments to a Medicare hospice program are excluded from coverage under Part D. For a prescription drug to be covered under Part D for a beneficiary who has elected hospice, the drug must be for treatment unrelated to the terminal illness or related conditions. This is because drugs and biologicals covered under the Medicare Part A per-diem payments to a Medicare hospice program are excluded from coverage under Part D. Therefore, in 2014,[10] we strongly encouraged sponsors to place beneficiary-level PA requirements on only four categories of prescription drugs including analgesics. As a result, a small number of beneficiaries who elected hospice care have been identified and excluded from the current policy/OMS.

Comment: A few commenters requested clarification on the practical meaning of an exempted individual. Specifically, they asked if the beneficiary is exempted from only coverage limitations or from retrospective DUR processes. A commenter opposed our proposal that drug management programs would supersede the current policy in that beneficiary-specific edits would no longer be permitted on non-opioid medications. Another commenter requested clarification on the status of existing beneficiary-specific POS claim edits for opioids and benzodiazepines beginning January 1, 2019.

Response: Exempted beneficiaries are exempted from Part D drug management programs. Also, because we are integrating the “lock-in” component of the drug management programs with the current policy, going forward, beneficiary-specific POS edits and lock-in for frequently abused drugs will be permitted only in compliance with § 423.153(f). However, as we noted earlier, the prescription drug management program requirements that we are finalizing in this rule do not affect plan sponsors' obligation to comply with other requirements pertaining to coverage or utilization management. Part D plan sponsors are still obligated to conduct other drug utilization review and management consistent with existing DUR requirements, which includes reviewing utilization for any Part D drug and may include implementing beneficiary-specific POS claim edits on drugs that are not frequently abused drugs, if necessary. However, we do not have specific guidance in this area, but we would expect the sponsor to employ the same level of diligence and documentation with respect to beneficiary-level POS claim edits for non-frequently abused drugs that we Start Printed Page 16455require for drug management programs, consistent with current policy.[11]

In addition, beneficiaries for whom Part D sponsors have implemented beneficiary-specific POS claim edits for opioids and/or benzodiazepines before January 1, 2019 can continue to be subject to those edits under the current policy after December 31, 2018, which means that they may remain in place unless removed under the current policy. For example, as the result of a coverage determination or appeal.[12] To the extent that such a beneficiary is reported through OMS on January 1, 2019 or later to a sponsor with a drug management program, that sponsor must comply with the requirements we are finalizing in this rule.

Comment: A commenter suggested that CMS develop a process by which additional categories of exempted individuals could be evaluated and added that are evidence-based and involve health care practitioners.

Response: We will evaluate the implementation of the drug management programs. Based on this experience or new or emerging relevant health care information, we will consider proposing additional exemptions through rulemaking as necessary.

Comment: A commenter asked how to handle retroactive notifications that would qualify a beneficiary for an exemption.

Response: As we stated in a previous response with regard to beneficiaries who move into LTC facilities, a sponsor must remove an exempted beneficiary from a drug management program 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.

Based on these comments, we are finalizing with modification the following definition for exempted beneficiary: An exempted beneficiary, with respect to a drug management program, will mean an enrollee who: (1) Has elected to receive hospice care or is receiving palliative or end-of-life care; (2) is a resident of a long-term care facility, of a facility described in section 1905(d) of the Act, or of another facility for which frequently abused drugs are dispensed for residents through a contract with a single pharmacy; or (3) is being treated for active cancer-related pain. Given this exemption, CMS will report potential at-risk beneficiaries who meet the minimum criteria of the clinical guidelines to sponsors through the OMS. Currently, we have the ability to exempt beneficiaries in LTC facilities, in hospice, and with active cancer-related pain. Sponsors may have more current data or obtain information through the case management and notification processes to further exempt beneficiaries, including those receiving palliative or end-of-life care.

(ii) Requirements of Drug Management Programs (§§ 423.153, 423.153(f))

As noted previously, we proposed to codify a regulatory framework under which Part D plan sponsors may adopt drug management programs to address overutilization of frequently abused drugs. Therefore, we proposed to amend § 423.153(a) by adding this sentence at the end: “A Part D plan sponsor may establish 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,” in accordance with our authority under revised section 1860D-4(c)(5)(A) of the Act.

We also proposed to revise § 423.153 by adding a new paragraph (f) about drug management programs for which the introductory sentence will read: “(f) Drug Management Programs. A drug management program must meet all the following requirements.” Thus, the requirements that a Part D plan sponsor must meet to operate a drug management program will be codified in various provisions under § 423.153(f).

We received the following comments and our response follows:

Comment: While CMS received many comments that were supportive of drug management programs as a whole, we did not receive comments specific to these provisions.

Response: We are therefore finalizing as proposed.

(iii) Written Policies & Procedures (§ 423.153(f)(1))

We proposed to require Part D sponsors document their programs in written policies and procedures that are approved by the applicable P&T committee and reviewed and updated as appropriate, which is consistent with the current policy. Also consistent with the current policy, we proposed to require that these policies and procedures address the appropriate credentials of the personnel conducting case management and the necessary and appropriate contents of files for case management. We additionally proposed to require sponsors to monitor information about incoming enrollees who will meet the definition of a potential at-risk and an at-risk beneficiary in proposed § 423.100 and respond to requests from other sponsors for information about potential at-risk and at-risk beneficiaries who recently disenrolled from the sponsor's prescription drug benefit plans.

To codify these requirements, we proposed the written policies and procedures specified at § 423.153(f)(1) (see 82 FR 56510).

We received the following comments and our response follows:

Comment: We received a comment strongly supportive of the requirements in this provision.

Response: We thank the commenter for the support.

Comment: We received a few comments inquiring what credentials are needed for clinical staff who conduct case management. The commenters were concerned that the clinical staff conducting case management be adequately qualified to perform it in terms of education and training. These commenters stated that unqualified case managers could significantly detract from the benefit of Part D drug management programs.

Response: We agree that the requirement that clinical staff conduct case management needs more detail. CMS expects that such clinical staff conducting case management as part of a Part D plan sponsor's drug management program would be a physician or other appropriate health care professional with sufficient expertise to conduct medical necessity reviews related to potential opioid overutilization. While we are not specifying particular credentials for clinical staff, in response to these comments, we are clarifying in the finalized version of § 423.153(f)(1)(i) that clinical staff must have a current and unrestricted license to practice within the scope of his or her profession in a State, Territory, Commonwealth of the United States (that is, Puerto Rico), or the District of Columbia.

Comment: We received several comments that a dentist should be required to be included on the case management team when a prescriber of frequently abused drugs is a dentist.

Response: We decline to adopt this recommendation. We do not want to be overly prescriptive as to the specific background of licensed clinical staff conducting case management. We believe the plan should have some flexibility, beyond what is discussed in the preceding response and described in § 423.153(f)(1)(i), to determine appropriate credentials of the clinical Start Printed Page 16456staff conducting case management based on the facts and circumstances of the case.

Comment: We received a question asking how prescriber agreement should be documented and shared with appropriate parties. We also received a few comments that a Part D sponsor must ensure that any records of contacts between the sponsors and prescribers under drug management programs must be easily accessible to at-risk beneficiaries who wish to appeal and that these records are easily able to be auto-forwarded to the Independent Review Entity (IRE).

Response: We agree that such information must be documented and available to appropriate parties including at-risk beneficiaries and the IRE, when applicable. To comply with § 423.153(f)(1)(ii), sponsors must document contact with prescribers during case management, for example, if a prescriber agreed with the plan sponsor to implement a limit on the beneficiary's access to coverage for frequently abused drugs pursuant to § 423.153(f)(4). Also, the sponsor must document if the beneficiary calls the sponsor to provide his or her pharmacy or prescriber preferences for lock-in. To make this clearer, we are adding language to § 423.153(f)(1)(ii) such that the necessary and appropriate contents of files for case management must include documentation of the substance of prescriber and beneficiary contacts.

Comment: We received a comment that we should require Part D plan sponsors' policies and procedures for clinical contact to include secure identity verification safeguards to protect prescribers from “phishing” communications that attempt to trick prescribers into disclosing patient information.

Response: We decline to make this a requirement specific to Part D drug management programs. We note that health care providers' offices and Part D sponsors are both covered entities under Health Insurance Portability and Accountability Act of 1996. We also encourage Part D sponsors to have written policies and procedures for their staff who contact providers to proactively identify themselves in a manner that should reasonably satisfy the providers of their identity and for providers to likewise have written practice policies and procedures to reasonably establish the identity of the staff of health benefit plans who contact them and do not proactively establish their identity.

Given these comments and our responses, we are finalizing § 423.153(f)(1) with modification to include the changes regarding the licensure of the clinical staff conducting case management and the required documentation of the substance of prescriber and beneficiary contacts.

(iv) Case Management/Clinical Contact/Prescriber Verification (§ 423.153(f)(2))

To meet the requirements of section 1860D-4(c)(5)(C) and section 1860D-4(c)(5)(B)(i)(II) of the Act, we proposed in a new § 423.153(f)(2) to require Part D sponsors' clinical staff to engage in case management for each potential at-risk beneficiary for the purpose of engaging in clinical contact with the prescribers of frequently abused drugs and verifying whether a potential at-risk beneficiary is an at-risk beneficiary. Specifically, we proposed that a new § 423.153(f)(2) would state that the sponsor's clinical staff must conduct case management for each potential at-risk beneficiary for the purpose of engaging in clinical contact with the prescribers of frequently abused drugs and verifying whether a potential at-risk beneficiary is an at-risk beneficiary. Proposed § 423.153(f)(2)(i) would further state that, except as provided in paragraph (f)(2)(ii) of this section, the sponsor must do all of the following:

  • Send written information to the beneficiary's prescribers that the beneficiary meets the clinical guidelines and is a potential at-risk beneficiary;
  • Elicit information from the prescribers about any factors in the beneficiary's treatment that are relevant to a determination that the beneficiary is an at-risk beneficiary, including whether prescribed medications are appropriate for the beneficiary's medical conditions or the beneficiary is an exempted beneficiary; and
  • In cases where the prescribers have not responded to the inquiry described in (f)(2)(i)(B), make reasonable attempts to communicate telephonically with the prescribers within a reasonable period after sending the written information.

We proposed to add paragraph (ii) to § 423.153(f)(2) that would specify that the exception would be for identification by prior plan. If a beneficiary was identified as a potential at-risk or an at-risk beneficiary by his or her most recent prior plan, and such identification has not been terminated in accordance with paragraph (f)(14) of this section, the sponsor meets the requirements in paragraph (f)(2)(i) of this section, so long as the sponsor obtains case management information from the previous sponsor and such information is still clinically adequate and up to date. This proposal is to avoid unnecessary burden on health care providers when additional case management outreach is not necessary because it has already been performed by a prior Part D sponsors for the beneficiary. We discuss potential at-risk and at-risk beneficiaries who change plans again later in this preamble.

The information that the plan sends to the prescribers and elicits from them is intended to assist a Part D sponsor to understand why the beneficiary meets the clinical guidelines and if a limitation on access to coverage for frequently abuse drugs is warranted for the safety of the beneficiary. Also, sponsors will use this information to choose standardized responses in OMS and provide information to MARx about any plan coverage limitations that the sponsors implement. We will address required reporting to OMS and MARx by sponsors again later.

Our proposed § 423.153(f)(2) used the terms “reasonable attempts” and “reasonable period” rather than specify a required number of attempts or a specific timeframe for plan sponsor to call prescribers. We explained that this was due to the competing priorities of sponsors' diligently addressing opioid overutilization in the Part D program through case management, which may necessitate telephone calls to the prescribers, while being cognizant of the need to be judicious in contacting prescribers telephonically in order to not unnecessarily disrupt their practices. We further stated that we wished to leave flexibility in the regulation text for sponsors to balance these priorities on a case-by-case basis in their drug management programs. However, we note that we proposed a 3 attempts/10 business days requirement for sponsors to conclude that a prescriber is unresponsive to case management in § 423.153(f)(4) discussed later in this section.

We received the following comments and our response follows:

Comment: We received a comment requesting that a plan sponsor be able to communicate to CMS if no prescriber will verify that the beneficiary is at-risk.

Response: We plan to expand and modify OMS and the MARx system to accommodate the CARA drug management program provisions we are finalizing here. We will issue additional guidance and technical instructions as needed.

Comment: We received a comment asking that we recommend that Part D sponsors encourage prescribers during case management to discuss drug management programs with their patients. We also received a request that we issue guidance to plan sponsors directing them to encourage prescribers, as part of the required clinical contact, Start Printed Page 16457to perform a comprehensive substance abuse disorder screening and/or assessment of the patient deemed to be a potential at-risk beneficiary, and if indicated, refer him or her for follow-up treatment with a pain specialist or addiction treatment provider.

Response: We encourage Part D plan sponsors to undertake both of these suggestions, but decline to require it at this time, as we believe prescribers, in their professional discretion by and large will undertake appropriate adjusted treatment plans with their patients and/or MA-PDs will negotiate such issues with their network providers. We also remind commenters that not all Part D prescription drug plans have network providers.

Comment: We received some comments that Part D sponsors should not be permitted to telephone prescribers in order to avoid disrupting their practices.

Response: We decline to adopt this suggestion. The clinical guidelines identify beneficiaries who are potentially at-risk for a serious adverse health event, including death, due to their opioid use and apparent lack of coordinated care. The requirements we are finalizing permit sponsors to escalate the steps they take during case management to engage in clinical contact with the beneficiary's prescribers of frequently abused drugs. We would expect such prescribers to understand such sponsors' attempts to make them aware of important information in this regard that they likely do not know.

Comment: We received a comment that integrated delivery systems use communication tools other than telephone calls to escalate matters to prescribers and that CMS should allow such systems to use such tools instead.

Response: Our intent is for Part D sponsors to use the most effective means designed to elicit a prescriber response to case management. Therefore, based on this comment, we are modifying the regulatory language in § 423.153(f)(2)(i)(C).

Comment: We received a question whether a gaining sponsor must immediately lock-in a new enrollee if the sponsor receives notice from the losing sponsor that the enrollee was locked-in by the losing sponsor.

Response: No. Part D sponsors are responsible for their own drug management programs. As such, a gaining sponsor is not required to but may do so under certain circumstances as we discuss later in this preamble. Also, we note that with respect to at-risk beneficiaries that are new to a plan, sponsors that do not take any action should be aware that such beneficiaries may later be reported through OMS if they meet the clinical guidelines. Also, we note that pursuant to § 423.153(f)(2)(i), the sponsor must conduct case management for every potential at-risk beneficiary, unless an exception applies.

After considering these comments, we are finalizing the proposed language in § 423.153(f)(2) with the modification described.

(v) Limitations on Access to Coverage for Frequently Abused Drugs (§ 423.153(f)(3))

We proposed to describe all the tools that will be available to sponsors to limit an at-risk beneficiary's access to coverage for frequently abused drugs under a drug management program in § 423.153(f)(3). Our proposal specified that subject to the requirements of paragraph (f)(4) of this section, a Part D plan sponsor may do all of the following:

  • Implement a point-of-sale claim edit for frequently abused drugs that is specific to an at-risk beneficiary.
  • In accordance with paragraphs (f)(10) and (f)(11) of this section, limit an at-risk beneficiary's access to coverage for frequently abused drugs to those that are—

++ Prescribed for the beneficiary by one or more prescribers;

++ Dispensed to the beneficiary by one or more network pharmacies; or

++ Specified in both paragraphs (f)(3)(ii)(B)(1) and (2) of this section.

Paragraph (iii)(A) will state that if the sponsor implements an edit as specified in paragraph (f)(3)(i) of this section, the sponsor must not cover frequently abused drugs for the beneficiary in excess of the edit, unless the edit is terminated or revised based on a subsequent determination, including a successful appeal. Paragraph (iii)(B) will state that if the sponsor limits the at-risk beneficiary's access to coverage as specified in paragraph (f)(3)(ii) of this section, the sponsor must cover frequently abused drugs for the beneficiary only when they are obtained from the selected pharmacy(ies) and/or prescriber(s), or both, as applicable, (1) in accordance with all other coverage requirements of the beneficiary's prescription drug benefit plan, unless the limit is terminated or revised based on a subsequent determination, including a successful appeal, and (2) except as necessary to provide reasonable access in accordance with paragraph (f)(12) of this section.

We received the following comments and our response follows:

Comment: We received a question whether a Part D sponsor, under a drug management program, may implement a combination of a beneficiary-specific POS claim edit, prescriber and/or pharmacy lock-in for frequently abused drugs, and whether these limitations may be implemented at different times. Another comment recommended that plan sponsors be permitted to establish a prescriber lock-in concurrently with a beneficiary-specific POS claim edit and not require the plan to contact the prescribers separately for each limitation.

Response: We acknowledge that there may be cases where a plan may impose one or more coverage limitations for frequently abused drugs simultaneously on an at-risk beneficiary, and at a later time, add new limitations and/or terminate existing ones. Thus, a plan sponsor may choose to implement multiple limitations on access to coverage for frequently abused drugs for an at-risk beneficiary at one time.

For instance, after case management, a plan sponsor may decide to pursue implementation of a POS claim edit, prescriber lock-in, and pharmacy lock-in for an at-risk beneficiary simultaneously because of the circumstances of the particular case. In this instance, prescriber agreement would be necessary to implement the POS edit and the prescriber lock-in.

A plan sponsor may also implement additional coverage limitations over time (for example, start with a beneficiary-level POS edit, subsequently add a prescriber lock-in, and subsequently add a pharmacy lock-in) because the case has not resolved itself as expected after initial case management. We remind plan sponsors that when implementing additional coverage limitations, the plan sponsor must repeat the case management process including prescriber verification, prescriber agreement, if applicable, and notice requirements for each additional limitation, and that such actions would also confer a new 60 day appeal timeframe. We discuss this scenario further in the appeal section of this preamble.

Furthermore, a plan sponsor might also terminate existing limitations on access to coverage over time (for example, an at-risk beneficiary may have a POS edit and pharmacy lock-in and the plan sponsor terminates the pharmacy lock-in and leaves in place the POS edit).

While we are allowing plan sponsors to make such additions/terminations to limitations to access to coverage for frequently abused drugs for an at-risk beneficiary, we recognize that such Start Printed Page 16458changes might be disruptive and/or confusing for the beneficiary, and thus strongly discourage plans from making frequent changes to such limitations for a particular at-risk beneficiary. To minimize such disruption and ensure such actions are taken in the manner contemplated by the statute, we have added a provision at § 423.153(f)(5)(iv) to the regulation text which specifies that, if a plan intends to make changes to the limitations imposed on a beneficiary under their drug management program after the beneficiary has been identified as at-risk, the plan sponsor is required to provide the beneficiary notices under the rules established at § 423.153(f)(5) through (f)(8) and discussed later in this preamble. Additionally, we will closely monitor information submitted by sponsors to CMS in OMS and MARx and complaint data to make sure plans are not inappropriately disrupting beneficiary access to coverage for frequently abused drugs by making frequent changes to the limitations on access to coverage. While we are not currently imposing limitations on how many times the plan can make such changes, we will re-evaluate this policy in the future if it becomes problematic.

In response to this comment, we are finalizing this provision as proposed, except we are modifying § 423.153(f)(3) to state a Part D plan sponsor may do “any or all of the following,” and § 423.153(f)(3)(ii)(C) to simply state “both.” This will make clearer that read as a whole, § 423.153(f)(3) means that a Part D sponsor may use the tool of a beneficiary-specific point-of-sale edit, or prescriber or pharmacy lock-in, or any combination of these three tools to limit an at-risk beneficiary's access to coverage of frequently abused drugs under its drug management program.

(vi) Requirements for Limiting Access to Coverage for Frequently Abused Drugs (§ 423.153(f)(4))

We proposed in § 423.153(f)(4) that before a Part D plan sponsor could limit the access of at-risk beneficiary to coverage for frequently abused drugs, the sponsor would first be required to take certain actions. We proposed in paragraph § 423.153(f)(4)(i)(A) that a sponsor would be required to conduct the case management discussed earlier, which includes clinical contact to determine whether prescribed medications are appropriate for the potential at-risk beneficiary's medical conditions that is required by section 1860D-4(c)(5)(C)(iv) of the Act and prescriber verification that the beneficiary is an at-risk beneficiary in accordance with Section 1860D-4(c)(5)(B)(i)(II).

We also proposed in paragraph § 423.153(f)(4)(i)(B) that the sponsor would be required to obtain the agreement of the prescribers of frequently abused drugs with the limitation, unless the prescribers were not responsive to the required case management. We invited stakeholders to comment on not requiring prescriber agreement to implement pharmacy lock-in.

We further proposed in paragraph § 423.153(f)(4)(i)(C) that the sponsor must first provide notices that complied with § 423.153(f)(5) and (f)(6) to the beneficiary in accordance with section 1860D-4(c)(5)(B)(i)(I) of the Act. We additionally proposed in paragraph § 423.153(f)(4)(ii) that a sponsor has complied with the requirement in § 423.153(f)(2)(i)(C) to make reasonable attempts to communicate telephonically with prescribers with a reasonable period if the prescribers were not responsive after 3 attempts to contact them within 10 business days. Finally, we proposed language in § 423.153(f)(4)(ii) that would provide an exception to the case management requirement in § 423.153(f)(2) in cases when a potential or an at-risk beneficiary was identified as such by the beneficiary's most recent prior prescription drug benefit plan and the sponsor had obtained the case management information from the sponsor and updated it as appropriate. We discussed such cases elsewhere in this section. We also discuss proposed § 423.153(f)(4)(iv) that would have imposed a 6-month delay before a sponsor could implement prescriber lock-in later in this preamble.

We received the following comments and our responses follow:

Comment: A commenter suggested that we allow a coverage limitation to be put in place through a drug management program if a prescriber requests one to assist in coordinating the care for his or her patient.

Response: If the beneficiary meets the clinical guidelines/OMS criteria we are finalizing, and a prescriber requests during case management that a coverage limitation be implemented for the beneficiary, the sponsor may implement it in accordance with the requirements we are finalizing for drug management programs in this rule.

Comment: Many commenters stated that Part D sponsors should not have to seek prescriber agreement to limit at-risk beneficiaries to a pharmacy(ies) for access to coverage for frequently abused drugs. These commenters argued that requiring prescriber agreement for pharmacy lock-in would create additional administrative burden and inefficiencies and thus prevent drug management programs from responding in a timely fashion to potentially dangerous overutilization of frequently abused drugs. These commenters also argued that sponsors of stand-alone Part D plans do not have contracts with most of the prescribers and, therefore, have limited opportunity to have clinical contact with these prescribers. Moreover, many commenters felt it was not appropriate to require that the prescriber agree to pharmacy lock-in when the pharmacy is not required to agree when a sponsor applies prescriber lock-in to an at-risk beneficiary.

Other commenters supported our proposal to require prescriber agreement for pharmacy lock-in. These commenters argued that provider discretion and clinical judgment is appropriate to prevent pharmacy lock-in from being implemented by Part D sponsors inappropriately and impeding legitimate patient access.

Response: CMS was persuaded by commenters' rationale that requiring prescriber agreement for pharmacy lock-in could undermine one purpose of drug management programs, which is to promptly address potentially dangerous overutilization of frequently abused drugs. While we recognize that prescriber agreement is an essential component of prescriber lock-in, and prescriber agreement is preferred in the case of a beneficiary-specific claim edit for frequently abused drugs, we are now persuaded that prescriber agreement to pharmacy lock-in is not essential, as pharmacy lock-in is primarily about where the drugs are dispensed and not who wrote the prescription or its dosage. Therefore, we are finalizing this provision with this modification. Plan sponsors will not be required to obtain the agreement of the prescribers of frequently abused drugs to implement a pharmacy lock-in. However, we do note that should a prescriber proactively alert the plan sponsor that they do not believe that pharmacy lock-in is appropriate for a particular at-risk beneficiary, we expect the plan sponsor to take such information into consideration.

On the point of prescriber agreement, we also wish to note that it was unclear in some of the statements if the commenters understood that section 1860D-4(c)(5)(C)(iv) and Section 1860D-4(c)(5)(B)(i)(II) of the Act require, respectively, that a Part D sponsor engage in clinical contact with prescribers regarding whether medications are appropriate for a beneficiary's medical condition and to Start Printed Page 16459verify that a beneficiary is at-risk before limiting access to coverage for frequently abused drugs. Thus, eliminating the need to obtain prescriber agreement to a pharmacy lock-in does not eliminate the requirement to comply with § 423.153(f)(2) and (f)(4)(i)(A) with respect to pharmacy lock-in.

Comment: Several commenters asked CMS to provide additional details about what options Part D plan sponsors would have if a prescriber does not agree to a pharmacy lock-in.

Response: As mentioned above, we are not finalizing the proposal that sponsors must receive prescriber agreement before placing an at-risk beneficiary in pharmacy lock-in.

Comment: In general, commenters supported our proposal that a Part D sponsor would have to obtain prescriber agreement before implementing prescriber lock-in or a beneficiary-specific claim edit at POS for frequently abused drugs to limit an at-risk beneficiary's access to coverage for frequently abused drugs, in cases when a prescriber is responsive to case management. These commenters maintained that the prescribers are in the best position to understand the beneficiary's background and know additional relevant considerations.

However, many commenters voiced their recommendation that the Part D sponsor be able to implement prescriber lock-in without obtaining agreement from all prescribers. Several commenters expressed that it would be difficult to get all prescribers to agree to any limitation, and suggested that as long as at least one prescriber of frequently abused drugs agreed to the limitation, sponsors should be able to proceed with a prescriber lock-in. Commenters suggested that plan sponsors will have already coordinated with the prescribers during case management, at which time the sponsor will have confirmed the appropriateness of the medication and verified with a prescriber that the beneficiary is at risk. Thus, these commenters further suggested that obtaining formal approval of the lock-in will only serve to delay initiating the lock-in.

Commenters also raised the point that a given prescriber may be contributing to the overutilization, in which case his or her approval may not be obtained and requested clarification how a sponsor should act in a beneficiary's best interest if prescribers disagree with each other about the implementation of a claim edit or lock-in. Some commenters recommended that CMS require approval only from the primary prescriber of frequently abused drugs, as determined by case management.

Response: We agree that in order for drug management programs to operate effectively, and prevent the resource-intensive process of obtaining agreement from multiple prescribers, a Part D sponsor should not have to obtain the agreement to prescriber lock-in of all the at-risk beneficiary's prescribers of frequently abused drugs. Therefore, we are changing the language of § 423.153(f)(4)(i)(B) to refer to at least one prescriber, which means that only one prescriber has to agree to prescriber lock-in or a beneficiary-specific POS edit.

In addition, we believe the language of § 423.153(f)(4)(ii)(B) needs to be clearer that prescribers must be responsive in the case of a prescriber lock-in, meaning that non-responsive prescribers cannot constitute agreement as they can in the case of a beneficiary-specific POS edit. Therefore, we are finalizing the § 423.153(f)(4) with this modification in paragraph (ii)(A) and a new (B).

Comment: We received a comment suggesting that a better approach to prescriber agreement would be for at-risk beneficiaries to identify a primary prescriber to help drug management and increase beneficiary safety.

Response: As noted above, we have modified our proposal and are finalizing that all prescribers do not have to agree to prescriber lock-in in order for a plan to implement prescriber lock-in for an at-risk beneficiary; rather, at least one prescriber has to agree. However, we believe that the prescriber who agrees to prescriber lock-in for a beneficiary should be identified through the plan sponsor as a result of case management, and not the at-risk beneficiary. There may be a conflict of interest in having an at-risk beneficiary select whom they consider to be their “primary” prescriber for purposes of prescriber agreement, given they might be motivated to select a “primary” prescriber that they feel would not agree to prescriber lock-in, such that they can continue receiving inappropriate amounts of frequently abused drugs. We reiterate that the requirement that at least one prescriber agree is for agreement to lock-in is different from the beneficiary's preferences for the prescriber to which they will be locked into, which we discuss later in this preamble.

Comment: We received comments that a prescriber should be able to agree, disagree or neither agree nor disagree with a limitation on a beneficiary's access to coverage for frequently abused drugs.

Response: A prescriber is of course free to have any of these reactions to case management. A plan sponsor cannot implement prescriber lock-in for the beneficiary, unless at least one prescriber agrees to prescriber lock-in, as discussed earlier. Typically, we would expect the one prescriber to agree to prescriber lock-in and agree to serve as the prescriber. A sponsor cannot lock-in a beneficiary to a prescriber who disagrees, unless the prescriber changes their mind, which must be documented in the case file.

We foresee a situation when a prescriber initially disagrees with prescriber lock-in and asserts that he or she must be able to continue to prescribe frequently abused drugs for the beneficiary. In such a case, if another prescriber has agreed to serve as the prescriber to which the beneficiary is locked into, a plan sponsor may need to again ask the first prescriber if he or she would agree to be a prescriber the beneficiary is locked into, and the beneficiary is ultimately locked into two prescribers to ensure reasonable access pursuant to § 423.153(f)(12), which we discuss further below. This could happen, for example, when a beneficiary has been obtaining opioids from multiple prescribers and benzodiazepines from one psychiatrist. A sponsor may have to permit an at-risk beneficiary to obtain opioids from the prescriber who agreed to the lock-in limitation and benzodiazepines from the psychiatrist, who initially did not agree to prescriber lock-in, but ultimately does agree to serve that beneficiary in a lock-in capacity.

With respect to a beneficiary-specific POS claim edit for frequently abused drugs, however, a plan sponsor may not implement one at a dosage that is lower than the highest dosage a prescriber asserts is medically necessary, which is consistent with our current policy.[13]

If a prescriber neither agrees nor disagrees with a limitation on access to coverage for frequently abused drugs, such a prescriber may be considered by the sponsor to be non-responsive, and an at-risk beneficiary could not be locked into that prescriber.

Comment: We received a comment suggesting that 30 days be the time period during which a Part D sponsors must attempt to reach an unresponsive prescriber.

Response: We believe 30 days is too long considering that drug management programs involve frequently abused drugs and multiple prescribers and Start Printed Page 16460pharmacies; that the clinical guidelines identify beneficiaries who are at potentially at high risk for an adverse health event due to the amount of such drugs they are taking; and that there is an apparent lack of coordinated care.

Comment: We received a comment that a sponsor should only be required to attempt to reach a prescriber twice in 10 business days rather than 3 times in order to establish that the prescriber is unresponsive.

Response: We decline to make this change as this is our current policy and we received minimal comment on this proposed requirement. The purpose of the policy is to ensure that sponsors have diligently tried to involve prescribers in the case management process.

We wish to note that we believe the language we proposed in § 423.153(f)(4)(iii) which provides an exception to case management is duplicative of the language we discussed above that we are finalizing in § 423.153(f)(2)(ii). Therefore, we are deleting the language in § 423.153(f)(4)(iii).

Given the foregoing, we are finalizing § 423.153(f)(4) with modification, including ones to assist the reader in more easily understanding the cross-references.

We will also state in paragraph (ii)(A) that, except as provided in paragraph (ii)(B) which regards a prescriber limitation, if the sponsor 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)(4)(i)(B) of this section which regards eliciting information from the prescribers. Paragraph (i)(B) will state that the sponsor may not implement a prescriber limitation pursuant to § 423.153(f)(3)(ii)(A) if no prescriber was responsive.

(vii) Beneficiary Notices and Limitation of Special Enrollment Period (§§ 423.153(f)(5), 423.153(f)(6), 423.153(f)(7), 423.153(f)(8), 423.38)

(A) Initial Notice to Beneficiary and Sponsor Intent To Implement Limitation on Access to Coverage for Frequently Abused Drugs (§ 423.153(f)(5))

The notices referred to in proposed § 423.153(f)(4)(i)(C) are the initial and second notice that section 1860D-4(c)(5)(B)(i)(I) of the Act requires Part D sponsors to send to potential at-risk and at-risk beneficiaries regarding their drug management programs.

We proposed in § 423.153(f)(5) that if a Part D plan sponsor intends to limit the access of a potential at-risk beneficiary to coverage for frequently abused drugs, the sponsor will be required to provide an initial written notice to the potential at-risk beneficiary. We also proposed that the language be approved by the Secretary and be in a readable and understandable form that contains the language required by section 1860D-4(c)(5)(B)(ii) of the Act, as well as additional detail specified in the proposed regulation text.

In proposed paragraph (f)(5)(ii)(C)(2)—which will require a description of public health resources that are designed to address prescription drug abuse—we proposed to require that the notice contain information on how to access such services. We also included a reference in proposed paragraph (ii)(C)(4) to the fact that a beneficiary will have 30 days to provide information to the sponsor, which is a timeframe we discuss later in this preamble. We proposed an additional requirement in paragraph (ii)(C)(5) that the sponsor include the limitation the sponsor intends to place on the beneficiary's access to coverage for frequently abused drugs, the timeframe for the sponsor's decision, and, if applicable, any limitation on the availability of the SEP. Finally, we proposed a requirement in paragraph (ii)(C)(8) that the notice contain other content that CMS determines is necessary for the beneficiary to understand the information required in the initial notice.

We noted that our proposed implementation of the statutory requirements for the initial notice will permit the notice also to be used when the sponsor intends to implement a beneficiary-specific POS claim edit for frequently abused drugs.

Although section 1860D-4(c)(5) is silent as to the sequence of the steps of clinical contact, prescriber verification, and the initial notice, we proposed to implement these requirements such that they will occur in the following order: first, the plan sponsor will conduct the case management which encompasses clinical contact and prescriber verification required by § 423.153(f)(2) and obtain prescriber agreement if required by § 423.153(f)(4), and subsequently, if applicable, the plan sponsor will provide the initial notice indicating the sponsor's intent to limit the beneficiary's access to frequently abused drugs. Further, under our proposal, although the proposed regulatory text of (f)(4)(i) states that the sponsor must verify with the prescriber(s) that the beneficiary is an at-risk beneficiary in accordance with the applicable statutory language, the beneficiary will still be a potential at-risk beneficiary from the sponsor's perspective when the sponsor provides the beneficiary the initial notice. This is because the sponsor has yet to solicit information from the beneficiary about his or her use of frequently abused drugs, and such information may have a bearing on whether a sponsor identifies a potential at-risk beneficiary as an at-risk beneficiary.

Moreover, we proposed that a sponsor should not send a potential at-risk beneficiary an initial notice until after the sponsor has been in contact with the beneficiary's prescribers of frequently abused drugs as part of case management, so as to avoid unnecessarily alarming the beneficiary. This is because the result of case management may be that the sponsors takes a “wait and see” approach to observe if the prescribers adjust their management of, and opioid prescriptions they are writing for, the beneficiary. We noted that while this approach is acceptable, we still expect sponsors to address the most egregious cases of apparent opioid overutilization without unreasonable delay.

Under our proposed approach, a sponsor will provide an initial notice to a potential at-risk beneficiary if the sponsor intends to limit the beneficiary's access to coverage for frequently abused drugs, and the sponsor will provide a second notice to an at-risk beneficiary when it actually imposes a limit on the beneficiary's access to coverage for frequently abused drugs. Alternatively, the sponsor will provide an alternate second notice if it decides not to limit the beneficiary's access to coverage for frequently abused drugs. The second notice and alternate second notice are discussed later in this final rule.

Finally, we proposed to require at § 423.153(f)(5)(iii) that the Part D plan sponsor make reasonable efforts to provide the beneficiary's prescriber(s) of frequently abused drugs with a copy of the notice required under paragraph (f)(5)(i).

We received the following comments related to the initial notice, and general comments applicable to all the proposed notices, and our responses follow:

Comment: We received many comments related to our proposal to require written beneficiary notice both when a plan identifies the beneficiary as potentially at risk for prescription drug abuse, and again when the plan determines the beneficiary is at risk and implements a beneficiary-level POS edit Start Printed Page 16461and/or a pharmacy or prescriber lock-in for frequently abused drugs. Some commenters disagreed with our proposal to require two notices, stating that a second notice would be unnecessary, confusing, or overly burdensome.

Several other commenters strongly supported our proposal to require the two notifications, including the proposed change to the existing OMS process that would require the initial and second notices before a plan imposes a beneficiary-specific edit at POS. Commenters stated that requiring multiple notices will increase the likelihood that affected beneficiaries will be notified of their status and aware of how they could dispute it. A commenter wanted CMS to require more than two notices, because CMS did not propose to require acknowledgement of receipt from the beneficiary.

Response: We thank those commenters who agreed with our proposals to require two notices and to integrate existing OMS process into a uniform process for all drug management program restrictions. While we appreciate the concerns expressed by commenters who do not agree with our proposal, as we noted in the proposed rule, the statute at § 1860D-4(c)(5)(B) clearly requires written beneficiary notification both upon identification as a potential at-risk beneficiary and again when the plan determines the beneficiary is at risk. We do not agree that additional notices beyond what we proposed should be required, as it would be overly burdensome on plans and provide little value to beneficiaries.

Comment: Several commenters asked if stakeholders will have an opportunity to comment on the beneficiary notices and for more information on whether they can be modified by plans and when they will be released. A commenter requested that CMS conduct focus-group testing with beneficiaries to ensure the notice is understandable.

Response: As discussed in section III.B.14 of this final rule, these notices are subject to approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The notices will be posted in the Federal Register to give stakeholders an opportunity to review and comment before final versions of the notices are posted. CMS will consider testing through beneficiary focus groups, time permitting. The notices and accompanying instructions will contain detailed information about permissible modifications by plans. CMS intends to release the notices with sufficient time for plan sponsors to implement them into their drug management programs.

Comment: We received some comments related to requirements to translate these beneficiary notices. Some of the commenters stated that these notices should be designated to be among materials subject to translation requirements in proposed §§ 422.2268 and 423.2268. A commenter asked for clarification on whether plans are required to include section 1557 taglines with these notices.

Response: While CMS is still developing instructions related to translation requirements to provide guidance on the requirements at §§ 422.2268 and 423.2268, we note that, 423.128(d)(1)(iii) requires Part D plan sponsors' call centers to have interpreter services available to call center personnel to answer questions from limited-English proficient beneficiaries. These obligations are based on Medicare regulations and other civil rights laws, such as Title VI of the Civil Rights Act of 1964, that apply to Medicare health and drug plans. Applicability of Section 1557, and the scope of requirements for access for limited English proficient beneficiaries, and what is a significant communication are determined by the Office for Civil Rights (OCR).

Comment: A commenter urged CMS to consider implementing additional requirements for beneficiary notification, including establishing requirements stipulating information that must be written on envelopes containing written notices, adding requirements for telephonic or email notification in addition to written notices, and requirements for prescribers to contact beneficiaries to confirm receipt of the required notices.

Response: We agree with the commenter that detailed beneficiary notification is important, both upon identification as a potential at-risk beneficiary and again either confirming the at-risk identification or that the plan has determined the beneficiary is not at-risk. However, we disagree with this commenter that additional notice requirements are necessary or advisable. We believe it would be overly burdensome to require plans to include specific information on the outside of mailing envelopes and there is no such precedent for similar beneficiary notices in the Part D program, such as notices of coverage denials or transition letters. While CMS expects that prescribers of frequently abused drugs will communicate regularly with their patients, we do not believe it is necessary to require prescribers to confirm that beneficiaries received the required plan notices. Finally, we note that, while CMS does not require telephonic or email notification in addition to the required written notices, plans are not precluded from doing so.

Comment: A commenter asked why CMS proposed to require that the initial notice contain contact information for other organizations that can provide assistance to beneficiaries regarding the sponsor's drug management program.

Response: Such information is statutorily required under § 1860D-4(c)(5)(B)(ii)(VII) to be included in the initial notice. As specified in the statute, it should be similar to the information provided in other standardized Part D beneficiary notices. We expect the notice may include, for example, contact information for the enrollee's State Health Insurance Program (SHIP), 1-800-MEDICARE, the Medicare Rights Center, and/or other organizations as appropriate.

Comment: We received some comments that supported our proposal to require plan sponsors to make reasonable efforts to provide copies of notices to the potentially at-risk and at-risk beneficiary's prescriber(s).

Response: We thank these commenters for their support.

Comment: A few commenters opined that Part D plan sponsors and third party administrators do not have access to a list of all State and Federal public health resources designed to address prescription drug abuse. These commenters stated that requiring plans operating in multiple states to compile such a list would be overly burdensome, and requested that CMS provide templates containing such information as required under proposed § 423.153(f)(5)(ii)(C)(2). Another commenter asked if MA-PD plans will be allowed to include information about plan-specific mental health benefits in addition to State and Federal resources.

Response: CMS appreciates the input provided by these commenters. While the notice templates and instructions are still under development, CMS expects to provide information on Federal and State public health resources to assist plans in meeting the statutory requirement at § 1860D-4(c)(5)(B)(ii)(II) to include such information in the initial notice. Under the existing regulations at § 423.505(i), Part D plan sponsors are ultimately responsible for adhering to all terms and conditions of their contract with CMS, including compliance with all Federal laws, regulations and CMS instructions related to activities or responsibilities delegated to a third party. Pursuant to the regulation at § 423.153(f)(5)(ii)(C)(2), which we are finalizing as proposed, plans will be also required to include Start Printed Page 16462information about relevant benefits and services covered by the plan, such as medical, mental health and MAT benefits.

Comment: Some commenters stated that CMS should specify in regulation text that initial notices must not be sent to potential at-risk beneficiaries until the plan has communicated with and received clinical information from the beneficiary's prescribers. These commenters noted that failure to conduct case management prior to sending the initial notice would interfere with doctor-patient relationships and unnecessarily alarm beneficiaries who may be determined not to be at-risk.

Response: We agree with these commenters that initial notices should not be sent to beneficiaries before the plan has engaged in case management and attempted to communicate with the beneficiary's prescriber(s), and this is specified in the regulation text at § 423.153(f)(2)(i). However, we know from experience with the OMS process that prescribers are not always responsive to the plan's attempts to make clinical contact; therefore, we proposed at § 423.153(f)(2)(i)(C) that plans must make additional attempts to contact such prescribers. Additionally, we proposed at § 423.153(f)(4) that plans cannot limit access to frequently abused drugs unless the plan has conducted case management and obtained agreement from prescribers (or made certain attempts to contact prescribers). We believe this approach strikes an appropriate balance between ensuring sufficient access to frequently abused drugs and protecting at-risk beneficiaries from potential harm in the absence of improved care coordination.

After consideration of the comments received on this section, we are finalizing our proposal with modification to clearly codify the policy that a sponsor should not provide the initial notice to the beneficiary until after the sponsor has engaged in the required case management by adding the phrase “after conducting the case management required by § 423.153(f)(2)” at the beginning of § 423.153(f)(5)(i).

(B) Limitation on the Special Enrollment Period for LIS Beneficiaries With an At-Risk Status (§ 423.38)

Section 704(a)(3) of CARA gave the Secretary the discretion to limit the SEP for full benefit dually eligible (FBDE) beneficiaries outlined in section 1860D-1(b)(3)(D) of the Act. In addition to providing relevant information to a potential at-risk beneficiary, we proposed that the initial notice will notify dually- and other low income subsidy (LIS)-eligible beneficiaries that they would be unable to use the special enrollment period (SEP) for LIS beneficiaries due to their potential at-risk status. (Hereafter, this SEP is referred to as the “duals' SEP”). This limitation is related to, but distinct from, other changes to the duals' SEP discussed in the proposed rule.

We proposed that once a dually- or other LIS-eligible individual is identified as a potential at-risk beneficiary, and the sponsor intends to limit the beneficiary's access to coverage for frequently abused drugs, the sponsor will provide an initial notice to the beneficiary and the duals' SEP would no longer be available to the otherwise eligible individual. This means that he or she would be unable to use the duals' SEP to enroll in a different plan or disenroll from the current Part D plan. The limitation would be effective as of the date the Part D plan sponsor identifies an individual to be potentially at-risk.

We proposed that, consistent with the timeframes discussed in proposed paragraph § 423.153(f)(7), if the Part D plan sponsor takes no additional action to identify the individual as an at-risk beneficiary within 90 days from the initial notice, the “potentially at-risk” designation and the duals' SEP limitation would expire. If the sponsor determines that the potential at-risk beneficiary is an at-risk beneficiary, the duals' SEP would not be available to that beneficiary until the date the beneficiary's at-risk status is terminated based on a subsequent determination, including a successful appeal, or at the end of a 12-month period calculated from the effective date of the limitation, as specified in the second notice provided under § 423.153(f)(6), whichever is sooner.

We noted that auto- and facilitated enrollment of LIS eligible individuals and plan annual reassignment processes would still apply to dual- and other LIS-eligible individuals who were identified as an at-risk beneficiary in their previous plan. Furthermore, we noted that the proposed enrollment limitations for Medicaid or other LIS-eligible individuals designated as at-risk beneficiaries would not apply to other Part D enrollment periods, including the AEP or other SEPs, including when an individual has a gain, loss, or change in Medicaid or LIS eligibility. We proposed that the ability to use the duals' SEP would not be permissible once the individual is enrolled in a plan that has identified him or her as a potential at-risk beneficiary or at-risk beneficiary under § 423.100 of this final rule. (See section II.A.10 for a more detailed discussion of Part D SEP changes.)

We received the following comments and our response follows:

Comment: We received many comments supporting the limitation of the duals' SEP for those individuals identified as potential at-risk or at-risk for overutilizing frequently abused drugs. Commenters noted that this limitation would support care coordination for this population, ensure that these beneficiaries are effectively managed, and prevent those that do abuse drugs from frequent plan switching, and either changing to a Part D plan without a drug management program, or accessing opioids because of a gap in information sharing across plans. Several commenters stated that this move would support their state's efforts in curbing the opioid epidemic.

Response: We appreciate the support for our proposal to limit the SEP for individuals identified as potential at-risk or at-risk for overutilizing frequently abused drugs.

Comment: A commenter requested that CMS confirm that any limitations on Part D LIS-eligible individuals would not impact the ability of such individuals to make an enrollment or disenrollment during other enrollment periods for which he or she is eligible. Commenters specifically asked about the AEP and the SEPs available for individuals to enroll in or disenroll from Program for All-inclusive Care (PACE) or enroll in a 5-Star plan.

Response: We note that the enrollment limitation for a potential at-risk or an at-risk individual will not apply to other Part D enrollment periods, including the AEP or other SEPs, including new SEPs that will be established at § 423.38(c)(9) and (c)(10) and are discussed in more detail in section II.A.10. of this final rule. In the event that an individual is subject to this limitation, but is eligible for another enrollment period, he or she may use that enrollment period to make a change. For example, a potential at-risk or at-risk dually- or other LIS-eligible individual who is subject to the duals' SEP limitation may use the PACE SEP to enroll in or disenroll from PACE, or they may use the 5-Star Rating SEP to enroll in an MA plan, PDP, or cost plan with a Star Rating of 5 stars during the year in which that plan has the 5-star overall rating, provided the enrollee meets the other requirements to enroll in that plan.

Comment: A commenter asked for clarification as to whether the SEP limitation for potential at-risk or at-risk individuals would apply when a Start Printed Page 16463beneficiary loses Medicaid eligibility and goes through the deeming process permitted in capitated models under Financial Alignment Initiative demonstrations. The commenter stated that, in their state, a beneficiary is allowed to remain in the demonstration Medicare-Medicaid Plan (MMP) for up to 3 months while he or she tries to regain Medicaid eligibility. If the beneficiary regains Medicaid eligibility within this 3 month window, would the state be required to allow the beneficiary to change his or her enrollment? The commenter stated, that, now, they automatically re-enroll the beneficiary back into the MMP.

Response: The period of deemed continued eligibility provides an opportunity for individuals in Dual Special Needs Plans (D-SNPs) or MMPs who lose Medicaid eligibility to stay enrolled in their plan for a short time,[14] while they try to regain Medicaid eligibility. However, should an individual be eligible to leave the plan, and takes an action to leave the plan, using any valid SEP, the plan must honor the disenrollment request. It is our view that a change in Medicaid status, especially loss of Medicaid eligibility, is an important event with potentially significant financial impacts to the beneficiary. As a result, the SEP outlined in § 423.38(c)(9) will remain available to a potential at-risk or at-risk individual, even if the person is provided a deeming period by an MMP or D-SNP. This will permit individuals in a capitated model under the Financial Alignment Initiative demonstrations to change plans using the duals' SEP, within 3 months of a gain, loss, or change to Medicaid or LIS eligibility, or notification of such.

Comment: We received several comments relating to the operational aspects of implementing this limitation on the duals' SEP. Commenters requested clarification on how a plan sponsor would know if a potential at-risk or at-risk beneficiary was not eligible to use the duals' SEP, and how the MARx system would be operationalized to effectuate this change. A commenter requested clarification on how these individuals would be prevented from utilizing the duals' SEP.

Response: Information related to an individual's at-risk status, including the beginning and end dates for any limitation imposed, will be stored in MARx and available to plans for enrollment processing via the User Interface (UI) and the beneficiary eligibility query (BEQ). CMS will reject a submitted enrollment for a beneficiary who is subject to the SEP limitation and the plan will be notified with a unique transaction reply code (TRC). We will also notify plans via a TRC if a member has a change in their at-risk status period. We will provide further subregulatory guidance on system and operational changes that will occur to effectuate this limitation, as well as the larger drug management program.

Comment: To further assist in these efforts to curb opioid misuse, a commenter requested that CMS share data about any members in Part D plans who are subject to this SEP limitation to target Medicaid wrap services, including supplemental behavioral health and substance use treatment services.

Response: We thank the commenter for their suggestion and we will explore data sharing for states to provide additional services to these individuals.

Comment: A commenter recommended that CMS allow potential at-risk or at-risk individuals to use the duals' SEP to change to another plan if that plan has an established drug management program in place.

Response: We appreciate the comment; however, we disagree with allowing individuals identified as potentially at risk or at risk to use the duals' SEP. Even if an at-risk individual joined another plan that had a drug management program in place, there would be challenges in terms of preventing a gap managing their potential or actual overutilization of frequently abused drugs due to the timing of information sharing between the plans and possible difference in provider networks.

Comment: A commenter stated that because the “at-risk” status is transferable from one plan to another, an individual will not avoid the implications of the lock-in by utilizing the SEP. As such, the commenter believed that the dual SEP should not be limited.

Response: We disagree. First, for general clarification purposes, the at-risk determination will not automatically transfer and be applied by a new Part D plan in the event a potentially at-risk or at-risk beneficiary changes plans. Even though a gaining plan will be able to see if a new member had an at-risk determination with their prior plan, the new plan will still have to make their own determination regarding the individual's status and send the individual the appropriate notice, which will trigger the SEP limitation, as we have explained elsewhere in this preamble. Although the beneficiary's prior at-risk designation is an indicator that the new plan will have to initiate case management and may even allow them to bypass the first notice and go straight to issuing the second notice, the at-risk determination is not directly transferable.

In addition, while we assume that all Part D sponsors will have drug management programs in place, it is not a requirement.

With respect to the need for the SEP limitation, this policy is still needed to prevent potential and at-risk beneficiaries from making frequent plan changes after they receive the initial and second notices, as applicable, and thus, avoid the care coordination that drug management plans are intended to provide.

We note that the SEP limitation—whether it is a first time designation or one that is being applied after enrollment into a new plan—will be effective as of the date on the initial notice that the Part D plan sponsor provides to an individual identified to be potentially at-risk. We are revising that language in § 423.38(c)(4) to state that beneficiaries that have been notified that they are potentially at-risk or at-risk, and such identification has not been terminated in accordance with § 423.153(f)), will not be able to use the duals' SEP.

Comment: A commenter encouraged CMS to offer increased resources to SHIPs to provide targeted outreach to the dual eligible and LIS populations who will be impacted by these changes. The commenter stated that CMS should also conduct outreach and education to providers and pharmacies, including mental health and substance use providers, as well as community based organizations (such as recovery learning communities), as these changes have a specific impact on beneficiaries with substance use disorders. The commenter stated that these efforts will help ensure that beneficiaries most likely to be impacted by these changes, and their providers, are made aware well in advance of implementation. Also, the commenter encouraged CMS and the Administration for Community Living (ACL) to provide continued funding for state Ombudsman programs that serve dual eligible populations enrolled in demonstration products, and to allow states to use this funding to serve dual Start Printed Page 16464eligible beneficiaries enrolled in any integrated care product, including, for example FIDE SNPs.

Response: CMS appreciates the comment, and we will continue to explore avenues for beneficiary and provider outreach and education; however, provisions for addressing cost and funding resources is outside of the scope of this rule.

Comment: Several commenters opposed the limitation of the duals' SEP for at-risk beneficiaries. Commenters cited issues, such as limited access to prescription drugs and the possible risks of medical complications and increased costs resulting from such access barriers. They also noted the vulnerability and special needs of this population. A commenter stated that this limitation is unnecessary, as the current OMS program in Part D typically resolves cases of potential misuse without resorting to any beneficiary-specific tactic and would result in beneficiaries losing access to an important patient protection.

Response: We appreciate the comments. As we stated in the proposed rule, based on the 2015 data in CMS' OMS, more than 76 percent of all beneficiaries estimated to be potential at-risk beneficiaries are LIS-eligible individuals. It is our view that the SEP limitation will be an important tool to reduce the opportunities for dual and LIS-eligible beneficiaries designated as at-risk to switch plans, and circumvent the care coordination that a drug management program is designed to provide for this vulnerable population, especially as our nation faces an opioid epidemic. As stated previously, the enrollment limitation for a potential at-risk or an at-risk individual would not apply to other Part D enrollment periods, including the AEP or other SEPs. In the event that a potential at-risk or at-risk dually- or other LIS-eligible individual is subject to this limitation, but that individual is eligible to make an enrollment change using a different and valid election period, he or she may do so.

In the case where an individual is prescribed a specific drug that is not on the sponsor's formulary, the individual always has the right to request a coverage determination for the drug. Each Part D sponsor that provides prescription drug benefits for Part D drugs and manages this benefit through the use of a formulary must establish and maintain exceptions procedures for receipt of an off formulary drug. A Part D sponsor must grant an exception whenever it determines that the drug is medically necessary, consistent with the physician's or other prescriber's statement, and that the drug would be covered but for the fact that it is an off formulary drug. Since these protections apply to all beneficiaries, they also protect dually-eligible and other LIS-eligible beneficiaries.

Comment: A couple of commenters stated that maintaining maximum flexibility regarding enrollment in Medicare Part D and the ability to change PDPs best serves the interests of low-income beneficiaries, especially American Indian and Alaskan Native (A/I and A/N) beneficiaries. The commenters further stated that a decision to change plans is often made in order to access a specific prescription drug. The commenters further requested that, if the proposed regulation is retained, CMS specify an exemption for Indian Health Service (IHS)-eligible individuals as inserting the Medicare Part D drug plans into the relationship between Medicare/IHS beneficiaries and their IHS/Tribal providers would not be helpful. We discuss IHS beneficiaries again further below.

Response: CMS disagrees with establishing population-based exceptions to the duals' SEP limitation. In our view, all potential at-risk and at-risk beneficiaries should be afforded the opportunity to benefit from the care coordination that the drug management program is designed to provide. We do not believe it is prudent at this time to carve out a subset of at-risk beneficiaries to which special rules apply. As previously mentioned, there are opportunities for potential at-risk and at-risk individuals to make enrollment choices during other election periods. Also, an individual always has the right to request a coverage determination, including an exception request for an off-formulary drug.

Comment: A couple of commenters expressed concern about this SEP limitation not being appealable. A commenter urged CMS to make the loss of the duals' SEP for potential at-risk beneficiaries appealable, as an at-risk beneficiary's other non-opioid-related conditions may justify the using of an SEP. A commenter noted that the proposal stipulated an appeals process for beneficiaries wishing to appeal their at-risk status, but encouraged CMS in its final rule to clarify whether the loss of a duals' SEP would be appealable in any way, and urge CMS to make a provision for beneficiaries who may need access to this SEP despite their at-risk status.

Response: Similar to all other enrollment decisions, the limitation on the duals' SEP for potential at-risk or at-risk individuals is not appealable. However, after an individual is determined to be at-risk, he or she may appeal that determination. We intend to provide maximum transparency to the beneficiary by ensuring, consistent with the statutory requirements, that the beneficiary has information about appeal rights during the at-risk determination process.

Comment: A commenter stated that nothing in the law would make a dual-eligible at- risk or potentially at-risk beneficiary ineligible for an SEP.

Response: We disagree with the commenter. Section 704(a)(3) of CARA gives the Secretary the discretion to limit the SEP for FBDE beneficiaries outlined in section 1860D-1(b)(3)(D) of the Social Security Act (the Act). As discussed previously, the duals' SEP was extended to all other subsidy-eligible beneficiaries by regulation so that all LIS-eligible beneficiaries are treated uniformly.

Comment: A commenter is concerned that dually- and other LIS-eligible individuals inappropriately identified as potentially at-risk may not understand the process for correcting a determination that was made in error or may otherwise be inappropriate. The commenter further stated that some beneficiaries will be erroneously identified and not confirmed as at-risk and they should not be subject to the SEP limitation as a result of poor data, plan error, or some other reason unrelated to the beneficiary's action.

Response: We appreciate the comments. We believe that there will be sufficient safeguards in the design and implementation of prescription drug management programs to prevent errors and provide beneficiaries with an opportunity to make corrections. CMS expects that exempt individuals will be identified through OMS. For those that are not excluded based on this data, they should be excluded by their plans during case management, as clinical contact and prescriber verification and agreement should occur before an initial notice of potential at-risk status is sent to the individual and the SEP limitation is imposed. Thereafter, if a beneficiary believes he or she has been identified in error, the beneficiary has a chance to submit relevant information in response to the initial notice. If a determination is made that a beneficiary is an at-risk beneficiary, a Part D sponsor must also provide a second written notice to the beneficiary which is required to provide clear instruction on how a beneficiary may submit further applicable information to the sponsor. A beneficiary is also provided a right to redetermination of the at-risk status. CMS expects these measures will provide adequate protections for all beneficiaries.Start Printed Page 16465

Comment: Another commenter requested clarification that the SEP is only removed for LIS beneficiaries once the plan sponsor has completed case management activities, including prescriber agreement.

Response: We appreciate the question regarding when the duals' SEP limitation goes into effect. The duals' SEP limitation can go into effect without prescriber agreement; however, before the initial notice is sent, which informs the beneficiary of the limitation, the sponsor is required to engage in case management and attempt to communicate with the beneficiary's prescriber(s).

Comment: A commenter urged CMS to make a provision for LIS beneficiaries who lose access to their SEP, but need access to non-opioid drugs. For example, if an LIS beneficiary is determined to be at-risk and loses an SEP, and is later diagnosed with a different chronic condition that requires medication not on the beneficiary's current formulary. The commenter requested that CMS specify in the final rule that such a beneficiary would be given special consideration when submitting an appeal to their current plan to gain coverage of necessary non-opioid drugs.

Response: We do not believe any “special consideration” is necessary. An enrollee—regardless of LIS eligibility—always has the right to request a coverage determination for a drug. In all cases, the standard is that the plan must notify the enrollee of its coverage determination decision as expeditiously as the enrollee's health condition requires, but no later than the applicable adjudication timeframe (24 hours for an expedited coverage determination, 72 hours for a standard coverage determination).

Comment: A commenter noted that, while they agree with the proposal to implement the SEP provision, there may be an increase in complaints and grievances against the sponsor. The commenter encourages CMS to exclude beneficiaries identified as potentially at-risk and at-risk from Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys and not count complaints related to the duals' SEP limitation in the Complaint Tracking Module (CTM) numbers for star-rating purposes.

Response: Thank you for the comment. Our Star Ratings proposal did not address this topic, and we plan to take this comment under advisement.

After consideration of these comments, we are finalizing the provision on the CARA duals' SEP limitation at § 423.38(c)(4) with a modification to specify that beneficiaries that have been notified that they are potentially at-risk or at-risk as defined in § 423.100, and such identification has not been terminated in accordance with § 423.153(f)), will not be able to use the duals' SEP.

The duals' SEP limitation will align with the revised timeframes for the potential-at-risk and at-risk status as addressed in section 423.153(f) of this final rule. That is, if the Part D plan sponsor takes no additional action to identify the individual as an at-risk beneficiary within 60 days from the date on the initial notice, the “potentially at-risk” designation and the duals' SEP limitation will expire. At-risk determinations will be for an initial 12 month period, with the option to extend for a maximum of 24 months in total (that is, an additional 12 month period) upon reassessment of the beneficiary's at-risk status at the completion of the initial 12 month period.

(C) Second Notice to Beneficiary and Sponsor Implementation of Limitation on Access to Coverage for Frequently Abused Drugs (§ 423.153(f)(6))

Section 1860D-4(c)(5)(B)(i)(I) of the Act requires Part D sponsors to provide a second written notice to at-risk beneficiaries when they limit their access to coverage for frequently abused drugs. We proposed to codify this requirement in § 423.153(f)(6)(i). As with the initial notice, our proposed implementation of the statutory requirement for the second notice will also permit it to be used when the sponsor implements a beneficiary-specific POS claim edit for frequently abused drugs. Specifically, we proposed to require the sponsor to provide the second notice when it determines that the beneficiary is an at-risk beneficiary and to limit the beneficiary's access to coverage for frequently abused drugs. We further proposed to require the second notice to include the effective and end date of the limitation. Thus, this second notice will function as a written confirmation of the limitation the sponsor is implementing with respect to the beneficiary, and the timeframe of that limitation.

We also proposed that the second notice, like the initial notice, contain language required by section 1860D-4(c)(5)(B)(iii) of the Act to which we proposed to add detail in the regulation text. The second notice must also be approved by the Secretary and be in a readable and understandable form, as well as contain other content that CMS determines is necessary for the beneficiary to understand the information required in the notice. In paragraph (2), we proposed language that will require a sponsor to include the limitation the sponsor is placing on the beneficiary's access to coverage for frequently abused drugs, the effective and end date of the limitation, and if applicable, any limitation on the availability of the SEP. We proposed an additional requirement in paragraph (6) that the sponsor include instructions how the beneficiary may submit information to the sponsor in response to the request described in paragraph (4). In § 423.153(f)(6)(iii), we proposed that the sponsor be required to make reasonable efforts to provide the beneficiary's prescriber(s) of frequently abused drugs with a copy of the notice, as we proposed with the initial notice. Finally, we proposed a requirement in paragraph (7) that the notice contain other content that CMS determines is necessary for the beneficiary to understand the information required in the initial notice.

Also, the sponsor will generally be required to send two notices—the first signaling the sponsor's intent to implement a POS claim edit or limitation (both referred to generally as a “limitation”), and the second upon implementation of such limitation. Under our proposal, the requirement to send two notices will not apply in certain cases involving at-risk beneficiaries who are identified as such and provided a second notice by their immediately prior plan's drug management program.

We received the following comments and our responses follow:

Comment: We received many comments related to our proposal requiring plans to provide a second written notice to beneficiaries before implementing a restriction under the plan's drug management program, most of which supported the proposal. Other commenters opposed it, expressing a belief that only one notice would be sufficient. Some of these commenters offered ideas for various alternative approaches for CMS to consider, such as including information in the plan's Evidence of Coverage that would replace the notices described in the proposed rule, or using a single notice similar to the current OMS requirement. Other commenters stated that the two notices required for lock-in should be limited to lock-in and plans should continue to be permitted to send a single notice when implementing a beneficiary-level POS edit.

Response: We disagree with the comments recommending requiring a single beneficiary notice or replacing one or both notices with general information in other documents. Section Start Printed Page 164661860D-4(c)(5)(B) requires two written notices before a beneficiary can be locked-in to a prescriber or pharmacy, and includes a high level of specificity about the content of the notices. Moreover, the required initial and second notices contain important information about access restrictions that may be or will be placed on potentially at-risk and at-risk beneficiaries, resources such beneficiaries may need to treat potential drug dependency issues, and notification of important beneficiary rights.

We also disagree with comments stating that the proposed notice requirements for the lock-in program should be limited to lock-in, and that CMS should retain existing beneficiary notice policies, including sending only one notice, when implementing beneficiary-level POS edits. Currently, the application of a beneficiary-level POS claim edit is not considered a coverage determination and does not trigger appeal rights under Subpart M. As we explained in the proposed rule, the implementation of a beneficiary-specific POS claim edit or a limitation on the at-risk beneficiary's coverage for frequently abused drugs to a selected pharmacy(ies) or prescriber(s) will be an aspect of an at-risk determination (a type of initial determination that will confer appeal rights on the beneficiary, consistent with section 1860D-4(c)(5)(E) of the Act) under our proposal establishing the Part D drug management program. As discussed in subsection (c) of this preamble, we are finalizing the proposal to integrate the current OMS process with lock-in to create a uniform drug management program for Part D. Under this final rule, since the application of a beneficiary-level POS edit for frequently abused drugs can only be applied upon the plan's at-risk determination and is subject to appeal, it is necessary to treat those edits the same as limitations on selected pharmacy(ies) or prescriber(s). Furthermore, we believe that establishing an inconsistency with respect to notice requirements would be confusing for beneficiaries and plans. For these reasons, and because we believe the second notice, which identifies the action taken by the plan and instructs the beneficiary how to exercise their statutory appeal rights, is an important beneficiary protection, the notice is required both for lock-in and for POS edits for frequently abused drugs.

Comment: A commenter suggested that CMS require that the second notice, in addition to the initial notice, include a description of all State and Federal public health resources addressing prescription drug abuse that are available to the beneficiary.

Response: While we agree that this information is important to communicate to affected beneficiaries, we recognize the potential burden that multiple notices may place on plan sponsors as well as beneficiaries. We note that such information is required in the initial notice, and the statute does not require it in the second notice. While CMS will not preclude plans from providing this information again, for example, if requested by the enrollee, we do not believe it is necessary to require that it be included in both notices.

After consideration of comments received, we are finalizing our proposal without modification to require plans to send both the initial and second notice before implementing a beneficiary-level POS edit or a pharmacy or prescriber lock-in under a drug management program.

(D) Alternate Second Notice When Limit on Access Coverage for Frequently Abused Drugs by Sponsor Will Not Occur (§ 423.153(f)(7))

Although not explicitly required by the statute, we proposed at § 423.153(f)(7) that if a sponsor determines that a potential at-risk beneficiary is not an at-risk beneficiary and does not implement the limitation on the potential at-risk beneficiary's access to coverage of frequently abused drugs it described in the initial notice, then the sponsor will be required to provide the beneficiary with an alternate second notice. Specifically, we proposed that such alternate second notice use language approved by the Secretary in a readable and understandable form, and contain the following information: The sponsor has determined that the beneficiary is not an at-risk beneficiary; the sponsor will not limit the beneficiary's access to coverage for frequently abused drugs; if applicable, the SEP limitation no longer applies; clear instructions that explain how the beneficiary may contact the sponsor; and other content that CMS determines is necessary for the beneficiary to understand the information required in this notice.

As with the other notices, we proposed that the Part D sponsor be required to make reasonable efforts to provide the beneficiary's prescriber(s) of frequently abused drugs with a copy of this notice.

We received the following comments and our response follows:

Comment: We received a few comments on this proposal. Some of these commenters supported the proposal and agreed that such notice is necessary to minimize beneficiary confusion and limit unneeded appeals when a plan decides not to implement any restrictions on frequently abused drugs. A commenter disagreed with our proposal to require an alternate second notice, stating such notice is not necessary.

Response: As we stated in the proposed rule, we believe that this alternate notice is necessary to ensure beneficiaries who received the initial notice of an intended limitation on access to frequently abused drugs under the plan's drug management program are informed of the outcome of the plan's decision not to take such action. We are finalizing § 423.153(f)(7) without modification.

(E) Timing of Notices and Exceptions to Timing (§ 423.153(f)(8))

Section 1860D-4(c)(5)(B)(iv) of the Act requires a Part D sponsor to provide the second notice to the beneficiary on a date that is not less than 30 days after the sponsor provided the initial notice to the beneficiary. Although not specifically required by CARA, we believe it is also important to establish a maximum timeframe by which the plan must send the second notice or the alternate second notice, to ensure that plans do not leave a case open indefinitely. We proposed to specify at § 423.153(f)(8)(i) that a Part D sponsor must provide the second notice described in paragraph (f)(6) or the alternate second notice described in paragraph (f)(7), as applicable, on a date that is not less than 30 days and not more than the earlier of the date the sponsor makes the relevant determination or 90 days after the date of the initial notice described in paragraph (f)(5).

Section 1860D-4(c)(5)(B)(iv)(II) of the Act explicitly provides for an exception to the required 30 day minimum timeframe for issuing a second notice. Specifically, the statute permits the Secretary to identify through rulemaking concerns regarding the health or safety of a beneficiary or significant drug diversion activities that will necessitate that a Part D sponsor provide the second written notice to the beneficiary before the minimum 30 day time period normally required has elapsed.

As we explained in the proposed rule, because this provision also allows an at-risk identification to carry forward to the next plan, we believe it is appropriate to permit a gaining plan to provide the second notice to an at-risk beneficiary so identified by the most Start Printed Page 16467recent prior plan without having to wait the minimum 30 days, if certain conditions are met. This is consistent with our current policy under which a gaining sponsor may immediately implement a beneficiary-specific POS claim edit, if the gaining sponsor is notified that the beneficiary was subject to such an edit in the immediately prior plan and such edit had not been terminated.[15]

As such, at § 423.153(f)(8)(ii), we proposed one exception to the timing of the notices, applicable to at-risk beneficiaries who switch plans. The exception allows a gaining plan sponsor to immediately provide the second notice described in paragraph (f)(6) to a beneficiary for whom the gaining sponsor received notice that the beneficiary was identified as an at-risk beneficiary by the prior plan and such identification had not been terminated. The exception is only permissible if the gaining sponsor is implementing either a beneficiary-specific POS edit as described in paragraph (f)(3)(i) under the same terms as the prior plan, or a limitation on access to coverage as described in paragraph (f)(3)(ii), if such limitation will require the beneficiary to obtain frequently abused drugs from the same pharmacy location and/or the same prescriber, as applicable, that was selected under the immediately prior plan under (f)(9).

We received the following comments and our responses follow:

Comment: Some commenters recommended that the timeframe between the first and second notices be shortened to within 15 days, which the commenters believe would provide sufficient time for beneficiaries to submit preferences. A commenter noted that there is no added value in waiting 30 days after the initial notice to provide the second notice because it contains similar information.

Response: We disagree with these commenters. Outside of circumstances identified by the Secretary through rulemaking, section 1860D-4(c)(5)(B)(iv) requires that the second notice be provided “on a date that is not less than 30 days” after the initial notice. Moreover, because the statute gives significant deference to beneficiary preferences, CMS does not believe that 15 days is sufficient for beneficiaries to receive the initial notice, identify their preferences for prescribers and/or pharmacies, potentially confer with the preferred prescribers and/or pharmacies, communicate preferences to their plan, and give the plan sufficient time to implement the limitation in their systems, including situations where the plan determines that an exception to preferences under § 423.153(f)(10) is warranted.

Comment: We received several comments supporting our proposal to establish a maximum timeframe by which sponsors must send the second or alternate second notice. However, most of these commenters expressed concerns that 90 days is too long because potentially at-risk beneficiaries would be subject to a limitation on their SEP without appeal rights during that 90 day timeframe. Commenters stated that, if those beneficiaries identified as potentially at-risk did not lose access to the SEP, 90 days would be acceptable. Other commenters expressed a belief that plans would not need 90 days to obtain beneficiary preferences and implement relevant access limitations upon receipt of those preferences.

Response: We appreciate the commenters' feedback about the proposed 90 day maximum timeframe. As we noted in the preamble to the proposed rule, while section 1860D-4(c)(5)(B)(iv) of the Act requires plans to wait a minimum of 30 days from the initial notice before providing the second notice, Congress did not establish a maximum timeframe. Because case management, clinical contact and prescriber verification requirements would be met before the plan sends the initial notice, we agree with the commenters that our proposed 90 day maximum timeframe between notices could be shortened. Therefore, we are modifying § 423.153(f)(8)(i) to require the notice required under (f)(6) or alternate notice required under (f)(7) to be provided to the beneficiary no more than the earlier of the date the sponsor makes the relevant determination or 60 days after the date of the initial notice required under (f)(5).

Given the comments received, many of which stated that the 90 day maximum timeframe we proposed is too long, we believe 60 days strikes the right balance. We do not believe the maximum timeframe should be shorter than 60 days, because sponsors may need this time to process information from beneficiaries that is received at the end of the minimum 30 day timeframe, or to communicate with prescribers who may have been unresponsive prior to receiving a copy of the initial notice the plan provided to the beneficiary. This revised timeframe is still sufficient to limit any potential compliance issues for sponsors related to timeliness and unnecessary appeals where such information is still being processed. However, we do not expect sponsors to routinely take the maximum amount of time to issue the second notice, and note that they must send it sooner if they make the relevant determination sooner. We note that the SEP is addressed in an earlier section of this preamble.

Comment: We received several comments related to our proposal at § 423.153(f)(8)(ii) to, under certain circumstances, permit a gaining plan to immediately send a second notice without waiting 30 days to a beneficiary who is already subject to a drug management program coverage limitation (a beneficiary-specific POS claim edit or pharmacy or prescriber lock-in) in their immediately prior plan. Most commenters supported our proposal to establish an exception to the 30-day notice for at-risk beneficiaries, as identified by the losing plan, when such beneficiaries switch plans and the gaining plan decides to continue the same limitation(s). Some of these commenters agreed that exceptions to the 30 day notice should be limited to circumstances where the beneficiary was already given notice by the previous plan. Some commenters noted that because a beneficiary may be changing plans due to dissatisfaction with their current providers, these beneficiaries must also have an opportunity to change their preferences with respect to pharmacies and prescribers when they change plans. Other commenters supported the exception that we proposed but stated that the statute allows exceptions under additional circumstances based on the health and safety of the beneficiary or significant drug diversion activity. A commenter recommended that CMS should specify that when a beneficiary who moves to a new plan offered by the same parent organization as their prior plan, the plan is not required to send any notice to the beneficiary to continue the restriction because such notice would only serve to confuse the beneficiary.

Response: As we explained in the proposed rule, we believe that exceptions to the statutory requirement to wait at least 30 days before sending the second notice and implementing a coverage limitation under a drug management program should be very limited. Since the drug management program is focused on improved care coordination for beneficiaries who are utilizing high doses of frequently abused drugs and/or have multiple providers, and the statute specifies that such exceptions be identified through rulemaking regarding the health or Start Printed Page 16468safety of the beneficiary or regarding significant drug diversion activities, we do not believe that it is appropriate to permit such an exception based on a sponsor's concerns about the health and safety of a particular beneficiary because that is too subjective and could adversely impact such beneficiaries, who could be subject to a coverage limitation without notice. Rather, we are finalizing the exception we proposed related to at-risk beneficiaries who switch plans and the gaining plan decides to continue a limitation(s) under the same terms as the losing plan, because we believe, in this instance, the coverage limitation(s) can safely be immediately implemented—namely, when the beneficiary already has been identified as at-risk by his or her prior plan, and the coverage limitations would continue in the same manner under his or her new plan. We have not at this time identified additional circumstances under which an exception to the 30-day minimum between the first and second notices is warranted. We note that this final rule does not change existing requirements that Part D plan sponsors cannot pay fraudulent claims. With respect to a beneficiary who changes plans within the same parent organization, we are clarifying that the gaining plan must still meet the requirements set forth at § 423.153(f)(8)(ii). We do not believe it is advisable to apply a different standard to a gaining plan just because it has the same parent organization as the losing plan.

While we are finalizing our proposed exception to the timing of the notices, we agree with the commenters who stated that beneficiaries who change plans should still have an opportunity to change their preferences for prescribers and pharmacies. Therefore, we are clarifying that an at-risk beneficiary's right to submit new preferences we are finalizing at (f)(9) also applies to beneficiaries who switch plans. While a gaining plan could still implement the restriction without providing 30 day advance notice, they must comply with the statutory and regulatory requirements to accept beneficiary preferences. Under the exception to the notice requirements that we are finalizing in this rule, a gaining plan choosing to immediately impose the restriction(s) of the prior plan is not required to resend the initial notice described at (f)(5) that was sent by the prior plan, but must issue a new version of the second notice described at (f)(6). This notice, which is being developed by CMS, will allow the gaining plan to include updated information from the initial notice that changes with the change to the new plan (for example, plan contact information or relevant medical benefits available to such beneficiary under the new plan).

After consideration of all comments received on § 423.153(f)(8), we are finalizing our proposal at paragraph (f)(8)(i) to retain the minimum 30 day timeframe between the initial and second or alternate second beneficiary notices (except as provided in subparagraph (ii)), with a modification establishing a maximum timeframe of 60 days between the notices.

Additionally, we are finalizing the proposed exception to the minimum 30 day timeframe at § 423.153(f)(8)(ii), which permits a gaining plan to immediately issue the second beneficiary notice required by (f)(6) and implement a continuation of the same claim edit and/or pharmacy or prescriber lock-in for an at-risk beneficiary who was already provided the initial and second notice for such limitation(s) from the losing plan. As discussed above, we believe the circumstances under which a limitation can be safely implemented without advance beneficiary notice and are consistent with the requirements for such exceptions at section 1860D-4(c)(5)(iv)(II) are limited in scope. While, at this time, we have not identified additional circumstances under which we believe an exception to the 30 day beneficiary notice is warranted under section 1860D-4(c)(5)(B)(iv)(II), we will continue to evaluate this issue, and may establish additional exceptions through future rulemaking.

(viii) Provisions Specific to Limitations on Access to Coverage of Frequently Abused Drugs to Selected Pharmacies and Prescribers (§§ 423.153(f)(4) and 423.153(f)(9) Through (13))

Some of the drug management program provisions in CARA are only relevant to “lock-in.” We proposed several regulatory provisions to implement these provisions, as follows:

(A) Special Requirement To Limit Access to Coverage of Frequently Abused Drugs to Selected Prescriber(s) (§ 423.153(f)(4))

In the proposed rule, we noted that, at that time, we viewed prescriber lock-in as a tool of last resort to manage at-risk beneficiaries' use of frequently abused drugs, meaning when a different approach has not been successful, whether that was a “wait and see” approach after case management or the implementation of a beneficiary specific POS claim edit or a pharmacy lock-in. We also were concerned about impacting an at-risk beneficiary's relationship with their provider, and we sought comment on whether a 6-month delay before a sponsor could implement prescriber lock-in would lessen burden on prescribers.

As a result, we proposed in § 423.153(f)(4)(iv) that a sponsor may not limit an at-risk beneficiary's access to coverage of frequently abused drugs to a selected prescriber(s) until at least 6 months has passed from the date the beneficiary is first identified as a potential at-risk beneficiary. We specifically sought comment on whether this 6-month waiting period would reduce provider burden sufficiently to outweigh the additional case management, clinical contact and prescriber verification that providers may experience if a sponsor later believed a beneficiary's access to coverage of frequently abused drugs should be limited to a selected prescriber(s).

We received the following comments and our response follows:

Comment: Many commenters expressed significant concerns with the proposal to require a Part D plan sponsor to wait at least six months from the date the beneficiary is first identified as a potential at-risk beneficiary before limiting that beneficiary to a prescriber for frequently abused drugs, noting that it works against the goal of CARA and defeats the purpose of the lock-in program. Moreover, many commenters also expressed that a 6 month delay to prescriber lock-in was not in the spirit of a national public health emergency, and may actually place at-risk beneficiaries at even greater risk for adverse health outcomes. A commenter expressed support for the 6 month delay, noting that it would allow time for alternative interventions to be implemented so as to not burden the prescriber unnecessarily. A commenter offered a lengthy legal argument against the 6-month delay for prescriber lock-in.

Response: In light of these comments, we have been persuaded not to finalize require a 6 month waiting period before a plan may limit an at-risk beneficiary to a prescriber for frequently abused drugs. We agree with the majority of commenters that CMS should not impose a waiting period for plan sponsors to implement a prescriber lock-in for at-risk beneficiaries, and that once a beneficiary is deemed at-risk, a plan sponsor should have the full range of limitations on access to coverage for frequently abused drugs to employ for such beneficiaries. We are persuaded Start Printed Page 16469that our initial concern about the beneficiary's relationship with a provider is significantly outweighed by the more immediate concerns for the beneficiary's safety.

In addition, we are unpersuaded that our proposal would reduce burden on providers. This is because a sponsor, in conducting the case management is required under § 423.153(f)(2), to contact prescribers and the sponsor may seek a prescriber's agreement to a beneficiary-specific POS claim edit pursuant to § 423.153(f)(4). Thus, we now believe that requiring a sponsor to wait 6 months to contact the prescriber again to assist with additional case management for the prescriber lock-in, and to possibly obtain the prescriber's agreement to such lock-in, will actually increase provider burden.

For these reasons, we are not finalizing the proposal that a sponsor may not limit an at-risk beneficiary's access to coverage of frequently abused drugs to a selected prescriber(s) until at least 6 months has passed from the date the beneficiary is first identified as a potential at-risk beneficiary. Therefore, we have removed the language from § 423.153(f)(4) relevant to this 6-month waiting period for prescriber lock-in.

(B) Selection of Pharmacies and Prescribers (§§ 423.153(f)(9) Through (13))

(1) Beneficiary Preferences (§ 423.153(f)(9))

Section 1860D-4(c)(5)(D)(iii) of the Act provides that, if a sponsor intends to impose, or imposes, a limit on a beneficiary's access to coverage of frequently abused drugs to selected pharmacy(ies) or prescriber(s), and the potential at-risk beneficiary or at-risk beneficiary submits preferences for a network pharmacy(ies) or prescriber(s), the sponsor must select the pharmacy(ies) and prescriber(s) for the beneficiary based on such preferences, unless an exception applies, for example, the beneficiary's preferred provider would contribute to the beneficiary's abuse of prescription drugs. We address exceptions to beneficiary's preferences later in the preamble.

In light of this language, we proposed a Part D plan sponsor must accept an at-risk beneficiary's preferences for in-network prescribers and pharmacies from which to obtain frequently abused drugs unless an exception applies. In cases that involve stand-alone PDPs, we proposed that a sponsor must accept the beneficiary's selection of prescriber, unless an exception applies, because such PDPs do not have provider networks. We further proposed that a stand-alone PDP or MA-PD does not have to accept a beneficiary's selection of a non-network pharmacy, except as necessary to provide reasonable access, which we discuss later in this section. Our rationale for this proposal was that the selection of network prescribers and pharmacies puts the plan sponsor in the best possible position to coordinate the beneficiary's care going forward in light of the demonstrated concerns with the beneficiary's utilization of frequently abused drugs.

Also, we did not propose to place a limit on how many times beneficiaries can submit their preferences, but we did solicit additional comments on this topic. Finally, under our proposal, the sponsor would be required to confirm the selection of pharmacy and/or prescriber in writing to the beneficiary either in the second notice, if feasible, or within 14 days of receipt of the beneficiary's submission.

We received the following comments and our response follows:

Comment: Commenters widely supported CMS's proposal that the pharmacy or prescriber in which an at-risk beneficiary is locked-into must be in-network for a plan, except to provide reasonable access or when the plan does not have a relevant network. Specifically, commenters noted that allowing selection of out of network pharmacies or prescribers would undermine keeping beneficiary costs low, and efforts to combat pharmacy-based fraud and abuse.

Response: We thank commenters for their support.

Comment: CMS received a handful of comments that disagreed that a prescriber should have to be in-network, given some Medicare Advantage beneficiaries may receive out-of-network treatment from providers due to their relationships with the prescriber and the high quality of care that they provide. These commenters requested that CMS eliminate the requirement that a prescriber generally must be in-network if the plan sponsor imposes a limit on a beneficiary's access to coverage for frequently abused drugs to a selected prescriber or prescribers.

Response: We were not persuaded that sponsors should have to accept a beneficiary's selection of an out-of-network prescriber or pharmacy, unless needed to maintain reasonable access or if the plan does not have a relevant network. Our rationale for this is that Section 1860D-4(c)(5)(D)(iii) refers specifically to the beneficiary selecting a network prescriber(s) and/or pharmacy(ies) and the plan sponsor accepting such selections based on the beneficiary's preference. We therefore believe that the statute does not contemplate requiring Part D plan sponsors to select a beneficiary's preference of an out-of-network prescriber or pharmacy in all instances.

However, because our requirements for drug management programs—as proposed and finalized—permit stand-alone PDPs to use prescriber lock-in, the requirement for a sponsor to accept the beneficiary's selection of a network prescriber is inapplicable, and the sponsor must accept the beneficiary's selection of a prescriber, unless an exception applies, such as if the selection would contribute to the beneficiary's abuse of prescription drugs. With regard to this exception, we note that when there is a prescriber or pharmacy network, and the plan sponsor asserts it would accept a beneficiary's in-network pharmacy or prescriber preference(s) but such selection would contribute to prescription drug abuse or drug diversion by the beneficiary, we would question why such pharmacy or prescriber is in the sponsor's network.

We realize that in the case of at-risk beneficiaries enrolled in MA plans that provide out-of-network coverage of services and are designed and specifically authorized for that purpose (that is, PPO, PFFS, and cost plans), these beneficiaries have access to supplemental services out of network. However, as we stated above, Section 1860D-4(c)(5)(D)(iii) states that if an at-risk beneficiary submits preferences for which in-network prescribers and pharmacies the beneficiary would prefer, the PDP sponsor shall select them. The requirement, discussed later, that Part D prescription drug management programs ensure reasonable access addresses the sponsor's selection out-of-network prescribers and pharmacies when necessary and therefore accommodate our regulations at § 422.105; § 422.112 that permit out-of-network coverage.

We note that by requiring a plan sponsor to accept an at-risk beneficiary's selection of an out-of-network prescriber, we would in effect have a blanket requirement that a coordinated health plan to manage an at-risk beneficiary out-of-network, which would be difficult to achieve. For those at-risk beneficiaries locked into a particular prescriber(s) and/or pharmacy(ies), prescriptions for frequently abused drugs would need to be obtained from an in-network prescriber (when such a network exists), even in the case of at-risk beneficiaries who are enrolled in MA plan that provide for out-of-network coverage. Start Printed Page 16470Therefore, we are finalizing our provision as proposed.

We wish to make a point of clarification regarding at-risk beneficiaries who are entitled to fill prescriptions or receive services from IHS, Tribal, and Urban Indian (ITU) organization pharmacies and providers. An IHS I/T/U pharmacy or provider may be the selected pharmacy or prescriber for such beneficiaries and they may go to such a pharmacy or prescriber pursuant to our reasonable access requirement, even if they are not in-network which we discuss again later.

Comment: Regarding a limitation on how many times beneficiaries can submit their preferences, many commenters suggested that we allow an at-risk beneficiary to submit his or her preferences anywhere from 1 to 3 times per year, noting that it was important to cap the number of times preferences can be submitted. A commenter noted that the beneficiary's unlimited opportunity to change preferences for prescribers and pharmacies will be problematic and burdensome, and recommended that CMS place a limit on the number of times a beneficiary may change preferences on an annual basis, unless they can provide good cause for requesting the change. Suggested examples of good cause would include moving beyond easy access to the prescriber or pharmacy; the prescriber has discharged the beneficiary from his/her practice; or the pharmacy is unable to provide the requested drugs.

Response: While commenters raised concerns that at-risk beneficiaries should have some parameters around changing their preferences for a selected pharmacy or prescriber, CMS must balance curbing opioid overuse and misuse with ensuring reasonable access to selected pharmacies and prescribers. Therefore, we will allow at-risk beneficiaries to submit their preferences to plan sponsors without a numerical restriction during the plan year. We note that the sponsor does not have to make changes to the selection of pharmacy(ies) and prescriber(s) based on the at-risk beneficiaries preferences if the plan sponsor believes such changes are contributing to abuse or diversion of frequently abused drugs, pursuant to § 423.153(f)(10), discussed above. Also, CMS will monitor for these issues and act accordingly to ensure efficient operation of the program and prevention of excessive administrative burden.

Comment: A commenter stated that an at-risk beneficiary should not be locked-into pharmacies in which the plan sponsor or PBM overseeing the drug management program has a financial interest.

Response: Since the selection of the pharmacy in which an at-risk beneficiary is locked into is largely a beneficiary choice, and one they are provided specifically in the statute with little exception, CMS does not find this comment persuasive, and will finalize this provision as proposed.

Comment: A commenter stated that plan sponsors should be able to implement the change in a beneficiary's preference within 14 days after the beneficiary has submitted the preference.

Response: We note that our proposal, which we are finalizing, requires the sponsor to inform the beneficiary of the selection in the second notice or if not feasible due to the timing of the beneficiary's submission of preference, in a subsequent written notice issue no later than 14 days after receipt of the submission.

Accordingly, we are finalizing § 423.153(f)(9), as proposed. We note that we added the words “or change” in paragraph (iii) for consistency with the rest of the regulation text in this section.

(2) Exception to Beneficiary Preferences (§ 423.153(f)(10))

Section 1860D-4(c)(5)(D)(iv) of the Act provides for an exception to an at-risk beneficiary's preference of prescriber or pharmacy from which the beneficiary must obtain frequently abused drugs, if the beneficiary's allowable preference of prescriber or pharmacy will contribute to prescription drug abuse or drug diversion by the at-risk beneficiary. Section 1860-D-4(c)(5)(D)(iv) of the Act requires the sponsor to provide the at-risk beneficiary with at least 30 days written notice and a rationale for not accepting his or her allowable preference for pharmacy or prescriber from which the beneficiary must obtain frequently abused drugs under the plan.

We received the following comments and our response follows:

Comment: Commenters generally agreed with our proposal that plan sponsors may disallow a beneficiary's selection of a prescriber or pharmacy that may contribute to prescription drug abuse or drug diversion.

Response: We appreciate the commenters support.

Comment: A commenter suggested that CMS require plans/PBMs to report the percentage of times when beneficiary preference is/is not considered and to track which pharmacy the plan/PBM utilizes to override patient preference.

Respons e: While we are not currently requiring that plans or PBMs report to CMS the percentage of times when beneficiary preference is/is not considered and to track which pharmacy the plan/PBM utilizes to override patient preference, we will re-evaluate this policy in the future if it becomes problematic. Therefore, we will closely monitor to make sure plans are not inappropriately choosing to not accept beneficiary preferences, in order to ensure efficient operation of the program and prevention of excessive administrative burden.

While we received no comments specific to beneficiary appeal rights when the plan's selection of pharmacies or prescribers for lock-in are not aligned with the beneficiary's submitted preferences, we remind plans that the statute at § 1860D-2(c)(5)(E) specifically states that the selection of pharmacy or prescriber for lock-in is subject to appeal. If a beneficiary complains about being locked into a pharmacy or prescriber that is not the one they selected, such complaint must be treated as an appeal. We address beneficiary appeals rights later in this preamble.

We are finalizing the following at § 423.153(f)(10) Exception to Beneficiary Preferences, as proposed.

(3) Reasonable Access (§§ 423.100, 423.153(f)(11) 423.153(f)(12))

If a potential at-risk beneficiary or at-risk beneficiary does not submit pharmacy or prescriber preferences, section 1860-D-4(c)(5)(D)(i) of the Act provides that the Part D sponsor shall make the selection. Section 1860-D-4(c)(5)(D)(ii) of the Act further provides that, in making the selection, the sponsor shall ensure that the beneficiary continues to have reasonable access to frequently abused drugs, taking into account geographic location, beneficiary preference, the beneficiary's predominant usage of prescriber or pharmacy or both, impact on cost-sharing, and reasonable travel time. We proposed § 423.153(f)(11) to codify these statutory provisions.

Since the statute explicitly allows the beneficiary to submit preferences, we interpreted the additional reference to beneficiary preference in the context of reasonable access to mean that a beneficiary allowable preference should prevail over a sponsor's evaluation of geographic location, the beneficiary's predominant usage of a prescriber and/or pharmacy impact on cost-sharing, and reasonable travel time. In the absence of a beneficiary preference for pharmacy and/or prescriber, however, a Part D plan sponsor must take into Start Printed Page 16471account geographic location, the beneficiary's predominant usage of a prescriber and/or pharmacy, impact on cost-sharing, and reasonable time travel in selecting a pharmacy and/or prescriber, as applicable, from which the at-risk beneficiary will have to obtain frequently abused drugs under the plan. Thus, absent a beneficiary's allowable preference or plan recognition that the beneficiary's selection will contribute to prescription drug abuse or drug diversion, we proposed that the sponsor must ensure reasonable access by choosing the network pharmacy or prescriber that the beneficiary uses most frequently unless the plan is a stand-alone PDP and the selection involves a prescriber(s). In the latter case, the prescriber will not be a network provider, because such plans do not have provider networks. In urgent circumstances, we proposed that reasonable access means the sponsor must have reasonable policies and procedures in place to ensure beneficiary access to coverage of frequently abused drugs without a delay that may seriously jeopardize the life or health of the beneficiary or the beneficiary's ability to regain maximum function. We stated that determining reasonable access may be complicated when an enrollee has multiple addresses or his or her health care necessitates obtaining frequently abused drugs from more than one prescriber and/or more than one pharmacy. Sections 1860D-4(c)(5)(D)(ii)(I) and (II) address this issue by requiring the Part D plan sponsor to select more than one prescriber to prescribe frequently abused drugs and more than one pharmacy to dispense them, as applicable, when it reasonably determines it is necessary to do so to provide the at-risk beneficiary with reasonable access, which we proposed to codify at § 423.153(f)(12). To address chain pharmacies and group practices, we proposed that in the case of a group practice, all prescribers of the group practice shall be treated as one prescriber and all locations of a pharmacy that share real-time electronic data should be treated as one pharmacy.

We proposed to interpret these provisions to mean that a sponsor will be required to select more than one prescriber of frequently abused drugs, if more than one prescriber has asserted during case management that multiple prescribers of frequently abused drugs are medically necessary for the at-risk beneficiary.

We received the following comments and our response follows:

Comment: A commenter noted that the reasonable access provisions did not allow for situations where a patient who is locked-in is hospitalized or develops a new medical condition that requires they see a new physician, and that CMS should consider providing additional flexibility in such unexpected or unplanned situations.

Response: We note that drugs dispensed during a hospitalization are covered under the Medicare Part A benefit. Aside from that, plans are required to provide reasonable access to at-risk beneficiaries in their drug management programs under proposed § 423.153(f)(11). Proposed § 423.153(f)(12) requires a Part D plan sponsor to select more than one prescriber to prescribe frequently abused drugs when it reasonably determines it is necessary to do so to provide the at-risk beneficiary with reasonable access. To the extent that a new health condition necessitates an at-risk beneficiary to change providers who prescribe frequently abused drugs rather than see more than one, the beneficiary can submit a new prescriber preference, as discussed earlier.

With respect to a hospital emergency room visit, for example, we stated that in urgent circumstances, proposed § 423.153(f)(11) requires a Part D sponsor to ensure an at-risk beneficiary has reasonable access in the case of emergency services, which we stated means that the sponsor must have reasonable policies and procedures in place to ensure beneficiary access to coverage of frequently abused drugs without a delay that may seriously jeopardize the life or health of the beneficiary or the beneficiary's ability to regain maximum function. Thus, we believe § 423.153(f)(11) and (12) address the commenter's concerns.

Comment: We received a comment requesting that group practices be permitted to designate one or more prescribers when a plan sponsor intends to limit a beneficiary's access to coverage of frequently abused drugs to a selected prescriber or prescribers at a group practice, and permit the group practice to modify such designation from time to time. The commenter stated that this requirement should apply whether or not the prescribers at the group practice are all associated with the same single Tax Identification Number (TIN).

Response: Under the provision we proposed and are finalizing, all prescribers of a group practice are treated as one prescriber. A TIN is a mechanism that can assist Part D sponsors in identifying group practices, but as discussed earlier in the preamble, case management can also reveal the existence of a group practice that is prescribing frequently abused drugs to a beneficiary.

Comment: We received several comments that recommended that CMS re-evaluate its policy for determining chain pharmacies, as identification of which pharmacies share real-time data may be difficult in many situations, noting that sponsors do not have an effective way to manage such arrangements, and PBMs do not have the systems capabilities to discern if their systems are integrated and interchangeable. A commenter stated support for CMS' proposal as it relates to chain pharmacies, but noted that managing this option will be challenging absent additional instructions from CMS.

Response: Section 1860D-4(c)(5)(D)(ii) of the Act states that with respect to a pharmacy that has multiple locations that share real-time electronic data, all such locations of the pharmacy shall collectively be treated as one pharmacy for purposes of an at-risk beneficiary's selection of pharmacies. Until such pharmacies can be determined through data, sponsors with drug management programs will have to ascertain such pharmacies through the case management and beneficiary notification processes. We therefore are finalizing this provision as proposed.

Earlier in the preamble in responding to comments about prescriber agreement, we stated that in the case of prescriber lock-in, if a prescriber who has not agreed to this limitation insists that he or she must be able to continue to prescribe frequently abused drugs for the beneficiary, a plan sponsor may need to offer to lock-in the at-risk beneficiary to more than one prescriber to ensure reasonable access pursuant to § 423.153(f)(12), for example, if the beneficiary has been obtaining opioids from one prescriber and benzodiazepines from another. Thus, we point out that in finalizing the drug management program regulations, we are not interpreting the reasonable access provisions to require a sponsor to select more than one prescriber, if more than one prescriber has asserted during case management that multiple prescribers of frequently abused drugs are medically necessary for the at-risk beneficiary but only to consider it in the context of the requirement to provide reasonable access. This should also be the sponsor's approach when a beneficiary submits a preference for more than one prescriber and/or more than one pharmacy as his or her preference.

Also earlier in this preamble, we stated that an IHS pharmacy or provider may be the selected pharmacy or Start Printed Page 16472prescriber for at-risk beneficiaries who are entitled to fill prescriptions from IHS, tribal, or Urban Indian (I/T/U) organization pharmacies and receive services through the IHS health system, and that they may go to such a pharmacy or prescriber pursuant to our reasonable access requirement, even if they are not in-network. Therefore, we are adding language to § 423.153(f)(12) to address situations when the sponsor reasonably determines that the selection of an out-of-network prescriber or pharmacy is necessary to provide the beneficiary with reasonable access. This language also addresses our earlier comment that a stand-alone PDP or MA-PD does not have to accept a beneficiary's selection of a non-network pharmacy or prescriber, except as necessary to provide reasonable access.

Given the foregoing, we therefore finalize as proposed the following at § 423.153(f)(11), with a modification to include language that the sponsor must ensure reasonable access by taking into account “all relevant factors, including but not limited to” and to renumber for better clarity: Reasonable access. In making the selections under paragraph (f)(12) of this section, a Part D plan sponsor must ensure that the beneficiary continues to have reasonable access to frequently abused drugs, taking into account all relevant factors, including but not limited to: (i) Geographic location; (ii) Beneficiary preference; (iii) The beneficiary's predominant usage of a prescriber or pharmacy or both; (iv) The impact on cost-sharing; (v) Reasonable travel time; (vi) Whether the beneficiary has multiple residences; (vii) Natural disasters and similar situations; and (viii) The provision of emergency services.

We are also finalizing with modification for the addition of language requiring the selection of an out-of-network prescriber or pharmacy if necessary at § 423.153(f)(12). Paragraphs (f)(12)(i) and (ii) will specify the following:

  • A Part D plan sponsor must select, as applicable—

++ One, or, if the sponsor reasonably determines it necessary to provide the beneficiary with reasonable access, more than one, network prescriber who is authorized to prescribe frequently abused drugs for the beneficiary, unless the plan is a stand-alone PDP, or the selection of an out-of-network provider is necessary; and

++ One, or, if the sponsor reasonably determines it necessary to provide the beneficiary with reasonable access, more than one, network pharmacy that may dispense such drugs to such beneficiary, unless the selection of an out-of-network pharmacy is necessary.

  • For purposes of paragraph (f)(12) of § 423.153, in the case of a—

++ Pharmacy that has multiple locations that share real-time electronic data, all such locations of the pharmacy shall collectively be treated as one pharmacy; and

++ Group practice, all prescribers of the group practice shall be treated as one prescriber.

(4) Confirmation of Pharmacy and Prescriber Selection (§ 423.153(f)(13))

Section 1860D-4(c)(5)(D)(v) of the Act requires that, before selecting a prescriber or pharmacy, a Part D plan sponsor must notify the prescriber and/or pharmacy that the at-risk beneficiary has been identified for inclusion in the drug management program, which will limit the beneficiary's access to coverage of frequently abused drugs to selected pharmacy(ies) and/or prescriber(s) and that the prescriber and/or pharmacy has been selected as a designated prescriber and/or pharmacy for the at-risk beneficiary. We proposed § 423.153(f)(13) to codify this statutory requirement.

We also proposed that plan sponsors must obtain the network prescriber's or pharmacy's confirmation that the selection is accepted before conveying this information to the at-risk beneficiary, unless the prescriber or pharmacy agreed in advance in its network agreement to accept all such selections and the agreement specifies how the prescriber and pharmacy will be notified of its selection. In these cases, the network provider would agree to forgo specific notification if selected under a drug management program to serve an at-risk beneficiary.

We received the following comments and our responses follow:

Comment: We received a comment that CMS should prohibit plan sponsors from including in their provider agreements any requirement that would require a prescriber to confirm in advance and forego specific confirmation, if selected under a drug management program to serve an at-risk beneficiary.

Response: In light of this comment, and given the fact that we are finalizing a requirement for prescriber agreement for prescriber lock-in, as discussed earlier in the preamble, we believe the appropriate approach is that the required prescriber agreement during case management satisfies the requirement that the plan sponsor notify the prescriber that the at-risk beneficiary has been identified for inclusion in a drug management program and the prescriber has been selected as a prescriber that the beneficiary will be locked into for purposes of frequently abused drugs. In our view, the process of obtaining the prescriber agreement to prescriber lock-in also serves as the receipt of confirmation from the prescriber, not to mention our requirement that the sponsor make reasonable efforts to provide the prescriber with a copy of the beneficiary notices that the sponsor must provide, discussed earlier. Such an approach reduces unnecessary repetition of communication with prescribers.

For network pharmacies, this approach means that the notification that the at-risk beneficiary has been identified for inclusion in a drug management program and the pharmacy has been selected as a pharmacy that the beneficiary will be locked into for purposes of frequently abused drugs and the pharmacy's confirmation can be negotiated between the plan sponsor and the pharmacy, and if not, the plan sponsor must do so on a case-by-case basis, which is also the case for out-of-network prescribers and pharmacies.

Comment: A commenter proposed an additional exception to the confirmation requirement for plan sponsors that own or operate their own pharmacies, arguing that such confirmation would be unnecessary given that the pharmacy would already be confirmed, as part of their integrated system.

Response: We are not persuaded that an exception is needed in these situations. If the pharmacy is a separate legal entity from the plan sponsor, then the contract could contain a blanket agreement stating that the pharmacy agrees to accept at-risk beneficiaries that the plan sponsors locks into that pharmacy, as we mentioned in the proposed rule. If the pharmacy is the same legal entity as the plan sponsor, then notification is automatic, and no further notification or contract language would be necessary.

Based on the comments and our responses, we are finalizing this provision with modifications to state the following regarding confirmation of selections(s):

  • Before selecting a prescriber or pharmacy under this paragraph, a Part D plan sponsor must notify the prescriber or pharmacy, as applicable, that the beneficiary has been identified for inclusion in the drug management program for at-risk beneficiaries and that the prescriber or pharmacy or both is(are) being selected as the beneficiary's designated prescriber or pharmacy or both for frequently abused drugs. For prescribers, this notification occurs during case management as described in Start Printed Page 16473paragraph (f)(2) or when the prescriber provides agreement pursuant to paragraph (f)(4)(i)(B).
  • The sponsor must receive confirmation from the prescriber(s) or pharmacy(ies) or both, as applicable, that the selection is accepted before conveying this information to the at-risk beneficiary, unless the pharmacy has agreed in advance in a network agreement with the sponsor to accept all such selections and the agreement specifies how the pharmacy will be notified by the sponsor of its selection.
  • A sponsor complies with paragraphs (i) and (ii) as it pertains to a prescriber by obtaining the prescriber's agreement pursuant to § 423.153(f)(4)(i)(B).

(ix) Drug Management Program Appeals (§§ 423.558, 423.560, 423.562, 423.564, 423.580, 423.582, 423.584, 423.590, 423.602, 423.636, 423.638, 423.1970, 423.2018, 423.2020, 423.2022, 423.2032, 423.2036, 423.2038, 423.2046, 423.2056, 423.2062, 423.2122, and 423.2126)

Section 1860D-4(c)(5)(E) of the Act specifies that the identification of an individual as an at-risk beneficiary for prescription drug abuse under a Part D drug management program, a coverage determination made under such a program, the selection of a prescriber or pharmacy, and information sharing for subsequent plan enrollments shall be subject to reconsideration and appeal under section 1860D-4(h) of the Act. This provision also permits the option of an automatic escalation to external review to the extent provided by the Secretary.

As discussed earlier in this preamble, we proposed to integrate the lock-in provisions with existing Part D Opioid DUR Policy/OMS. Determinations made in accordance with any of those processes, at § 423.153(f), and discussed previously, are interrelated issues that we collectively refer to as an “at-risk determination.” In this final rule, we are adding a definition of at-risk determination at § 423.560 to describe a decision made under a plan sponsor's drug management program in accordance with § 423.153(f) that involves the identification of an individual as an at-risk beneficiary for prescription drug abuse; a limitation, or the continuation of a limitation, on an at-risk beneficiary's access to coverage of frequently abused drugs (that is, a beneficiary specific point-of-sale edit the selection of a prescriber and/or pharmacy and implementation of lock-in); and information sharing for subsequent plan enrollments.

We proposed that at-risk determinations made under the processes at § 423.153(f) be adjudicated under the existing Part D benefit appeals process and timeframes set forth in Subpart M. Consistent with the existing Part D benefit appeals process, we proposed that at-risk beneficiaries (or an at-risk beneficiary's prescriber, on behalf of the at-risk beneficiary) must affirmatively request IRE review of adverse plan level appeal decisions made under a plan sponsor's drug management program. We also proposed to amend the existing Subpart M rules at § 423.584 and § 423.600 related to obtaining an expedited redetermination and IRE reconsideration, respectively, to apply them to appeals of an at-risk determination made under a drug management program. While we did not propose to adopt auto-escalation, the proposed approach ensures that an at-risk beneficiary has the right to obtain IRE review and higher levels of appeal (ALJ/attorney adjudicator, Council, and judicial review). Accordingly, we also proposed to add the reference to an “at-risk determination” to the following regulatory provisions that govern ALJ and Council processes: §§ 423.2018, 423.2020, 423.2022, 423.2032, 423.2036, 423.2038, 423.2046, 423.2056, 423.2062, 423.2122, and 423.2126.

Finally, we also proposed a change to § 423.1970(b) to address the calculation of the amount in controversy (AIC) for an ALJ hearing in cases involving at-risk determinations made under a drug management program in accordance with § 423.153(f).

In addition to the changes related to the implementation of drug management program appeals, we also proposed to make technical changes to § 423.562(a)(1)(ii) to remove the comma after “includes” and replace the reference to “§§ 423.128(b)(7) and (d)(1)(iii)” with a reference to “§§ 423.128(b)(7) and (d)(1)(iv).”

We received the following comments and our responses follow:

Comment: A few commenters strongly objected to beneficiaries not having appeal rights during their designation as “potential” at-risk beneficiaries at the time the initial notice is received from the plan sponsor.

Response: As we noted in the proposed rule, when a beneficiary is identified as being potentially at-risk, but has not yet been definitively identified as at-risk, the plan is not taking any action to limit such beneficiary's access to frequently abused drugs. Because the plan sponsor has not taken any action to limit a beneficiary's access at this point in the process, the situation is not ripe for appeal. We proposed that a beneficiary will have the right to appeal a determination made under a plan sponsor's drug management program when the beneficiary receives the second notice explaining that access to coverage for frequently abused drugs will be limited. We believe the intent of the statute is to confer appeal rights to beneficiaries at the point in the process at which a beneficiary is notified that access will be limited and provide an explanation of the restrictions that will be applied under the drug management program.

As discussed earlier in this preamble, the proposed 90 day maximum timeframe for the plan sponsor to send the second or alternate second notice is being reduced to 60 days under this final rule. Specifically, the second or alternate second notice is to be provided to the beneficiary no more than the earlier of the date the sponsor makes the relevant determination or 60 days after the date of the initial notice. This 60 day period may be used by a plan sponsor to process information received from beneficiaries or communicate with prescribers who may have been unresponsive prior to receiving a copy of the initial notice the plan provided to the beneficiary. As we also previously noted in this preamble, we do not expect plans to routinely take the maximum amount of time to issue the second notice, and note that the plan must send it sooner if they make the relevant determination sooner. Reducing this period between the initial notice and the second or alternate second notice to a maximum of 60 days balances plan sponsors' need for time to process information from beneficiaries and prescribers, if applicable, with providing timely notice to beneficiaries.

Comment: Several commenters encouraged CMS to make the appeals process regarding lock-in as simple as possible for beneficiaries to ensure that those who need particular drugs are able to access them. These commenters suggested that CMS implement all of the protections of CARA, including automatic escalation to independent review. Several commenters do not agree with CMS' interpretation of the CARA language on appealing lock-in and believe automatic escalation to the IRE would ensure beneficiary due process and access to needed prescription drugs. These commenters strongly oppose the use of the existing Part D appeals process for appeals of at-risk status or other consequences of drug management, and view the process as a significant barrier that will increase the timeframe for the lock-in appeals process. Commenters expressed concerns regarding case management and physician agreement as additional hurdles for beneficiaries who are not at-Start Printed Page 16474risk, in addition to plan compliance with the current requirements for timely appeals. A few commenters stated that CARA contemplates a more streamlined process that is easier for beneficiaries to navigate and that automatic escalation would allow for improved tracking and monitoring of the scope and impact of the lock-in program, in addition to providing more uniform decision making across various plan programs. A commenter suggested that CMS conduct analysis to determine which option would prevent or reduce bias against beneficiaries, as well as minimize the timeframe by which the review process occurs, and upon implementation closely monitor the decisions of at-risk status to ensure decisions are made in the best interest of the beneficiary. A commenter recommended a separate appeals process that is similar to the grievance process.

Response: We agree with commenters that the appeals process for enrollees identified as at-risk should be as easy to navigate as possible. As we noted in the proposed rule, Part D enrollees, plan sponsors, and other stakeholders are already familiar with the Part D benefit appeals process. Resolving disputes that arise under a plan sponsor's drug management program within the existing Part D benefit appeals process is not only required by statute, but will allow at-risk beneficiaries to be more familiar with, and more easily access, the appeals process as opposed to creating a new process specific to appeals related to a drug management program. Since the statute specifically refers to section 1860D-4(h) of the Act and the process we proposed is consistent with the existing appeals process, we disagree with the comment that further analysis of options is necessary to “prevent or reduce bias against beneficiaries.” As we noted in the proposed rule, affording a plan sponsor the opportunity to review its initial determination may result in resolution of the disputed issues at a lower level of review and obviate the need for further appeal of the issues to the Part D IRE which, in turn, will minimize the time for reviewing and resolving disputes. With respect to the monitoring of plan sponsors' at-risk decisions, appeal decisions involving at-risk status will be subject to review under existing plan sponsor audit processes. We do not believe that a process similar to the existing grievance process, as recommended by a commenter, would comport with the statute, which requires the use of the existing appeals process. However, potential at-risk and at-risk beneficiaries retain their existing right to file a grievance with the plan if they have complaints about the prescription drug management program.

With respect to the comment on case management and physician involvement, these are key components to drug management programs and we disagree that these components create additional hurdles for beneficiaries within the appeals process. In fact, we believe that the extensive case management we expect to be performed under plan sponsors' drug management programs, including ongoing communications among the plan sponsor, enrollee, prescriber(s) and pharmacy, will result in a relatively low volume of appeals under these programs. In addition, the appeals that are processed will be informed by the case management conducted by the plan sponsor and the involvement of the physician.

Comment: Many commenters agreed with the proposal to utilize the existing Part D appeals process for at-risk beneficiaries, including not requiring automatic escalation for external review. These commenters believed that use of the existing process is the simplest and most administratively efficient approach, as it is familiar to beneficiaries, plan sponsors, and other stakeholders. These commenters also believed that plan sponsors should have the opportunity to review additional information and potentially adjust their initial decision before the case is reviewed by the IRE.

Response: We thank the commenters for expressing support for use of the existing Part D benefit appeals process for beneficiaries identified as at-risk under a plan sponsor's drug management program. In addition to comporting with the statutory requirement, we agree with the commenters that use of the existing appeals process is the most administratively efficient approach and will result in better outcomes for at-risk beneficiaries. Not only is the existing appeals process familiar to enrollees, plans, and the IRE, but it allows a plan sponsor the opportunity to review information it used to make an at-risk determination under its drug management program (and any additional relevant information submitted as part of the appeal), promotes the resolution of issues at a lower level of administrative review and potentially reduces the need for the beneficiary to further appeal the issues in dispute. However, if the matter is not resolved by the plan sponsor at the redetermination level, an at-risk beneficiary will have the right to seek review by the Part D IRE.

Comment: With respect to the calculation of the amount in controversy (AIC) for an ALJ hearing or judicial review, a commenter expressed support for using a formula based on the value of any refills for frequently abused drugs to calculate the AIC, noting that it will provide a greater probability for higher review, benefiting both the plan and the beneficiary.

Response: We thank the commenter for expressing support for the proposal related to calculation of the AIC at § 423.1970(b)(2) for disputes related to identification as an at-risk beneficiary under a plan sponsor's drug management program.

Comment: A few commenters requested clarification as to whether the beneficiary Notice of Appeal Rights (reject code 569), which triggers a pharmacy to provide the beneficiary with the standardized pharmacy notice, Prescription Drug Coverage and Your Rights (CMS-10147), should accompany any POS claim rejections regarding prescriber or pharmacy lock-in or beneficiary-specific POS edits. Commenters recommended that the CMS-10147 not be provided to beneficiaries when a claim rejects at POS due to issues under a plan sponsor's drug management program.

Response: We agree with the commenters that a POS claim rejection as a result of a restriction imposed under a plan sponsor's drug management program should not trigger delivery of the standardized pharmacy notice (CMS-10147). The pharmacy notice informs a beneficiary to contact his or her Part D plan to request a coverage determination. As discussed above in this final rule, a determination under a plan sponsor's drug management program is not a coverage determination as defined at § 423.566. Instead, a determination made under a drug management program is governed by the provisions proposed at § 423.153(f) related to at-risk determinations. If a beneficiary disagrees with a decision made under § 423.153(f), the beneficiary has the right to appeal such decision. The at-risk beneficiary will be notified of this appeal right pursuant to the notice described at § 423.153(f)(6).

Comment: Several commenters requested clarification that when a beneficiary appeals their coverage limitation under the drug management program, that the request should be processed as a redetermination and not as a coverage determination. A few commenters requested clarification as to whether or not the POS edit or a lock-Start Printed Page 16475in would be a coverage determination. Commenters asked if Chapter 18 of the Prescription Drug Benefit Manual would apply, and if so, noted that CMS should release proposed changes to the guidance for comment. Commenters inquired about how the CARA provisions would impact the coverage determination and redetermination processes, including approval and denial language used by plan sponsors. A commenter stated that they do not believe that these are coverage determinations because they involve access issues and being treated as such would pose system, policy, and process challenges. This commenter also asked for clarification on how this process would impact the appeals auto-forward star measure if treated as a coverage determination.

Response: We did not propose to change the current definition of a coverage determination at § 423.566. As we stated in the proposed rule, the types of decisions made under a drug management program align more closely with the regulatory provisions in Subpart D than with the provisions in Subpart M. We believe it is clearer to set forth the rules for at-risk determinations as part of § 423.153 and cross reference § 423.153(f) in relevant appeals provisions in Subpart M and Subpart U. The types of initial determinations made under a drug management program (for example, a restriction on the at-risk beneficiary's access to coverage of frequently abused drugs to those that are prescribed for the beneficiary by one or more prescribers) will be subject to the processes proposed at § 423.153(f).

What we did propose is that at-risk determinations made under the processes at § 423.153(f) be adjudicated under the existing Part D benefit appeals process and timeframes set forth in Subpart M. Thus, we agree with these commenters that a determination made under a drug sponsor's drug management program should not be considered a coverage determination as defined at § 423.566. If a beneficiary has a dispute related to a determination under the processes set forth at § 423.153(f), the beneficiary has the right to request a redetermination and potentially higher levels of appeal. Therefore, drug management program disputes are subject to the appeals provisions in Subpart M and Subpart U of the regulations and the guidance in Chapter 18 of the Prescription Drug Benefit Manual also applies. Disputes under a plan sponsor's drug management program will be adjudicated under the existing appeals process and the regulatory timeframes will apply. The manual guidance will be updated, as necessary, to reflect any changes relevant to drug management program disputes. With respect to the redetermination notice, plan sponsors may use CMS' model redetermination notice (with modifications) or develop their own notice for informing an enrollee of the outcome of the appeal.

Comment: A few commenters suggested that these appeals be limited to the beneficiary-level edit, the selected pharmacy or the prescriber, and not the underlying criteria for identification and guidance. Commenters noted that the appeal should be limited to the issue of whether the beneficiary is an appropriate candidate for lock-in, and not have any other scope. A commenter stated that the appeal should not relate to whether the plan may impose prior authorization or other utilization management restrictions on certain prescriptions. Rather, according to the commenter, beneficiary appeals should be limited to compliance with internal program criteria and CMS guidance, rather than allowing beneficiaries to challenge the underlying criteria. A commenter asked that CMS clarify how to effectuate a redetermination that requires the reversal of one limit, but other limits remain (for example, a formulary restriction and lock-in), and which limit takes priority. This commenter stated that beneficiaries would have to receive decision notices explaining that because of the remaining limits, their drug access will continue to be limited. Another commenter requested guidance on whether to handle a dispute involving beneficiary-specific POS claim edit and a dispute about a pharmacy or prescriber selection under the same appeal, or the POS edit as a coverage determination and the lock-in as an appeal.

Response: As explained above, the statute explicitly states that one of the issues that can be appealed is the identification as an at-risk beneficiary for prescription drug abuse under a Part D drug management program. With respect to the comment that an enrollee not be permitted to challenge the “underlying criteria,” we interpret this to mean a plan sponsor's clinical guidelines used to identify potential at-risk beneficiaries. We believe that a beneficiary disputing his or her at-risk determination will inherently be arguing that the plan's criteria for identifying at-risk beneficiaries do not apply to his or her particular circumstances. In addition to the at-risk determination, an enrollee has the right under the statute to appeal the selection of a prescriber or pharmacy as well as a coverage determination made under a plan sponsor's drug management program. As previously noted, determinations made under the processes at § 423.153(f) will be adjudicated under the existing Part D benefit appeals process. Such determinations include limitation on access to coverage for frequently abused drugs, including a POS claim edit for frequently abused drugs that is specific to an at-risk beneficiary and a limit on an at-risk beneficiary's access to coverage for frequently abused drugs to those that are prescribed by one or more prescribers or dispensed to the beneficiary by one or more network pharmacies. As also previously noted, we did not propose to revise the existing definition of a coverage determination. In addition to a determination made under the processes at § 423.153(f), a coverage determination, including an exception, is also subject to appeal. For example, if an enrollee does not dispute a POS edit for a quantity limit on a drug within 60 days of the date of the second notice pursuant to § 423.153(f)(6) but later requests an exception to the quantity limit and that request is denied by the plan sponsor, the enrollee has the right to appeal the denial of the exception request. While the enrollee always has the right to request a coverage determination, changes to previously imposed limitations can also be implemented through ongoing case management and a new determination under the processes at § 423.153(f).

As noted earlier, a commenter asked whether a dispute regarding pharmacy or prescriber selection for purposes of lock-in and a dispute related to a beneficiary specific POS claim edit should be processed as the same appeal. If a beneficiary's request for an appeal raises multiple issues related to the limitations imposed on the beneficiary under a drug management program, the plan sponsor must address each issue as part of the appeal. For example, if the beneficiary's appeal request includes a dispute related to pharmacy selection and a POS edit, the adjudication and disposition of the appeal would involve both issues. All disputes raised in the enrollee's appeal request that arise under a plan's drug management program will be adjudicated as a single case. Assuming the request is filed timely, an enrollee could later appeal another limitation imposed under the drug management program, such as the selection of a prescriber, and the adjudication and disposition of that appeal would relate to prescriber selection for purposes of lock-in and be considered separate and distinct from any previous or pending appeal Start Printed Page 16476requests. An appeal request must be filed within 60 calendar days from the date of the notice that explains the limitations imposed under the drug management program (unless there is good cause for late filing of the appeal). In addition to appealing determinations made under the processes at § 423.153(f) that limit a beneficiary's access, a beneficiary who is subject to a Part D plan sponsor's drug management program always retains the right to request a coverage determination under existing § 423.566 for any Part D drug that the beneficiary believes may be covered by their plan.

With respect to effectuation of a redetermination of an at-risk determination, we agree with the commenter that the redetermination notice should clearly explain which aspect of the program is changing (for example, change in pharmacy lock-in) and which restrictions remain unchanged and will continue to apply to the beneficiary. We would like to clarify that all changes must be effectuated pursuant to the effectuation rules at § 423.636 and § 423.638; in other words, one change does not take “priority” over another applicable change with respect to effectuation. For example, if the outcome of a standard redetermination related to pharmacy and prescriber lock-in is a change to the pharmacy and the prescriber(s) an at-risk enrollee must use, the plan sponsor must implement both of those changes concurrently and as expeditiously as the enrollee's health condition requires, but no later than 7 calendar days from the date the plan sponsor receives the redetermination request.

Comment: A few commenters suggested that CMS confirm that a beneficiary should not continue to receive inappropriate fills of opioids during the appeals process.

Response: We thank the commenters for their request for confirmation that a beneficiary who has been identified as at-risk, has received the second notice, and has requested an appeal should not continue to receive “inappropriate fills” of opioids during the appeals process. We are interpreting “inappropriate fills” to mean a fill that does not comport with the specific restrictions placed on the at-risk beneficiary (for example, pharmacy lock-in). Once the beneficiary has been notified via the second notice of applicable restrictions, there should be no additional fills of any of the drug(s) subject to the drug management program that do not satisfy the parameters of the program established for the at-risk beneficiary, unless those restrictions are later modified through the appeals process.

Comment: A commenter asked that CMS clarify whether these appeals are required to be handled based on the timeframes for a request for benefit or a request for payment, and whether or not these are subject to the expedited timeframes.

Response: As noted in the proposed rule, at-risk determinations made under the processes at § 423.153(f) would be adjudicated under the existing Part D benefit appeals process and timeframes set forth in Subpart M and Subpart U. As such, at-risk determinations will be subject to the benefit request timeframes set forth at § 423.590(a). We also proposed to amend the existing Subpart M rules at § 423.584 and § 423.600 related to obtaining an expedited redetermination and IRE reconsideration, respectively, to apply them to appeals of a determination made under a drug management program. Consistent with existing rules, the beneficiary must meet the requirements set forth in regulation in order to obtain an expedited review of their at-risk determination.

Comment: In the case of a beneficiary appealing the Part D plan sponsor's initial selection of a prescriber or pharmacy, a commenter requested clarification whether the plan sponsor must obtain confirmation of acceptance from the new prescriber and/or pharmacy the beneficiary has selected as part of the appeal and whether this confirmation needs to be made within the appeals timeframes. This commenter expressed concern with obtaining such confirmation within the short window for adjudicating the case.

Response: While we appreciate the commenter's concern regarding the timeframe for making a decision, we believe that the current timeframes afford the plan sponsor sufficient time to obtain confirmation from a prescriber and/or pharmacy that they have accepted the beneficiary's selection for lock-in. Under the current Part D benefit appeals process, plan sponsors are required to obtain similar information from prescribers and we believe that appeals of at-risk determinations should not be materially different from the outreach plans conduct as part of the coverage determination, exceptions, and benefits appeals process. Please refer to the discussion regarding confirmation of pharmacy and prescriber selection earlier in this preamble.

Comment: A few commenters requested clarification as to whether or not plans would be permitted to terminate exceptions or implement temporary exceptions, in consultation with the prescriber, prior to the end of a plan year due to opioid case management and, if so, what prior notice requirements will apply.

Response: Consistent with existing rules for the exceptions process at § 423.578(c), if a drug is found to no longer be safe for the enrollee, then a previously approved exception request could be terminated prior to the end of the plan year. This would include if the plan determines that the previously approved exception is no longer safe as part of an at-risk determination or ongoing case management under its drug management program. A determination made by a plan sponsor under the processes at § 423.153(f) is subject to appeal. For example, if a determination is made under a plan sponsor's drug management program to implement a beneficiary-specific POS claim edit for a drug, the beneficiary will be notified of that decision per the provisions at § 423.153(f)(6) and the decision may be appealed. If the beneficiary does not appeal the decision within 60 calendar days from the date of the notice that explains the limitations the plan sponsor is placing on the beneficiary's access to coverage for frequently abused drugs, the beneficiary retains the right to request a coverage determination related to a beneficiary-specific POS edit at any time. And, as stated above, changes to previously imposed limitations can also be implemented through ongoing case management and a new determination under the processes at § 423.153(f).

Comment: A few commenters expressed concern regarding the lack of any proposed review criteria that would be used by plans to evaluate these appeals based on the at-risk determination. Commenters stated that appeal requests for opioid restrictions do not fit in any existing utilization management criteria (for example formulary and tiering exceptions criteria) and request additional guidance from CMS. These commenters are concerned that if the beneficiary appeals the limitation beyond the plan, the IRE or ALJ/attorney adjudicator will likely review these restrictions similar to a formulary or tiering exception and not based on the at-risk determination. A commenter indicated that this type of review may have an adverse impact on plans' D03 STARS Ratings, and if approved, an exception must be effectuated through the end of the plan year, which could remove the enrollee from case management for the rest of the year even if they meet the criteria for such.

Response: We appreciate the commenters' concerns. If the case goes to the IRE, or higher levels of appeal, the administrative case file assembled by Start Printed Page 16477the plan sponsor will contain the relevant information needed by the adjudicator to make an informed decision, such as information used by the plan sponsor to determine at-risk status, a description of the case management the plan has performed and the beneficiary's preference with respect to prescriber or pharmacy lock-in. We believe the regulations, applicable manual guidance, the plan sponsor's review criteria and case management notes on the access limitations that apply to the enrollee (which would be included in the administrative case file) will be sufficient for an adjudicator to review an appeal. With respect to the comment on an approved exception, please refer to the introductory section on drug management programs earlier in this preamble for a discussion of determinations where continuing an approved exception is no longer appropriate.

Comment: With respect to the handling and reporting of appeals, a few commenters expressed concerns regarding the negative impact choosing to implement the lock-in procedures could potentially have on a plan. A commenter noted that opioid restriction reviews are not represented in their reporting and there are no allowable values in the audit universes that would designate a case as an opioid restriction. As a result, the commenter believes that if an approved exception is terminated prior to the end of the plan year, this could be detected on audit and the plan sponsor may be found to be non-compliant with exception processing requirements.

Response: If a plan sponsor makes a determination under its drug management program per the processes at § 423.153(f) that results in a finding that a drug previously approved through the exception process is found to no longer be safe for treating the beneficiary's disease or medical condition, the previously approved exception can be terminated prior to the end of the plan year. With respect to the commenter's concern about such a case being reviewed on audit, the plan sponsor would not be subject to a finding of non-compliance for having terminated a previously authorized exception if such termination is consistent with a clinically appropriate determination made under the plan sponsor's drug management program.

Comment: A few commenters encourage CMS to communicate appeal-related information and requirements in a clear, concise, and consistent manner to beneficiaries, the IRE, and plan sponsors to support a uniform understanding of the agency's rules and related expectations. A commenter stated that beneficiaries are not always aware of their exceptions and appeal rights and many do not understand how the process works. This commenter expressed concern that there may be a lack of transparency in the appeals process or excessive administrative burden for the beneficiary and provider, which may extend to those who may be inappropriately identified as at-risk and subject to unnecessary access restrictions to needed medications.

Response: We agree with the commenters that appeals-related information and requirements should be communicated in a clear, concise, and consistent manner to beneficiaries, Part D plan sponsors, and the IRE. We will continue to update existing materials and develop new CARA related communications, such as the first and second notices described elsewhere in this final rule, with these goals in mind.

After consideration of these comments, we are finalizing with modifications the provisions on CARA appeals with two clarifying changes. First, in this final rule, we are including a definition of at-risk determination to § 423.560 to clarify the types of actions made under the processes at § 423.153(f) that are subject to appeal. In addition to coverage determinations made under a drug management program, an enrollee has the right to appeal the identification as an at-risk beneficiary for prescription drug abuse; a beneficiary specific point-of-sale (POS) edit; the selection of a prescriber or pharmacy for purposes of lock-in; and information sharing for subsequent plan enrollments. Second, proposed new paragraph (a)(1)(v) at § 423.562 has been revised to clarify that determinations made in accordance with the processes at § 423.153(f) are collectively referred to as an at-risk determination as defined at § 423.560.

Finally, we did not receive comments on the technical changes to § 423.562(a)(1)(ii) and we are finalizing those changes as proposed.

(x) Termination of a Beneficiary's Potential At-Risk or At-Risk Status (§ 423.153(f)(14))

Section 1860-D-4(c)(5)(F) of the Act provides that the Secretary shall develop standards for the termination of the identification of an individual as an at-risk beneficiary, which shall be the earlier of the date the individual demonstrates that he or she is no longer likely to be an at-risk beneficiary in the absence of limitations, or the end of such maximum period as the Secretary may specify.

We proposed a maximum 12-month period for both a lock-in period, and also for the duration of a beneficiary-specific POS claim edit for frequently abused drugs. However, we also noted that if the sponsor implements an additional, overlapping limitation on the at-risk beneficiary's access to coverage for frequently abused drugs, the beneficiary may experience a coverage limitation beyond 12-months. The same is true for at-risk beneficiaries who were identified as such in the most recent prescription drug plan in which they were enrolled and the sponsor of their subsequent plan immediately implements a limitation on coverage of frequently abused drugs.

Section 1860-D-4(c)(5)(F)(ii) of the Act states that nothing in CARA shall be construed as preventing a plan from identifying an individual as an at-risk beneficiary after such termination on the basis of additional information on drug use occurring after the date of notice of such termination. Accordingly, termination of an at-risk determination will not prevent an at-risk beneficiary from being subsequently identified as a potential at-risk beneficiary and an at-risk beneficiary on the basis of new information on drug use occurring after the date of such termination that causes the beneficiary to once again meet the clinical guidelines.

We received the following comments and our response follows:

Comment: We received widespread comments that suggested that a maximum 12-month lock-in period was arbitrary, and that automatic termination of a beneficiary's at-risk status after 12 months threatens beneficiary safety. Commenters suggested that termination of such programs should be based on the needs of the beneficiary following a clinical assessment, and that an arbitrary time limit assumes without any clinical justification that he or she is no longer at-risk for drug abuse after 12 months. Following this period, many commenters also recommended plan sponsors should be permitted to conduct a review of the beneficiary's at-risk status at the expiration of the first 12 months whether a beneficiary is determined at-risk, and if so, implement a termination after an additional 12 months, for 24 months total. While very few commenters supported the 12-month limitation timeframe, they did not provide rationale for their support.

Response: We disagree with commenters that the 12-month period lock-in period we proposed is arbitrary. As we noted in the proposed rule, during the Stakeholder Listening Session on CARA held in November Start Printed Page 164782016, most commenters recommended a maximum 12-month period for lock-in. We also noted that a 12-month lock-in period is common in Medicaid lock-in programs.[16] Additionally, Section 1860D-4(c)(5)(F) grants the Secretary the authority to establish a maximum limitation period, and we choose to exercise said authority.

CMS was, however, persuaded that a 12-month limitation maximum might be too short to ensure for beneficiary safety in some instances, and a longer limitation on access to coverage for frequently abuse drugs might be needed in such cases. We also re-reviewed limitation periods in Medicaid lock-in programs, and found that another very common lock-in period is 24 months. An additional prevalent trend for Medicaid lock-in periods is the ability to extend the lock-in period based on a review of appropriateness of continuance of lock-in.[17] This trend aligned very closely with the many commenters who suggested a 24-month limitation period, and/or the ability of the plan sponsor to extend the limitation as a result of a clinical assessment. As a compromise between these two options, CMS is finalizing an initial 12-month limitation period as proposed, but with ability modification allowing for the sponsor to extend the limitation for up to an additional 12 months. This extension will be dependent upon a clinical assessment whether the beneficiary demonstrates that they are no longer likely, in the absence of the limitation(s) the plan sponsor has placed on their access to coverage for frequently abused drugs, to be an at-risk beneficiary for prescription drug abuse at the conclusion of the initial 12 months of the limitation. Thus, the maximum limitation period will be 24 months.

Based on the provisions discussed earlier regarding when prescriber agreement is required, we believe the plan sponsor must, as part of the required clinical assessment, obtain prescriber agreement to extend a prescriber lock-in beyond the initial 12 months. Prescriber agreement will also be required with respect to extending beneficiary-specific POS edits. However, as with the initial POS edit, one can be extended without prescriber agreement if no prescriber is responsive. Also, the plan sponsor will be required to send the at-risk beneficiary another second notice, indicating that the limitation is being extended, and that they continue to be considered as an at-risk beneficiary. Aside from the required prescriber agreement just described, a plan sponsor will have discretion as to how they clinically assess whether an at-risk beneficiary's demonstrates whether they are no longer likely to be an at-risk beneficiary for prescription drug abuse in the absence of limitation at the conclusion of the initial 12 months of the limitation. This assessment might include a review of medical records or prescription drug monitoring program data, if available to the sponsor. Given that the plan sponsor will not be required to obtain prescriber agreement to extend pharmacy lock-in past the initial 12 month period, we expect the plan sponsor to have a clinical basis to extend the limitation, such as, the plan sponsor has recently rejected claims for frequently abused drugs from non-selected pharmacies to an extent that indicates the beneficiary may abuse frequently abused drugs without the limitation.

Comment: A handful of commenters suggested that a limitation to coverage for frequently abused drugs only be terminated as a result of a clinical assessment by the at-risk beneficiary's prescriber with no maximum limitation period.

Response: CMS believes it advisable to place a time limit on the duration of a limitation on access to coverage for frequently abused drugs that a plan sponsor can place on an at-risk beneficiary in order to balance the beneficiary's right to utilize their Part D benefit without encumbrance against with the sponsor's responsibility to manage the Part D benefit and promote the safety of its enrollees.

Comment: A commenter suggested that CMS could consider requiring Part D sponsors to send annual notifications to beneficiaries who are subjected to a lock-in and their approving prescribers to let them know the lock-in will be extended another 12 months. This would afford beneficiaries and prescribers an annual opportunity to request that the lock-in be reconsidered or raise any concerns.

Response: We decline to adopt this suggestion, as it does not suggest a basis upon which the limitation would be extended. Under the provision we are finalizing, a clinical assessment is required and, if the limitation on access to coverage is extended beyond the initial 12 month period, the plan sponsor would be required to send the at-risk beneficiary an additional second notice pursuant to § 423.153(f)(6) explaining that the limitation is being extended and for how long.

Also, a beneficiary, their representative, or their prescriber on behalf of the beneficiary, is not precluded from requesting that the plan revisit its determination that the beneficiary is an at-risk beneficiary as defined at § 423.100, or the terms of any limitation imposed on the beneficiary under the plan's drug management program.

Based on these comments and our responses, we are therefore finalizing additional language at § 423.153(f)(14). The revised language will specify that the identification of an at-risk beneficiary as such must terminate as of the earlier of the following:

  • The date the beneficiary demonstrates through a subsequent determination, including but not limited to, a successful appeal, that the beneficiary is no longer likely, in the absence of the limitation under this paragraph, to be an at-risk beneficiary; or
  • The end of a—

++ One year period calculated from the effective date of the limitation, as specified in the notice provided under paragraph (f)(6) of this section, unless the limitation was extended pursuant to paragraph (f)(14)(ii)(B) of this section.

++ Two year period calculated from the effective date of the limitation, as specified in a notice provided under paragraph (f)(6) of this section, subject to the following requirements:

—The plan sponsor determines at the end of the one year period that there is a clinical basis to extend the limitation.

—Except in the case of a pharmacy limitation imposed pursuant to paragraph (f)(3)(ii)(B) of this section, the plan sponsor has obtained the agreement of a prescriber of frequently abused drugs for the beneficiary that the limitation should be extended.

—The plan sponsor has provided another notice to the beneficiary in compliance with paragraph (f)(6) of this section.

—If 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)(14)((ii)(B)(2) of this section.

—The sponsor may not extend a prescriber limitation implemented pursuant to paragraph (f)(3)(ii)(A) of this section if no prescriber was responsive.Start Printed Page 16479

(xi) Data Disclosure and Sharing of Information for Subsequent Sponsor Enrollments (§ 423.153(f)(15))

In order for Part D sponsors to conduct the case management/clinical contact/prescriber verification pursuant to § 423.153(f)(2), certain data disclosure and sharing of information must happen. First, CMS must identify potential at-risk beneficiaries to sponsors who are in the sponsors' Part D prescription drug benefit plans. In addition, a new sponsor must have information about potential at-risk beneficiaries and at-risk beneficiaries who were so identified by their immediately prior plan and enroll in the new sponsor's plan and such identification had not terminated before the beneficiary disenrolled from the immediately prior plan. Finally, as discussed earlier, sponsors may identify potential at-risk beneficiaries by their own application of the clinical guidelines (that is, applying the minimum clinical guidelines more frequently or in applying the supplemental clinical guidelines). It is important that CMS be aware of which Part D beneficiaries sponsors identify on their own, as well as which ones have been subjected to limitations on their access to coverage for frequently abused drugs under sponsors' drug management programs for Part D program administration and other purposes.

Regarding data disclosures, section 1860D-4(c)(5)(H) of the Act provides that, in the case of potential at-risk beneficiaries and at-risk beneficiaries, the Secretary shall establish rules and procedures to require the Part D plan sponsor to disclose data, including any necessary individually identifiable health information, in a form and manner specified by the Secretary, about the decision to impose such limitations and the limitations imposed by the sponsor under this part. We plan to expand and modify the scope of OMS and the MARx system as appropriate to accommodate the data disclosures necessary to oversee and facilitate Part D drug management programs.

Section 1860-D-4(c)(5)(I) of the Act requires that the Secretary establish procedures under which Part D sponsors must share information when at-risk beneficiaries or potential at-risk beneficiaries enrolled in one prescription drug plan subsequently disenroll and enroll in another prescription drug plan offered by the next sponsor (gaining sponsor). We plan to expand the scope of the reporting to MARx under the current policy to include the ability for sponsors to report similar information to MARx about all pending, implemented, and terminated limitations on access to coverage of frequently abused drugs associated with their plans' drug management programs.

We proposed to codify the data disclosure and information sharing process under the current policy, with the expansion just described, by adding data disclosure requirements in § 423.153.

We received the following comments and our response follows:

Comment: We received comments supportive of our proposal regarding data disclosures and sharing of information. We did not receive comments opposed to our proposal.

Response: We thank the commenters for their support.

Comment: A commenter recommended that we clarify sponsors must conduct case management with respect to potential at-risk beneficiaries who are current utilizers under the Part D sponsor and not such beneficiaries who are identified by the prior sponsor. This commenter stated further that if sponsors are required to conduct case management on potential at-risk beneficiaries identified by the prior sponsor, then the response due date should be extended for such cases (that is, to next OMS quarter), as sponsors may need to contact the prior sponsor for case details to conduct case management for the prior claims data. In extending the outlier response due date, this commenter urged us to consider that the volume of such cases may differ based on the size of the prior sponsor.

Response: Pursuant to § 423.153(f)(2)(i), sponsors are required to conduct case management with respect to all potential at-risk beneficiaries who are identified by CMS or the sponsor applying the clinical guidelines, regardless of whether the beneficiary meets the clinical guidelines based on PDE data from the beneficiary's current Part D contract alone or across multiple contracts (including contracts the beneficiary was previously enrolled in during the measurement period).

§ 423.153(f)(2)(ii) does provide an exception to the case management requirements with respect to potential at-risk beneficiaries identified as such by their most recent prior plan, if the identification has not been terminated and the sponsor obtains case management information from the previous sponsor, which is clinically adequate and up to date. Under the current policy, a sponsor may report in OMS that a beneficiary's case is under review. We plan to keep this response. However, because of this comment, we realize that there may be some instances in which a sponsor receives notice about a potential at-risk beneficiary who has just enrolled in its plan, but the deadline to provide information to CMS within 30 days from the date of the most recent prior CMS report identifying potential at-risk beneficiaries pursuant to proposed § 423.153(f)(15) might be very short. Therefore, we are modifying § 423.153(f)(15) such that the sponsor would have to provide the information within 30 days from the date of the most recent CMS report received after receiving such a notice.

Comment: We received a comment requesting clarity on the issue of patient consent in the sharing of the patient personal health information related to implementation of these finalized provisions.

Response: While the commenter's concerns about sharing personal health information are not entirely clear, we note that Part D plan sponsors are required under § 423.136 to establish procedures for maintenance and sharing of medical records and other health information about enrollees in accordance with all applicable Federal and State confidentiality laws.

Comment: We received a question asking what data sources we will use to identify LIS beneficiaries who are potentially at-risk.

Response: We plan to use OMS to identify all potential at-risk beneficiaries who meet the minimum criteria of the clinical guidelines, discussed earlier, to report to Part D plan sponsors. We will modify the OMS as appropriate to implement the Part drug management program requirements. We will issue guidance and updated OMS technical user guides to plan sponsors at a later time, including data sources used in OMS reporting.

Comment: We received a question whether the original plan that identified the beneficiary's at-risk status has a duty to inform the new plan of individual's status.

Response: Plan sponsors will be required to communicate beneficiaries' potential and at-risk statuses to each other through the data disclosures and information sharing we are finalizing in this section.

Comment: We received a question whether we will be providing new response codes for pharmacy and prescriber lock-in in OMS, specifically whether we will eliminate the response code “BSC” which stands for “Beneficiary did not meet sponsor's internal criteria.” We also received some specific suggestions to: (1) Include responses to OMS that differentiate between lock-in and a claim edit at POS; Start Printed Page 16480(2) add a sponsor summary page to OMS; (3) make enhancements to MARx to recognize internal and external contract changes; and (4) allow for more complete case management information to be shared to obviate the needs for sponsors to contact each other.

Response: We appreciate these suggestions. We plan to expand and modify the scope of OMS and MARx as appropriate and technically possible in light of the final requirements in this rule to accommodate the data disclosures necessary to oversee and facilitate Part D drug management programs. We plan to issue guidance about this expansion and details on the modifications. Based on these comments, we are finalizing § 423.153(f)(15) with modifications to specify the following regarding data disclosure:

  • CMS identifies potential at-risk beneficiaries to the sponsor of the prescription drug plan in which the beneficiary is enrolled.
  • A Part D sponsor that operates a drug management program must disclose any data and information to CMS and other Part D sponsors that CMS deems necessary to oversee Part D drug management programs at a time, and in a form and manner, specified by CMS. The data and information disclosures must do all of the following:

++ Provide information to CMS within 30 days of receiving a report about a potential at-risk beneficiary from CMS.

++ Provide information to CMS about any potential at-risk beneficiary that meets paragraph (1) of the definition in § 423.100 that a sponsor identifies within 30 days from the date of the most recent CMS report identifying potential at-risk beneficiaries.

++ Provide information to CMS about any potential at-risk beneficiary that meets paragraph (2) of the definition in § 423.100 within 30 days of the date after which the sponsor referred to in paragraph (2).

++ Provide information to CMS as soon as possible but no later than 7 days of 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 of a termination date, as applicable, about a beneficiary-specific opioid claim edit or a limitation on access to coverage for frequently abused drugs.

++ Transfer case management information upon request of a gaining sponsor as soon as possible but no later than 2 weeks from the gaining sponsor's request when—

—An at-risk beneficiary or potential at-risk beneficiary disenrolls from the sponsor's plan and enrolls in another prescription drug plan offered by the gaining sponsor; and

—The edit or limitation that the sponsor had implemented for the beneficiary had not terminated before disenrollment.

We note that this final provision contains a technical correction to refer to 7 days instead of 7 business days the first instance this timeframe is used for consistency and added “as soon as possible” in § 423.153(f)(15(D). It also substitutes “provide information” for “respond” in one place for consistent terminology in this section.

(xii) Out of Scope Comments and Summary

We received comments on the following topics which were out of scope of our proposal and to which we are therefore not responding: (1) CMS oversight of Part D drug management programs; (2) Education of Part D enrollees and providers regarding prescription drug management programs; (3) A seven day limit on opioids for acute pain; (4) Additional ideas about how to address the national opioid overuse crisis; (5) Opioid use standards in Medicare Set Aside arrangement (MSAs).

2. Flexibility in the Medicare Advantage Uniformity Requirements

We have determined that providing access to services (or specific cost sharing for services or items) 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 Medicare Advantage (MA) regulations at § 422.100(d). We solicited comments on this reinterpretation in the proposed rule. In response to those comments and our further consideration of this issue, we are providing guidance here to MA organizations. As discussed in more detail below, the Bipartisan Budget Act of 2018 (Pub. L. 115-123) amends section 1853 of the Act to authorize waiver of the uniformity requirement beginning in 2020 for MA plans that provide additional supplemental benefits (which are not required to be health care benefits) to chronically ill enrollees. It also amends section 1859 of the Act to require a nationwide revision of the Medicare Advantage Value-Based Insurance Design test model currently administered by the Center for Medicare and Medicaid Innovation, which provides similar flexibility to participating MA plans to offer targeted supplemental benefits. Our reinterpretation of the uniformity requirements is not identical to these statutory changes, but does provide a comparable flexibility for MA plans that is consistent with the requirement that MA plans offer uniform benefits, with uniform premium and uniform cost-sharing to all enrollees.

This regulatory requirement that MA plans provide uniform benefits implements 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. We have determined that these statutory provisions and the regulation at § 422.100(d) mean that we have the authority to permit MA organizations the ability to reduce cost sharing for certain covered benefits, offer specific tailored supplemental benefits, and offer lower deductibles 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. In addition, 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. As examples, uniformity flexibility will allow an MA plan to offer an enrollee with diabetes any or all of the following:

  • Reduced cost sharing for endocrinologist visits;
  • More frequent foot exams as a tailored, supplemental benefit;
  • A lower deductible.

In these examples, non-diabetic enrollees will not have access to these tailored cost sharing or supplemental benefits; however, any enrollee that develops diabetes will then have access to these benefits.

We believe that our reinterpretation of the uniformity requirement is consistent with the underlying Part C statutory requirements because targeted supplemental benefits and cost sharing reductions must be offered uniformly to all enrollees with a specified health status or disease state. By tying specific supplemental benefits to specific medical conditions, MA plans would be building upon the concept of medical necessity and developing targeted benefits designed to treat the illnesses of enrollees who meet specific medical criteria. Further, treating similarly situated enrollees equally preserves the uniformity of the benefits package. This Start Printed Page 16481flexibility is similar to our policy over the past several years of permitting MA plans to adopt tiered cost-sharing, that is, allowing plans to have different cost sharing for contracted providers of the same type (for example, hospitals) provided that enrollees are equally able to access the lower cost-sharing providers.

Such flexibility under our new interpretation of the uniformity requirement is not without limits, however, as section 1852(b)(1)(A) of the Act prohibits an MA plan from denying, limiting, or conditioning the coverage or provision of a service or benefit based on health-status related factors. MA regulations (for example, §§ 422.100(f)(2) and 422.110(a)) reiterate and implement this non-discrimination requirement. In interpreting these obligations to protect against discrimination, we have historically indicated that the purpose of the requirements is to protect high-acuity enrollees from adverse treatment on the basis of their higher cost health conditions (79 FR 29843; 76 FR 21432; and 74 FR 54634). As MA plans consider this new flexibility in meeting the uniformity requirement, they must be mindful of ensuring compliance with non-discrimination responsibilities and obligations.[18] MA plans that exercise this flexibility must ensure that the cost sharing reductions and targeted supplemental benefits are for health care services that are medically related to each disease condition. CMS will be concerned about potential discrimination if an MA plan is targeting cost sharing reductions and additional supplemental benefits for a large number of disease conditions, while excluding other, potentially higher-cost conditions. We will review 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.

In identifying eligible enrollees, the MA plan must use medical criteria that are objective and measurable, and the enrollee must be diagnosed by a plan provider or have their existing diagnosis certified or affirmed by a plan provider to assure equal application of the criteria. Objective criteria that are contained in written policies and that are clearly and adequately communicated to enrollees (such as in the EOC and other plan documents) are necessary to ensure that these tailored benefits are not provided in a discriminatory fashion and that the overall package of benefits is uniform among similarly situated individuals. We view this flexibility as an extension of the concept that as an enrollee in good health without cardiac problems would not receive cardiac rehabilitation services, an enrollee who does not meet the medical criteria would not receive the targeted benefits offered by an MA plan.

CMS is currently testing value based insurance design (VBID) through the use of our demonstration authority under section 1115A of the Act (42 U.S.C. 1315a, added by section 3021 of the Affordable Care Act), and we note that Bipartisan Budget Act of 2018 expands the testing of the model under section 1115A(b) to all 50 states by 2020. This demonstration includes some of the elements that are a part of our reinterpretation of the uniformity requirements. However, there are also features of the VBID demonstration that are unique to the demonstration test, such as the ability for participating plans to target Part D benefits, the restriction to certain medical conditions, and the requirement that plans apply to participate. We expect the VBID demonstration to provide CMS with insights into future VBID innovations for the MA program.

After the publication of the proposed rule, Congress passed the Bipartisan Budget Act of 2018 (Pub. L. 115-123). Section 50322 of the law expanded supplemental benefits in Section 1852(a)(3) of the Act and also authorized waiver of the uniformity requirements to permit MA plans to offer targeted supplemental benefits for the chronically ill through new provisions, effective in plan year 2020.

Specifically, the Bipartisan Budget Act of 2018 expands supplemental benefits available to chronically ill enrollees by adding a new subparagraph (D) to Section 1852(a)(3). This subparagraph expands supplemental benefits for the chronically ill to include benefits that “have a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee and may not be limited to being primarily health related benefits.” These additional supplemental benefits will be qualitatively different than the supplemental health care benefits that MA plans may currently offer and may continue to offer to enrollees who are not chronically ill. In addition, it provides authority for the waiver of uniformity requirements “only with respect to supplemental benefits provided to a chronically ill enrollee.”

We have evaluated how this new authority for the Secretary to waive uniformity requirements relates to our concurrent reinterpretation of uniformity requirements. We believe that a waiver of uniformity requirements was authorized in this new provision to allow for the delivery of different, non-uniform benefits to a subset of enrollees that meet a specific definition: Chronically ill enrollee.[19] We do not believe that our reinterpretation, which also allows for targeted benefits based on the disease state or health status, can only be accomplished through a waiver of uniformity requirements.

We believe that the waiver authorized under the Bipartisan Budget Act is necessary in order to allow MA plans the flexibility to offer chronically ill enrollees supplemental benefits that are not uniform across the entire population of the chronically ill. The Bipartisan Budget Act states that supplemental benefits must “have a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee.” This means that MA plans do not have to offer uniform supplemental benefits to all chronically ill enrollees, and instead, may vary supplemental benefits offered to the chronically ill as it relates to the individual enrollee's specific medical condition and needs. In other words, a supplemental benefit adopted under the new statutory provision may not be provided to a chronically ill enrollee if that benefit does not have a reasonable likelihood of improving that enrollee's health condition. Therefore, we have determined that the waiver of uniformity requirements and the enactment of section 1852(a)(3)(D) of the Act does not limit our authority to interpret sections 1851(d) and 1854(c) of the Act as permitting uniform benefits to include specific services targeted for groups of similarly situated specific enrollees based on medical criteria.

Our reinterpretation of uniformity requirements maintains the spirit of the MA regulations at § 422.100(d), which aims for equal treatment across all similarly situated enrollees. A specific health status or disease state—or meeting a specific group of medical criteria—is merely a means of “grouping” similarly situated enrollees for equal access to and treatment in connection with coverage of benefits. Start Printed Page 16482All enrollees in that group must have access to the same targeted benefits. The new expansion of supplemental benefits for the chronically ill breaks that construct because the needs of one chronically enrollee may be very different from those of another within the same health status or disease state. As such, a waiver was authorized to provide for differences in supplemental benefits across chronically ill enrollees in order for MA organization to craft specific supplemental benefit offerings for each vulnerable plan member so that individual needs are met.

Further, our reinterpretation of uniformity requirements is compatible with the new legislation in Bipartisan Budget Act. Beginning in 2020, MA plans may offer three forms of supplemental benefits: “standard” supplemental benefits offered to all enrollees; “targeted” supplemental benefits offered to qualifying enrollees by health status or disease state; and “chronic” supplemental benefits offered to the chronically ill. The first two (standard and targeted) will be allowable in 2019. Only “chronic” supplemental benefits will be evaluated under the new expansive definition in the Bipartisan Budget Act and be eligible for a waiver of the uniformity requirements. Standard and targeted supplemental benefits will be evaluated under our existing interpretation of whether the benefit is “primarily health related.” It is possible that an enrollee qualifies for a “targeted” supplemental benefits as well as “chronic” supplemental benefits. In that circumstance, the MA plan must provide the targeted supplemental benefits as long as the enrollee establishes the required health status or disease state and the benefits are medically appropriate. However, the MA plan must only provide “chronic” supplemental benefits if the benefit has a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee.

Based on these differences, it will be important for MA plans to identify in their bids and in their Evidence of Coverage documents which supplemental benefits are offered as “standard”, “targeted”, or “chronic” benefits. CMS will evaluate the acceptability of the supplemental benefit offering based on this designation and the standards identified in section 1852(a)(3) of the Act. We believe that both the new uniformity interpretation and the new statutory provision will succeed in increasing MA plans' flexibility and plan options and ultimately allow for better health outcomes.

We received the following comments, and our response follows:

Comment: A number of commenters supported CMS' implementation of this reinterpretation. These commenters stated that their ability to lower cost sharing will help beneficiaries seek high value and effective care.

Response: We thank commentators for their support of this reinterpretation.

Comment: Commenters suggested that CMS include regulatory text in the final rule that confirms that the flexibility that will be allowed in the MA uniformity requirements.

Response: In this final rule, we are reinterpreting existing statutory and regulatory authority to allow MA organizations the ability to reduce cost sharing for certain covered benefits, offer specific tailored supplemental benefits, and offer different lower deductibles for enrollees that meet specific medical criteria. Thus, it is unnecessary to provide additional regulation language.

Comment: A number of commenters requested that CMS provide additional sub-regulatory guidance surrounding this policy.

Response: We will provide additional guidance and update all corresponding guidance documents (that is, bid guidance and operational guidance) to reflect the new interpretation. This guidance will be available before contract year 2019 bids are due.

Comment: We received a number of comments asking that CMS issue sub-regulatory guidance with examples for permissible and impermissible actions, as well as examples of what would be considered discriminatory. In addition, others suggested that CMS specify the medical criteria that MA plans should use to determine enrollee eligibility as well as clear guidelines for eligible tailored supplemental benefits and/or reduced cost sharing.

Response: CMS will provide additional operational guidance before CY 2019 bids are due.

Comment: A commenter recommended that CMS open its implementing guidance to public comment prior to issuance.

Response: We appreciate this comment. We will not be able to solicit industry comment in time for CY 2019 bids. However, we will take this suggestion under consideration as we develop future guidance and will reach out for input as needed.

Comment: A number of commenters requested that CMS to provide certain technical clarifications. For instance, commenters questioned whether the plan-level deductible could be eliminated, or just reduced, and if lower cost sharing means a zero-dollar copay.

Response: Yes, under this reinterpretation, a plan may reduce or eliminate a deductible, co-pay, or cost sharing for Part C services. We remind all organizations that this is reinterpretation is about MA benefits only and does not permit changes in Part D cost sharing or Part D benefits, which must be consistent with Part D applicable law and CMS policy. In addition, additional operational guidance will be provided before CY 2019 bids are due.

Comment: We also received comments asking CMS to clarify whether a plan may reduce or eliminate certain cost sharing based on participation in a disease management program.

Response: Yes, under this reinterpretation, a plan may restrict cost sharing reductions based on participation in a disease management program so long as there is equal access to the disease management program based on objective criteria related to a health status or disease state.

Comment: We received comments asking CMS to clarify whether a plan may offer different co-pays to a subset of the population for some visits, but not all.

Response: We appreciate the comment and are still considering how our new interpretation of the uniformity requirement would apply to such situations. We intend to provide clarifying guidance on this issue through HPMS memoranda and updates to the Medicare Managed Care Manual.

Comment: A commenter requested that CMS clarify whether reduced cost sharing can be extended to premiums.

Response: No, this flexibility does not extend to premiums; beneficiaries in the same plan must have the same premium. Allowing different premiums would violate section 1854(c) of the Act, which explicitly requires uniform premiums. Our reinterpretation of section 1854(c), section 1852(d) regarding access to benefits for all enrollees, and the regulations implementing those statutes permits only reductions in Part C cost sharing and deductibles, and in targeting Part C supplemental benefits. As noted elsewhere, these specific benefits must be tied to health status or disease state and must be applied to health care services that are medically related to each disease condition. Additionally, targeted benefits and reduced cost sharing must be offered in a manner that ensures that similarly situated individuals are treated uniformly is consistent with the uniformity Start Printed Page 16483requirement in the Medicare Advantage (MA) regulations at § 422.100(d).

Comment: We received a comment asking CMS to confirm if MA plans may choose to apply these flexibilities to out-of-network benefits.

Response: CMS will provide additional guidance and update all corresponding guidance documents to reflect the new interpretation. This guidance will be available before CY 2019 bids are due.

Comment: We received comments requesting that CMS encourage plans to offer such flexibilities to beneficiaries with specific conditions (for example, dementia), stating that such flexibilities could help the ongoing treatment.

Response: In the proposed rule, we stated that an MA plan may offer reduced cost sharing, deductibles, and or targeted supplemental benefits to enrollees diagnosed with specific diseases. In identifying eligible enrollees, the MA plan must use medical criteria that are objective and measurable, and the enrollee must be diagnosed by a plan provider or have their existing diagnosis certified or affirmed by a plan provider to assure equal application of the objective criteria necessary to provide equal treatment of similarly situated individuals. We do not have the authority to restrict or mandate which diagnoses or health conditions a plan chooses for this flexibility. Plans may determine which diagnoses or health conditions they choose to offer these flexibilities. CMS encourages plans to consider the population of their plan when making these decisions.

Comment: We received a number of comments requesting that CMS allow reduced cost sharing and targeting supplemental benefits based on conditions unrelated to medical conditions, such as living situation and income. A commenter suggested CMS allow plans to reduced premiums for beneficiaries who sign up for automated premium payments.

Response: The revised uniformity interpretation does not allow plans to reduce cost sharing and offer targeted supplemental benefits based on criteria unrelated to a diagnosis or health condition. We have determined that a plan may only provide access to targeted supplemental benefits (or specific cost sharing for certain services or items) based on health status or disease state. In identifying eligible enrollees, the MA plan must use medical criteria that are objective and measurable. In addition, MA plans that exercise this flexibility must ensure that the cost sharing reductions and targeted supplemental benefits are for health care services that are medically related to each diagnosis or health condition. Note that, effective CY 2020, the Bipartisan Budget Act of 2018 calls for a new category of supplemental benefits to be made available to chronically ill enrollees that are not limited to being primarily health related. Because the new benefits will not be limited to the primarily health related standard, it is possible for certain offerings to address issues beyond a specific medical condition, such as social supports. However, the basis for offering the new benefits will be based solely on an enrollees' qualification as “chronically ill” and may not be based on conditions unrelated to medical conditions, such as living situation and income.

Comment: We received a comment urging CMS to include an affirmation that C-SNPs would automatically be permitted to adjust benefits and cost sharing based on the eligibility groupings that CMS has approved for each C-SNP.

Response: CMS will update sub-regulatory guidance to clarify the impact of both this reinterpretation and the Bipartisan Budget Act on SNP policy.

Comment: A commenter suggested that CMS should also provide clarification on how the additional benefit flexibility for highly integrated dual eligible special needs plans (D-SNPs), as outlined in Chapter 16b of the Medicare Managed Care Manual, is retained and/or modified under these provisions.

Response: Chapter 16b and any corresponding guidance will be updated to clarify any impact this reinterpretation has on D-SNP policy.

Comment: A commenter asked CMS to allow plans to provide certain supplemental benefits only to fully integrated D-SNP (FIDE SNP) enrollees who do not meet nursing home level of care requirements that would otherwise make them eligible for home and community-based services under an Elderly Waiver.

Response: CMS will update sub-regulatory guidance to clarify the impact of both this reinterpretation and the Bipartisan Budget Act on D-SNP policy.

Comment: We received some comments suggesting that CMS allow plans to reduce cost sharing and offer targeting supplemental benefits based on functional status, in addition to a medical condition.

Response: There must be an underlying disease condition that is diagnosed, such as Alzheimer's disease or Parkinson's disease, in order for the plan to reduce cost sharing and offer targeted supplemental benefits. As stated in the proposed rule, in identifying eligible enrollees, the MA plan must use medical criteria that are objective and measurable, and the enrollee must be diagnosed by a plan provider or have their existing diagnosis certified or affirmed by a plan provider to assure equal application of the objective criteria necessary to provide equal treatment of similarly situated individuals. Specifically, MA plans offering targeted benefits will be responsible for developing the criteria to identify enrollees who fall within each of the clinical categories selected by an organization. Furthermore, cost sharing reductions and targeted supplemental benefits must be for health care services that are medically related to each disease condition.

Note that, effective CY 2020, the Bipartisan Budget Act of 2018 calls for a new category of supplemental benefits to be made available to chronically ill enrollees that are not limited to being primarily health related. Because the new benefits will not be limited to the primarily health related standard, it is possible for certain offerings to address issues beyond a specific medical condition, such as social supports. However, the basis for offering the new benefits will be based solely on an enrollees' qualification as “chronically ill” and may not be based on conditions unrelated to medical conditions, such as living situation and income.

Comment: We received a comment asking CMS to expand our definition of health status or disease state to include “medically complex patients.”

Response: We have determined that a plan may only provide access to targeted supplemental benefits (or specific cost sharing for certain services or items) based on health status or disease state. In identifying eligible enrollees, the MA plan must use medical criteria that are objective and measurable. MA plans offering targeted benefits are responsible for developing the criteria to identify enrollees who fall within each of the clinical categories selected by an organization.

Comment: We received comments requesting that CMS clarify whether a plan may reduce cost sharing only for a subset of high-quality network providers as long as all members with the same health status or disease state receive the same lower cost sharing for using these providers.

Response: Yes, under this flexibility, a plan may reduce cost sharing for certain high-quality providers to members with a specified health status or disease state. MA plans may identify high-value providers across all Medicare provider types. This can include physicians and practices, hospitals, Start Printed Page 16484skilled-nursing facilities, home health agencies, ambulatory surgical centers, etc.

Comment: Some commenters suggested CMS delay implementation, stating that plans need time to enhance their existing internal tools and systems to accommodate varying benefit structures for different sub-populations within a single plan. Some commented that this may be administratively burdensome to implement, and therefore, may not be equal adoption across all MA organizations.

Response: CMS will permit this flexibility beginning in CY 2019. MA organizations that need additional time to consider whether and how to take advantage of this new flexibility are not required to offer targeted supplemental benefits or reductions in cost sharing or deductibles. We believe it is important to allow plans the flexibility to target and better provide for the needs of their enrollees. Our reinterpretation of the uniformity requirements offers flexibility to MA organizations in designing their coverage and is not a mandate.

Comment: Some commenters recommended that only high-performing plans be permitted to provide flexibility in the MA Uniformity Requirements.

Response: CMS appreciates these comments and believes this flexibility will help enrollees seek higher value care. Therefore, CMS will permit all plans to use this flexibility beginning in CY 2019. CMS appreciates these comments and believes this flexibility will help enrollees seek higher value care. This flexibility is not a change to the regulation; it is a reinterpretation of an existing regulation. Therefore, all MAOs must comply with uniformity requirements regardless of individual plan performance. CMS will permit all plans to use this flexibility beginning in CY 2019.

Comment: We received a number of comments suggesting that this reinterpretation is premature. Some commenters suggested that CMS wait until the VBID demonstration has concluded.

Response: The existing VBID demonstration will continue. Information regarding this demonstration can be found at https://innovation.cms.gov/​initiatives/​vbid/​. While we have adopted features of the VBID demonstration, the VBID demonstration and the new uniformity flexibilities are distinct. CMS will permit this flexibility beginning in CY 2019, as we believe it is important to allow plans the flexibility to target and better provide for the needs of their enrollees. We hope that the VBID demonstration will provide CMS with insights into future innovations for the MA program.

Comment: Some commenters suggested that CMS take a measured approach by setting initial limits on the number of targeted conditions and tailored benefit packages that an MA plan can offer.

Response: The existing uniformity flexibility regulatory authority does not allow CMS to limit the number of targeted conditions without additional rulemaking.

Comment: Some suggested that CMS adopt the oversight requirements in the VBID demonstration in allowing plans to use this flexibility under the new reinterpretation.

Response: Currently, the VBID demonstration has a number of oversight requirements, including some marketing restrictions, monitoring to ensure compliance with demonstration rules, data reporting to help CMS evaluate outcomes, and restricting low performing plans from participation. CMS has no plans to adopt these additional demonstration requirements. First, CMS has a robust compliance and auditing program to oversee MA plans and all benefit packages are reviewed by CMS. Therefore, we do not believe any additional monitoring or compliance is needed. Second, MA rules require that this benefit be available in marketing materials and transparent to enrollees. Therefore, we cannot restrict marketing this benefit. Third, we believe we do not need to introduce any additional uniformity reporting as the VBID reporting is designed to aide demonstration evaluation. However, CMS will monitor the implementation of this flexibility and make appropriate adjustments as needed.

Comment: Commenters asked that CMS clarify how this flexibility impacts the VBID demonstration.

Response: The existing VBID demonstration will continue. We note that Bipartisan Budget Act of 2018 expands the testing authority under section 1115A(b) to all 50 states. This flexibility will not impact the VBID demonstration, which is separate from this rulemaking. The new flexibilities discussed here will have no impact on current VBID operations. Information regarding this demonstration can be found at https://innovation.cms.gov/​initiatives/​vbid/​. The VBID demonstration will provide CMS with insights into future innovations for the MA program.

Comment: A commenter asked if CMS planned to implement reporting requirements related to this flexibility, noting that such requirements are in the VBID demonstration.

Response: CMS has no plans to add any reporting requirements related to uniformity flexibility at this time. We do note that MA plans must explain the targeted supplemental benefits and reductions in cost sharing and deductibles in their bids (OMB 0938-0763), including information necessary for CMS to evaluate if there is any discrimination involved. In addition, MA plans must include descriptions of these benefits in benefit disclosures required under § 422.111.

Comment: We received a number of comments expressing concern that this policy could increase beneficiary confusion, particularly as it relates to marketing materials provided during the annual election process.

Response: To mitigate beneficiary confusion, CMS will require MA plans that take advantage of this flexibility to include benefit flexibility information in their CY 2019 EOC. Also, indication of additional benefits and/or reduced cost sharing for enrollees with certain health conditions will be displayed in Medicare Plan Finder.

Comment: We received several comments asking CMS to clarify whether plans will be permitted to market this flexibility to potential enrollees. Some suggested CMS permit marketing. Others suggested CMS prohibit marketing.

Response: Plans will be allowed to market the additional benefits and/or reduced cost sharing to potential enrollees to give beneficiaries the information necessary to choose the best plan for their health care needs. Plans will be required to follow the same CMS marketing rules for this benefit, as they are required to follow when marketing any other benefit. This includes ensuring that materials are not materially inaccurate or misleading or otherwise make material misrepresentations. Specifically, CMS will require that plans include comprehensive benefit flexibility information in their CY 2019 EOC and indicate the additional benefits and/or reduced cost sharing in Medicare Plan Finder.

Comment: A number of commenters expressed concern that this policy may lead to discrimination. For example, some commenters expressed concern that a plan may balance the reduction of cost sharing for one group by increasing cost sharing for others. Further, some commenters expressed concern that this could lead to lead to “cherry-picking” by plans for beneficiaries with low-cost conditions while discriminating against Start Printed Page 16485those with higher-cost chronic conditions.

Response: As noted in the preamble language, the implementation of this flexibility must not violate existing anti-discrimination rules (for example, service category cost sharing and per member per month actuarial equivalence standards communicated by CMS annually in the Call Letter). Organizations that exercise this flexibility must ensure that the cost sharing reductions and targeted supplemental benefits only apply to healthcare services that are medically related to each health status or disease state. CMS will not permit cost sharing reductions across all benefits for an enrollee; cost sharing reductions must be for specific benefits related to a specific health status or disease state. Specifically, plans must not target cost sharing reductions and additional supplemental benefits for a large number of disease conditions, while excluding other higher-cost conditions. CMS will review benefit designs to make sure that targeted disease state(s) and/or clinical condition(s) included in the benefit design are non-discriminatory and that higher acuity, higher cost enrollees are not being excluded in favor of healthier populations.

Comment: A commenter recommended that plan members should have full appeal rights with respect to denial of access to supplemental benefits.

Response: All negative coverage decisions are subject to appeal rights. CMS is reinterpreting existing statutory language at section 1854(c) and 1852(d) of the Act, and the implementing regulation at § 422.100(d), to allow MA organizations the ability to reduce cost sharing for certain covered benefits, offer specific tailored supplemental benefits, and offer lower deductibles for enrollees that meet specific medical criteria. We have reviewed and considered all comments on this clarification and will begin implementing this additional flexibility in CY 2019. In addition, we will provide additional operational guidance before CY 2019 bids are due.

3. Segment Benefits Flexibility

In reviewing section 1854(h) of the Act and Medicare Advantage (MA) regulations governing plan segments, we have determined that the statute and existing regulations may be interpreted to allow 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. Plans segments are county-level portions of a plan's overall service area which, under current CMS policy, are permitted to have different premiums and cost sharing amounts as long as these premiums and cost sharing amounts are uniform throughout the segment. As county-level areas, these are separate rating setting areas within the plan's service area; no further subdivision is permitted. We are proposed to revise our interpretation of the existing statute and regulations to allow MA plan segments to vary by supplemental benefits in addition to premium and cost sharing, consistent with the MA regulatory requirements defining segments at § 422.262(c)(2).

We received the following comments, and our response follows:

Comment: We received a number of comments supporting the implementation of this reinterpretation.

Response: We thank commentators for their support of this reinterpretation.

Comment: Many commenters requested that CMS clarify if this segmentation can be offered to a sub-set of the network providers.

Response: The MA regulations at § 422.2 define a provider network as occurring at the MA plan level: “. . . the providers with which an MA organization contracts or makes arrangements to furnish to furnish covered health care services to Medicare enrollees under a MA coordinated care plan or network PFFS plan”. In implementing its network adequacy standard CMS allows for networks at the MA plan level (a provider specific plan) or at the contract level. In addition to being inconsistent with the regulations we believe that allowing networks to be established at the MA plan segment level would introduce an unnecessary level of complexity to the MA program.

Comment: A commenter asked if there are any restrictions to the benefits that may vary and if all supplemental benefits and services are eligible, or is this specific to a set of supplemental benefits?

Response: Plans may vary supplemental benefits by plan segment consistent with the bid submitted for the segment. All basic benefits (that is, Part A and B benefits) must be offered by all MA plans in all segments.

Comment: A commenter asked if the maximum out-of-pocket (MOOP) amount was one of the elements that may vary.

Response: Yes, because the MOOP is an element of the cost-sharing structure of the plan, each segment may have its own MOOP. This flexibility already exists in MA.

Comment: Commenters asked CMS to clarify if in sub-regulatory guidance that plans are allowed to display multiple segments in the Evidence of Coverage (EOC), Summary of Benefits, and other coverage documents.

Response: Plans will be required to follow the same CMS communication, disclosure and marketing guidelines for each segment In addition, as noted in section II.B, CMS will require plans to include comprehensive benefit flexibility information in their CY 2019 (EOC).

Comment: A commenter noted that CMS uses both “supplemental benefits” and “benefits” in the preamble language and asked CMS explicitly clarify if this new segment benefit flexibility applies only to supplemental benefits and not to the core MA benefit package to which beneficiaries are entitled.

Response: Thank you for the comment. All MA plans must provide basic benefits—meaning Part A and Part B benefits consistent with the cost-sharing limits identified in section 1854(e)(4)(A) [20] and § 422.100(j) and (k)—in all segments. We have determined that the statute and existing regulations may be interpreted to allow MA plans to vary supplemental benefits, in addition to premium and cost sharing, by segment, as long as the benefits, premium, and cost sharing are uniform within each segment of an MA plan's service area. Supplemental benefits include cost-sharing reductions from the actuarial equivalent on average of original Medicare for basic benefits and coverage of additional services and items not covered by original Medicare.

Comment: Some commenters expressed concern that CMS is moving too quickly in implementing this reinterpretation and that such flexibility should be tested on a small scale first.

Response: We believe this flexibility will allow plans to better target and provide for the needs of their populations. CMS will monitor the implementation of this flexibility and make appropriate adjustments as needed. In addition, we note that MA organizations are not required to use this flexibility to vary benefits, cost-sharing and premium at the segment level.Start Printed Page 16486

Comment: We received many comments related to concern about benefit transparency and that this flexibility to offer segments with varied benefits, cost-sharing, or premiums, may lead to beneficiary confusion. Commenters expressed concern that this flexibility will result in beneficiary confusion regarding the differences between plans, which may create a confusing environment for Medicare beneficiaries trying to make informed decisions when choosing plans.

Response: Plans will be required to follow existing rules governing mandatory disclosures (for example, § 422.111), communications and marketing. In addition, CMS will require plans to include comprehensive benefit flexibility information in their CY 2019 EOC.

In this final rule, CMS is adopting a reinterpretation of section 1854(h) of the Act and §§ 422.100(d)(2) and 422.262 to allow MA organizations the ability to vary supplemental benefits, in addition to premium and cost sharing, by segment, as long as the benefits, premium, and cost sharing are uniform within each segment of an MA plan's service area. We have reviewed comments on our proposal and have considered these comments as we finalize the policy. Plans will be permitted to begin implementing this flexibility in CY 2019.

4. Maximum Out-of-Pocket Limit for Medicare Parts A and B Services (§§ 422.100(f)(4) and (5) and 422.101(d))

As provided at §§ 422.100(f)(4) and (5) and 422.101(d)(2) and (3), all Medicare Advantage (MA) plans (including employer group waiver plans (EGWPs) and special needs plans (SNPs)), must establish limits on enrollee out-of-pocket cost sharing for basic benefits (meaning Parts A and B services) that do not exceed the annual limits established by CMS. CMS added § 422.100(f)(4) and (5), effective for coverage in 2011, under the authority of sections 1852(b)(1)(A), 1856(b)(1), and 1857(e)(1) of the Act in order not to discourage enrollment by individuals who utilize higher than average levels of health care services (that is, in order for a plan not to be discriminatory) (75 FR 19709-11). Section 1858(b)(2) of the Act requires a limit on in-network out-of-pocket expenses for enrollees in regional MA plans. In addition, local preferred provider organization (LPPO) plans, under § 422.100(f)(5), and regional PPO (RPPO) plans, under section 1858(b)(2) of the Act and § 422.101(d)(3), are required to have a “catastrophic” limit inclusive of both in- and out-of-network cost sharing for all Parts A and B services, the annual limit which is also established by CMS; all cost sharing (that is, deductibles, coinsurance, and copayments) for Parts A and B services, excluding plan premium, must be included in each plan's maximum out-of-pocket (MOOP) amount subject to these limits. As stated in the CY 2018 final Call Letter [21] and in the 2010 final rule (75 FR 19710), CMS currently sets MOOP limits based on a beneficiary-level distribution of Parts A and B cost sharing for individuals enrolled in Medicare Fee-for-Service (FFS) for local and regional MA plans.

CMS proposed to amend §§ 422.100(f)(4) and (5) and 422.101(d)(2) and (3) to clarify that CMS may use Medicare FFS data to establish the annual MOOP limits, which have historically been linked to values that approximate the 85th and 95th percentile of out-of-pocket expenditures for beneficiaries in original Medicare. The proposal included that CMS have authority to increase the voluntary MOOP limit to another percentile level of Medicare FFS, increase the number of service categories that have higher cost sharing in return for offering a lower MOOP amount, and implement more than two levels of MOOP and cost sharing limits to encourage plan offerings with lower MOOP limits. CMS also proposed that it have authority to increase the number of service categories that have higher cost sharing in return for offering a lower (voluntary) MOOP amount. To codify these various authorities, CMS proposed regulation text permitting CMS to set the annual MOOP limits to strike a balance between limiting maximum beneficiary out-of-pocket costs and potential changes in premium, benefits, and cost sharing, with the goal of ensuring beneficiary access to affordable and sustainable benefit packages. CMS intends to use the annual Call Letter process to communicate its application of the regulation and to transition changes to MOOP limits over time, beginning no earlier than in CY 2020, to avoid disruption to benefit designs and minimize potential beneficiary confusion.

As noted in the proposed rule, CMS discussed in the 2010 rulemaking (75 FR 19709) that it provides greater flexibility in establishing cost sharing for basic benefits to MA plans that adopt a lower, voluntary MOOP limit than is available to plans that adopt the higher, mandatory MOOP limit. The number of beneficiaries with access to a voluntary MOOP limit plan and the proportion of total enrollees in a voluntary MOOP limit plan has decreased significantly from CY 2011 to CY 2017.

Currently, CMS sets the mandatory MOOP amount at approximately the 95th percentile of projected beneficiary out-of-pocket spending. Stated differently, 5 percent of Medicare FFS beneficiaries are expected to incur approximately $6,700 or more in Parts A and B deductibles, copayments, and coinsurance. CMS sets the voluntary MOOP amount of $3,400 to represent approximately the 85th percentile of projected Medicare FFS out-of-pocket costs. The Office of the Actuary conducts an annual analysis to help CMS determine these MOOP limits. Since the MOOP requirements for local and regional MA plans were finalized in regulation, a strict application of the 95th and 85th percentiles would have resulted in MOOP limits for local and regional MA plans fluctuating from year-to-year. To avoid enrollee confusion, allow plans to provide stable benefit packages year over year, and minimize disincentives to the adoption of the lower voluntary MOOP amount because of fluctuations in the amount, CMS has exercised discretion in order to maintain stable MOOP limits from year-to-year that approximate but are not exactly at the 85th and 95th percentile of, beneficiary cost sharing in Medicare FFS.

In the proposed rule, CMS explained that it would want to change the MOOP limits if a consistent pattern of increasing or decreasing costs emerges over time. CMS also summarized how stakeholders have suggested changes to how CMS establishes MOOP limits, including suggestions to use the most appropriate data to inform its decision-making, increase the MOOP limits and the number of service categories that have higher cost sharing in return for a plan offering a lower MOOP limit, and implement different levels of MOOP and service category cost sharing standards to encourage plan offerings with lower MOOP limits.

CMS explained in the proposed rule its goal to establish future MOOP limits based on the most relevant and available data, or combination of data, that reflects beneficiary health care costs in the MA program and maintains MA benefit stability over time. Medicare FFS data currently represents the most relevant and available data at this time so the proposal included codifying use of Medicare FFS data in §§ 422.100(f)(4) and (5) and 422.101(d)(2) and (3).

CMS also explained in the proposed rule that it wished to have flexibility to Start Printed Page 16487change its existing methodology (of using the 85th and 95th percentiles of projected beneficiary out-of-pocket Medicare FFS spending) in the future. The proposed rule was explicitly based on a policy objective of striking the appropriate balance between limiting MOOP costs and potential changes in premium, benefits, and cost sharing with the goal of making sure beneficiaries can access affordable and sustainable benefit packages. While CMS intends to continue using the 85th and 95th percentiles of projected beneficiary out-of-pocket spending for the immediate future to set MA MOOP limits, the proposed amendments to §§ 422.100(f)(4) and (5) and 422.101(d)(2) and (3) were to incorporate authority to balance these factors to set the MOOPs. The flexibility contemplated by the proposed rule would permit CMS to annually adjust mandatory and voluntary MOOP limits based on changes in market conditions and to ensure the sustainability of the MA program and benefit options.

The proposed rule also explained how CMS would, in advance of each plan year, use the annual Call Letter and other guidance documents to explain its application of the regulations and the data used to identify MOOP limits. In addition, CMS committed to transitioning any significant changes adopted using the new proposed authority over time to avoid disruption to benefit designs and minimize potential beneficiary confusion.

In conclusion, CMS proposed to amend §§ 422.100(f)(4) and (5) and 422.101(d)(2) and (3) to clarify that CMS may use Medicare FFS data to establish annual MOOP limits and to adopt a flexible standard for setting the MOOPs. This flexible standard would authorize CMS to increase the voluntary MOOP limit to another percentile level of Medicare FFS beneficiary spending; increase the number of service categories that have higher cost sharing in return for offering a lower MOOP amount; and implement more than two levels of MOOP and cost sharing limits (as a means to encourage plan offerings with lower MOOP limits).

We received the following comments on this proposal, and our response follows,

Nearly all commenters who provided feedback on this provision (Maximum Out-of-Pocket Limit for Medicare Parts A and B Services (§§ 422.100(f)(4) and (5) and 422.101(d))) also provided feedback on the proposal at section II.B.5 (Cost Sharing Limits for Medicare Parts A and B Services (§ 422.100(f)(6))). In this section, we address comments that focus on either this section or both sections, while we address comments that focus on cost sharing limits in section II.B.5.

Comment: The majority of commenters supported this proposal, stating that CMS should primarily use Medicare FFS and MA encounter data to inform its decision-making, and that CMS should consider authorizing more than two levels of MOOP and associated cost sharing standards to encourage plan offerings with lower MOOP limits. Some commenters also made suggestions for levels of MOOP limits and cost sharing service category adjustments that could be especially beneficial.

Response: We thank commenters for their support. CMS's goal is to establish future MOOP limits based on the most relevant and available data, or combination of data, that reflects beneficiary health care costs in the MA program and maintains benefit stability over time. This final rule limits that data to the FFS Medicare data, but as other data sources become accessible, relevant, and of the quality necessary to make these determinations, we will engage in rulemaking to change the rule.

Comment: Many commenters expressed concern with MA encounter data being used at this time to establish MOOP levels based on data quality issues. Commenters also encouraged CMS to continue working with MA organizations to improve the validity and reliability of MA encounter data. A commenter suggested CMS consider other data such as of Marketplace Qualified Health Plan review data.

Response: Medicare FFS data is the most relevant and available data at this time. CMS will consider future rulemaking to use MA encounter cost data as well as Medicare FFS data to establish MOOP limits. In determining completeness and accuracy of MA encounter data CMS does consider the various managed care payment arrangements and payment policies that may exist between organizations, as compared to Medicare FFS data (which are based on relatively consistent payment schedules and payment policies). At this time we cannot commit to a timeline for use of MA encounter data or other data sources to establish MOOP limits. As we learn more and are able to establish standards for the completeness and sufficiency of alternate data sources, we will revisit this issue.

Comment: Some commenters noted concern with the specific methodology that CMS would use other than the 85th or 95th percentile of Medicare FFS beneficiary costs to establish MOOP limits and how abrupt changes may impact cost sharing and the levels of MOOP limits. A commenter also stated concern about what level of change to MOOP limits would be considered “significant” and necessitate a multi-year transition. Some commenters suggested CMS maintain the current voluntary and mandatory MOOP limits (that is, $3,400 and $6,700) and establish additional MOOP limits between these levels with prorated cost sharing standards to minimize any impact to benefit design and beneficiaries. Some commenters suggested CMS further change the regulatory cost sharing standards for inpatient, skilled nursing facility, emergency care, and other professional services as an incentive for plans to adopt lower MOOP limits, while other commenters cautioned CMS to limit changes to these categories to prevent discrimination.

Response: We appreciate the feedback and will take these suggestions and concerns under consideration. CMS plans to transition changes under the finalized regulations over time, beginning no earlier than CY 2020, to avoid disruption to benefit designs and minimize potential beneficiary confusion. The regulation standard adopted in this final rule for §§ 422.100(f)(4) and (5) and 422.101(d)(2) and (3) (that the MOOP be set to strike a balance between limiting maximum beneficiary out of pocket costs and potential changes in premium, benefits, and cost sharing, with the goal of ensuring beneficiary access to affordable and sustainable benefit packages) will apply to determinations regarding a transition period from one particular MOOP to another MOOP. We anticipate that sudden and significant shifts in the MOOP would cause sudden changes in premiums, benefits and cost sharing, which are identified under the new regulation text as something to be minimized. Consistent with past practice, CMS will continue to publish the expected changes for the next year and a description of how the regulation standard is applied (that is, the methodology used) in the annual Call Letter prior to bid submission so that MA plans can submit bids consistent with MA standards. CMS has historically provided prior notice and an opportunity to comment on the Call Letter guidance document and does not expect that to change. This will provide MA organizations adequate time to comment and prepare for changes. We anticipate potential changes in MOOP limits or cost sharing based on MA benefit design strategies will be Start Printed Page 16488conveyed through existing enrollee communication materials.

Comment: Several commenters were concerned about CMS's strategy to promote plan adoption of lower MOOP limits by increasing the cost sharing flexibility for those plans. They suggested that allowing this flexibility may result in discriminatory benefit designs as plans may raise cost sharing limits for certain service categories more likely to be utilized by vulnerable beneficiaries, and that such beneficiaries would be especially disadvantaged if they do not reach the lower, voluntary MOOP limit. Some commenters identified concern for specific service categories if their cost sharing limits were raised (for example, inpatient and professional services) and requested CMS be especially thoughtful when considering changes to these categories. A few commenters proposed that CMS consider lowering cost sharing limits for mandatory MOOP plans as another method to encourage adoption of a lower MOOP limit.

Response: CMS agrees that while increasing flexibility for MA plans that voluntarily offer lower MOOP limits can allow for improved plan design, it will be important to make sure that vulnerable patient populations are not discriminated against and that plan designs are not confusing to beneficiaries. Other existing regulations governing cost sharing designs of MA plans—such as the prohibition on discrimination (§ 422.100(f)(2)), requirement that certain services have cost sharing that is no higher than FFS Medicare limits (§ 422.100(j)), and requirement that overall plan cost-sharing for coverage of basic benefits must be actuarially equivalent to the level of cost sharing (deductible, copayments, or coinsurance) charged to beneficiaries under the original Medicare program option (§ 422.254(b)(4))—remain in place and are unchanged by this final rule. CMS will manage the flexibility plans have in setting cost sharing limits to make sure that plan designs are not discriminatory. For example, CMS does not intend to significantly increase cost sharing limits as a percentage of Medicare FFS above current levels for inpatient, primary, and specialty care based on cost sharing standards that CMS publishes in its annual Call Letter. CMS intends to continue the practice of furnishing information to MA organizations about the methodology used to establish cost sharing limits and the thresholds CMS identifies as non-discriminatory through the annual Call Letter process or Health Plan Management System (HPMS) memoranda and solicit comments, as appropriate.

Comment: Some commenters reported concern with the proposal to amend § 422.100(f)(6) and implement it as described in the proposed rule strategy because of unintended consequences, such as beneficiaries having to choose between plans offering different levels of MOOP limits and variability in cost sharing across services. A commenter suggested that CMS update plan selection resources such as Medicare Plan Finder (MPF) to simplify the plan selection process and assist beneficiaries choose the plan that best fits their unique health care needs.

Response: We agree that cost sharing must not be discriminatory and that it is important to make sure that beneficiaries have adequate information to support their plan enrollment decision-making. Beneficiaries typically make decisions based on plan characteristics that are important to their needs (for example, benefits, cost sharing, MOOP limit, plan premium, and providers) and are not familiar with the complexities associated with bidding guidance and cost sharing standards that plans use to prepare bids. To minimize beneficiary confusion, CMS will continue evaluations and enforcement of the current authority prohibiting plans from misleading beneficiaries in their communication materials. In addition, we will disapprove a plan bid if its proposed benefit design substantially discourages enrollment in that plan by certain Medicare-eligible individuals. In addition, CMS will continue efforts to improve plan offerings and plan comparison tools and resources (for example, MPF and 1-800-MEDICARE).

Comment: We received a comment that noted the importance of MOOP limits as part of a benefit offering for beneficiary protection and that there are MA plans being marketed that do not have a MOOP for out-of-network services.

Response: CMS notes that all Medicare LPPOs and RPPOs are required to have a combined in- and out-of-network MOOP limit. HMO-POS plans may offer out-of-network benefits as supplemental benefits, but are not required to have these services contribute to the in-network MOOP limit or a combined in- and out-of-network MOOP limit.

We received over 40 comments pertaining to the proposal, with the majority reflecting support to amend §§ 422.100(f)(4) and (5) and 422.101(d)(2) and (3) to clarify that CMS may use Medicare FFS data to establish annual MOOP limits. The majority of comments also supported the regulation amendment to add a standard governing CMS establishment of MOOP limits (to strike a balance between limiting maximum beneficiary out of pocket costs and potential changes in premium, benefits, and cost sharing, with the goal of ensuring beneficiary access to affordable and sustainable benefit packages). As noted in the proposed rule, CMS will interpret and implement these amendment to give CMS the authority to change MOOP limits; increase the number of service categories that have higher cost sharing in return for offering lower MOOP limits; and implement more than two levels of MOOP limits. Consistent with past practice, CMS will continue to publish the expected changes for the next year and a description of how the regulation standard is applied in the annual Call Letter prior to bid submission so that MA plans can submit bids consistent with MA standards. CMS plans to transition changes under the finalized regulations over time, beginning no earlier than CY 2020, to avoid disruption to benefit designs and minimize potential beneficiary confusion. After careful consideration of all of the comments we received, we are finalizing the proposal to amend §§ 422.100(f)(4) and (5) and § 422.101(d)(2) and (3) as described with an applicability date of January 1, 2020; this applicability date is consistent with our intent that these new standards apply to cost sharing limits set for plans years after 2019. We are also finalizing minor revisions as follows:

(1) In § 422.100(f)(5), we are finalizing the regulation text without the phrase “annually determined by CMS using Medicare Fee for Service and to establish appropriate” in the introductory text; we believe that the regulation text finalized in the paragraph (f)(5)(ii) is sufficiently clear on this point.

(2) In § 422.100(f)(5)(ii), we will finalize the text with “CMS sets” in place of “CMS will set” for clarity.

5. Cost Sharing Limits for Medicare Parts A and B Services (§ 422.100(f)(6))

In addition to MOOP Limits, MA plan cost sharing for Parts A and B services is subject to additional regulatory requirements and limits in §§ 417.454(e), 422.100(f)(6), and 422.100(j). Section 422.100(f)(6) provides that cost sharing must not be discriminatory and CMS determines annually the level at which certain cost sharing becomes discriminatory. Sections 417.454(e) and 422.100(j) are based on how section 1852(a)(1)(B)(iii) and (iv) of the Act directs that cost Start Printed Page 16489sharing for certain services may not exceed the cost sharing levels in Medicare Fee-for-Service (FFS); under the statute and the regulations, CMS may add to that list of services. CMS identifies Parts A and B services that are more likely to be used by enrollees in establishing its cost sharing parameters for review and evaluation. The review parameters are currently based on Medicare FFS data and reflect a combination of patient utilization scenarios and length of stays or services used by average to sicker patients. CMS uses multiple utilization scenarios for some services (for example, inpatient care) to guard against MA organizations distributing or designing cost sharing amounts in a manner that is discriminatory. Review parameters are also established for frequently used professional services, such as primary and specialty care services.

CMS proposed to amend § 422.100(f)(6) to clarify that it may use Medicare FFS data to establish appropriate cost sharing limits for certain services that are not discriminatory. In addition, CMS proposed to amend the regulation to reflect that CMS would use FFS data and MA encounter data to inform patient utilization scenarios to help identify MA plan cost sharing standards and thresholds that are not discriminatory. We specifically solicited comment on whether to codify that use of MA encounter data for this purpose in § 422.100(f)(6). In this final rule, we reiterate our intent to use the annual Call Letter process to communicate its application of the regulation and announce our intent to transition changes to cost sharing standards over time, beginning no earlier than in CY 2020, to avoid disruption to benefit designs and minimize potential beneficiary confusion. This proposal is not related to a statutory change.

In the proposed rule, CMS explained that it sought to codify authorization to allow CMS to use the most relevant and appropriate information in determining whether specific cost sharing is discriminatory and to set standards and thresholds above which CMS believes cost sharing is discriminatory. In addition, CMS stated its intent to continue the practice of furnishing information to MA organizations about the methodology used to establish cost sharing limits and the thresholds CMS identifies as non-discriminatory through the annual Call Letter process. We referenced soliciting comments before finalizing guidance as necessary and appropriate. We expect this process will allow MA organizations to prepare plan bids consistent with parameters that CMS have determined to be non-discriminatory. In addition, and as appropriate, CMS noted that we may also issue guidance using Health Plan Management System (HPMS) memoranda.

CMS noted in the proposed rule that while it has not established a specific service category cost sharing limit for all possible services, CMS has issued guidance that MA plans must pay at least 50 percent of the contracted (or Medicare allowable) rate and that cost sharing for services cannot exceed 50 percent of the total MA plan financial liability for the benefit in order for the cost sharing for such services to be considered non-discriminatory (Medicare Managed Care Manual, Chapter 4, Section 50.1 at https://www.cms.gov/​Regulations-and-Guidance/​Guidance/​Manuals/​internet-Only-Manuals-IOMs-Items/​CMS019326.html). We stated our belief that cost sharing (service category deductibles, copayments, or co-insurance) that fails to cover at least half the cost of a particular service or item acts to discriminate against those for whom those services and items are medically necessary and discourages enrollment by beneficiaries who need those services and items. If an MA plan uses a copayment method of cost sharing, then the copayment for an in-network Medicare FFS service category cannot exceed 50 percent of the average contracted rate of that service without CMS seriously questioning and reviewing the cost-sharing as discriminatory. CMS does not believe that cost sharing at such high levels can legitimately serve any purpose other than discriminating against the enrollees who need and frequently use those services. Some service categories may identify specific benefits for which a unique copayment will apply, while others are grouped, such as durable medical equipment or outpatient diagnostic and radiological services, which contain a variety of services with different levels of cost which may reasonably have a range of copayments.

As discussed in section II.A/B.4 in the proposed rule and this final rule, CMS uses (and will continue to use under revisions finalized for §§ 422.100 and 422.101) Medicare FFS data in setting limits and thresholds for MA cost sharing for the basic benefits (that is, the Part A and Part B services that MA plans must cover). Medicare FFS data currently represents the most relevant and available data at this time. CMS uses it as well to evaluate the cost sharing for specific services, apply the anti-discrimination standard currently at § 422.100(f)(6), and consider whether to exercise CMS's authority to add (by regulation) categories of services for which cost sharing may not exceed levels in Medicare FFS.

As noted with regard to setting MOOP limits under §§ 422.100 and 422.101, CMS may consider future rulemaking regarding the use of MA encounter data to understand program health care costs and compare to Medicare FFS data in establishing cost sharing limits. Therefore, in addition to proposing to codify use of the FFS data, CMS proposed to include in § 422.100(f)(6) that CMS would use MA encounter data to inform utilization scenarios used to identify discriminatory cost sharing.

CMS explained that its proposal to amend § 422.100(f) would allow use of the most relevant and appropriate information in determining cost sharing standards and thresholds. For example, analyses of MA utilization encounter data can be used with Medicare FFS data to establish the appropriate utilization scenarios to determine MA plan cost sharing standards and thresholds. CMS solicited comments and suggestions on this proposal, particularly whether additional regulation text is needed to achieve CMS's goal of setting and announcing each year presumptively discriminatory levels of cost sharing.

We received the following comments on this proposal, and our response follows,

Nearly all commenters who provided feedback on this provision (Cost Sharing Limits for Medicare Parts A and B Services (§ 422.100(f)(6))) also provided feedback on section II.B. 4 (Maximum Out-of-Pocket Limit for Medicare Parts A and B Services (§§ 422.100(f)(4) and (5) and 422.101(d))). In this section, we address commenters that primarily focus on cost sharing limits, while section II.B.4 addresses commenters that focus on MOOP limits or both of these provisions.

Comment: The majority of commenters supported the proposal, stating that CMS should use Medicare FFS data to establish non-discriminatory cost sharing limits as it is currently the most relevant and appropriate information in determining cost sharing standards and thresholds. Commenters also supported providing guidance through the annual Call Letter to achieve CMS's goal of setting and announcing each year presumptively discriminatory levels of cost sharing that will not be considered discriminatory or in violation of other applicable standards.

Response: We thank the commenters for their support. CMS intends to continue the practice of furnishing Start Printed Page 16490information to MA organizations about the methodology used to establish cost sharing limits and the thresholds CMS identifies as non-discriminatory through the annual Call Letter process. We will also continue to solicit comments before finalizing guidance as necessary and appropriate. Addressing changes in these vehicles that solicit comments provides for more timely and effective changes to protect beneficiaries. We expect this process will allow MA organizations to prepare plan bids consistent with parameters that CMS have determined to be non-discriminatory. In addition, and as appropriate, CMS will announce and issue guidance using HPMS memoranda.

Comment: Many commenters were concerned about the quality of MA encounter data and questioned whether such data should be used to establish cost sharing limits. A few commenters were concerned about using MA encounter data to inform utilization scenarios, as proposed, based on data quality issues. A commenter proposed that CMS consider using a phased in approach over multiple years by blending Medicare FFS and MA encounter data for utilization analyses to address data quality concerns.

Response: We understand the concerns expressed by commenters about using MA encounter data to estimate costs associated with specific health care services. However, we believe MA encounter data can be used to understand utilization trends in establishing the utilization scenarios selected for cost sharing standards (for example, 6-day and 10-day inpatient cost sharing standards). Medicare FFS data currently represents the most relevant and available data at this time but we believe adding MA encounter data to FFS data will improve our utilization scenarios for the MA population. CMS may consider future rulemaking to incorporate MA encounter data with Medicare FFS data to establish cost sharing limits as well. Under this final rule, CMS will use Medicare FFS data along with MA encounter data to help inform utilization scenarios (for example, inpatient lengths of stay) in establishing cost sharing standards as we continue to rely on Medicare FFS data to determine cost sharing dollar limits. We believe the use of MA encounter data to inform utilization scenarios is reasonable as we are using it in conjunction with Medicare FFS data, which mitigates concerns about the completeness and quality of the MA encounter data.

Comment: Several commenters were concerned about CMS's strategy to promote plan adoption of lower MOOP limits by increasing the cost sharing flexibility for those plans. Commenters expressed concern that allowing this flexibility may result in discriminatory benefit designs as plans may raise cost sharing limits for certain service categories more likely to be utilized by vulnerable beneficiaries. Some commenters referenced specific service categories of concern if cost sharing limits were raised (for example, inpatient and professional services) and requested CMS be especially thoughtful when considering changes to these categories.

Response: CMS agrees that while increasing flexibility in cost sharing standards for plans that voluntarily offer lower MOOP limits can allow for improved plan design, it will be important to make sure that vulnerable patient populations are not discriminated against and that plan designs are not confusing to beneficiaries. CMS will manage the flexibility plans have in setting cost sharing limits to make sure that plan designs are not discriminatory.

Comment: Some commenters noted concern with the specific methodology that CMS would use to establish cost sharing limits and how abrupt any changes may be from one contract year to the next. A few commenters requested CMS provide additional guidance on its implementation of the proposed changes to § 422.100(f)(6).

Response: CMS intends to use the annual Call Letter process to communicate its application of the regulation and to transition changes to cost sharing standards over time, beginning no earlier than CY 2020, to avoid disruption to benefit designs and minimize potential beneficiary confusion. Consistent with past practice, CMS will continue to publish annual limits, expected changes for the next year, and a description of how the regulation standard is applied (that is, the methodology used) in the annual Call Letter prior to bid submission so that MA plans can submit bids consistent with CMS standards. This will provide MA organizations adequate time to comment and prepare for changes.

We received over 40 comments pertaining to the proposal, with the majority reflecting support to amend § 422.100(f)(6) to permit use of Medicare FFS data to establish cost sharing limits that will not be considered discriminatory for Part A and B services in MA plans. Commenters also generally supported continued use of the annual Call Letter process for explaining our application and implementation of the revised § 422.100(f)(6). After careful consideration of all the comments, we are finalizing our proposal to use Medicare FFS data along with MA encounter data to inform utilization scenarios (for example, inpatient lengths of stay) and rely on Medicare FFS data to determine cost sharing standards and thresholds. We are finalizing these amendments with an applicability date of January 1, 2020; this applicability date is consistent with our intent that these new standards apply to cost sharing limits set for plans years after 2019. As MA encounter cost data quality improves, CMS will consider future rulemaking to incorporate with Medicare FFS data to establish cost sharing limits. CMS intends to use the annual Call Letter process to communicate its application of the regulation and plans to transition changes under the finalized regulations over time, beginning no earlier than CY 2020, to avoid disruption to benefit designs and minimize potential beneficiary confusion. We are also finalizing a minor revision to paragraph (f)(6) to improve the flow of the text. Specifically, we are separating the last sentence into two sentences divided by a semicolon with minor grammatical edits.

6. Meaningful Differences in Medicare Advantage Bid Submissions and Bid Review (§§ 422.254 and 422.256)

As provided at §§ 422.254(a)(4) and 422.256(b)(4), CMS will only approve a bid submitted by a Medicare Advantage (MA) organization if its plan benefit package (PBP) is substantially different from those of other plans offered by the organization in the same area with respect to key plan characteristics such as premiums, cost sharing, or benefits offered. MA organizations may submit bids for multiple plans in the same area under the same contract only if those plans are substantially different from one another based on CMS's annual meaningful difference evaluation. CMS proposed to eliminate the meaningful difference requirement beginning with MA bid submissions for contract year (CY) 2019. Separate meaningful difference rules were concurrently adopted for MA and stand-alone prescription drug plans (PDPs), but this specific proposal was limited to the meaningful difference provision related to the MA program. A proposal related to the Part D meaningful difference regulation is addressed at section III. II.A.16. of this final rule.

In the proposed rule, CMS explained the goal of eliminating the meaningful difference requirement: To improve competition, innovation, available Start Printed Page 16491benefit offerings, and provide beneficiaries with affordable plans that are tailored for their unique health care needs and financial situation. Other regulations prohibit plans from misleading beneficiaries in their communication materials, provide CMS the authority to disapprove a bid if a plan's proposed benefit design substantially discourages enrollment in that plan by certain Medicare-eligible individuals, and allow CMS to non-renew a plan that fails to attract a sufficient number of enrollees over a sustained period of time (§§ 422.100(f)(2), 422.510(a)(4)(xiv), 422.2264, and 422.2260(e)). Therefore, CMS explained in the proposed rule, MA organizations could be expected to continue designing PBPs that, within a service area, are different from one another with respect to key benefit design characteristics. CMS stated its belief that any potential beneficiary confusion would be minimized when comparing multiple plans offered by the MA organization. For example, beneficiaries may consider the following factors when they make their health care decisions: Plan type, Part D coverage, differences in provider network, Part B and plan premiums, and unique populations served (for example, special needs plans). In addition, CMS stated its intent to continue the practice of furnishing information to MA organizations about the bid evaluation methodology through the annual Call Letter process and/or Health Plan Management System (HPMS) memoranda and solicit comments, as appropriate. This process allows CMS to articulate bid requirements and MA organizations to prepare bids that satisfy CMS requirements and standards prior to bid submission in June each year.

As stated in the proposed rule, although challenged by choices, beneficiaries do not want their plan choices to be limited and understand key decision factors such as premiums, out-of-pocket cost sharing, Part D coverage, familiar providers, and company offering the plan.[22] CMS noted that more sophisticated approaches to consumer engagement and decision-making should help beneficiaries, caregivers, and family members make informed plan choices. CMS cited supporting 1-800-MEDICARE and enhancements to MPF that have improved the customer experience, such as including MA and Part D benefits and a new consumer friendly tool for the CY 2018 Medicare open enrollment period. This new tool assists beneficiaries in choosing a plan that meets their unique health and financial needs based on a set of 10 quick questions.

As stated in the October 22, 2009, proposed rule (74 FR 54670 through 73) and April 15, 2010, final rule (75 FR 19736 through 40), CMS's goal for the meaningful difference evaluation was to ensure a proper balance between affording beneficiaries a wide range of plan choices and avoiding undue beneficiary confusion in making coverage selections. The meaningful difference evaluation was initiated when cost sharing and benefits were relatively consistent within each plan, and similar plans within the same contract could be readily compared by measuring estimated out-of-pocket costs (OOPC) and other factors currently integrated in the evaluation's methodology. Detailed information about the meaningful difference evaluation is available in the CY 2018 Final Call Letter issued April 3, 2017, (pages 115-118) and information about the CMS OOPC model is available at: https://www.cms.gov/​Medicare/​Prescription-Drug-Coverage/​PrescriptionDrugCovGenIn/​OOPCResources.html. As discussed in the CY 2018 Final Call Letter, the differences between similar plans must have at least a $20 per member per month estimated beneficiary out-of-pocket cost difference. Differences in plan type (for example, HMO, LPPO), SNP sub-type, and inclusion of Part D coverage are considered meaningful differences, which align with beneficiary decision-making. As noted in the proposed rule, premiums, risk scores, actual plan utilization, and enrollment are not included in the evaluation because these factors will introduce risk selection, costs, and margin into the evaluation, resulting in a negation of the evaluation's objectivity. CMS clarified that the OOPC model uses the lowest cost sharing value for each service category to estimate out-of-pocket costs, which may or may not be a relevant comparison between different plans for purposes of evaluating meaningful difference when variable cost sharing of this type is involved.

Based on CMS's efforts to revisit MA standards and the implementation of the governing law to find flexibility for MA beneficiaries and plans, MA organizations are able to: (1) Tier the cost sharing for contracted providers as an incentive to encourage enrollees to seek care from providers the plan identifies based on efficiency and quality data which was communicated in CY 2011 guidance; (2) establish Provider-Specific Plans (PSPs) designed to offer enrollees benefits through a subset of the overall contracted network in a given service area, which are sometimes referred to as narrower networks, and which was collected in the PBP beginning in CY 2011; and (3) beginning in CY 2019, provide different cost sharing and/or additional supplemental benefits for enrollees based on defined health status or disease state within the same plan (Flexibility in the Medicare Advantage Uniformity Requirements). These flexibilities allow MA organizations to provide beneficiaries with access to health care benefits that are tailored to individual needs, but make it difficult for CMS to objectively measure meaningful differences between plans. Items 1 and 3 provide greater cost sharing flexibility to address individual beneficiary needs but result in a much broader range of cost sharing values being entered into the PBP.

CMS restated its commitment to ensuring transparency in plan offerings so that beneficiaries can make informed decisions about their health care plan choices while also noting the importance of encouraging competition, innovation, and providing access to affordable health care approaches that address individual needs. CMS recognized that the current meaningful difference methodology evaluates the entire plan and does not capture differences in benefits that are tied to specific health conditions. As a result, CMS noted the meaningful difference evaluation will not fully represent benefit and cost sharing differences experienced by enrollees and could lead to MA organizations to focus on CMS standards, rather than beneficiary needs, when designing benefit packages. CMS noted the challenges with trying to capture differences in provider network, more tailored benefit and cost sharing designs, or other innovations. In addition, we are concerned that plans may be forced to potentially develop more complicated and confusing benefit designs to achieve differences between plans.

CMS recognized to satisfy current CMS meaningful difference standards, MA organizations may have to change benefit coverage or cost sharing in certain plans to establish the necessary benefit value difference, even if substantial difference exists based on factors CMS is currently unable to incorporate into the evaluation (such as tiered cost sharing, and unique benefit packages based on enrollee health conditions). Although these changes in benefits coverage may be positive or negative, CMS stated concern that the meaningful difference requirement Start Printed Page 16492results in organizations potentially reducing the value of benefit offerings. These are unintended consequences of the existing meaningful difference evaluation and may restrict innovative benefit designs that address individual beneficiary needs and affordability.

As discussed in the proposed rule, CMS continually evaluates consumer engagement tools and outreach materials (including marketing, educational, and member materials) to ensure information is formatted consistently so beneficiaries can easily compare multiple plans. Annual guidance and model materials are provided to MA organizations to assist them in providing resources, such as the plan's Annual Notice of Change (ANOC) and Evidence of Coverage (EOC), which contain valuable information for the enrollee to evaluate and select the best plan for their needs. CMS invests substantial resources in engagement strategies such as 1-800-MEDICARE, MPF, standard and electronic mail, and social media to continuously communicate with beneficiaries, caregivers, family members, providers, community resources, and other stakeholders.

CMS noted that MA organizations may be able to offer a portfolio of plan options with clear differences between benefits, providers, and premiums which will allow beneficiaries to make more effective decisions if the MA organizations are not required to change benefit and cost sharing designs in order to satisfy §§ 422.254 and 422.256. Currently, MA organizations must satisfy CMS meaningful difference standards (and other requirements), rather than solely focusing on beneficiary purchasing needs when establishing a range of plan options. CMS also noted additional beneficiary protections including: Plans are required to not mislead beneficiaries in communication materials; CMS may disapprove a bid if CMS finds that a plan's proposed benefit design substantially discourages enrollment in that plan by certain Medicare-eligible individuals; and CMS may terminate plans that fail to attract a sufficient number of enrollees over a sustained period of time (§§ 422.100(f)(2), 422.510(a)(4)(xiv), 422.2264, and 422.2260(e)). For these reasons, CMS proposed to remove §§ 422.254(a)(4) and 422.256(b)(4) to eliminate the meaningful difference requirement for MA bid submissions. CMS also solicited comments and suggestions on making sure beneficiaries have access to innovative plans that meet their unique needs.

We received the following comments on this proposal, and our response follows:

Comment: Some commenters fully supported the proposal, stating that eliminating the meaningful difference requirement will support plan innovation and provide Medicare beneficiaries access to plans that meet their unique needs. Several commenters noted that eliminating the current meaningful difference requirement that established arbitrary differences between plans will allow MA organizations to put the beneficiary at the center of benefit design. This will result in MA organizations being able to offer a portfolio of plan options with clear differences between benefits, providers, and premiums that are easily understood by beneficiaries. Commenters also noted that CMS's efforts to support beneficiaries make informed choices by maintaining existing requirements for marketing materials and nondiscriminatory benefit designs will sufficiently safeguard beneficiaries if the meaningful difference requirement is eliminated.

Response: We thank the commenters for supporting the proposal. We believe this proposed change could result in more innovative products that are more competitive and market-driven within a less restrictive regulatory framework.

Comment: A commenter supported the proposal and questioned how the agency will ensure potential savings from eliminating the meaningful difference requirement will be passed on to beneficiaries in the form of lower premiums, while also maintaining coverage of essential and appropriate benefits.

Response: CMS expects that the elimination of the meaningful difference evaluation, in conjunction with the expansion of benefit flexibilities, will allow organizations to provide benefit offerings that satisfy the unique needs of beneficiaries, increase enrollee satisfaction, reduce overall plan expenditures, and result in more affordable plans. All MA plans must provide enrollees in that plan with all Parts A and B services so beneficiaries are assured a minimum package of covered services; many plans also provide supplemental benefits, at the MA organization's option. While CMS reviews and approves MA PBPs and premiums for actuarial soundness and satisfying CMS standards, we do not have the legal authority to dictate MA organizations' business decisions to establish premiums at a specific level. MA organizations can adjust their plan offerings to reflect annual changes in medical costs and payment rates and may do so in a variety of ways, such as adjustments to cost sharing amounts, adding or subtracting supplemental benefits, or making changes to the monthly premium(s). Plans face competition in their defined market areas and must also comply with Part C standards related to changes in benefits, cost sharing, and premium. In addition, all beneficiaries are made aware of plan changes including premium for the upcoming year and can choose to switch plans during the annual election period.

Comment: Several commenters disagreed with the proposal to eliminate the meaningful difference requirement because they believe it is a beneficiary protection. Reasons for maintaining the meaningful difference requirement included: Concerns about the ability of Medicare beneficiaries to make the nuanced comparisons among various plan types and benefit packages, limited resources to assist beneficiaries with complicated decisions, expectation that older people and people with disabilities do not use technology to the same extent as non-Medicare beneficiary populations (thereby limiting the usefulness of MPF, a primary means of CMS assistance to beneficiaries in comparing plans), and unknown resource availability to support call centers to assist beneficiaries who do not have access to or use the internet. Several comments were concerned that narrower networks could be potentially discriminatory or a means of limiting benefit access for enrollees. Another commenter had concerns that eliminating the meaningful difference requirement may encourage plan risk segmentation based on benefit design but did not include any rationale for their concern. Some commenters referenced plan selection research, such as National Institutes of Health, and Brookings studies,[23] noting Consumers Union findings that indicate beneficiaries face challenges in navigating the Medicare market due to not using available tools (such as MPF), Start Printed Page 16493confusion when using MPF, and high rates of individuals not making an active health plan selection because of choice anxiety. Several commenters also noted their general concern that the net effect of eliminating the meaningful difference requirement and other proposals pursued in the proposed rule may have unintended consequences regarding beneficiary confusion that will negate the value of market innovation, especially for people with lower income and educational levels.

Response: We acknowledge the commenters' concerns about beneficiary confusion. We believe that the tools CMS provides for beneficiaries to make decisions and our enforcement of communication and marketing requirements (such as the prohibition on misleading beneficiaries) mitigate and address these concerns. Under our existing authority at § 422.110, CMS will monitor to ensure organizations are not engaging in activities that are discriminatory or potentially misleading or confusing to Medicare beneficiaries. We note that CMS has authority, clarified in this final rule, to review marketing (review in advance of use) and communication (review after use) materials to ensure compliance with MA program requirements. CMS will conduct outreach with organizations that appear to offer a large number of similar plans in the same county following bid submissions and communicate any general concerns through the annual Call Letter process and/or HPMS memoranda. CMS network adequacy requirements apply to all Part C provider networks to ensure adequate network provider access for enrollees. With regard to concerns about risk segmentation, CMS believes risk segmentation is not beneficial to MA organizations or enrollees who want to maintain stable benefits and premiums, but if an organization wanted to purposely create risk segmentation within its plan offerings, it could do so with or without the meaningful difference evaluation. The agency will continue to monitor and address potential concerns as part of our existing authority to review and approve bids. We expect eliminating the meaningful difference requirement will improve plan choices for beneficiaries by driving provider network and benefit package innovation and affordable health care coverage. MA organizations also consider beneficiary choice anxiety when developing their own portfolio of plan offerings, so that sales and broker personnel and marketing materials can highlight key differences between plan offerings and support informed choice. Beneficiaries also rely on established health plan characteristics to guide their decision making, such as preferences for plan type (for example, HMO or PPO), providers (for example, established primary care physician being in network), presence of Part D benefits, cost sharing, plan premium, and brand.[24] In addition, dually eligible beneficiaries may choose D-SNPs that provide more standardized plan options with little or no cost sharing responsibilities instead of a non-D-SNP plan without these benefits. This allows beneficiaries to reduce the number of health plan options of interest (for example, focus on MA organizations offering SNP options) and simplify the process to choose their health plan. After taking into account specific preferences, such as plan type, beneficiaries may choose from a limited subset of available plan options with the assistance of plan communication materials and existing CMS resources such as MPF and 1-800-MEDICARE. In addition, CMS will continue to prohibit plans from misleading beneficiaries in their communication materials, disapprove a plan's bid if its proposed benefit design substantially discourages enrollment in that plan by certain Medicare-eligible individuals, and allow CMS to terminate a plan that fails to attract a sufficient number of enrollees over a sustained period of time so that any potential beneficiary confusion is minimized when comparing multiple plans offered by the organization (§§ 422.100(f)(2), 422.510(a)(4)(xiv), 422.2264, and 422.2260(e)).

Comment: Several commenters had concern that eliminating the meaningful difference requirement would promote “gaming” among plan sponsors (for example, offering a large number of plan options in a service area) which may challenge or complicate beneficiary decision-making because of the potential increase in plan options; these commenters questioned if elimination of the requirement provides enough benefits to outweigh the risks. A few commenters questioned whether there is evidence that innovation is or will be inhibited by the meaningful difference evaluation. A commenter recommended CMS formally survey MA organizations about the impact of meaningful difference standards as well as survey beneficiaries regarding their satisfaction with MA plan offerings. Some commenters suggested CMS first pursue adjusting the meaningful difference requirement before eliminating it by either waiving the requirement if MA organizations can provide alternative evidence to CMS that their plan offerings are substantively different, significantly reducing the current $20 meaningful difference threshold between similar plans to provide more flexibility, accounting for differences in premiums, and providing broader consideration of provider network differences in the evaluation. A commenter requested that instead of eliminating the meaningful difference requirement, CMS revise the evaluation and require plan actuaries to attest to actuarial value differences among plans using a utilization profile that is representative of the plan population. A few comments stated that if CMS was to place a limit on the number of plans an organization could offer that CMS take into consideration the appropriate level within an organizational structure to establish the limit (for example, parent, legal entity, or contract organization), mergers and acquisitions, and that CMS treat full-provider networks separately from more limited provider networks.

Response: As discussed in the proposed rule, CMS is concerned the meaningful difference requirement may force MA organizations to design benefit packages to meet CMS standards rather than address beneficiary needs. CMS has been made aware of these concerns through comments submitted in response to recent Call Letters and the Request for Information (April 2017), that highlighted how MA organizations may be forced to meet arbitrary limits between their plans to comply with CMS meaningful difference standards. Based on this information CMS does not believe formal surveys are necessary to determine the unintended consequences of the meaningful difference evaluation. Our proposal to eliminate the meaningful difference requirement aimed to improve competition, innovation, available benefit offerings, and provide beneficiaries with Start Printed Page 16494affordable plans that are tailored for their unique health care needs and financial situation. The number of MA plan bids may increase because of a variety of factors, that are not related to the elimination of the meaningful difference requirement, such as payments, bidding and service area strategies, serving unique populations, and in response to other program constraints or flexibilities. CMS expects that eliminating the meaningful difference requirement will improve plan choice for beneficiaries by driving provider network and benefit package innovation and affordable health care coverage. CMS believes that eliminating the current meaningful difference requirement will allow MA organizations to put the beneficiary at the center of benefit design as MA organizations will not be pressured to make benefit changes to comply with an arbitrary requirement that may ultimately result in higher premiums and/or cost sharing for beneficiaries. This will result in MA organizations being able to offer a portfolio of plan options with clear differences between benefits, providers, and premiums that are more easily understood by beneficiaries. In order to capture differences in provider networks, more tailored benefit and cost sharing designs, or other innovations, the evaluation process would have to use more varied and complex assumptions to identify plans that are not meaningfully different from one another. CMS believes that such an evaluation could result in more complicated and potentially confusing benefit designs and would require investment of greater administrative resources for MA organizations and CMS, while not producing results that are useful to beneficiaries. CMS expects that eliminating the meaningful difference requirement will improve the plan options available for beneficiaries. As it is unknown how many organizations will choose to add plan options as a result of this provision, we are unable to estimate the impact to beneficiaries should this lead to more competition. CMS expects increased competition will lead to potentially lower premiums and/or cost-sharing for Medicare beneficiaries. CMS does not anticipate beneficiaries will need additional time to compare differences between plans related to the elimination of the meaningful difference requirement. This particular change is expected to help MA organizations differentiate plan offerings more effectively so that beneficiaries can make decisions more efficiently. We believe that the tools and information CMS provides for beneficiaries to make decisions (for example, Medicare Plan Finder, Medicare and You Handbook, 1-800-MEDICARE), in addition to our enforcement of communication and marketing requirements, aim to mitigate any potential choice overload. We are not pursuing adjustments to the meaningful difference requirement (for example, waivers) because the use of a waiver or justification process introduces subjectivity into the benefit review and we believe the goal of increasing flexibility is better served by eliminating the requirement. With this final rule, organizations will have more flexibility to design MA plans in a manner that is more focused on beneficiary needs. Finally, we do not intend to establish a specific number of plans that any one organization could offer. The MA program has a different market structure than standalone PDPs, that is, PDPs serve entire regions while MA organizations may serve different service areas based on county. The same MA organization may have multiple plans but those plans may only overlap in a limited number of counties. Depending on the market structure (for example, makeup of providers and consumers) it may be helpful for MA organizations to provide offerings from multiple plan types so that beneficiaries have valuable options. In addition, it may be helpful for MA organizations to offer SNP plans to meet the needs of different beneficiary populations. CMS will monitor and address potential concerns as part of our existing authority to review and approve bids.

Comment: A few commenters requested that CMS conduct an evaluation to estimate whether eliminating the meaningful difference requirement would create choice anxiety among beneficiaries and its potential effect on future enrollment. A few commenters also questioned if CMS had presented sufficient reasons to justify eliminating the meaningful difference requirement.

Response: In the proposed rule (82 FR 56363 through 56365) and in the responses in this section, we have discussed our supporting rationale to eliminate the meaningful difference requirement. After carefully considering the commenters' concerns, we believe our proposal will result in improved options—both in terms of innovative plans and affordability—for beneficiaries and that existing safeguards, along with beneficiary decision making education and tools, will be successful in managing beneficiary choice anxiety concerns.

Comment: A commenter requested clarification on how this proposal, in conjunction with others, affects expectations for state Medicaid agencies and SNPs.

Response: CMS does not anticipate that eliminating the meaningful difference requirement, in conjunction with other proposals, would affect state Medicaid agencies. To the extent that clarification of state Medicaid or SNP issues is required as a result of the regulation changes in this final rule, CMS would communicate this guidance through the annual Call Letter process, HPMS memoranda, and Medicare Managed Care Manual updates. In addition, the CMS Medicare-Medicaid Coordination Office (MMCO) may provide assistance for states and D-SNPs. The Center for Medicare is working collaboratively with MMCO in the regulations drafting process and implementation steps related to this rule. Separately, MMCO is re-examining the potential need for resources related to implementing the provisions of section 50311 of the Bipartisan Budget Act of 2018.

Comment: Several commenters requested that CMS issue guidance regarding the distinctions in plan options that would be permissible and operational guidance on the implementation of this proposal in the annual Call Letter to support CY 2019 bid development and submission.

Response: MA organizations can use the information contained in this final rule about the elimination of the meaningful difference requirements and CMS expectations to prepare CY 2019 bid submissions. CMS intends to continue using the annual Call Letter process in future years for releasing draft versions of bid-related guidance for comment and to provide additional guidance regarding general concerns we may have with organizations' portfolio of plan offerings. In addition, we will provide information about potential concerns regarding activities that are potentially discriminatory or potentially misleading or confusing to Medicare beneficiaries.

Comment: Several commenters noted concern about resources to support beneficiaries choose a health plan and navigate their benefits (for example, 1-800-MEDICARE, MPF, SHIP counselors, and the Medicare Ombudsman program) and supported improvements to MPF that allow beneficiaries to more easily narrow down their choices based on personalized information (for example, more filters and pre-selection criteria to identify important plan characteristics that limit plan options to evaluate). Several commenters offered to provide Start Printed Page 16495input to MPF changes, while others encouraged CMS to establish a group of representatives (for example, MA organizations, advocacy organizations, provider groups, and other stakeholders) to help develop MPF improvements, health plan decision-making education materials, and other information to improve the health plan selection process and overall experience for beneficiaries. Some comments indicated that changes to the MPF should occur prior to eliminating the meaningful difference evaluation. Commenters also had an interest in CMS establishing communications and marketing guidance so that MA organizations can describe how an organization's plan offerings are different in situations where multiple plan options are compared (for example, providing additional information in the Summary of Benefits). In addition, other comments noted the need for CMS to solicit input from multiple stakeholders to improve communication materials (for example, ANOC and EOC).

Response: These recommendations are not strictly within the scope of this final rule provision. We do however appreciate the many comments and suggestions related to improving the health plan decision making process and overall experience for beneficiaries. We agree with the need for clear and complete information and intend to continue improving the MPF to make it as user friendly as possible. We are sharing these comments and suggestions with the CMS Office of Communications. Additionally, we would encourage third party organizations that support beneficiaries in their decision-making to take advantage of existing resources 1-800-MEDICARE, MPF, SHIP counselors, and the Medicare Ombudsman program. CMS will take commenter suggestions under careful consideration and will continue to include stakeholders and beneficiaries in the planning, preparation, testing, and execution process for MPF; CMS subjects some model enrollee communication materials to periodic consumer testing and also considers comments submitted from MA organizations and stakeholders on an ongoing basis. In addition, CMS will look for ways to incorporate the suggestions from commenters about how the health plan selection process can be simplified for beneficiaries through existing and possibly new Medicare materials. MA organizations have and are encouraged to use existing flexibilities to highlight differences between their own plan offerings for beneficiaries in marketing and communications materials (for example, summary of benefits).

We received over 65 comments pertaining to the proposal; the great majority reflected mixed support for eliminating the meaningful difference requirement. After careful consideration of all of the comments we received, we are finalizing the elimination of the meaningful difference requirement from §§ 422.254 and 422.256 as proposed. Under our existing authority at § 422.2268, CMS will monitor to ensure organizations are not engaging in activities that are discriminatory or potentially misleading or confusing to Medicare beneficiaries. CMS will communicate and work with organizations that appear to offer a large number of similar plans in the same county, raising and discussing with such MA organizations any concerns. CMS plan checks would include plans offered under each contract, unique plan type, and county. Plan types currently include: (1) HMO and HMO-POS not offering all Parts A and B services out-of-network, (2) HMO POS offering all Parts A and B services out-of-network, (3) LPPO, (4) RPPO, (5) PFFS, and (6) unique SNP types (that is, different chronic diseases, institutional categories, and dual-eligible sub-types). From a beneficiary's perspective, CMS would expect plans within the same contract, plan type, and county to be distinguishable by beneficiaries using such factors as the inclusion or exclusion of Part D coverage, provider network, plan premium, Part B premium buy-down, estimated out-of-pocket costs, and benefit design so that MA organizations can market their plans clearly. CMS intends to issue guidance through the annual Call Letter process and HPMS memoranda to help organizations design plan options that avoid potential beneficiary confusion prior to bid submission.

7. Coordination of Enrollment and Disenrollment Through MA Organizations and Effective Dates of Coverage and Change of Coverage (§§ 422.66 and 422.68)

In addition to general authority for the Secretary to establish the process through which MA plan election is made by Medicare beneficiaries, section 1851(c)(3)(A)(ii) of the Act authorizes the Secretary to implement default enrollment rules for the Medicare Advantage (MA) program. This default enrollment is in addition to the statutory direction that beneficiaries who do not elect an MA plan are defaulted to original (fee-for-service) Medicare. Section 1851(c)(3)(A)(ii) states that the Secretary may establish procedures whereby an individual currently enrolled in a non-MA health plan offered by an MA organization at the time of his or her Initial Coverage Election Period is deemed to have elected an MA plan offered by the organization if he or she does not elect to receive Medicare coverage in another way. We proposed new regulation text to establish limits and requirements for these types of default enrollments to address our administrative experience with and concerns raised about these types of default enrollments under our existing practice. Based on our experience with the seamless conversion process thus far, we proposed to codify at § 422.66(c)(2) requirements for seamless default enrollments upon initial eligibility for Medicare. As proposed, such default enrollments would be into dual eligible special needs plans (D-SNPs) and would be subject to five substantive conditions: (1) The state has approved use of this default enrollment process and provided Medicare eligibility information to the MA organization; (2) CMS has approved the MA organization to use the default enrollment process before any enrollments are processed; (3) the individual is enrolled in an affiliated Medicaid managed care plan and is dually eligible for Medicare and Medicaid; (4) the MA organization provides a notice that meets CMS requirements to the individual; and (5) the individual does not opt out of the default enrollment. We proposed that coverage under these types of default enrollments begin on the first of the month that the individual's Part A and Part B eligibility is effective. We also proposed changes to §§ 422.66(d)(1) and (d)(5) and 422.68 that coordinate with the proposal for § 422.66.

As noted in the proposed rule, we initially addressed default enrollment upon conversion to Medicare in a 2005 rulemaking (70 FR 4606 through 4607) and released subregulatory guidance [25] to provide an optional enrollment mechanism in 2006. This mechanism permitted MA organizations to develop processes and, with CMS approval, provide seamless continuation of coverage by way of enrollment in an MA plan for newly MA eligible individuals who are currently enrolled in other health plans offered by the MA organization (such as commercial or Medicaid plans) at the time of the individuals' initial eligibility for Medicare. The guidance emphasized Start Printed Page 16496that approved MA organizations not limit seamless continuation of coverage to situations in which an enrollee becomes eligible for Medicare by virtue of age, and directed MA organizations to implement seamless conversions to include all newly eligible Medicare beneficiaries, including those whose Medicare eligibility is based on disability. From its inception, the guidance required that individuals receive advance notice of the proposed MA enrollment and have the ability to “opt out” of such an enrollment prior to the effective date of coverage. This guidance has been in practice for the past decade, but we encountered complaints and heard concerns about the practice.

The Advance Notice of Methodological Changes for Calendar Year (CY) 2016 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies and 2016 Call Letter discussed the opportunity to integrate Medicare and Medicaid benefits via seamless continuation of coverage into D-SNPs, and we received positive comments from state Medicaid agencies supporting this enrollment mechanism and requesting clarification of the approval process. We also received comments from beneficiary advocates asking for additional consumer protections (for example, requiring written beneficiary confirmation and a special enrollment period for those enrolled using this optional mechanism).

On October 21, 2016,[26] in response to inquiries regarding this enrollment mechanism, its use by MA organizations, and the beneficiary protections currently in place, we announced a temporary suspension of acceptance of new proposals for seamless continuation of coverage. We discovered, based on our subsequent discussions with beneficiary advocates and MA organizations approved for this enrollment mechanism, that MA organizations find it difficult to comply with our current guidance and approval parameters, especially the requirement to identify commercial members who are approaching Medicare eligibility based on disability when the other plan offered by the MA organization is a commercial insurance plan. MA organizations also outlined challenges in confirming entitlement to Medicare Parts A and B within necessary timeframes and obtaining the individual's Medicare number—which in 2018 will become a random and unique number instead of the Social Security Number-based identifier used today. As discussed in more detail below, we anticipate that the switch from the SSN-based identifier will exacerbate this difficulty.

We noted in the proposed rule how organizations operating Medicaid managed care plans are better able to meet these requirements when states provide data, including the individual's Medicare number, to identify individuals about to become Medicare eligible; MA organizations with state contracts to offer D-SNPs will be able to obtain (under their agreements with state Medicaid agencies) the data necessary to process and submit default enrollments to CMS without needing to collect information from the Medicare beneficiaries. Therefore, we proposed to revise § 422.66 to permit default enrollment only for Medicaid managed care enrollees who are newly eligible for Medicare and who are enrolled into a D-SNP administered by an MA organization with the same parent organization as the organization that operates the Medicaid managed care plan in which the individual remains enrolled. At § 422.66(c)(2)(i)(B), we also proposed to limit these default enrollments to situations where the state has actively facilitated and approved the MA organization's use of this enrollment process and articulates this in the agreement with the MA organization offering the D-SNP and by providing necessary identifying information to the MA organization.

The proposal was designed to support state efforts to increase enrollment of dually eligible individuals into fully integrated systems of care There is evidence [27] that such systems improve health outcomes so supporting efforts to increase use those systems is consistent with overall CMS policy. Further, we believe then, and now, that the proposal provided states with additional flexibility and control.

To ensure individuals are aware of the default MA enrollment and of the changes to their Medicare and Medicaid coverage, we also proposed, at § 422.66(c)(2)(i)(C) and (c)(2)(iv), a requirement for MA organizations to issue a notice no fewer than 60 days before the default enrollment effective date to the enrollee. The notice [28] must include clear information on the D-SNP, as well as instructions to the individual on how to opt out (or decline) the default enrollment and how to enroll in Original Medicare or a different MA plan.

We also proposed, in paragraph (c)(2)(i)(E) and (2)(ii), that MA organizations must obtain approval from CMS before implementing default enrollment. We explained that under our proposal in paragraph (c)(2)(i)(B), CMS approval would be granted only if the applicable state approves the default enrollment through its agreement with the MA organization. We also noted that MA organizations would be required to implement default enrollment in a non-discriminatory manner, consistent with their obligations under § 422.110; that is, MA organizations could not select for default enrollment only certain members of the affiliated Medicaid plan who were identified as eligible for default enrollment. Lastly, we proposed authority for CMS to suspend or rescind approval at any time it determined that the MA organization is not in compliance with the requirements. We requested comment on whether this authority to rescind approval should be broader. We also explained that we continued to consider whether a time limit on the approval (such as 2 to 5 years) would be appropriate so that CMS would have to revisit the processes and procedures used by an MA organization in order to assure that the regulation requirements are still being followed. We were particularly interested in comment on this point in conjunction with our alternative proposal (discussed later in this section) to codify the existing parameters for this type of seamless conversion default enrollment such that all MA organizations would be able to use this default enrollment process for newly eligible and newly enrolled Medicare beneficiaries in the MA organization's non-Medicare coverage.Start Printed Page 16497

Under our proposal, default enrollment of individuals at the time of their conversion to Medicare would be more limited than the default enrollments Congress authorized the Secretary to permit in section 1851(c)(3)(A)(ii) of the Act. However, we also proposed some flexibility for MA organizations that wish to offer seamless continuation of coverage to their non-Medicare members (commercial, Medicaid or otherwise) who are gaining Medicare eligibility. We further proposed to amend § 422.66(d)(5) and to establish, through subregulatory guidance, a new and simplified positive (that is, “opt in”) election process that would be available to all MA organizations for their commercial, Medicaid or other non-Medicare plan members. To reflect this proposal for a simplified election process, we proposed to add text in § 422.66(d)(5) authorizing a simplified election for purposes of converting existing non-Medicare coverage to MA coverage offered by the same organization. This new simplified enrollment process aimed to lessen burden for MA organizations, make enrollment easier for the newly-eligible beneficiary to complete, and provide opportunity for beneficiary choice, so that beneficiaries could remain with the organization that offers their non-Medicare coverage or select another MA plan that meets their individual needs with respect to provider network, prescription drug formularies, and cost and benefit structures. We explained that our new election process would provide a longer period of time for MA organizations to accept enrollment requests than the time period in which MA organizations would be required to effectuate default enrollments, as organizations would be able to accept simplified enrollments throughout the individual's Initial Coverage Election Period (ICEP), provided he or she enrolled in both Medicare Parts A and B when first eligible. We proposed to use existing authority to create this new enrollment mechanism, which would be available to MA organizations in the 2019 contract year. We solicited comments on the proposed changes to § 422.66(d)(5) and the form and manner of the simplified enrollments.

In addition to these proposals and solicitations for comment related to default and seamless enrollments for newly eligible Medicare beneficiaries, we proposed amendments to §§ 422.66(d)(1) and 422.68 that are also related to MA enrollment. Currently, as described in the 2005 final rule (70 FR 4606 through 4607), § 422.66(d)(1) requires MA organizations to accept enrollment requests from an individual who is enrolled in a non-Medicare health plan offered by the MA organization during the month immediately preceding the month in which he or she is entitled to both Part A and Part B and who meets MA eligibility requirements. We are concerned that in some instances, this regulation has been interpreted as meaning that the enrollment request must be filed during the month before Medicare entitlement occurs. To clarify the requirement and be more consistent with section 1851(c)(3)(A)(ii), we proposed to amend § 422.66(d)(1) to add text clarifying that seamless continuation of coverage is available to an individual who requests enrollment during his or her Initial Coverage Election Period. We also proposed a revision to § 422.68(a) to ensure that ICEP elections made during or after the month of entitlement to both Part A and Part B are effective the first day of the calendar month following the month in which the election is made. This proposed revision would codify subregulatory guidance that MA organizations have been following since 2006. This proposal is also consistent with the proposal at § 422.66(c)(2)(iii) regarding the effective date of coverage for default enrollments into D-SNPs. We also solicited comment on these related proposals.

In conclusion, we proposed to add regulation text at § 422.66(c)(2)(i) through (iv) to set limits and requirements for a default enrollment of the type authorized under section 1851(c)(3)(A)(ii). We proposed a clarifying amendment to § 422.66(d)(1) regarding when seamless continuation coverage can be elected and revisions to § 422.66(d)(5) to reflect our proposal for a new and simplified positive election process that will be available to all MA organizations and their members who enroll in an MA plan offered by the same entity that offers the individual's pre-Medicare coverage. Lastly, we proposed revisions to § 422.68(a) to ensure that ICEP elections made during or after the month of entitlement to both Part A and Part B are effective the first day of the calendar month following the month in which the election is made. We solicited comments on all these proposals.

In addition, we presented an alternative for consideration and comment. Because we recognized that our proposal narrowed the scope of default enrollments compared to what CMS approved under section 1851(c)(3)(A) of the Act in the past, we discussed in the proposed rule that we continued to consider retaining processes similar to the pre-moratorium seamless conversion process. That seamless conversion mechanism is outlined currently in section 40.1.4 of Chapter 2 of the Medicare Managed Care Manual and had been in practice through October 2016. As an alternative we considered proposing regulations to codify that guidance as follows—

  • Articulating the requirements for an MA organization's proposal to use the seamless conversion mechanism, including identifying eligible individuals in advance of Medicare eligibility;
  • Establishing timeframes for processing and the effective date of the enrollment; and
  • Requiring notification to individuals at least 60 days prior to the conversion of their right to opt-out or decline the enrollment.

In considering this alternative, we contemplated additional beneficiary protections, including the issuance of an additional notice to ensure that individuals understood the implication of taking no action when notified of the default enrollment. While this alternative would lead to increased use of the seamless conversion enrollment mechanism than what had been used in the past, we expressed concern that the operational challenges, particularly in relation to the new Medicare Beneficiary Identification number, could be significant for MA organizations to overcome at this time.

We also explained how we considered proposing regulations to limit the use of default enrollment to only beneficiaries who are eligible for Medicare based on age. While this alternative would simplify an MA organization's ability to identify eligible individuals, we noted concerns about disparate treatment among newly eligible beneficiaries based on their reason for obtaining Medicare entitlement.

We invited comments on our proposal and the alternate approaches we identified, including the following:

  • Codify the existing parameters for this type of seamless conversion default enrollment such that all MA organizations would be able to use this default enrollment process for newly eligible and newly enrolled Medicare beneficiaries already covered by the MA organization's non-Medicare coverage.
  • Codify the existing parameters for this type of seamless conversion default enrollment, as described previously, but allow that use of default enrollment to be limited to only the aged population.

We also asked for solutions to address the concerns we identified in the proposed rule, particularly related to Start Printed Page 16498how MA organizations could identify commercial members who are approaching Medicare eligibility based on disability, as well as how plans could confirm MA eligibility and process enrollments without access to the individual's Medicare number.

We received the following comments and our responses follow:

Comment: We received significant support for our proposal to permit default MA enrollments, especially for dually-eligible beneficiaries who are newly eligible for Medicare. Most commenters supported the proposal to permit only D-SNPs to receive defaulted enrollments for dually-eligible beneficiaries. Some commenters who supported our proposal also supported the alternative we noted for consideration that would permit default enrollment of newly Medicare-eligible individuals enrolled in a non-Medicare health plan offered by the same organization.

Response: We appreciate the widespread support we received for the proposal. In our view, this proposal and our final rule support state efforts to increase enrollment of dually eligible individuals in fully integrated systems of care.

We appreciate the responses to our solicitation of feedback on expanding default enrollment to include individuals enrolled in commercial health plans offered by an MA organization. As noted in the proposed rule (82 FR 56366) and above, our experience with the current seamless conversion enrollment mechanism makes it clear that organizations attempting to seamlessly convert individuals from commercial coverage (that is, private coverage and Marketplace coverage) are, for the most part, unable to comply with our current guidance and approval parameters, especially the expectation that organizations have the means to identify their commercial members who are approaching Medicare eligibility based on disability. Given these challenges, we did not specifically propose to codify default enrollment from commercial coverage. We also solicited feedback on how MA organizations might overcome the challenges in confirming entitlement to Medicare Parts A and B within necessary timeframes and obtaining the individual's Medicare number, given that in 2018 this will become a random and unique number instead of a Social Security Number-based identifier. We received only a few responses to our solicitation of ideas on how to resolve these issues; commenters generally deferred to CMS to find a way to identify non-MA members when those members approach Medicare eligibility and for CMS to convey this information to plans well in advance of the Medicare eligibility date. In light of these comments, CMS may consider expanding default enrollment to occur from commercial or other coverage arrangements in future rulemaking. We are not finalizing the alternate proposal on which we solicited comment.

Comment: A commenter asked that we expand default enrollment to those enrolled in other “state innovated models” and delivery systems other than Medicaid managed care, such as ACOs. The same commenter asked that we allow the default enrollment provisions to be applied to individuals enrolled in coverage other than comprehensive Medicaid managed care, including prepaid inpatient health plans, prepaid ambulatory health plans, and primary care case management. Another commenter asked that we consider expanding our proposal for default enrollment and/or changing the current parameters for passive enrollment to allow a State to enroll any dually-eligible individual (whether in a Medicaid managed care plan or in a Medicaid Fee-for-Service program) into a D-SNP at any time.

Response: We appreciate the comments. As proposed, default enrollment would be subject to several substantive conditions, one of which required that anyone being considered for default enrollment be enrolled in a Medicaid managed care plan affiliated with the MA organization. Our proposal was specific to allowing default enrollment of individuals enrolled in comprehensive Medicaid managed care plans—rather than limited-benefit plans or case management arrangements—into D-SNPs when these Medicaid managed care plan enrollees first become eligible for Medicare. We believe that our overall goals of encouraging integrated care are best met by limiting the default enrollment to the context of comprehensive Medicaid managed care plans at this point and may revisit an expansion of this regulation in future rulemaking. We plan to further clarify allowable scenarios in subsequent guidance. However, given the parameters of section 1851(c)(3)(A)(ii) of the Act, we are unable to finalize a regulation that so substantially expands the population of beneficiaries subject to this default enrollment to include Medicaid beneficiaries who are not enrolled in a health plan offered by an MA organization.

Comment: Several commenters who support our proposal for default enrollment recommend that, if finalized, we ensure that beneficiaries who do not speak English as a primary language receive outreach in their language, preferably by both mail and telephone.

Response: We appreciate these comments and agree that clear communication with individuals identified for default enrollment is an important protection, especially with regard to the potential impact of MA plan enrollment on an individual's access to care. We note that existing law, such as Title VI of the Civil Rights Act of 1964 (applicable to MA organizations in connection with Medicare coverage) and 42 CFR 438.10 (applicable to Medicaid managed care plans) address requirements for providing access to enrollees who have limited English proficiency (LEP). Guidance on the Civil Rights Act of 1964 and authorities that are not limited to Medicare or Medicare is issued by the HHS Office for Civil Rights (OCR). We refer the commenter to section II.B.5 of this final rule on marketing and communications requirements. We believe, therefore, that revisions to our proposed rule are not necessary.

Comment: Several commenters stated that the network for the MA plan should be substantially identical and should not be substantially narrower than the network of the Medicaid plan from which default enrollment would occur.

Response: Although we did not include specific provider network criteria in our proposal for default MA enrollment, we note that CMS currently has in place network adequacy requirements that would apply to any MA plan into which default enrollment occurs. States also have the opportunity to use their State Medicaid agency contracts with D-SNPs to create additional provider network continuity requirements. Therefore, we do not believe that additional criteria are warranted.

Comment: Several of the commenters who opposed our proposal for default enrollment asked that in the event that our proposal for default enrollment is finalized, we consider additional beneficiary protections, such as a minimum star rating for the MA plan into which default enrollment would occur and the exclusion of MA plans that have been assessed a civil monetary penalty or have been sanctioned within the previous 18 months. Another commenter expressed concern about the potential for individuals to be default enrolled into an MA plan with a low star rating when there are MA plans with higher star ratings offered by other organizations in the same area. These commenters note that organizations with high star ratings that do not offer Start Printed Page 16499a Medicaid plan would not be permitted to conduct default enrollment.

Response: We appreciate the comments we received regarding the significance of the compliance history of an MA organization that wishes to conduct default MA enrollment and the suggestion of a minimum star rating. We agree with these commenters that standards governing the quality of the MA D-SNP are appropriate to adopt as well. We believe that default enrollment should not be permitted into an MA plan offered by an MA organization with a low star rating and/or recent issues of significant noncompliance with our regulatory requirements such that CMS has imposed a suspension on new enrollments. Since default MA enrollment is based on an opt-out, rather than opt-in, approach, we believe it is important to ensure that individuals are not enrolled by default into MA plans offered by poor performing organizations. Therefore, we are finalizing the regulation with additional paragraphs ((c)(2)(i)(F) and (G)) that limit default enrollment authority to MA plans that have an overall rating of 3 Stars (or are low enrollment or new contracts) and that are not under a prohibition on new enrollments.

Comment: Most commenters expressed support for limiting CMS approval of an organization's request to conduct default enrollment to a specific time frame. Those who mentioned a specific time frame suggested a period of 2 to 5 years. A commenter suggested that CMS conduct a review after initial approval only if there is an indication of disruption in care.

Response: CMS oversight of plans' implementation of the default enrollment process is an important beneficiary protection. We agree with the suggestions of a 5 year timeframe, as it provides a reasonable amount of time for MA organizations to implement and then assess the approved process, limits administrative burden for MA organizations to request continued approval, and provides them the opportunity to update their processes as operational enhancement or new technologies emerge. However, in our view, should beneficiary complaints or allegations of noncompliance come to our attention, we need to be able to conduct a review of an organization's default enrollment process prior to the expiration of the five year period. Therefore, we will include in the final rule an approval time period of 5 years with a provision that permits CMS to suspend or rescind approval if CMS determines that the MA organization is not in compliance with the requirements or § 422.66(c)(2) or other MA program standards.

Comment: A commenter suggested that we share with states the criteria we will use to review plan proposals to offer default enrollment, adding that this may promote uniformity with implementation across the various states.

Response: The requirements for default enrollment are outlined in this regulation. In addition, we will consider additional guidance, which is available to states, industry, advocates, and the general public, as necessary.

Comment: Most commenters expressed support for our proposal to permit simplified elections for seamless continuation of commercial coverage into a MA plan offered by the same organization. A commenter expressed opposition to the offering of a simplified (opt-in) enrollment mechanism to anyone enrolled in a Medicaid managed care plan. Another commenter asked that we consider making the simplified (opt-in) enrollment mechanism available to all beneficiaries, including those who are not in their ICEP and those who are not enrolled in a non-Medicare plan offered by the same organization.

Response: We appreciate the support for our proposal to promote beneficiary choice and simplify the enrollment process for all MA organizations that offer non-Medicare coverage. However, we disagree with the suggestion to prohibit use of the simplified enrollment mechanism by those enrolled in Medicaid managed care plans. In our view, an eligible individual always has the option to make an active choice into an MA plan that meets their needs when in an election period. Further, as not all individuals in Medicaid managed care plans will be automatically enrolled into a D-SNP (such as those individuals enrolled in Medicaid managed care plans whose parent organizations have opted not to use the default enrollment mechanism or those individuals whose Medicaid managed care enrollment is in a Medicaid prepaid health plan that covers a limited scope of benefits), the simplified enrollment mechanism will lessen burdens on the enrollee and MA organizations that offer such plans. We believe that a simplified election process for beneficiaries who wish to convert from their non-Medicare coverage to MA coverage offered by the same entity will facilitate a more efficient enrollment process overall.

As described in the proposed rule, this mechanism will be available to any MA organization that chooses to offer it. It will be potentially available to any beneficiary who wishes to join an MA plan offered by the same MA organization that offers his or her non-Medicare coverage at the time of his or her initial Medicare eligibility. The simplified enrollment mechanism aims to lessen the amount of information that an MA organization needs to collect from the beneficiary and to use information the MA organization already has. MA organizations that do not already have an existing relationship with an individual must collect all the necessary information in which to determine eligibility and process the enrollment request under § 422.60.

We appreciate the feedback to finalize use of a simplified enrollment mechanism authorized under § 422.66(d)(5) as amended in this final rule. We will permit individuals who are in their ICEP and enrolled in any type of non-Medicare plan to use the simplified (opt-in) enrollment mechanism to request enrollment in any type of MA plan offered by the same MA organization that offers the non-Medicare coverage.

Comment: A few commenters responded to our solicitation of feedback on limiting default enrollment to only the aged. Most of these commenters opposed this limitation; a commenter supported it. Those who oppose limiting default enrollment to only the aged believe that allowing default enrollment to be offered only to those whose Medicare eligibility is based on age, instead of to all beneficiaries, would be discriminatory on its face because the exclusion is based on having a disability or ESRD. Another commenter believes that states and plans should be allowed to determine whether including all individuals approaching Medicare eligibility is feasible and, if not feasible, include only those whose Medicare eligibility is based on age.

Response: We thank the commenters and agree that it would be inappropriate to exclude individuals whose Medicare eligibility is based on disability from default enrollment. We believe that an individual's eligibility to be included in default enrollment should be based on his or her projected Medicare eligibility in general and not on the specific reason for Medicare eligibility. We are, therefore, finalizing this aspect of our proposal as described in the notice of proposed rulemaking and are not including any authority to limit default enrollment (under paragraph (c)) or seamless conversions (under paragraph (d)) to beneficiaries whose eligibility is based on age.Start Printed Page 16500

Comment: In the event that our proposal for default enrollment is finalized, several commenters who opposed our proposal for default enrollment ask that default-enrolled beneficiaries be provided transition coverage, allowing use of an off-formulary drug, and allowing a beneficiary to maintain an out-of-network provider for 12 months, similar to the Medicare-Medicaid financial alignment demonstration.

Response: We appreciate these comments and note that several of the concerns expressed are addressed in other areas of current regulation and guidance. With regard to formulary concerns, we note that all plans offering Part D coverage must meet CMS' formulary adequacy requirements and, in addition, must offer a transition period upon a member's enrollment in a new plan. Specifically, under § 423.120(b)(3), new enrollees must be provided a temporary supply of non-formulary Part D drugs, as well as Part D drugs with utilization management restrictions, and can work with their new plan and provider to switch to a different formulary drug or request an exception during their first 90 days of enrollment in the new MA plan. States may also use their State Medicaid Agency contracts with D-SNPs to create additional continuity requirements. With regard to the commenters' suggestion that we require MA organizations to allow new members to receive care from out-of-network providers for 12 months, similar to the Medicare-Medicaid financial alignment demonstration, we note that a 6 month continuity of care period is more common for demonstration plans. In addition, we note that this period can be offered by demonstration plans due to the demonstration authority itself; we do not have similar authority to impose a similar requirement on MA organizations that choose to implement the default enrollment process.

Comment: The few commenters who opposed default enrollment cite as the basis for their position the lack of beneficiary choice and the potential for disruption in care resulting from default enrollment into a plan with different benefits, cost-sharing, provider network and formulary.

Response: In response to these comments, we note that an important feature of this enrollment process is clear and timely advance notice to the individual regarding default MA enrollment and the opportunity to decline the enrollment up to and including the day prior to the enrollment effective date. We, therefore, disagree with these commenters that the default MA enrollment process, as proposed and as finalized in this rule, does not involve beneficiary choice. The notice requirements in the final rule will provide the beneficiary a least a 2 month period in which to review his or her Medicare options and make an informed choice. Further, the new MA Open Enrollment Period, discussed at section II.B.1 of this final rule, would be available to any beneficiary who was default enrolled in an MA plan pursuant to § 422.66(c)(2). Upon an individual's new enrollment in an MA plan during the individual's ICEP, he or she would have 3 months, under the MA Open Enrollment Period discussed in § 422.62(a)(5), to make a change to another MA plan or select Original Medicare for health coverage. Additionally, as individuals eligible for default enrollment would only be those dually-eligible, they would also be eligible to use their quarterly opportunity under the duals SEP, as outlined in II.A.10 of this final rule, to make a Part D election, as well as any other election periods for which they may qualify, to make a change. In this context, a Part D election would include enrollment into an MA plan that includes a Part D benefit. We believe that there are adequate protections in place, as finalized with these amendments to § 422.66(c)(2) and elsewhere in this final rule, for beneficiary choice in connection with the initial election period when someone is first entitled to or eligible for Medicare.

The regulation we proposed requires the MA organization conducting default enrollment to provide notice that describes the costs and benefits of the MA plan into which the default enrollment would occur, as well as the process for accessing care under the plan. We agree with the commenters that information on the differences between an individual's current non-Medicare coverage and the new MA plan, including a statement as to whether the individual's current primary care provider will continue to be available to the individual upon enrollment in the MA plan, should be included in the advance notification of default enrollment. We also agree that information on other types of Medicare plans should be included in the notice to ensure an individual who is notified of default enrollment has sufficient information and can make an informed choice with regard to the coverage option that best meets his or her needs. Therefore, we are finalizing additional paragraphs, at (c)(2)(iv), that specific information be included in the notice describing the default enrollment and the ability to opt-out:

(A) Information on the differences in premium, benefits and cost sharing between the individual's current Medicaid managed care plan and the dual eligible MA special needs plan and the process for accessing care under the MA plan;

(B) The individual's ability to decline the enrollment, up to and including the day prior to the enrollment effective date, and either enroll in Original Medicare or choose another MA plan; and

(C) A general description of alternative Medicare health and drug coverage options available to an individual in his or her Initial Coverage Election Period.

In addition, we are including in the regulation that this information and the notice about the default enrollment is in addition to any mandatory disclosures required under § 422.111.

Comment: Several commenters who opposed our proposal for default enrollment expressed support for our proposal to develop a simplified (opt-in) enrollment mechanism, as long as differences between an individual's current and new plan are clearly communicated and that he or she is made aware of all options available to newly Medicare-eligible individuals. These commenters note that an individual's initial eligibility for Medicare is a critical decision point and that information on the full range of Medicare coverage options is important to help ensure that those approaching Medicare eligibility are aware of the resources available to them and of any time-limited enrollment opportunities, such as the option to obtain Medigap on a guaranteed issue basis.

Response: With respect to the new simplified (opt-in) election mechanism that would be available to all MA organizations for MA enrollments of their commercial, Medicaid or other non-Medicare members, we note that MA organizations that choose to implement this optional election mechanism will be required to follow existing rules governing mandatory disclosures (for example, § 422.111), communications and marketing that are applicable to other beneficiary-initiated enrollment requests. Required disclosures include a description of the MA plan benefits, including applicable conditions and limitations, premiums and cost-sharing (such as copayments, deductibles, and coinsurance), any other conditions associated with accessing benefits and for purposes of comparison, a description of the benefits offered under original Start Printed Page 16501Medicare. Also included under § 422.111 is the requirement to disclose the number, mix, and distribution (addresses) of providers from whom enrollees may reasonably be expected to obtain services. We will provide additional information on this optional enrollment mechanism in subregulatory guidance.

Given these substantial existing disclosure requirements that will be applicable to the new simplified (opt-in) election mechanism, as well as our ongoing public outreach and education activities for individuals new to Medicare, we do not believe that additional notice or disclosure requirements are warranted.

Comment: A few commenters asked that we reduce the requirement to identify newly-eligible Medicare beneficiaries from 90 to 60 days.

Response: We believe the commenters' reference to a 90 day requirement for advance notification of newly-eligible Medicare beneficiaries is based on the current subregulatory guidance applicable to the seamless conversion enrollment mechanism. This guidance will be revised as a result of this final rule to account for default enrollment and the new simplified (opt-in) enrollment mechanism. The rule we are finalizing requires notice to the affected beneficiary at least 60 days in advance of the enrollment effective date (the month in which the individual is first entitled to both Part A and Part B). This reflects a change from the current seamless conversion process, which requires identification of beneficiaries that will be seamlessly enrolled 90 days in advance. While we believe that timely identification of individuals approaching Medicare eligibility is an important beneficiary protection that helps to ensure that plans are able to provide timely advance notification and submission of enrollment transactions to CMS, we also believe that for default enrollment this shorter timeframe does not have an adverse beneficiary impact. MA plans that are authorized to use this default enrollment process must identify all eligible enrollees in time to provide the required advance notification to individuals eligible for default enrollment no fewer than 60 days before the default enrollment effective date.

Comment: Several commenters suggested that CMS consider allowing default enrollment from Medicaid managed care plans into fully integrated dual eligible special needs plans (FIDE SNPs), which are a type of special needs plan designed to promote the full integration and coordination of Medicaid and Medicare benefits for dual eligible beneficiaries by a single managed care organization.

Response: We thank the commenters for their feedback and agree that allowing default enrollment from Medicaid managed care plans into FIDE SNPs is consistent with the proposed rule. FIDE SNPs are a specific type of approved MA-PD dual eligible special needs plan. We will finalize revised text to clarify that FIDE SNPs are permitted to use the default enrollment mechanism, subject to the other requirements in the rule.

Comment: A commenter stated that Congress should revisit default enrollment in traditional Medicare. This commenter believes that to the extent that MA quality is superior, enrollment should default to the highest quality option, rather than to traditional Medicare.

Response: As acknowledged by the commenter, this comment is outside of the scope of this regulation and our authority under section 1851. CMS's authority is circumscribed by the Medicare statute, particularly section 1851(c)(3)(A)(ii) of the Act with regard to default enrollments.

Comment: A commenter suggests that plans conducting default enrollment be allowed to send the notification of default enrollment up to 90 days after an individual's initial Medicare eligibility, adding that this would increase enrollment into integrated plans.

Response: We appreciate the suggestion; however we disagree with permitting notification of default enrollment after enrollment or, as implied by the commenter, effectuating the default enrollment up to 90 days after the initial date of Medicare eligibility. As described in our proposal, states have the information to identify newly eligible Medicare beneficiaries before the actual first date of Medicare eligibility; therefore, they have the information necessary to provide to their contracted MA organizations so that the integrated coverage can begin at the earliest possible date—the date the individual first has both Medicare Parts A and B. As such, the effective date for default enrollment will always coincide with the date of an individual's entitlement to and eligibility for Medicare Parts A and B, which would not allow the commenter's suggested change. We note as well that the commenter's suggestion would result in notification of the default enrollment well after the enrollment effective date, resulting in a period of time during which the individual is not aware of his or her enrollment in an MA plan, does not have the information necessary to access benefits and would be financially liable for healthcare services received from providers not contracted with the MA plan. To ensure that individuals receive timely advance notification of the default enrollment, we are declining the commenter's suggestion. We note that individuals who are enrolled into a MA plan through default enrollment continue to have a three-month opportunity to change their enrollment using the MA Open Enrollment Period, as outlined in § 422.62(a)(5). Further, an individual who chooses to opt out of default enrollment into an MA plan is still able to make an election during his or her Initial Coverage Election Period, which begins 3 months before and lasts 3 months after the month of initial Medicare eligibility.

Comment: A commenter suggested that default enrollment not be allowed where Medicare-Medicaid financial alignment demonstration plans are available.

Response: We are committed to partnership with state Medicaid agencies to pursue integrated care approaches that work for each state. We believe that the proposed regulatory language requiring state approval for default enrollment into D-SNPs provides an appropriate safeguard that ensures any default enrollments are consistent with the state's Medicare-Medicaid integration goals.

Comment: A commenter who opposes default enrollment into D-SNPs stated that it will lead to reduced competition and fewer D-SNP offerings for beneficiaries, resulting in higher costs and fewer benefits over time.

Response: We appreciate the comment but disagree with the commenter's assessment and conclusion regarding the impact of default MA enrollment on competition in the market and the number of D-SNP offerings. As default enrollment accounts only for those newly eligible for Medicare, it is our view that D-SNPs provide a valuable service to all beneficiaries—those currently and newly in the Medicare program.

After review of the comments, and as discussed earlier, we are finalizing the proposed changes to §§ 422.66(c) and 422.68(d)(1) and (5) with the following modifications:

  • Paragraph 422.66(c)(2)(i) will be revised to clarify that we will allow default enrollment into a FIDE-SNP administered by an MA organization under the same parent organization as the organization that operates the Medicaid managed care plan in which the individual remains enrolled.
  • Paragraph 422.66(c)(2)(i) will be revised to require a minimum star rating Start Printed Page 16502on the contract receiving default enrollments for an MA organization to be approved for default enrollment. We are revising the paragraph to require that, for an organization to be approved for default enrollment, it must have an overall quality rating, from the most recently issued ratings, under the rating system described in §§ 422.160 through 422.166, of at least 3 stars or is a low enrollment contract or new MA plan as defined in § 422.252. In addition, the MA organization must not be under an enrollment suspension.
  • Paragraph 422.66(c)(2)(ii) will be revised to include an approval period not to exceed 5 years, subject to CMS authority to rescind or suspend approval if the plan is non-compliant.
  • Paragraph 422.66(c)(2)(iv) will be revised to require that the notice issued by the MA organization include information on the differences in premium, benefits and cost sharing between the individual's current Medicaid managed care plan and the dual eligible MA special needs plan and the process for accessing care under the MA plan; an explanation of the individual's ability to decline the enrollment, up to and including the day prior to the enrollment effective date, and either enroll in Original Medicare or choose another MA plan; and a general description of alternative Medicare health and drug coverage options available to an individual in his or her Initial Coverage Election Period.
  • Paragraph 422.66(c)(2)(iv) will be revised to clarify that the mandatory notice is in addition to the information and documents required to be provided to new enrollees under § 422.111.

8. Passive Enrollment Flexibilities To Protect Continuity of Integrated Care for Dually Eligible Beneficiaries (§ 422.60(g))

Beneficiaries who are dually eligible for both Medicare and Medicaid typically face significant challenges in navigating the two programs, which include separate or overlapping benefits and administrative processes. Fragmentation between the two programs can result in a lack of coordination for care delivery, potentially resulting in unnecessary, duplicative, or missed services. One method for overcoming this challenge is through integrated care, which provides dually eligible beneficiaries with the full array of Medicaid and Medicare benefits for which they are eligible through a single delivery system, thereby improving quality of care, beneficiary satisfaction, and care coordination, and reducing administrative burden.

In the proposed rule, we proposed a limited expansion of CMS' regulatory authority to initiate passive enrollment for certain dually eligible beneficiaries who are currently enrolled in an integrated D-SNP into another integrated D-SNP in instances where integrated care coverage would otherwise be disrupted, such as during a state re-procurement of Medicaid managed care contracts that results in current Medicaid managed care plans not being renewed, or when beneficiaries are enrolled in an integrated D-SNP that non-renews its MA contract at the end of the contract year. The intent of CMS' proposal was to improve care coordination and minimize disruption in care by promoting enrollment in integrated care arrangements for dually eligible beneficiaries currently enrolled in an integrated D-SNP.

Specifically, we proposed authorizing CMS to passively enroll certain dually eligible individuals currently enrolled in an integrated D-SNP into another integrated D-SNP, after consulting with the state Medicaid agency that contracts with the D-SNP or other integrated managed care plan, when CMS determines that the passive enrollment will promote continuity of care and integrated care under § 422.60(g)(1)(iii). We also proposed, under § 422.60(g)(2), a number of requirements an MA plan would have to meet in order to qualify to receive passive enrollments under paragraph (g)(1)(iii). These proposed requirements are detailed below.

  • MA plans receiving the passive enrollments must be highly integrated D-SNPs, thereby restricting passive enrollment to those MA plans that operate as a FIDE SNP or meet the integration standard for a highly-integrated D-SNP, as defined in § 422.2 and described in § 422.102(e), respectively.
  • In an effort to promote continuity of care, receiving MA plans must have substantially similar provider and facility networks and Medicare- and Medicaid-covered benefits as the integrated MA plan (or plans) from which beneficiaries are passively enrolled.
  • D-SNP contracts must have a minimum overall MA Star Rating of at least 3 stars for the year prior to receipt of passive enrollment or be a low enrollment or new MA contract (which do not have a Star Rating because of the insufficient data available).
  • Receiving MA plans must not have any prohibition on new enrollment imposed by CMS.
  • Receiving MA plans must have appropriate limits on premium and cost-sharing for beneficiaries.

We solicited comments on our proposal to identify plans for receiving passive enrollments, particularly on the minimum quality standards relevant to dually eligible beneficiaries. We also solicited comments on whether to limit passive enrollment authority to circumstances that would not raise total cost to the Medicare and Medicaid programs. Additionally, we requested feedback on how to calculate the projected impact on Medicare and Medicaid costs from exercise of this authority.

In the proposed rule, we noted that we had also considered proposing new (or additional) beneficiary notification requirements for passive enrollments that occur under proposed paragraph (g)(1)(iii), including the provision of two notifications to enrollees prior to the effective date. Citing the existing beneficiary notifications that are currently required under Medicare regulations and concerns regarding the quantity of notifications sent to beneficiaries, we did not propose to modify the existing notification requirements under paragraph (g)(4) of the proposed rule. However, we solicited comment on alternatives regarding beneficiary notices, including comments about the content and timing of such notices.

We received the following comments and our responses follow.

Comment: Many commenters expressed support for CMS' proposal for a limited expansion of the current passive enrollment authority in order to promote continued enrollment of dually eligible beneficiaries in integrated D-SNPs, preserve and promote care integration, and limit disruptions in care under certain circumstances. Several commenters supported CMS' goal of care continuity while expressing their belief that the best way to empower beneficiaries is through mechanisms where beneficiaries opt in to integrated care. A commenter requested that CMS consider how passive enrollment of beneficiaries from an existing integrated D-SNP into another integrated D-SNP could create disruptions in care. A few commenters opposed our passive enrollment proposal due to concerns that passive enrollment limits beneficiary choice and erodes the role of competition in the marketplace. A commenter suggested that a better alternative for beneficiaries in integrated D-SNPs that are non-renewing is for them to revert to FFS Medicare. Another commenter noted that passive enrollment in other Start Printed Page 16503circumstances has proven to be too confusing for dually eligible beneficiaries.

Response: We appreciate the support by most commenters of our goals of promoting continuity and quality of care for dually eligible beneficiaries currently enrolled in integrated D-SNPs in situations where they would otherwise experience an involuntary disruption in either Medicare or Medicaid coverage. As we stated in the proposed rule (82 FR 56369-56370), we anticipate using this new authority exclusively in limited situations related to market disruptions related to D-SNP non-renewal or changes in state Medicaid managed care organization procurements; therefore, we anticipate that this authority, as finalized, will have no significant impact on competition in the Medicare Advantage marketplace. We also proposed that D-SNPs meet certain requirements related to integration, quality, performance, and provider network and benefits comparability relative to the enrollees' previous coverage. We believe these safeguards will ensure continuity of care and limit any disruption associated with a plan change for affected enrollees. In addition, we believe the beneficiary notice requirements for passively enrolled individuals described in § 422.60(g)(4) ensure that beneficiaries will receive appropriate advance notice regarding the costs and benefits of their new coverage, the process for accessing care under the new plan, and an explanation of the beneficiary's ability to decline the enrollment or choose another plan. As described elsewhere in this final rule, we are strengthening the notice requirements associated with passive enrollment under this new limited expansion of CMS' passive enrollment authority. Finally, we note that all individuals enrolled into an integrated D-SNP under CMS' passive enrollment authority will have a special election period (SEP) under § 422.60(g)(5), which as finalized in this rule refers to the new SEP established in this final rule at § 423.38(c)(10). This SEP will allow individuals to opt out of the passive enrollment within 3 months of notification of a CMS or state-initiated enrollment action or that enrollment action's effective date (whichever is later). This SEP is in addition to any other election periods for which they qualify. During the SEP, a beneficiary would be able choose FFS Medicare or other coverage based on their personal preferences. Therefore, we are finalizing the proposed limited expansion of CMS' passive enrollment authority at § 422.60(g)(1)(iii). However, we note that we are making a technical revision to paragraph (g)(1)(iii) to clarify that a plan must meet all the requirements under paragraph (g)(2) to be eligible to receive passive enrollment.

Comment: A commenter stated that any beneficiary who has chosen FFS Medicare should not be passively enrolled. Several commenters suggested that passive enrollment be extended to existing and new dually eligible beneficiaries in FFS Medicare and stand-alone Part D plans. A few commenters recommended passively enrolling dually eligible beneficiaries into a D-SNP when states enroll beneficiaries into a mandatory Medicaid long-term services and supports (LTSS) program.

Response: While we appreciate commenters' support for coordinated care options for individuals who are not currently enrolled in an MA plan, we note that our intent in proposing an expansion of CMS' passive enrollment authority was to promote continuity of integrated care for those beneficiaries enrolled in an integrated D-SNP but who would experience an involuntary disruption in their Medicare or Medicaid coverage in the absence of passive enrollment into a comparable integrated D-SNP. This authority could not be used to transition enrollees currently in FFS Medicare to an MA plan.

Comment: Some commenters agreed that passive enrollment eligibility should be limited to highly integrated D-SNPs. A commenter recommended limiting eligibility for passive enrollment to integrated D-SNPs with the experience and size to meet the unique needs of the dual eligible population. A few commenters expressed concern that the scope of our proposal was too limited because only Fully Integrated Dual Eligible (FIDE) SNPs and other MA plans that meet the integration standard for a highly-integrated D-SNP, as defined in § 422.2 and described in § 422.102(e), respectively, would be qualified to receive the passive enrollments. These commenters noted the limited number of highly integrated D-SNPs and FIDE SNPs currently in the market. A few commenters recommended extending eligibility to include all D-SNPs that meet minimum quality standards and can demonstrate appropriate levels of integrated benefits. Another commenter recommended that CMS allow states the flexibility to determine which D-SNPs are eligible to participate in passive enrollment.

Response: We appreciate the commenters' perspectives on this issue. We may re-examine this issue as we gain experience, but we have concluded that it is more prudent to focus this form of passive enrollment on a narrow set of circumstances that offer the highest levels of integration between Medicare and Medicaid. This will allow us to better monitor implementation and will promote integration, which has been associated with better outcomes.[29] We also note that our proposed criteria are minimum standards only; states can establish additional criteria to determine which D-SNPs may be eligible for passive enrollment. As such, we are finalizing the scope of the proposed passive enrollment authority for dually eligible beneficiaries enrolled in an integrated D-SNP, without modification.

Comment: Several commenters encouraged CMS to consider further expanding our proposed passive enrollment authority to transition enrollees of non-renewing Medicare-Medicaid Plans (MMPs) into an integrated D-SNP.

Response: We clarify that under the Financial Alignment Initiative capitated model demonstrations, MA regulations—including those governing passive enrollments—apply to MMPs unless waived. As has been the case to date under the demonstrations, we will continue to use our demonstration authority to waive applicable MA regulatory requirements in three-way contracts as necessary, and in partnership with each state, to achieve each individual demonstration's objectives.

Comment: Several commenters supported the requirement for consultation with the state Medicaid agency that contracts with an eligible D-SNP, as proposed in § 422.60(g)(1)(iii). Some commenters noted that this consultation would ensure both the proper utilization of CMS' passive enrollment authority and consistency Start Printed Page 16504with states' integration goals and priorities. A commenter noted that this consultation would result in a more seamless process for states, integrated D-SNPs, and dually eligible beneficiaries. A few commenters noted that passive enrollment should occur at state discretion and pursuant to the State Medicaid Agency Contract with the D-SNP required under § 422.107.

Response: We appreciate the support for the proposed requirement that CMS consult with state Medicaid agencies to make a determination that D-SNPs meet the passive enrollment eligibility criteria and that the use of passive enrollment will promote integrated care and continuity of care for full-benefit dual eligible beneficiaries currently enrolled in an integrated D-SNP. We are committed to working with states to ensure that any passive enrollments under this authority meet CMS requirements as well as state priorities.

Comment: A commenter requested that CMS clearly communicate the criteria for an integrated D-SNP to be eligible to accept passive enrollees in subregulatory guidance.

Response: We anticipate issuing subregulatory guidance about the criteria for the passive enrollment authority finalized in this rule. We believe that the amendments to § 422.60(g) as finalized here are sufficiently clear, particularly in light of the detailed discussion in the proposed rule and these various responses to comment, that implementation in CY2019 will not be confusing for D-SNPs that are qualified to receive enrollments.

Comment: A commenter expressed concern that passive enrollment authority would be delegated to states. Another commenter recommended that CMS provide more clarification on whether CMS or state Medicaid agencies would be managing passive enrollment into integrated D-SNPs under our proposal, as well as on the implementation process for such passive enrollments.

Response: When circumstances arise in which passive enrollment into an integrated D-SNP could potentially be applied, CMS will consult with the applicable state Medicaid agency, consistent with § 422.60(g)(1)(iii) as finalized. We anticipate that such consultation would include collaboration between CMS and the state Medicaid agency on issues such as identifying plans that meet the requirements in § 422.60(g)(2), decisions about enrollee assignment, and communications with impacted plans. We clarify that, as is the case today with respect to other passive enrollments into MA plans, affected D-SNPs will submit enrollment transactions to CMS' MARx system.

Comment: Several commenters supported our proposed requirement in § 422.60(g)(2)(ii) that a receiving integrated D-SNP have substantially similar provider and facility networks to the other MA integrated D-SNP plan (or plans) from which the passively enrolled beneficiaries are enrolled. A few commenters suggested that CMS limit the application of provider network and benefit similarity in order not to further narrow the scope of permissible passive enrollments into D-SNPs.

Response: We appreciate the support of our proposed requirement for provider network comparability as a minimum requirement for an integrated D-SNP's eligibility for passive enrollment. We disagree with the commenters' suggestion that we limit our eligibility analysis on provider network comparability given our emphasis on continuity of care in the application of this limited expansion of CMS' passive enrollment authority. We believe that this comparability analysis will minimize the number of enrollees whose provider relationships are disrupted as a result of passive enrollment and will encourage retention following enrollees' transition to a new integrated D-SNP. We are therefore finalizing the requirements for assessing network comparability as a condition for eligibility for passive enrollment under § 422.60(g)(1)(iii) as proposed.

Comment: Several commenters requested clarification on how CMS will determine that the receiving integrated D-SNP has substantially similar provider and facility networks and Medicare- and Medicaid-covered benefits as the D-SNP from which the beneficiaries were passively enrolled.

Response: We appreciate the commenters' request for clarification and anticipate issuing clarifications through subregulatory guidance. The subregulatory guidance will articulate the process and timing for the losing and receiving D-SNPs to submit networks through the CMS Health Plan Management System. CMS will also review plan benefit packages submitted by the impacted D-SNPs as well as engage the State Medicaid agency to ensure covered services are similar to services currently being received by impacted dual eligible beneficiaries.

Comment: In addition to our proposed network comparability requirement, several commenters recommended the use of an “intelligent assignment” process for passively enrolling beneficiaries into a D-SNP based on the providers and prescription drugs associated with each individual beneficiary. Several commenters also recommended that, in our analysis of benefits comparability, CMS consider the comparability of the receiving D-SNP's formulary.

Response: We agree that intelligent assignment processes would be helpful for ensuring care continuity and minimizing enrollee disruption. We will consider the availability of intelligent assignment processes when effectuating passive enrollments under this authority and will also consider intelligent assignment options in the future. However, we note that all plans offering Part D coverage must meet CMS' formulary adequacy requirements and, in addition, must offer a transition period upon a member's enrollment in a new plan. Specifically, under § 423.120(b)(3), new enrollees must be provided a temporary supply of non-formulary Part D drugs, as well as Part D drugs with utilization management restrictions, and can work with their new plan and provider to switch to a different formulary drug or request an exception during their first 90 days of enrollment in their new plan.

Comment: A commenter expressed concern that passive enrollment could further limit enrollee choice in states in which biologic medications are reimbursed at low rates under Medicaid.

Response: We appreciate the commenter's concern about access to medically necessary drugs. We note that Medicare covers nearly all prescription drugs for dually eligible individuals under Parts A, B, and D. Medicaid coverage of drugs for dually eligible individuals is generally limited to over-the-counter drugs and products and prescription drugs that are otherwise excluded from the definition of a Part D drug. For dually eligible beneficiaries, the drugs referenced by this commenter would be covered under Medicare Part B rather than Medicaid.

Comment: Several commenters recommended a transition period during which passively enrolled beneficiaries can see current providers that are not in their new plan's network. A few commenters also suggested that care plans and authorized services be continued for a period of time following passive enrollment.

Response: We appreciate the commenters' suggestion that we incorporate continuity of care requirements into our proposed passive enrollment processes. We believe our finalization of the requirement for substantially similar provider and facility networks under § 422.60(g)(2)(ii) will facilitate continuity of care in most Start Printed Page 16505cases. In addition, as previously discussed, the Part D transition requirements provide continuity of prescription drug benefits during a beneficiary's first 90 days of coverage in a new plan, including in cases where passive enrollment has been effectuated. We encourage states to consider using their State Medicaid Agency Contracts with D-SNPs as a vehicle for requiring that any passive enrollments into integrated D-SNPs apply transition rules that align with those applicable to Medicaid managed care organizations under § 438.62(b). As previously noted, we are finalizing our provider and benefits comparability requirements at § 422.60(g)(2)(ii) without further modification.

Comment: Several commenters responded to our request for comment on CMS' proposal that an integrated D-SNP meet certain quality criteria to qualify for passive enrollment, particularly with respect to the proposed requirement that a D-SNP have an overall quality rating of at least 3 stars based on the MA Star Ratings system. Several commenters expressed support for our proposed application of a minimum overall MA Star Rating of at least 3 stars. A commenter noted that CMS' consultation with the state Medicaid agency would ensure that an integrated D-SNP's Medicaid performance is considered in addition to the Medicare performance captured by the MA Star Ratings. Several commenters recommended raising the minimum required MA Star Rating level. A commenter noted concerns with the MA Star Ratings as a basis for our proposed quality requirement because star ratings may be affected more by the percentage of dually eligible members enrolled in an MA plan than other factors and suggested requiring state approval instead of a minimum MA Star Rating. Some commenters expressed concern that use of MA Star Ratings does not capture plans' performance related to services covered under Medicaid or other factors affecting plan capacity to ensure access to care for passively enrolled individuals.

Response: We appreciate commenters' support for establishing minimum quality criteria as part of our assessment of an integrated D-SNP's eligibility for passive enrollment under this provision. We call attention to our revision to § 422.60(g)(2)(iii), clarifying that the minimum star rating of at least 3 stars for a D-SNP to be eligible to receive passive enrollment from the most recently issued MA Star Rating for the D-SNP under the rating system described in §§ 422.160 through 422.166. While we acknowledge the limitations commenters identified with the MA Star Ratings, especially with respect to assessing the quality of Medicaid services provided under an integrated D-SNP, we believe the MA Star Ratings system is CMS' most effective and methodologically sound tool for measuring plan performance and quality and ensuring that passive enrollments are limited to MA plans that have demonstrated a commitment to quality. With regard to the methodological concerns related to the impact of enrollees' socioeconomic status on MA contract performance, we direct the commenter's attention to the discussion in this final rule about the MA and Part D Quality Rating System about adjustments to the ratings to address those and similar concerns in section II.A.11.t. We note that the additional required consultation with states in § 422.60(g)(1)(iii) as part of the process of determining that an integrated D-SNP meets the criteria for receipt of passive enrollment will provide valuable information regarding the performance and quality of the organization's Medicaid product. We are therefore finalizing the quality requirements under § 422.60(g)(2)(iii) with a clarification that the most recently issued overall MA Star Rating is the applicable rating for determining eligibility to receive passive enrollment. We note as well that new and low enrollment plans are generally not assigned an overall Star Rating because of the lack of data from a prior performance period (new plans) or insufficient number of enrollees for reliable sampling (low enrollment); therefore, the regulation text as proposed and as finalized, permits new and low enrollment plans that meet the other requirements to also receive these passive enrollments. However, we will consider revisiting the minimum MA Star Rating level in future rulemaking once we gain additional experience with implementing passive enrollments into integrated D-SNPs.

Comment: Several commenters made additional recommendations for specific minimum quality measures and other criteria relevant to dually eligible beneficiaries that CMS should consider as part of our determination of integrated D-SNPs' eligibility for passive enrollment under proposed § 422.60(g)(1)(iii). A few commenters recommended that CMS require integrated D-SNPs to have additional accreditation, such as the National Committee for Quality Assurance (NCQA) Medicaid plan accreditation and long-term services and supports (LTSS) accreditation. A commenter recommended using measures developed by the multi-stakeholder Core Quality Measures Collaborative. Another commenter suggested evaluating an integrated D-SNP's behavioral health services by number of days on waiting list and availability of a behavioral health expert. This commenter also suggested several methods for assessing LTSS.

Response: We appreciate the additional information these commenters provided regarding accreditation and measures relevant to dually eligible beneficiaries. Since the number of plans eligible to receive passive enrollment under our proposed limited expansion of passive enrollment authority is projected to be small, we believe it is important to consider minimizing burden to eligible plans and ensuring that there are an adequate number of plans to receive enrollments. MA Star Ratings are based on currently reported plan data and do not impose additional reporting or specific accreditation requirements on integrated D-SNPs. As stated previously, we are finalizing the quality requirements for receipt of passive enrollment under § 422.60(g)(1)(iii) as proposed.

Comment: We received no comments supporting a limitation of our proposed expansion of CMS' passive enrollment authority to circumstances that would not raise total cost to the Medicare and Medicaid programs. A few commenters stated they would not support a cost-effectiveness test as a standalone requirement for determining a D-SNP's eligibility to receive passive enrollments under our proposed rule. In addition, several commenters expressed concerns about establishing such a limitation for a variety of reasons. A commenter stated that a cost-effectiveness test would limit CMS' ability to align enrollment and preserve continuity of care. Another commenter believed that this approach did not consider long-term savings resulting from better integration. A few commenters also noted that the added cost and administrative burden involved in identifying these circumstances and measuring the cost-effectiveness of passive enrollment would potentially offset any cost-savings. Another commenter believed that choosing integrated D-SNPs for passive enrollment based on an artificial cost estimate would be inconsistent with the MA bid process and good faith contracting efforts.

Response: We thank commenters for their comments on this issue. We are not adding a cost-effectiveness test for passive enrollments under paragraph (g)(1)(iii) in this final rule.Start Printed Page 16506

Comment: In response to our request for comments on beneficiary notices for passive enrollments that would occur under proposed paragraph (g)(1)(iii), a few commenters supported maintaining the current requirement that receiving plans send one enrollee notice requirement when passive enrollment is applied, arguing that states or receiving plans could voluntarily choose to add more notifications as necessary, and that additional notices added to plan burden. A commenter noted that, because the Medicaid Managed Care Rule under § 438.54(c)(3) requires the State to notice beneficiaries regarding passive enrollment into a Medicaid managed care plan but does not specify the number of notices required, a requirement of one notice under our proposed passive authority resulted in better alignment between Medicare and Medicaid requirements. However, many commenters recommended a more robust noticing process, including increasing the number of required notices to two for these passive enrollments. Some commenters also recommended that impacted plans provide the notices in beneficiaries' primary language and identify for each enrollee any providers or prescription drugs not included under their new plan. A few commenters recommended additional telephonic outreach for beneficiaries whose notices are returned by the postal service as undeliverable and for those whose primary language is not English.

Response: We agree with most commenters on this issue that, on balance, two notices may be more beneficial than one notice when enrollees are being passively enrolled from one integrated D-SNP into another under paragraph (g)(1)(iii). A second notice provides an additional opportunity for the receiving D-SNP to connect with new members and to ensure they receive information about their benefits, rights, and options. We believe the benefits from an additional notice outweigh the additional burden. In contrast, passive enrollments effectuated under paragraphs (g)(1)(i) and (ii)—in other words, when an immediate termination as provided in § 422.510(b)(2)(i)(B) occurs or when CMS determines a plan poses a potential risk of harm to enrollees—are typically performed under time constraints which may make the provision of two notices impracticable.

We are therefore finalizing the notice requirements associated with passive enrollments under paragraph (g)(1)(iii) to require two notices and to establish parameters around the timing of such notices. Accordingly, we are adding new paragraph (g)(4)(ii) to require that plans receiving passive enrollments under paragraph (g)(1)(iii) send two notices to enrollees that describe the costs and benefits of the plan and the process for accessing care under the plan and clearly explain the beneficiary's ability to decline the enrollment or choose another plan. In addition, we are adding new paragraph (ii)(A) to specify that the first notice provided under paragraph (ii) must be provided, in a form and manner determined by CMS, no fewer than 60 days prior to the enrollment effective date. We are also adding a new paragraph (ii)(B) to specify that the second notice must be provided—again, in a form and manner determined by CMS—no fewer than 30 days prior to the enrollment effective date.

We clarify that for passive enrollments under paragraphs (g)(1)(i) and (ii), only one notice will be required. This requirement is now reflected in new paragraph (4)(i), which also specifies that the notice must describe the costs and benefits of the plan and the process for accessing care under the plan, as well as the beneficiary's ability to decline enrollment or choose another plan, and be provided prior to the enrollment effective date (or as soon as possible after the effective date if prior notice is not practical).

We appreciate commenters' suggestions about the importance of telephonic outreach and will encourage affected plans to conduct this additional telephonic outreach. We will also encourage the D-SNPs losing members to passive enrollment into another plan to share information about their enrollees' language preferences to facilitate the provision of information in non-English languages and alternate formats as applicable. As we gain additional experience using this passive enrollment authority, we will consider the development of additional guidance or further rulemaking about beneficiary notice requirements as necessary.

Comment: We received a number of comments about the content of beneficiary notices sent to passively enrolled individuals. Some commenters recommended that notices used as part of this process be consumer tested. Several commenters recommended that notices include alternative options for Medicare coverage, such as available PACE organizations. A few commenters suggested that the notices include information on the Special Election Period (SEP) and opt-out process. A few commenters also recommended that beneficiaries have access to individual counseling regarding their benefit options. A commenter recommended that notices be designed to ensure informed consent by affected enrollees.

Response: We appreciate the suggestions commenters provided about the content of beneficiary notices for passive enrollment under paragraph (g)(1)(iii). We note that CMS currently requires notices sent to passively enrolled individuals to clearly explain the beneficiary's ability to decline the enrollment or choose another plan. We are therefore finalizing the requirements related to notice content without modification at § 422.60(g)(4)(i) and (ii), as described elsewhere in this preamble. We agree with commenters who emphasized the importance of providing additional information and counseling to inform beneficiary choice. As we move forward with implementation of this limited expansion of CMS' passive enrollment authority, we will consider developing a notice template that includes information about the availability of resources for additional information and choice counseling in the impacted service area, including SHIP programs, as well as 1-800-Medicare and Medicare Plan Finder. We will consider opportunities for consumer testing notice language, though we note that each instance of passive enrollment under this authority will be unique and require tailoring to the specific circumstances. As noted previously, we believe that the addition of a second notice will help increase beneficiaries' awareness of the change to their coverage and ensure individuals have the information to make decisions about whether to remain in the new integrated D-SNP or select other coverage that better serves their needs.

Comment: A few commenters recommended any beneficiary who is unable to be contacted should not be passively enrolled and should instead be defaulted into FFS Medicare.

Response: We do not agree with these commenters. The individuals impacted by our proposal are those already enrolled in an integrated D-SNP and who, absent our application of CMS' passive enrollment authority, would lose access to their current integrated care. Dually eligible individuals will have various SEPs available, including the Part D SEP for dual and other LIS-eligible beneficiaries discussed in section II.A.10 of this final rule and the new SEP at § 423.38(c)(10) discussed in section II.A.10 of this final rule that allows individuals who have been auto-enrolled, facilitated enrolled, passively enrolled, or reassigned into a plan by CMS an opportunity to change plans. These SEPs will allow any individual who does not wish to retain coverage Start Printed Page 16507under his or her new integrated D-SNP to make a different election, including opting for coverage in FFS Medicare. We also note that the addition of the SEP at § 423.38(c)(10) to this final rule renders the SEP described in current § 422.60(g)(5) duplicative because it applies to all individuals who have been enrolled in a plan as a result of a CMS- or state-initiated enrollment action, including passive enrollment under § 422.60(g). To avoid operational complexity, we are therefore finalizing this provision by replacing the language describing the SEP for passively enrolled individuals at § 422.60(g)(5) with a cross-reference to the new SEP described at § 423.38(c)(10).

Comment: A commenter suggested that CMS provide additional opportunities for states to fully integrate Medicaid and Medicare noticing and beneficiary communications materials for integrated products.

Response: We appreciate the support for further integration of Medicare and Medicaid benefits information for integrated D-SNPs and note that CMS has made progress toward this goal in collaboration with some state partners. However, this comment is outside the scope of this regulation.

Comment: Several commenters requested clarification on how the SEP related to our proposed passive enrollment provision would be impacted by, or would interact with, the proposal to limit the Part D SEP for dual and other LIS-eligible beneficiaries.

Response: As previously discussed, dually eligible beneficiaries will have access to other SEPs, including the Part D SEP for dual and other LIS-eligible beneficiaries and the new SEP finalized in this rule at § 423.38(c)(10) that allows individuals who have been auto-enrolled, facilitated enrolled, passively enrolled, or reassigned into a plan by CMS or a state an opportunity to change plans.

Comment: A couple of commenters noted a lack of alignment between the length of the SEP for passive enrollees under § 422.62(b)(4)—that is, 60 days—and the 90-day disenrollment period afforded to enrollees passively enrolled into a Medicaid managed care organization under § 438.56.

Response: The commenters are correct that the length of the SEP for passive enrollees, as described in the proposal, and that of the Medicaid managed care disenrollment period are not the same. In certain integrated care programs, the combination of changes to the SEP for dual eligible beneficiaries (discussed in section II.A.10.of this final rule) and the 2-month period for the SEP in proposed § 422.60(g)(5) could lead to beneficiary confusion and unintended misalignments between Medicare and Medicaid. As noted previously in this preamble, we are finalizing § 422.60(g)(5) with modifications to replace the language describing the SEP for passively enrolled individuals with a cross-reference to the new SEP described at § 423.38(c)(10). This SEP will allow individuals to opt out of the passive enrollment within 3 months of notification of a CMS or state-initiated enrollment action or that enrollment action's effective date (whichever is later). We believe this change will better align the length of the SEP for individuals who are passively enrolled under § 422.60(g) with the Medicaid managed care disenrollment period under § 438.56.

Comment: A commenter encouraged CMS to monitor any negative and unintended consequences of our use of passive enrollment after implementation of our proposed expanded authority.

Response: We appreciate the commenters' concerns and clarify that we intend to use all currently available mechanisms to monitor any passive enrollments into integrated D-SNPs, including grievances and complaints reported to impacted plans and to 1-800-Medicare. We are committed to making all necessary adjustments as we gain experience with the application of passive enrollment in the circumstances provided for in this final rule, including future rulemaking as necessary.

After consideration of the comments we received, we are finalizing our proposal regarding the expansion of CMS' regulatory authority to initiate passive enrollment for certain dually eligible beneficiaries who are currently enrolled in an integrated D-SNP into another integrated D-SNP at § 422.60(g) with some modifications. Specifically, we are making the following modifications:

  • We are making a technical revision to paragraph (g)(1)(iii) to clarify that a plan must meet all the requirements established in paragraph (g)(2) to be eligible to receive passive enrollment.
  • We are revising paragraph (g)(2)(iii) to require a minimum Star Rating that applies for a plan to be eligible to receive passive enrollment. For a plan to be eligible to receive passive enrollment, it must have an overall quality rating, from the most recently issued ratings, under the rating system described in §§ 422.160 through 422.166, of at least 3 stars or is a low enrollment contract or new MA plan as defined in § 422.252.
  • We are adding new paragraph (g)(4)(ii) to require that plans receiving passive enrollments under paragraph (g)(1)(iii) send two notices to enrollees that describe the costs and benefits of the plan and the process for accessing care under the plan and clearly explain the beneficiary's ability to decline the enrollment or choose another plan. In addition, we are adding new paragraph (ii)(A) to specify that the first notice provided under paragraph (ii) must be provided, in a form and manner determined by CMS, no fewer than 60 days prior to the enrollment effective date. We are also adding a new paragraph (ii)(B) to specify that the second notice must be provided, in a form and manner determined by CMS, no fewer than 30 days prior to the enrollment effective date. New paragraph (g)(4)(i) will retain the original requirement that one notice be provided to passively enrolled individuals under paragraphs (g)(1)(i) and (ii).
  • We are modifying § 422.60(g)(5) by replacing the current language describing the SEP for passively enrolled individuals at § 422.60(g)(5) with a cross-reference to the new SEP described at § 423.38(c)(10), which provides a 3-month SEP when an enrollee has been auto-enrolled, facilitated enrolled, passively enrolled, or reassigned into a Part D plan as a result of a CMS or state-initiated enrollment action. We note that all D-SNPs are also Part D plans as they are required to provide the Part D prescription drug benefit pursuant to § 422.2 (definition of specialized MA plans for special needs individuals).

9. Part D Tiering Exceptions (§§ 423.560, 423.578(a) and (c))

a. Background

Section 1860D-4(g)(2) of the Act specifies that a beneficiary enrolled in a Part D plan offering prescription drug benefits for Part D drugs through the use of a tiered formulary may request an exception to the plan sponsor's tiered cost-sharing structure. The statute requires such plan sponsors to have a process in place for making determinations on such requests, consistent with guidelines established by the Secretary. The requirements for tiering exceptions, set forth at § 423.578(a), require plan sponsors to establish and maintain reasonable and complete exceptions procedures that permit enrollees, under certain circumstances, to obtain a drug in a higher cost-sharing tier at the more favorable cost-sharing applicable to alternative drugs on a lower cost-sharing tier of the plan sponsor's formulary. Such an exception is granted when the plan sponsor determines that the non-Start Printed Page 16508preferred drug is medically necessary based on the prescriber's supporting statement.

As we stated in the proposed rule, we believe that changes in the prescription drug marketplace necessitate revisions to existing regulations to ensure that tiering exceptions are adjudicated by plan sponsors in the manner the statute contemplates, and are understood by beneficiaries. Therefore, we proposed various changes to §§ 423.560, 423.578(a) and 423.578(c) to revise and clarify requirements for how tiering exceptions are to be adjudicated and effectuated (82 FR 56371).

We received the following general comments on this proposal and our responses follow:

Comment: We received many comments on the proposal. While most comments received were generally supportive of our efforts to update and improve tiering exceptions policy, there was mixed support for and opposition to specific aspects of what we proposed. Many commenters who supported our overall proposal noted that beneficiaries have difficulty understanding the existing policy, and stated that there is a need for a more simplified process. A commenter who opposed revising our existing policy for tiering exceptions stated that plans and enrollees already understand the current policy and there will be little positive outcome. Another commenter agreed that tiering exceptions are an important beneficiary protection, but stated a belief that they undermine plan sponsors' ability to manage their formularies, which are already reviewed by CMS for clinical accuracy. This commenter also stated that tiering exceptions provide no incentive for an enrollee to try a less expensive drug found on a lower tier if they are able to get a more expensive drug at a lower cost.

Response: We thank the commenters who supported our proposal for their support. We agree that this policy area has been confusing for beneficiaries and one of our goals in making changes is to make it more understandable. We believe that the proposed revisions will streamline and clarify the requirements for tiering exceptions, as well as help ensure that enrollees have appropriate access to medically necessary drugs.

We disagree with the comment that tiering exceptions provide no incentive for enrollees to try lower-cost drugs. On the contrary, § 1860D-4(g)(2) stipulates that, in order for a tiering exception to be approved, the enrollee's prescriber must determine that the preferred drug for treatment of the same condition has been or would be less effective or have adverse effects for that individual. If the enrollee cannot demonstrate that the requested drug is medically necessary, a tiering exception cannot be obtained.

We address comments about specific aspects of the tiering exceptions proposal in relevant sections below.

Comment: Several commenters requested that CMS ensure beneficiaries are educated about the availability of tiering exceptions. Some commenters expressed a belief that there is little information available to beneficiaries about tiering exceptions, and that it is difficult to apply to individual situations. Comments offered several suggestions, including improving existing educational publications and information provided through 1-800-MEDICARE, providing information in plain language, and developing notices that provide information at the pharmacy counter. Some commenters stated that CMS should require plan sponsors to improve information provided in their member materials, and noted that plans and pharmacies have a responsibility for educating beneficiaries about the availability of tiering exceptions.

Response: We agree that information about the availability of tiering exceptions must be provided to beneficiaries by CMS and their Part D plan sponsor. We note that such information is already contained in several CMS publications, including Medicare & You (CMS pub. 10050), Medicare Appeals (CMS pub. 11525), Your Guide to Medicare Prescription Drug Coverage (CMS pub. 11109) and Medicare Rights and Protections (CMS pub. 11534), as well as documents that plans are required to provide to enrollees, including the Evidence of Coverage, Part D formulary, and Annual Notice of Change. Information about the availability of tiering exceptions is also included in the standardized pharmacy notice (CMS-10147) provided to affected enrollees at the point of sale when a claim is rejected by their Part D plan sponsor, and in the standardized Part D denial notice (CMS-10146), which is provided to enrollees when their plan makes an adverse coverage determination. Such information is also found on Medicare.gov. CMS will continue to review plan documents and beneficiary publications to identify potential areas for improvement, and update the documents mentioned above as needed based on this final rule, including consideration of how to clarify when a tiering exception may be available.

Comment: Several commenters recommended that CMS ensure consistent understanding of tiering exceptions policy by providing specific guidance to plan sponsors related to the review of tiering exception requests, including examples using various formulary structures that illustrate the steps of the process, and guidance to determine the lowest applicable tier and appropriate alternative drugs. A commenter expressed concern that the proposed rule conflicts with current guidance in Chapter 18 of the Medicare Prescription Drug Benefit Manual.

Response: We appreciate the commenters' suggestions for additional guidance to ensure that plan sponsors understand the revised policy and properly process tiering exception requests. CMS manual guidance will be updated to reflect the changes made through this final rule. With respect to the comment about the existing version of Chapter 18, we note that existing guidance reflects existing regulations and policy.

Comment: A commenter asserted that utilization management tools, such as the use of tiered cost-sharing to encourage use of lower-cost drugs, put unnecessary burden on prescribers and cause access delays for beneficiaries. The commenter stated that exception requests usually require prescribers to submit a written statement supporting the exception request, and noted that prescribers are not compensated for time spent preparing these statements or obtaining utilization management information for the specific plans used by their patients. This commenter also suggested that if there was greater transparency on which medications are subject to utilization management tools, it would reduce the administrative burden placed on physicians.

Response: We thank the commenter for sharing their concerns. Because section 1860D-4(g)(2) of the Act specifies that a tiering exception could be granted “if the prescribing physician determines that the preferred drug for treatment of the same condition either would not be as effective for the individual or would have adverse effects for the individual or both,” we do not believe CMS has authority to require plans to provide tiering exceptions in the absence of such a statement from the prescriber. Under existing § 423.568(a), plans are required to accept oral requests for benefits at the coverage determination level, including exception requests, and CMS encourages plans to accept oral prescriber supporting statements for exception requests when appropriate.

Comment: A commenter recommended that SNPs, MMPs, and defined standard benefit plans be exempt from the tiering exceptions process. This commenter also asked that Start Printed Page 16509CMS explain how tiering exceptions are applied to Low Income Subsidy (LIS) beneficiaries.

Response: We appreciate the commenter's recommendation. In accordance with § 423.578(a), the exceptions process applies to Part D plans that provide prescription drug benefits through the use of a tiered formulary. Given the fixed copays for LIS beneficiaries, that are based on whether the drug is a brand or generic product pursuant to § 423.782(a)(2)(iii)(A), tiering exceptions do not apply. Regardless of whether the beneficiary meets the medical necessity criteria for the drug in the higher tier, it would not change the brand vs. generic nature of the requested drug, so the cost-sharing would remain fixed.

b. Limitations on Tiering Exceptions

We proposed to revise § 423.578(a)(2) to read as follows: “Part D plan sponsors must establish criteria that provide for a tiering exception consistent with paragraphs § 423.578(a)(3) through (a)(6) of this section.” This adds a cross-reference to revised paragraph (a)(6), which revises allowable limitations plan sponsors are permitted to establish in their tiering exceptions procedures.

At § 423.578(a)(6), we proposed to revise the regulations to specify how a Part D plan sponsor may limit tiering exceptions. The proposed revision strikes the existing regulation text which permits plans to disallow tiering exceptions for any non-preferred drug to cost-sharing associated with a dedicated generic tier. We proposed to replace it with new regulation text at § 423.578(a)(6) specifying that a Part D plan sponsor will not be required to offer a tiering exception for a brand name drug or biological product to a preferred cost-sharing level that applies only to generic alternatives. Under our proposal, plans would be required to approve tiering exceptions for non-preferred generic drugs when the plan determines that the enrollee cannot take the preferred generic alternative(s), including when the preferred generic alternative(s) are on dedicated generic tier(s) and when the lower tier(s) contain a mix of brand and generic alternatives. In other words, plans would no longer be permitted to exclude a tier containing alternative drug(s) with more favorable cost-sharing from their tiering exceptions procedures altogether just because that lower-cost tier includes only generic drugs.

We proposed to revise existing tiering exceptions policy for brand name and generic drugs, and proposed a new policy for requests involving biological products. First, we proposed to revise § 423.578(a)(6) by adding new paragraphs (i) and (ii), which would permit plans to limit the availability of tiering exceptions for the following drug types to a preferred tier that contains the same type of alternative drug(s) for treating the enrollee's condition:

  • Brand name drugs for which an application is approved under section 505(c) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(c)), including an application referred to in section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(b)(2)); and
  • Biological products, including biosimilar and interchangeable biological products, licensed under section 351 the Public Health Service Act.

With the proposed revisions, approved tiering exceptions for brand name drugs would generally be assigned to the lowest applicable cost-sharing associated with brand name alternatives, and approved tiering exceptions for biological products would generally be assigned to the lowest applicable cost-sharing associated with biological alternatives. As discussed above, cost sharing for approved tiering exceptions for non-preferred generic drugs would be assigned to the lowest applicable cost-sharing associated with alternative drug(s) that could be either brand name or generic drugs.

We proposed at § 423.578(a)(6)(i) to codify that plans are not required to offer tiering exceptions for brand name drugs or biological products at a cost-sharing level of alternative drug(s) for treating the enrollee's condition where the alternatives include only the following drug types:

  • Generic drugs for which an application is approved under section 505(j) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)), or
  • Authorized generic drugs as defined in section 505(t)(3) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(t)(3)).

We proposed to codify existing CMS policy treating authorized generics as generics for purposes of tiering exceptions because the process used by CMS to collect Part D plan formulary data does not allow us to clearly identify whether a plan sponsor includes coverage of authorized generic National Drug Codes (NDCs). Under this regulatory proposal, a plan sponsor could not completely exclude a lower tier containing only generic and authorized generic drugs from its tiering exception procedures; rather, the plan sponsor would be permitted to limit tiering exceptions for a particular brand drug or biological product to the lowest cost sharing tier containing alternatives of the same drug type. Plans will be required to grant a tiering exception for a higher cost generic or authorized generic drug to the cost sharing associated with the lowest tier containing generic and/or authorized generic alternatives when the medical necessity criteria are met.

Finally, we proposed to revise and redesignate existing § 423.578(a)(7) as new § 423.578(a)(6)(iii), to specify that, “If a Part D plan sponsor maintains a specialty tier, as defined in § 423.560, the sponsor may design its exception process so that Part D drugs and biological products on the specialty tier are not eligible for a tiering exception.” We also proposed to add the following definition to Subpart M at § 423.560:

Specialty tier means 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.

The proposed changes retain the existing regulatory policy that permits Part D plan sponsors to disallow tiering exceptions for any drug that is on the plan's specialty tier. While we did not propose to specify it in regulation text, we stated in the preamble to the proposed rule (82 FR 56372) that, if the specialty tier has cost sharing more preferable than another tier, then a drug placed on such other non-preferred tier is eligible for a tiering exception to the cost sharing applicable to the specialty tier if an applicable alternative drug is on the specialty tier and the other requirements of § 423.578(a) are met. In other words, while plans are not required to allow tiering exceptions for drugs on the specialty tier to a more preferable cost-sharing tier, the specialty tier is not exempt from being considered a preferred tier for purposes of tiering exceptions.

We received the following comments and our responses follow:

Comment: We received many comments on this aspect of our proposal. Most commenters were supportive of the proposal to remove the generic tier exclusion and replace it with limitations that apply to brand name drugs and biological products. Some commenters opposed our proposal to remove the generic tier exclusion, stating that this would discourage plans from offering $0 copayment tiers and increase costs for enrollees. Others opposed the proposal to allow plans to limit tiering exceptions for brand name drugs only when brand alternatives are on a lower tier, noting that allowing plans to limit tiering exceptions for brand drugs to the lowest Start Printed Page 16510cost-sharing associated with brand alternatives does not provide sufficient relief for enrollees with a medical need for a brand drug because they cannot take a lower cost generic. Commenters expressed concern that this would eliminate beneficiaries' ability to seek tiering exceptions in many cases, and also stated that nothing in the statute permits these limitations.

Response: We thank commenters who supported the proposed changes for their support. As we stated in the proposed rule, we believe a policy that allows beneficiaries with a medical need for a non-preferred product to seek and obtain more favorable cost-sharing through the tiering exceptions process must be balanced by reasonable limitations to ensure that all enrollees have access to medically necessary drugs at the most favorable cost-sharing terms possible.

We disagree with the commenters opposed to our proposal to require plans to include dedicated generic tiers in their tiering exceptions procedures. As we discussed in the preamble to the proposed rule (82 FR 56371), most Part D formularies now include multiple generic tiers, as well as multiple higher-cost tiers that contain a mix of brand and generic drugs. To encourage the use of generic drugs, we proposed to revise the existing regulatory policy to permit tiering exceptions into dedicated generic tiers, but allow plans to limit those exceptions to requests involving non-preferred generic drugs. Because approval of a tiering exception continues to require that the enrollee demonstrate a medical need for the non-preferred drug, and because plans will not be required to permit exceptions for brand name drugs or biological products to the cost-sharing associated with dedicated generic tiers, we do not believe this change will result in changes to plan benefit design.

We disagree with the comments asserting that the statute does not permit tiering exceptions for non-preferred brand name drugs to be limited to the cost sharing associated with preferred brand name drugs. Section 1860D-4(g)(2) of the Act specifies that Part D plan sponsors offering a tiered drug benefit must have a process for tiering exceptions, consistent with guidelines established by the Secretary for making such determinations, where “a nonpreferred drug could be covered under the terms applicable for preferred drugs” (emphasis added). While we agree that the statutory language does not specifically refer to brand name and generic drugs, it clearly gives CMS authority to establish guidelines for plan procedures, and does not require that such exceptions be available in all circumstances.

Comment: Several commenters supported our proposal to treat authorized generic drugs in the same manner as generic drugs for tiering exceptions.

Response: We thank the commenters for their support.

Comment: We received some comments requesting that CMS specify that multi-source drugs and other drugs that do not meet the definition of a generic or authorized generic drug, but that a plan may place on a generic-labeled tier, also be treated as generic drugs for purposes of tiering exceptions.

Response: We disagree with these comments. As discussed above, we are revising the tiering exceptions regulations to specify that authorized generic drugs be treated as generic drugs. We recognize that other drugs may be treated in a similar manner to generic drugs, including being placed on generic-labeled drug tiers; however, we believe further expansion of what drugs are treated as generics would introduce additional complexity to a process that beneficiaries and plans already have difficulty understanding. For example, whether a brand drug is a “multi-source” drug is dependent on multiple factors and may change over time. An authorized generic is determined at the time of FDA approval and does not change as long as the drug is marketed under that approval, regardless of how many other interchangeable drugs may be introduced to or leave the market. Because tier placement of the same drug can vary widely across Part D plans, we believe that applying rules based on FDA approval type is the best way to limit confusion and create a consistent policy. Additionally, we believe that an enrollee who cannot take a brand drug on a lower-cost tier, regardless of the tier label, should be able to obtain the brand drug on a higher-cost tier at the more favorable cost-sharing of the brand drug on the lower-cost tier.

Comment: We received many comments related to our proposal to retain the current regulatory policy allowing plans to exclude specialty tier drugs from their tiering exceptions process. Commenters were divided on whether they supported or opposed this proposal. Some commenters asked CMS to confirm that drugs on the specialty tier will continue to be exempt from tiering exceptions.

Commenters who supported our proposal stated that tiering exceptions should not be allowed for specialty tier drugs because alternative drugs on lower tiers are not typically appropriate or therapeutically equivalent, even though they may treat the same condition.

Commenters who opposed this limitation on tiering exceptions noted that vulnerable beneficiaries who need to access specialty tier drugs often do not have alternative options on more preferred tiers and can accrue very high out of pocket costs. A few noted that cost-prohibitive out of pocket expenses can lead to decreased adherence to drug therapies and put patients at risk. Some commenters questioned CMS' authority to allow plans to exclude specialty tier drugs from the tiering exceptions process because the statute gives beneficiaries the right to request a tiering exception for any non-preferred drug when the formulary contains a preferred drug for the same condition that has lower cost sharing. A commenter stated that prohibiting tiering exceptions for specialty tier drugs discriminates against beneficiaries who need them.

Response: We appreciate the comments expressing concern about beneficiary access to very high cost drugs. While CMS is aware that access to needed drug therapies can be impacted by the out of pocket expenses associated with these drugs, we do not believe that requiring plans to offer tiering exceptions for specialty tier drugs will result in the desired effect. In order for a drug to be placed on the specialty tier, the plan's negotiated price for the drug must exceed a monthly threshold established by the Secretary ($670 for 2018). Along with the protection against tiering exceptions for specialty tier drugs that is afforded to plans, CMS also requires plans to limit enrollee cost sharing for the specialty tier to 25 percent coinsurance (up to 33 percent if the plan waives all or part of the Part D deductible), which aligns with the statutorily defined maximum cost sharing for the defined standard benefit at section 1860D-2(b)(2)(A). When high cost drugs are placed on the specialty tier instead of a Non-Preferred Brand or Non-Preferred Drug tier, which can have up to 50 percent coinsurance, the cost to enrollees who would not qualify for a tiering exception is often considerably lower than if the same drug were placed on one of these other non-preferred tiers. Additionally, many specialty tier drugs, particularly biological products, often do not have viable alternatives on lower-cost tiers. The statutory basis for approval of a tiering exception request is the presence of an alternative drug(s) on a lower cost-sharing tier of the plan's formulary; therefore, even if a plan sponsor permitted tiering exceptions for Start Printed Page 16511specialty tier drugs, such requests would not be approvable if the plan's formulary did not include any alternative drugs on a lower tier.

We disagree with the comments positing that allowing plans to exclude the specialty tier from their tiering exceptions procedures is inconsistent with the statute. As discussed above in this section, section 1860D-4(g)(2) of the Act gives CMS authority to establish guidelines for Part D plan sponsors' tiering exceptions procedures, and does not require such exceptions to be available in all circumstances. For the reasons stated earlier, we believe that our current policy of allowing plans to exclude specialty tier drugs from their tiering exceptions procedures, coupled with the maximum allowable coinsurance of 25 percent to 33 percent for the specialty tier, affords the most beneficiaries the most protection from high out-of-pocket expenses associated with very high cost drugs.

Comment: A few commenters suggested that CMS permit plan sponsors to designate two specialty tiers on their formularies—a non-preferred specialty tier, as well as a preferred specialty tier that would have lower cost sharing. These commenters expressed a belief that permitting plans to have two specialty tiers would encourage increased competition among specialty drugs, giving plans greater leverage in price negotiations, resulting in more affordable access for Part D enrollees and lower costs for the program. The commenters also noted that permitting two specialty tiers could encourage enrollees to try preferred specialty products and could reduce the need for enrollees to seek coverage through the non-formulary exceptions process.

Response: While we appreciate these comments, we disagree with the suggestion to permit Part D plans to have a preferred and a non-preferred specialty tier. As discussed above, CMS limits specialty tier cost sharing to the statutorily mandated amount for the defined standard Part D benefit. While we did not propose to allow plans to establish multiple specialty tiers, we are making significant changes to existing tiering exceptions policy through this final rule, including removal of the generic tier exclusion and addition of the brand-to-brand limitation discussed above in subsection b. Additionally, while the plan's cost for a drug must exceed a CMS-specified monthly cost threshold in order to be placed on the specialty tier, CMS does not require all drugs exceeding that threshold be placed on the specialty tier. In other words, if plans wish to encourage the use of certain specialty drugs over others, they can do so within existing formulary benefit designs. As such, we are not making additional changes in this policy area before having an opportunity to consider the effects of the changes in this rule. CMS will continue to disallow plan benefit packages with more than one specialty tier.

Comment: We received some comments requesting that CMS clarify whether select care/select diabetic or other $0 copayment tiers can be excluded from a plan's tiering exceptions procedures. These commenters supported a policy that would permit such an exclusion, stating that requiring tiering exceptions to $0 or very low cost tiers would discourage plans from offering them and increase overall beneficiary out of pocket costs.

Response: We appreciate the commenter's requests for clarification. As discussed above, we proposed to revise the existing regulatory text that permits plans to exclude generic tiers from their tiering exceptions procedures. We did not propose to permit plans to exclude any formulary tiers other than the specialty tier, and do not agree that such an exclusion is advisable. As we stated in the proposed rule, we believe that tiering exceptions are an important enrollee protection and must not be restricted to such a degree. Under the proposed rule, which we are finalizing without modification, plans can establish tiering exceptions procedures where they do not have to offer such exceptions for brand name drugs or biological products to more preferred cost-sharing tiers that do not contain an alternative brand name or biological product, respectively. We believe that permitting additional restrictions that make certain low-cost tiers wholly inaccessible to beneficiaries with a medical need for a non-preferred drug would be inappropriate.

Comment: A commenter urged CMS to monitor Part D plan formularies to ensure that plans do not change their formularies in an effort to decrease opportunities for tiering exceptions. Another commenter suggested that CMS consider requiring plan sponsors to establish evidence-based formularies that tie enrollee cost-sharing to the appropriateness of medications based on safety and efficacy.

Response: All Part D plan formularies must be approved by CMS as part of the bid review process described at § 423.272. Under § 423.120(b)(1), formularies must be developed and reviewed by a pharmacy and therapeutic committee that makes clinical decisions based on scientific evidence and standards of practice and considers safety and efficacy when determining inclusion of a drug on a formulary, including tier placement.

Comment: We received a comment requesting that CMS clarify non-formulary drugs approved for a formulary exception continue to be ineligible for tiering exceptions. Another commenter suggested that CMS consider ways to make it easier for individuals applying for a formulary exception to also apply for a tiering exception, if applicable.

Response: We appreciate the commenter's request for clarification. We did not propose to revise the existing requirement set forth at § 423.578(c)(4)(iii) which establishes that an enrollee may not request a tiering exception for a non-formulary drug approved under the formulary exceptions rules at § 423.578(b). Under the proposed changes to tiering exceptions rules, which we are finalizing as proposed, an enrollee may not obtain a tiering exception for an approved non-formulary drug. We note that, if an enrollee obtains an exception to a utilization management requirement such as step therapy or a quantity limit, such enrollee may also request a tiering exception, pursuant to § 423.578(a) and (c). The model Part D coverage determination request form, developed by CMS with stakeholder feedback, permits an enrollee or their prescriber, on the enrollee's behalf, to request a tiering exception along with, for example, prior authorization. The form includes check boxes for various types of requests, including an exception to cost-sharing.

Comment: We received some comments opposed to requiring plans to consider tiering exceptions for non-preferred drugs to specialty tier cost-sharing when the specialty tier cost-sharing is more favorable for the enrollee. Some of these commenters stated that such a policy would be confusing for enrollees because the specialty tier is often a higher-numbered tier (for example, tier 5 on a 5-tier formulary). Commenters also stated that it would be overly burdensome for plans to administer such a policy, particularly if the exception request is for a drug on a copayment tier to a coinsurance tier (for example, tier 4—Non Preferred Drug has a $100 copayment and tier 5—Specialty has a 25 percent coinsurance). These commenters opined that allowing a drug with a copayment to be approved to a coinsurance tier would bypass formulary design and require extensive price review and calculation to determine which tier is more favorable. A commenter asked CMS to clarify whether plans would be permitted to Start Printed Page 16512retain specialty tier supply limits such as a 30 day supply, even if the enrollee wishes to obtain a 90 day supply and a tiering exception is approved.

Response: We appreciate the comments received on this aspect of the proposal. We are persuaded by the comments received that requiring plans to consider tiering exceptions into the specialty tier would be confusing and difficult for plans to implement, and are not finalizing this aspect of the proposal. While we believe many of the concerns expressed by commenters would be addressed by clarifying that such a policy would only apply if the requested drug meets the specialty tier cost threshold, we recognize it would still be difficult to explain to enrollees, who probably would have no knowledge as to whether any given drug would meet the specialty tier cost threshold and would be very unlikely to request such an exception. As noted above, we did not propose regulation text for such a requirement, and therefore, while we are not finalizing it, we are also not making any changes to the proposed regulation text.

Comment: A few commenters stated that CMS should conduct an analysis of Part D plan formularies to ensure plans are not discriminating against beneficiaries by always placing certain classes of drugs on specialty tiers. A commenter asserted that, without standardized tiering in Part D, nothing prevents plans from putting high cost brand name drugs on specialty tiers to avoid having to offer tiering exceptions. The commenter stated that CMS should establish additional requirements for tiered formularies, such as requiring that all generic drugs be placed on tier 1 or tier 2. Another commenter recommended that CMS continue to explore improvements to benefit design and meaningful exceptions to high cost-sharing.

Response: Pursuant to existing Part D policy and the proposed definition of specialty tier, it is a tier dedicated to very high cost drugs, which are often brand name drugs or biological products. As noted in a previous response, pursuant to § 423.120(b)(1), formularies must be developed and reviewed by a pharmacy and therapeutic committee that makes clinical decisions based on scientific evidence and standards of practice, and considers safety and efficacy when determining inclusion of a drug on a formulary, including that drug's tier placement. While CMS does not prohibit plan sponsors from having a mix of both brand and generic drugs on each tier, it is our expectation that a tier label be representative of the drugs that make up that tier. Additionally, consistent with § 30.2.7 of Chapter 6 of the Medicare Prescription Drug Benefit Manual, CMS reviews formularies for the placement of drugs in non-preferred tiers in the absence of therapeutically similar drugs in preferred tiers.

Comment: A few commenters stated that CMS should increase the $670 specialty tier cost threshold to reduce the number of drugs that qualify and, therefore, reduce out of pocket spending for beneficiaries.

Response: As we did not propose to change the specialty tier threshold in this rule, we decline to adopt this recommendation.

After consideration of the comments received, we believe our proposed revisions to § 423.578(a)(6) regarding the limitations plans are permitted to establish for tiering exceptions strike an appropriate balance between allowing plans to manage their formularies and ensuring enrollee access to this statutory protection. These revisions prohibit plans from excluding generic drug tiers from their tiering exceptions procedures, and permit plans to limit tiering exceptions for brand name drugs to the lowest applicable cost sharing associated with preferred brand name alternatives, and tiering exceptions for biological products to the lowest applicable cost sharing associated with preferred biological product alternatives. We are finalizing the proposed revisions to § 423.578(a)(6) and the proposed definition of specialty tier at § 423.560 without modification, noting the clarification discussed above that plans are not required to treat the specialty tier as a preferred cost-sharing tier for purposes of tiering exceptions. CMS continues to explore ways to ensure Part D enrollees are able to access very high cost, medically necessary prescription drugs.

d. Alternative Drugs for Treatment of the Enrollee's Condition

We noted in the proposed rule that we have received comments from plan sponsors and PBMs requesting that CMS provide additional guidance on how to determine what constitutes an alternative drug for purposes of tiering exceptions, including establishment of additional limitations on when such exceptions are approvable. The statutory language for tiering and formulary exceptions at sections 1860D-4(g)(2) and 1860D-4(h)(2) of the Act, respectively, specifically refers to a preferred or formulary drug “for treatment of the same condition.” While our proposal did not include regulation text specific to the meaning of an alternative drug, we clarified in the preamble that we interpret this language to refer to the condition as it affects the enrollee—that is, taking into consideration the individual's overall clinical condition, including the presence of comorbidities and known relevant characteristics of the enrollee and/or the drug regimen, which can factor into which drugs are appropriate alternative therapies for that enrollee.

We received the following comments on this section and our responses follow:

Comment: We received several comments related to how to determine which drugs should be considered alternatives for treating the enrollee's health condition. Some of these commenters were supportive of the additional information we provided in the preamble to the proposed rule about how to determine alternative drugs. Most of the commenters stated that a more specific regulatory definition of alternative drug is needed. Some commenters recommended that the definition specify that alternative drugs must be one or more of the following: supported in drug compendia or treatment guidelines for use in the same place in therapy, FDA-approved for the same indication as the requested drug, in the same therapeutic class and/or category as the requested drug, use the same route of administration as the requested drug, and/or have the same mechanism of action as the requested drug.

Several commenters provided various hypothetical scenarios using specific diagnoses and drugs and asked that CMS clarify whether a tiering exception would be allowed under our interpretation. A commenter asked CMS to provide examples that include how to determine what an appropriate alternative drug is. Another commenter stated that plan sponsors will continue to inaccurately apply rules for tiering exceptions because CMS does not define what a preferred alternative drug is. A few commenters stated that CMS' proposed interpretation of “same condition” will limit exception requests and negatively impact beneficiaries. A few commenters stated that this interpretation has no statutory basis, and one of the commenters asserted that our clarification basing what constitutes an alternative drug on the individual characteristics and condition of the enrollee would make it easy for plans to claim there are no alternatives for treating that enrollee and therefore no tiering exception would be allowed.

Response: The statutory language noted above related to approval of a tiering exception request broadly refers to preferred drugs “for treatment of the Start Printed Page 16513same condition.” We believe that most of the criteria suggested by commenters would be more restrictive than the statute allows if plans were required to apply such criteria to all tiering exception situations, and we therefore disagree that such criteria should be specified in regulation. For example, if the mechanism of action or route of administration of a plan's preferred alternative drug would cause adverse effects for a particular enrollee versus the non-preferred drug for treating the same condition, this could be the basis for that enrollee to seek a tiering exception for the non-preferred drug. Also, CMS does not specify the classification system that must be used on Part D plan formularies; therefore, establishing a requirement that alternative drugs must be in the same therapeutic class would introduce inconsistency because what one plan considers the same drug class may be different than another plan for the same drugs. The changes to the tiering exception regulations that we are finalizing in this rule do not require plans to consider a drug for which the enrollee's condition is not a medically accepted indication to be an alternative drug for purposes of a tiering exception request. Because payment under Part D cannot be made for any drug that does not meet the definition of a Part D drug for the prescribed indication, such drug could not reasonably be considered an alternative drug for treatment of the enrollee's condition.

In response to comments suggesting that our interpretation of “for treatment of the same condition” is inconsistent with the statute, we disagree. As we noted in the proposed rule, we interpret this language to refer to the condition as it affects the enrollee. Given the language in section 1860D-4(g)(2) of the Act states that an exception could be covered if the prescribing physician determines that the preferred drug would not be as effective “for the individual” or would have adverse effects “for the individual,” we believe it is appropriate to interpret the standard for the “same condition” to be referring to the individual.

While we are not making any changes to the regulations with respect to defining alternative drugs, we wish to note that plan medical directors are required to be involved in the development and oversight of policies and procedures for processing exception requests, including criteria for determining alternative drugs, as part of their responsibility under § 423.562(a)(5) to ensure the clinical accuracy of all coverage determinations and redeterminations involving medical necessity. Additionally, § 423.566(d) requires that, before issuing an adverse coverage determination based on lack of medical necessity, including exception requests, it must be reviewed by a physician or appropriate health care professional. These policies requiring clinician involvement in the establishment and application of plan coverage rules contemplate that those individuals apply reasonable clinical judgment, based on sound medical and scientific evidence and acceptable standards of practice, in adjudicating exception requests, including consideration of alternative drugs on the plan's formulary.

While we agree that in certain situations and with certain medical conditions, what is reasonably considered an alternative drug may be limited in ways suggested by commenters, we disagree that such designations should be codified in regulation to apply to all tiering exceptions for the reasons previously stated, and because we do not see a good reason to codify these types of clinical considerations only for tiering exceptions, when we have not proposed to do so for other types of coverage determinations. We also believe these clarifications provide sufficient guidance for plans to determine what drugs should be considered alternatives for treating the enrollee's condition, and will ensure that plans do not apply unreasonable clinical or policy standards to their interpretation of the meaning of alternative drug so as to inappropriately refuse to allow tiering exceptions. Therefore, we are not adding a definition of alternative drug in this final rule.

As discussed earlier in this preamble, CMS will update any existing agency guidance related to tiering exceptions as needed to ensure that it comports with the requirements of this final rule.

Comment: A commenter asked CMS to clarify whether a tiering exception should be approved when the requested drug is not being prescribed for a medically accepted indication, or does not otherwise meet the definition of a Part D drug.

Response: Pursuant to the existing regulation at § 423.578(e), which we did not propose to revise, enrollees are not permitted to use the exceptions process to obtain coverage for a drug that is not being prescribed to treat a medically accepted indication as defined in section 1860D-2(e)(4) of the Act, or does not otherwise meet the definition of a Part D drug at § 423.100. Thus, a plan cannot approve a tiering exception request if the requested drug is not being used to treat a medically accepted indication or does not meet the definition of a Part D drug.

After consideration of the comments received on this section, we are finalizing our proposal without modification, and have chosen not to further specify how to determine what an alternative drug for treating the enrollee's condition is.

e. Approval of Tiering Exception Requests

We proposed to revise § 423.578(c)(3) by renumbering the provision and adding a new paragraph (ii) to codify our current policy that cost sharing for an approved tiering exception request is assigned at the lowest applicable tier when preferred alternatives sit on multiple lower tiers. Under our proposal, assignment of cost sharing for an approved tiering exception must be at the most favorable cost-sharing tier containing alternative drugs, unless such alternative drugs are not applicable pursuant to limitations set forth under proposed § 423.578(a)(6).

We received the following comments and our responses follow:

Comment: We received several comments related to this aspect of our proposal. Commenters were divided, with some supporting our proposal and others opposed. Commenters in support of the proposal to require approval at the lowest applicable tier stated that this policy allows beneficiaries who cannot take less expensive drugs to obtain needed drugs at an affordable price. Some commenters noted that they supported this aspect of the proposal because we also proposed to allow plans to limit tiering exceptions for brand name drugs to the lowest tier containing alternative brand name drugs. A few commenters expressed a belief that this policy would be easy for beneficiaries to understand.

Commenters who opposed our proposal stated that requiring approval to the lowest applicable tier interferes with plans' ability to manage their formularies. A few commenters expressed a belief that our proposal is not consistent with the statute, which states that the requested drug could be covered at terms applicable to preferred drugs but does not specify that it be the terms applicable to the most preferred alternatives. A commenter stated that § 1860D-4(g)(2) does not specifically refer to a right to obtain a drug at the lowest cost-sharing tier. Another commenter stated that requiring plans to provide high cost drugs at the lowest tier instead of the next lower tier increases premiums for all beneficiaries and provides only slightly lower cost-sharing for a few individuals.Start Printed Page 16514

Response: We thank commenters who were supportive of our proposal for their support. We agree that our policy of approval to the lowest applicable tier containing alternatives provides the most relief for beneficiaries with a medical need for a non-preferred drug.

We disagree that our proposal is inconsistent with the statute. Section 1860D-4(g)(2) provides that if a plan sponsor uses formulary tiers and offers lower cost sharing for “preferred drugs” (plural) included in the formulary, an enrollee may request an exception to the tiered cost-sharing structure, and under such an exception, a non-preferred drug could be covered “under the terms applicable for preferred drugs” (plural) if the prescriber determines that “the preferred drug” (singular) for the same condition would not be as effective or would have adverse effects, or both. The statute clearly contemplates that while there can be multiple drugs that are preferred drugs relative to the requested drug, and the prescribing physician can determine that “the” preferred drug would not be as effective or would have adverse effects. We believe it is reasonable to interpret this provision to permit an enrollee to seek a tiering exception under which he or she would pay the cost sharing applicable to the most preferred drug among one or more preferred drugs.

After consideration of the comments received, we are finalizing without modification our proposal at § 423.578(c)(3), which specifies that cost-sharing for approved tiering exceptions is assigned at the lowest applicable tier when preferred alternatives sit on multiple lower tiers.

f. Additional Technical Changes and Corrections

Finally, we proposed various technical changes and corrections to improve the clarity of the tiering exceptions regulations and consistency with the regulations for formulary exceptions. Specifically, we proposed the following:

  • Revise the introductory text of § 423.578(a) to clarify that a “requested” non-preferred drug for treatment of an enrollee's health condition may be eligible for an exception.
  • Revise § 423.578(a)(1) to include “tiering” when referring to the exceptions procedures described in this subparagraph.
  • Revise § 423.578(a)(4) by making “conditions” singular and by adding “(s)” to “drug” to account for situations when there are multiple alternative drugs.
  • Revise § 423.578(a)(5) by removing the text specifying that the prescriber's supporting statement “demonstrate the medical necessity of the drug” to align with the existing language for formulary exceptions at § 423.578(b)(6). The requirement that the supporting statement address the enrollee's medical need for the requested drug is already explained in the introductory text of § 423.578(a).
  • Redesignate paragraphs § 423.578(c)(3)(i) through (iii) as paragraphs § 423.578(c)(3)(i)(A) through (C), respectively. This proposed change will improve consistency between the regulation text for tiering and formulary exceptions.

We received no comments on the proposed technical changes and corrections and are finalizing them without modification.

After consideration of all comments received on the tiering exceptions proposal, we are finalizing the proposed regulation text without modification. As discussed above, CMS will review agency guidance and beneficiary communications and revise as needed to be consistent with this final rule.

10. Establishing Limitations for the Part D Special Election Period (SEP) for Dually Eligible Beneficiaries (§ 423.38)

As discussed in section II.A.1 of this final rule, the MMA added section 1860D-1(b)(3)(D) to the Act to establish a special election period (SEP) for full-benefit dual eligible (FBDE) beneficiaries under Part D. This SEP, codified at § 423.38(c)(4), was later extended to all other subsidy-eligible beneficiaries by regulation (75 FR 19720). The SEP allows eligible beneficiaries to make Part D enrollment changes (that is, enroll in, disenroll from, or change Part D plans, including Medicare Advantage Prescription Drug (MA-PD) plans) once a month throughout the year, unlike other Part D enrollees who generally may switch plans only during the annual enrollment period (AEP) each fall.

With over 10 years of programmatic experience, we have observed certain enrollment trends in terms of FBDE and other LIS beneficiaries:

  • Most LIS beneficiaries do not make an active choice to join a PDP.
  • Once in a plan, whether it was a CMS-initiated enrollment or a choice they made on their own, most LIS beneficiaries do not make changes during the year.
  • A small subset (0.8 percent) of LIS beneficiaries use the SEP to actively enroll in a plan of their choice and then disenroll within 2 months.

In addition, the application of the continuous SEP carries different service delivery implications for enrollees of MA-PD plans and related products than for standalone enrollees of PDPs. At the outset of the Part D program, when drug coverage for dually eligible beneficiaries was transitioned from Medicaid to Medicare, there were concerns about how CMS would effectively identify, educate, and enroll dually eligible beneficiaries. While processes (for example, auto-enrollment, reassignment) were established to facilitate coverage, the continuous SEP served as a fail-safe to ensure that the beneficiary was always in a position to make a choice that best served their healthcare needs. Unintended consequences have resulted from this flexibility, including, as noted by the Medicare Payment Advisory Commission (MedPAC [30] ), opportunities for marketing abuses.

Among the key obstacles the continuous SEP (and resulting plan movement) can present are—

  • Interfering with the coordination of care among the providers, health plans, and states;
  • Hindering the ability for beneficiaries to benefit from case management and disease management;
  • Inefficient use of the effort and resources needed to conduct enrollee needs assessments and developing plans of care for services covered by Medicare and Medicaid;
  • Limiting a plan's opportunity for continuous coordinated treatment of chronic conditions; and
  • Diminishing incentives for plans to innovate and invest in serving potentially high-cost members.

To support plan sponsors' efforts to administer benefits to beneficiaries, including coordination of Medicare and Medicaid benefits, and maximize care management and positive health outcomes, we proposed to amend § 423.38(c)(4) to make the SEP for FBDE and other subsidy-eligible individuals available only in certain circumstances. Specifically, we proposed to revise to § 423.38(c) to specify that the SEP is available only as follows:

  • In new paragraph (c)(4)(i), eligible beneficiaries (that is, those who are dual or other LIS-eligible and do not meet the definition of at-risk beneficiary or potential at-risk beneficiary under proposed § 423.100) would be able to use the SEP once per calendar year.
  • In new paragraph (c)(4)(iii), eligible beneficiaries who have been assigned to a plan by CMS or a State would be able to use the SEP before that election becomes effective (that is, opt out and Start Printed Page 16515enroll in a different plan) or within 2 months of their enrollment in that plan.
  • In new paragraph (c)(9), dual and other LIS-eligible beneficiaries who have a change in their Medicaid or LIS-eligible status would have an SEP to make an election within 2 months of the change, or of being notified of such change, whichever is later. This SEP would be available to beneficiaries who experience a change in Medicaid or LIS status regardless of whether they have been identified as potential at-risk beneficiaries or at-risk beneficiaries under proposed § 423.100.
  • In addition, we also proposed to remove the phrase “at any time” in the introductory language of § 423.38(c) for the sake of clarity.

We considered multiple alternatives related to the SEP proposal. In the proposed rule, we described and asked for comments on two alternatives:

Limit of two or three uses of the SEP per year. We considered applying a simple numerical limit to the number of times the LIS SEP could be used by any beneficiary within each calendar year. We specifically considered limits of either two or three uses of the SEP per year.

Limits on midyear MA-PD plan switching. We also considered an option that would prohibit SEP use into non-integrated MA-PD plans, but allow continuous use of the dual SEP to allow eligible beneficiaries to enroll into FIDE SNPs or comparably integrated products for dually eligible beneficiaries or standalone PDPs.

We received the following comments and our responses follow:

Comment: Some commenters supported the proposal and agreed that continuity of enrollment could maximize coordination of care and positive health outcomes. However, the majority of commenters opposed the proposal based on a variety of factors. Most of these commenters expressed concerns about the impact on the dual-eligible population which, they noted, not only has limited financial resources, but also higher rates of disability, higher rates of cognitive impairment, and lower health literacy. These circumstances, commenters noted, often contribute to more complex and changing health needs and difficulties with medication adherence. Citing these circumstances, many commenters believed these beneficiaries needed the flexibility to change their healthcare coverage at any time during the year.

Commenters also believed that the proposal was too complex and would be difficult for beneficiaries to understand and for plans to administer. They noted that limited and, in some cases, multi-layered SEPs were unnecessary when the existing ongoing SEP has worked well and has proved to be simpler to communicate and understand.

Many commenters also said that the proposal would have an even greater impact given the proposed changes related to midyear formulary changes. Commenters noted that since plans have the ability to change formularies or provider networks during the year, the ongoing dual SEP is a vital beneficiary protection.

Lastly, commenters said that the proposed dual SEP limitation could, in actuality, hamper CMS' stated goal of bringing Medicare and Medicaid into better alignment because it could inadvertently discourage dual eligible beneficiaries from enrolling in integrated products. Commenters noted that because beneficiaries are often hesitant to change plans, they may opt to stay in their current plan instead of trying an integrated option. In other cases, commenters expressed concern that beneficiaries who are assigned into a plan by CMS or a State may panic and disenroll immediately if they believe pressured to make an immediate decision. Commenters said that the ongoing SEP gives beneficiaries the comfort and time to make a deliberate and educated choice.

Response: We thank the commenters for their thoughtful feedback. We are mindful of the unique health care challenges that dual and other LIS-eligible beneficiaries may face. The goals of the proposal were to improve administration of benefits and coordination of care and we believed that this could best be accomplished through continuity of enrollment. While we acknowledge that many commenters prefer the ongoing nature of the existing dual SEP, we still believe that adopting some limitations is an appropriate step toward encouraging care coordination, achieving positive health outcomes, and discouraging extraneous beneficiary movement during the plan year.

In response to comments, we are modifying our approach. In lieu of the proposed dual SEP limitation that would only allow a onetime use per year with certain exceptions, we are instead revising the dual SEP so that it is similar to the “two or three uses per year” alternative discussed in the proposed rule. Specifically, the dual SEP is being amended so that it can be used once per calendar quarter during the first nine months of the year (that is, one election during each of the following time periods: January-March, April-June, July-September). During the last quarter of the year, a beneficiary can use the AEP to make an election that would be effective on January 1. In addition to this change, the exception outlined at § 423.38(c)(4)(ii) related to CMS and State-initiated elections will not be finalized as proposed. (Instead, as discussed below, CMS will be using its authority under § 423.38(c)(8)(ii) to establish a coordinating SEP for those who are enrolled into a plan by CMS or a State at new § 423.38(c)(10).

We believe that limiting use of the dual SEP, but in a less restrictive manner, strikes the appropriate balance of our stated goals and the concerns raised by commenters, for the reasons that follow. We consider this approach to be less confusing for both plan sponsors and beneficiaries than our proposal because it provides a date-based parameter that is easier to comprehend without the additional layers of exceptions. By still allowing multiple changes throughout the year, dual and other LIS-eligible beneficiaries will maintain additional flexibilities not afforded to other Part D-eligible beneficiaries, but there may be times when these individuals cannot change plans and have that choice effective the next month either because they already made an election during that calendar quarter (during the first nine months of the year) or because they are making an election during the AEP. We believe that having certain periods when individuals must maintain enrollment in a particular plan will increase opportunities for coordination of care and case management. Even though these periods of required continuity of enrollment will be shorter than what was proposed, we believe it still matches our stated goals and addresses the concerns expressed by commenters.

While we believe this limitation is an appropriate control to put in place, we also believe that it will not impact the vast majority of individuals eligible for the dual SEP. As discussed in the proposed rule, 2016 data demonstrated that most beneficiaries do not use the dual SEP and, of those who do use it, the majority (74.5 percent) only used it once. Analysis of 2017 data continues to show that beneficiaries who use the SEP use it only one time (85.5 percent). Of those who use it two times, the average time between elections is 3.4 months, which is roughly the duration of a calendar quarter.

Given this flexibility, we believe that dual and other LIS-eligible beneficiaries will have the freedom to choose a plan that works for their evolving health care needs during the year. For those that have an opportunity to enroll in an integrated product, they will be able to do so and know that if it does not suit their needs, they can choose another Start Printed Page 16516plan in the near future. The same logic can be applied to those who want to explore other plan options during the year due to formulary, provider network, or health status changes. We note, though, that as discussed earlier, individuals who have been identified as an at-risk beneficiary or potential at-risk beneficiary under § 423.100 will not be able to use the dual SEP. As discussed in section II.A.1, we are specifying at § 423.38(c)(4) that this particular limitation applies once the beneficiary has been notified that he or she has been identified as a potential at-risk beneficiary or at-risk beneficiary, and the limitation will continue until such identification has been terminated consistent with § 423.153(f).

Comment: Many commenters recommended a wide range of modifications or alternatives to the dual SEP limitation outlined in the proposed rule. Suggestions included the following:

  • Allow beneficiaries to disenroll to FFS at any time.
  • Instead of limiting the use of the dual SEP, require a minimum enrollment duration in a plan.
  • Limit to onetime use per year, without exceptions, to mitigate administrative burden.
  • Delay any sort of SEP limitation and, instead, contemplate for future rulemaking.

Some commenters—both those who supported and opposed the concept of a limitation to the dual SEP—expressed a preference for one of the two alternatives discussed in the proposed rule. There were some who supported the concept of expanding the onetime annual election to 2-3 uses per year because it provided more flexibility. Some commenters expressed support for the more complex approach that would have allowed limited use of the dual SEP for enrollment in integrated products, standalone PDPs, and FFS, but not any non-integrated MA plans.

Along these lines, there was varied feedback for dual SEP use for enrollment into integrated products. Some said that it should be allowed as a onetime exception, some said that it should be an ongoing opportunity, while others said that it should be the only allowable use of the dual SEP. A commenter encouraged CMS to work with States to define which plans would be considered “integrated” and another commenter suggested that CMS maintain and publicize a list of integrated plans.

Response: We believe that the wide array of feedback that commenters provided on the proposal represents the complexity and varying interests of those who would be impacted by a change to the dual SEP. Given that the majority of commenters preferred more flexibility than what we proposed, we are opting to finalize a limitation that is along the lines of the “two or three uses per year” alternative described in the proposed rule.

We contemplated allowing multiple uses per year at any time, but thought that an approach that allowed for quarterly elections (that is, the dual SEP in coordination with the AEP) was preferable because it would be easier to keep track of and for beneficiaries to understand. With a multiple-use-per-year-at-any-time policy, if a beneficiary makes several elections in the beginning of the year, as they approach the end of the year it may be hard to remember how many elections they have made or whether any more are available. With an approach that allows for quarterly elections, however, they only need to remember if they made an election in the last few months. If they have not, it is likely that they are eligible for a quarterly dual SEP use or the AEP. A quarterly approach also mitigates scenarios where a beneficiary makes multiple elections in the first half of the year and is then locked into a plan for the latter half of the year.

Comment: In addition to the modifications/alternatives discussed above, a number of commenters believed that if limitations were established for the dual SEP, CMS should consider additional exceptions for certain beneficiary groups or conditions. Specifically, commenters believed exceptions would serve as important beneficiary protections for the following individuals/circumstances:

  • Those who have a new or existing disability.
  • Those with a new or altered disease state or diagnosis.
  • American Indians and Alaska Natives who also receive services through the Indian Health Service.
  • Enrollees whose prescription drugs are not covered under their plan's formulary or whose providers change during the year.
  • Individuals whose caregiver arrangements change during the year.
  • Individuals who must comply with Medicaid open enrollment periods or those who meet the “for cause” standards established for enrollees in Medicaid managed care plans.
  • Those whose providers request an SEP on their behalf.

Response: We believe that by allowing the dual SEP to be used quarterly during the first nine months of the year in conjunction with the AEP at the end of the year, we are mitigating the need for the exceptions suggested by the commenters. Dual or other LIS-eligible beneficiaries who fall into any of these categories would still be able to use the dual SEP. The only way that they may be limited is if they had already made a recent election into a plan. If that were the case, they may have to wait several months to make another change. (A more detailed discussion of different election periods and when they are considered “used” and effective can be found below.) Again, we do not see the frequency of movement that would lead us to believe that this will be an issue for the vast majority of LIS-eligible beneficiaries.

We would note that in addition to the dual SEP, there are already a number of protections in place for all beneficiaries who have Part D coverage and are unable to change plans. For example, beneficiaries can request transition fills—prescription drugs that are not on a plan's formulary or that are on a plan's formulary but require prior authorization or step therapy under a plan's utilization management rules—during the first 90 days of enrollment in a new plan as provided under § 423.120(b)(3). In addition, beneficiaries can request a formulary or tiering exception to obtain a drug that is not on their plan's formulary or to obtain a drug at a lower cost-sharing tier.

While we understand that commenters believe that the ability to change plans at any time is an important beneficiary protection, we believe it is worth re-stating that the changes finalized at § 423.38(c)(4) will still provide for multiple uses of the dual SEP throughout the year and this is a flexibility that is not afforded to all Part D enrollees. During other parts of the year, dual and other LIS-eligible individuals will still have access to the AEP in the fall or, if applicable, the initial enrollment period (IEP) or the new MA open enrollment period (OEP) discussed in section II.B.1. Beneficiaries may also continue to be eligible for other SEPs outlined in § 422.62(b) and § 423.38(c), which includes circumstances like a change or residence or other exceptional circumstances as determined by CMS.

In addition, we will be finalizing the SEP opportunity that was contemplated in the proposed rule for beneficiaries assigned to a plan by CMS or a State. While this was proposed at new § 423.38(c)(4)(iii) as an additional use of the dual SEP, and would have been available before that election became effective or within 2 months of enrollment in the plan, we will be finalizing this as a new and separate Start Printed Page 16517SEP at § 423.38(c)(10). We believe that establishing this as a separate SEP is more straightforward because it makes clear that this opportunity is separate and in addition to the elections allowable under the revised dual SEP.

This new SEP will allow individuals who have been auto-enrolled, facilitated enrolled, or reassigned into a plan by CMS, as well as those who have been subject to passive enrollment processes discussed in section II.A.8, an opportunity to change plans. Unlike the proposed SEP, this new SEP will be available even if a beneficiary meets the definition of an at-risk beneficiary or potential at-risk beneficiary. Beneficiaries would be able to use this new CMS/State assignment SEP before that enrollment becomes effective (that is, opt out and enroll in a different plan) or within 3 months of the assignment effective date, whichever is later. (Note that this SEP will not apply to individuals who have been subject to default enrollment processes discussed in section II.A.7, as they will be able to use the new Open Enrollment Period (OEP) to make an election.)

Comment: A commenter requested a mechanism for plan sponsors to determine if the enrollment prior to the enrollee's SEP request was assigned by the CMS or the State. Another commenter requested clarification that States may make passive enrollment decisions where otherwise permitted, such as in Medicare-Medicaid Plans (MMPs), regardless of whether an individual has exhausted his or her SEP options for the year.

Response: CMS is exploring possible mechanisms that would allow plan sponsors to determine if the enrollee's most recent enrollment transaction was one that was initiated by CMS or the State. In the interim, plan sponsors should ask the enrollee if they received a notice that indicates that they have been assigned to a plan and have certain SEP opportunities.

If a beneficiary is assigned to a plan by CMS or a State, the enrollment change does not count against any of their SEP opportunities. That is, if a State passively enrolls a dual-eligible beneficiary in April, the beneficiary would still have their second quarter dual SEP, as well as the SEP associated specifically with the passive enrollment.

Comment: Several commenters sought clarification on how the dual SEP limitation would affect and interact with other election periods. Commenters stated that it was unclear how the SEP changes in § 423.38 would relate to the AEP and OEP. A few commenters sought verification that the SEPs for Program of All-inclusive Care for the Elderly (PACE) eligible beneficiaries, institutionalized individuals, and enrollments into 5-star plans would be unaffected. A commenter requested clarification whether the once-per-year SEP falls outside of the AEP, or whether the SEP also applies during this same AEP timeframe.

Response: As noted in the proposed rule and above, other election periods, including the AEP and the new OEP, are still available to eligible individuals. The established SEPs that allow beneficiaries to enroll in 5-star plans and PACE, as well as the SEP that allows elections for those who move into, reside in, or move out of an institution, are unaffected. If used, they would not count as use of the dual SEP. If the beneficiary is eligible for multiple election periods, plan sponsors (or other enrollment facilitators) may need to determine which election period the beneficiary would like to use, especially if the election periods would result in different enrollment effective dates. This is consistent with subregulatory guidance in Chapter 2 of the Medicare Managed Care Manual (section 30.6), Chapter 3 of the Medicare Prescription Drug Manual (section 30.4), and current enrollment processing procedures for any enrollment request received when the individual is eligible for more than one election period.

The dual SEP will be considered “used” based on the application date. If, for example, an election is made in March and effective in April, we would consider the beneficiary as having used their first quarter (Q1) dual SEP, even though coverage would not be effective until the second quarter of the calendar year. If a dual or other LIS-eligible beneficiary makes an election during the AEP (October 15th through December 7th), coverage would be effective January 1.

If, for example, a beneficiary is reassigned into a new plan in the fall for coverage effective January 1, they would be able to make an election under the AEP or the new CMS/State assignment SEP. If they opt out of the reassignment before it becomes effective and choose to stay in their current plan, this would be considered a cancellation and no election period is required.

We recognize that when looking at all of the election periods and associated timeframes in whole, there are multiple opportunities both within this SEP and other election periods for an individual to make a choice that best meets their needs. We believe that enrollment is an individual-based exercise, and 1-800-MEDICARE, SHIPs, advocacy helplines, plans, and enrollment brokers, already have processes in place to work with individual beneficiaries and determine the election periods for which they may be eligible. Ultimately, as already outlined in Chapter 3 of the Prescription Drug Benefit Manual (section 30), it is the plan sponsor's responsibility to determine the enrollment period for each enrollment/disenrollment request. In some cases, plan sponsors may need to contact the beneficiary directly to confirm the election period.

Table 2 summarizes the election periods discussed above and the suggested hierarchy of election periods (highest to lowest). Readers should note that it is not a comprehensive list of all election periods and does not negate a plan sponsor's responsibility to contact a beneficiary if they believe that multiple election periods may be available. More detailed information will be provided in subregulatory guidance.

Table 2—Election Periods

Election periodAvailableConsidered “Used”
Part D IEPBased on when first eligible for Part DUpon effective date.
MA OEP (must meet OEP requirements)AnnuallyUpon application date.
SEP—5-Star plansOngoingAvailable as long as election is in 5-Star plan.
SEP—PACEOngoing for enrollment into PACE; two month window after disenrollment from PACEAvailable as long as election is in PACE plan; upon application date for election subsequent to PACE disenrollment.
SEP—InstitutionalizedOngoing if moving into/residing in facility; two month window after moving out of facilityAvailable while in facility; upon application date for election subsequent to moving out of facility.
Start Printed Page 16518
SEP—CMS/State AssignmentWithin 3 months * of assignment or notification of assignment, whichever is laterUpon application date.
SEP—Change in Dual/LIS StatusWithin 3 months * of status change or notification of change, whichever is laterUpon application date.
Dual SEPOngoing—One use per calendar quarter during the first nine months of the yearUpon application date.
AEPAnnuallyMultiple elections can be submitted during AEP, last rec'd will be considered the choice.
* As discussed below, the finalized SEPs will allow for a 3-month opportunity to change plans, not the 2-month window noted in the proposed rule.

Comment: A few commenters requested clarification on how plan sponsors would be able to determine if a beneficiary has used their allowable dual SEP election. Commenters asked whether this information would be available in MARx or as a batch enrollment query (BEQ). Commenters also asked who is responsible for validating the SEP and noted that beneficiaries may be frustrated if they are unaware that they have exhausted their allowable use of the dual SEP and their enrollment is denied. A commenter asked that plans not be penalized for rejections related to the dual SEP.

Response: Plan sponsors continue to be responsible for determining the eligibility and enrollment period for enrollment/disenrollment requests. As noted earlier, plan sponsors and other enrollment facilitators may need to ask questions of the beneficiary to determine if they are eligible for the dual SEP or another election period. As a part of this process, we assume that beneficiaries are informed about the enrollment process and told that a submitted enrollment form does not always guarantee enrollment in a plan. Further, the enrollment module in MARx will be updated to no longer allow use of the dual SEP more than once per calendar quarter during the first nine months of the year. Enrollment transactions submitted for an individual who has already used their quarterly opportunity will be rejected, and sponsors would notify the individual of the denial, as they do today. While the commenter did not specify which penalties they wanted waived, as stated earlier, the vast majority of beneficiaries do not use the dual SEP multiple times, let alone within a 3-month period, so any rejected transactions should be minimal.

Comment: A commenter asked that we confirm that the dual SEP applies to individuals considered full-benefit dual eligible beneficiaries under § 423.773(c)(1).

Response: The dual SEP, with the parameters established in this rule, is available for full benefit dual eligible individuals and other subsidy-eligible beneficiaries as defined at § 423.772.

Comment: A few commenters recommended that we modify the proposed SEP at § 423.38(c)(9) to allow for a three-month or unlimited window post LIS-change, not a 2-month window. These commenters said that the outreach and education time can be lengthy and two months does not provide the beneficiary with enough time to make a fully-informed choice. In addition, a commenter requested that we clarify whether a change in co-pay level only is considered a change in LIS-eligible status and would prompt eligibility for the dual SEP. Another commenter asked how the change in status SEP would affect those going through the deeming process.

Response: We appreciate this insight from commenters and believe that a three-month window should give the beneficiary adequate time to understand their coverage changes and determine if it is in their best interest to change plans. Accordingly, we are revising § 423.38(c)(9) to allow individuals to make an election within 3 months of a gain, loss, or change to Medicaid or LIS eligibility, or notification of such a change, whichever is later. A change in co-pay level, or any change, resulting from the deeming process, would be considered a change in LIS eligibility.

As discussed previously, the SEP for dual/LIS status change is separate from the dual SEP. If, for example, a Medicare beneficiary becomes eligible for Medicaid during the year, they would be able to use the dual/LIS status change SEP to change plans. In addition, because they are now a dually-eligible beneficiary, they would also be able to make their allowable quarterly dual SEP election during the first nine months of the year.

Comment: A commenter noted that the Medicaid managed care rule at 42 CFR 438.56(c)(2)(i) includes a 90-day period for plan changes following enrollment, and that dual/LIS SEPs should align so as to avoid conflicts between Medicare and Medicaid rules.

Response: We appreciate the identification of the potential conflict. We believe that because of the various election periods that are available, including the new SEPs that are being finalized in this rule, there should not be a coordination issue with Medicaid managed care rules. Specifically, a beneficiary can still use the dual SEP quarterly during the first nine months of the year, the new three-month SEP for change in Medicaid status, the new three-month CMS/State assignment SEP, and the AEP.

Comments: A commenter recommended that if the proposal was finalized, CMS should allow beneficiaries the right to file an appeal to switch plans in instances where their Part D plan has made a material change (such as to its formulary or to its pharmacy network) during the plan year.

Response: Enrollment decisions are not appealable and we do not believe it would be prudent to set up an enrollment appeals process at this time. Given that dual and other LIS-eligible beneficiaries will still be able to use the dual SEP on a quarterly basis during the first nine months of the year, we believe that there is a readily accessible remedy for this enrollment issue. The beneficiary will still be able to change plans, but in the event that they have already used up their dual SEP election, they may have to wait to make another change, unless they are eligible for one of the many other SEPs. Again, we expect this circumstance to be extremely rare.

Comment: A few commenters recommended that in addition to MA and Part D plans, CMS apply the SEP limitations to Medicare-Medicaid Plans Start Printed Page 16519(MMPs) as part of the Financial Alignment Initiative demonstration.

Response: We clarify that under the Financial Alignment Initiative capitated model demonstrations, MA regulations—including those governing SEPs—apply to MMPs unless waived. As has been the case to date under the demonstrations, we will continue to use our demonstration authority to waive applicable MA regulatory requirements in three-way contracts as necessary, and in partnership with each state, to achieve each individual demonstration's objectives.

Comment: A commenter requested clarification regarding the federal vs. state authority over the dual SEP.

Response: Other than state laws relating to state licensure and plan solvency the standards established under Part D supersede any state law or regulation with respect to Part D plans.

Comment: Many commenters provided valuable feedback related to our request for suggestions on how to educate the affected population and other stakeholders of changes to the dual SEP. Suggestions included the following:

  • Development of more outreach materials, including non-English materials.
  • Direct notification to affected individuals.
  • Increased resources for SHIPs.
  • Coordination with the Administration for Community Living and State ombudsmen.
  • Television advertisements.
  • Educational opportunities sales agents, providers and community partners.
  • Broader education about the dual SEP in general.

Response: We appreciate the feedback provided by commenters and will keep these suggestions in mind as we proceed with implementation of the dual SEP limitation beginning in plan year 2019.

Comment: A commenter recommended changes to Medicaid managed care disenrollment rules outlined at 42 CFR 438.56.

Response: Medicaid disenrollment rules are outside the scope of proposals set forth in the proposed rule and, as such, will not be considered for this rulemaking.

After review of the comments, and as discussed above, we are finalizing the proposed changes to § 423.38 with the following modifications:

  • Paragraph (c)(4) is revised to allow eligible beneficiaries (that is, those who are dual or other LIS-eligible) use of the dual SEP once per calendar quarter during the first nine months of the year. We are further specifying that the limitation applicable to at-risk beneficiaries and potential at-risk beneficiaries (as defined under § 423.100 and discussed in section II.A.1) is effective upon notification of that status and ends upon termination of that status consistent with § 423.153(f).
  • New paragraph (c)(9), which provides dual and other LIS-eligible beneficiaries who have a change in their Medicaid or LIS-eligible status an SEP, is modified to allow a 3-month window to make a change.
  • Proposed paragraph (c)(4)(iii) allowing eligible beneficiaries who have been assigned to a plan by CMS or a State use of the dual SEP before that election becomes effective or within 2 months of their enrollment in that plan will not be finalized. Instead, a new CMS/State assignment SEP is established at § 423.38(c)(10) to allow individuals in a similar circumstance (that is, auto- or facilitated enrolled, reassigned, default or passively enrolled by CMS or a state) an opportunity to change plans upon notification or within 3 months of the assignment effective date, whichever is later.

Further detail on the SEP changes will be provided in subregulatory guidance. As suggested by a commenter, we will monitor the impact of this change and consider future modifications if there is evidence that beneficiaries are being harmed.

11. Medicare Advantage and Part D Prescription Drug Plan Quality Rating System

a. Introduction

We are committed to transforming the health care delivery system—and the Medicare program—by putting a strong focus on person-centered care, in accordance with the CMS Quality Strategy, so each provider can direct their time and resources to each beneficiary and improve their outcomes. As part of this commitment, one of our most important strategic goals is to improve the quality of care for Medicare beneficiaries. The Part C and D Star Ratings support the efforts of CMS to improve the level of accountability for the care provided by health and drug plans, physicians, hospitals, and other Medicare providers. We currently publicly report the quality and performance of health and drug plans on the Medicare Plan Finder tool on www.medicare.gov in the form of summary and overall ratings for the contracts under which each MA plan (including MA-PD plans) and Part D plan is offered, with drill downs to ratings for domains, ratings for individual measures, and underlying performance data. We also post additional measures on the display page [31] at www.cms.gov for informational purposes. The goals of the Star Ratings are to display quality information on Medicare Plan Finder to help beneficiaries, families, and caregivers make informed choices by being able to consider a plan's quality, cost, and coverage; to provide information for public accountability; to incentivize quality improvement; to provide information to oversee and monitor quality; and to accurately measure and calculate scores and stars to reflect true performance. In addition, CMS has made strides in recognizing the challenges of serving high risk, high needs populations while continuing the focus on improving health care for these important groups.

In this final rule, as part of the Administration's efforts to improve transparency, we are codifying the existing Star Ratings system for the MA and Part D programs with some changes. As noted later in this section in more detail, the changes we proposed and are finalizing include more clearly delineating the rules for adding, updating, and removing measures and modifying how we calculate Star Ratings for contracts that consolidate. As we explained in the proposed rule, codifying the Star Ratings methodology will provide plans with more stability to plan multi-year initiatives, because the rulemaking process will create a longer lead time for changes and MA organizations and Part D sponsors will know the measures several years in advance. We have received comments for the past several years from MA organizations and other stakeholders asking that CMS use Federal Register rulemaking for the Star Ratings system; we discuss in section II.A.11.c. of this final rule (regarding plans for the transition period before the codified rules are used) how section 1853(b) authorizes CMS to establish and annually modify the Star Ratings system using the Advance Notice and Rate Announcement process because the system is an integral part of the policies governing Part C payment. We believe this is an appropriate time to codify the methodology, because the rating system has been used for several years now and is relatively mature so there is less need for extensive changes every year; the smaller degree of flexibility in having codified regulations rather than using the process for adopting payment methodology changes may be appropriate. Further, by adopting and Start Printed Page 16520codifying the rules that govern the Star Ratings system, we are demonstrating a commitment to transparency and predictability for the rules in the system so as to foster investment.

b. Background

We originally acted upon our authority to disseminate information to beneficiaries as the basis for developing and publicly posting the 5-star ratings system (sections 1851(d) and 1852(e) of the Act). The MA statute explicitly requires that information about plan quality and performance indicators be provided to beneficiaries to help them make informed plan choices. These data are to include disenrollment rates, enrollee satisfaction, health outcomes, and plan compliance with requirements.

The Part D statute (at section 1860D-1(c)) imposes a parallel information dissemination requirement with respect to Part D plans, and refers specifically to comparative information on consumer satisfaction survey results as well as quality and plan performance indicators. Part D plans are also required by regulation (§ 423.156) to make Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey data available to CMS and are required to submit pricing and prescription drug event data under statutes and regulations specific to those data. Regulations require plans to report on quality improvement and quality assurance and to provide data which CMS can use to help beneficiaries compare plans (§§ 422.152 (b)(3) and 423.153(c)(5)). In addition we may require plans to report statistics and other information in specific categories (§§ 422.516 and 423.514).

Currently, for similar reasons of providing information to beneficiaries to assist them in plan enrollment decisions, we also review and rate section 1876 cost plans on many of the same measures and publish the results. We also proposed to continue to include 1876 cost contracts in the MA and Part D Star Rating system to provide comparative information to Medicare beneficiaries making plan choices. We proposed specific text, to be codified at § 417.472(k), requiring that 1876 cost contracts to agree to be rated under the quality rating system specified at subpart D of part 422. Cost contracts are also required by regulation (§ 417.472(j)) to make CAHPS survey data available to CMS. As is the case today, no Quality Bonus Payments (QBP) will be associated with the ratings for 1876 cost contracts.

In line with §§ 422.152 and 423.153, CMS uses the Healthcare Effectiveness Data and Information Set (HEDIS), Health Outcomes Survey (HOS), CAHPS data, Part C and D Reporting requirements and administrative data, and data from CMS contractors and oversight activities to measure quality and performance of contracts. We have been displaying plan quality information based on that and other data since 1998.

Since 2007, we have published annual performance ratings for stand-alone Medicare PDPs. In 2008, we introduced and displayed the Star Ratings for Medicare Advantage Organizations (MAOs) for both Part C only contracts (MA-only contracts) and Part C and D contracts (MA-PDs). Each year since 2008, we have released the MA Star Ratings. An overall rating combining health and drug plan measures was added in 2011, and differential weighting of measures (for example, outcomes being weighted 3 times the value of process measures) began in 2012. The measurement of year to year improvement began in 2013, and an adjustment (Categorical Adjustment Index) was introduced in 2017 to address the within-contract disparity in performance revealed in our research among beneficiaries that are dual eligible, receive a low income subsidy, and/or are disabled.

The MA and Part D Star Ratings measure the quality of care and experiences of beneficiaries enrolled in MA and Part D contracts, with 5 stars as the highest rating and 1 star as the lowest rating. The Star Ratings provide ratings at various levels of a hierarchical structure based on contract type, and all ratings are determined using the measure-level Star Ratings. Contingent on the contract type, ratings may be provided and include overall, summary (Part C and D), and domain Star Ratings. Information about the measures, the hierarchical structure of the ratings, and the methodology to generate the Star Ratings is detailed in the annually updated Medicare Part C and D Star Ratings Technical Notes, referred to as Technical Notes, available at http://go.cms.gov/​partcanddstarratings.

The MA and Part D Star Ratings system is designed to provide information to the beneficiary that is a true reflection of the plan's quality and encompasses multiple dimensions of high quality care. The information included in the ratings is selected based on its relevance and importance such that the ratings can meet the needs of beneficiaries using them to inform plan choice. While encouraging improved health outcomes of beneficiaries in an efficient, person centered, equitable, and high quality manner is one of the primary goals of the ratings, they also provide feedback on specific aspects of care and performance that directly impact outcomes, such as process measures and the beneficiary's perspective. The ratings focus on aspects of care and performance that are within the control of the health plan and can spur quality improvement. The data used in the ratings must be complete, accurate, reliable, and valid. A delicate balance exists between measuring numerous aspects of quality and the need for a small data set that minimizes reporting burden for the industry. Also, the beneficiary (or his or her representative) must have enough information to make an informed decision without feeling overwhelmed by the volume of data.

The Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by the Healthcare and Education Reconciliation Act (Pub. L. 111-152), provides for quality ratings, based on a 5-star rating system and the information collected under section 1852(e) of the Act, to be used in calculating payment to MA organizations beginning in 2012. Specifically, sections 1853(o) and 1854(b)(1)(C) of the Act were added and amended to provide, respectively, for an increase in the benchmark against which MA organizations bid and in the portion of the savings between the bid and benchmark available to the MA organization to use as a rebate. Under the Act, Part D plan sponsors are not eligible for quality based payments or rebates. We finalized a rule on April 15, 2011 to implement these provisions and to use the existing Star Ratings system that had been in place since 2007 and 2008. (76 FR 21485-21490).[32] In addition, the Star Ratings measures are tied in many ways to responsibilities and obligations of MA organizations and Part D sponsors under their contracts with CMS. We believe that continued poor performance on the measures and overall and summary ratings indicates systemic and wide-spread problems in an MA plan or Part D plan. In April 2012, we finalized regulations to use consistently low summary Star Ratings—meaning 3 years of summary Star Ratings below 3 stars—as the basis for a contract termination for Part C and Part D plans. (§§ 422.510(a)(14) and 423.509(a)(13)). Those regulations further reflect the role the Star Ratings have had in CMS' oversight, evaluation, and monitoring of MA and Part D plans to ensure compliance with the Start Printed Page 16521respective program requirements and the provision of quality care and health coverage to Medicare beneficiaries.

The true potential of the use of the MA and Part D Star Ratings system to reach our goals and to serve as a catalyst for change can only be realized by working in tandem with our many stakeholders, including beneficiaries, plans, and advocates. The following guiding principles have been used historically in making enhancements and updates to the MA and Part D Star Ratings:

  • Ratings align with the current CMS Quality Strategy.
  • Measures developed by consensus-based organizations are used as much as possible.
  • Ratings are a true reflection of plan quality and enrollee experience; the methodology minimizes risk of misclassification.
  • Ratings are stable over time.
  • Ratings treat contracts fairly and equally.
  • Measures are selected to reflect the prevalence of conditions and the importance of health outcomes in the Medicare population.
  • Data are complete, accurate, and reliable.
  • Improvement on measures is under the control of the health or drug plan.
  • Utility of ratings is considered for a wide range of purposes and goals.

++ Accountability to the public.

++ Enrollment choice for beneficiaries.

++ Driving quality improvement for plans and providers.

  • Ratings minimize unintended consequences.
  • Process of developing methodology is transparent and allows for multi-stakeholder input.

We used these goals to guide our proposal and intend to use them to guide how we interpret and apply the final regulations. For each provision we proposed, we solicited comment on whether our specific proposed regulation text best serves these guiding principles. We also solicited comment on whether additional or other principles are better suited for these roles in measuring and communicating quality in the MA and Part D programs in a comparative manner.

As we continue to consider making changes to the MA and Part D programs in order to increase plan participation and improve benefit offerings to enrollees, we also solicited feedback from stakeholders on how well the existing stars measures create meaningful quality improvement incentives and differentiate plans based on quality. We solicited comments on those topics, and have considered them in adopting this final rule, as noted in the responses below, and will consider them for future rulemaking. We specifically asked for feedback on the following topics:

  • Additional opportunities to improve measures so that they further reflect the quality of health outcomes under the rated plans.
  • Whether CMS' current process for establishing the cut points for Star Rating can be simplified, and if the relative performance as reflected by the existing methodology to establish cut points accurately reflects plan quality.
  • How CMS should measure overall improvement across the Star Ratings measures. In the proposed rule, we specifically requested input on additional improvement adjustments that could be implemented, and the effect that these adjustment could have on new entrants (here meaning new MA organizations and/or new plans offered by existing MA organizations).
  • Additional adjustments to the Star Ratings measures or methodology that could further account for unique geographic and provider market characteristics that affect performance (for example, rural geographies or monopolistic provider geographies), and the operational difficulties that plans could experience if such adjustments were adopted.
  • In order to further encourage plan participation and new market entrants, whether CMS should consider implementing a demonstration to test alternative approaches for putting new entrants (that is, new MA organizations) on a level playing field with renewing plans from a Star Ratings perspective for a pre-determined period of time.
  • Adding measures that evaluate quality from the perspective of adopting new technology (for example, the percent of beneficiaries enrolled through online brokers or increasing implementation of the use of telemedicine) or improving the ease, simplicity, and satisfaction of the beneficiary experience in a plan.
  • Including survey measures of physicians' experiences. (Currently, we measure beneficiaries' experiences with their health and drug plans through the CAHPS survey.) Physicians also interact with health and drug plans on a daily basis on behalf of their patients. We noted in the proposed rule that we are considering developing a survey tool for collecting standardized information on physicians' experiences with health and drug plans and their services.

CMS appreciates the feedback we received on our proposals and on the solicitations for comment on the various topics. In the sections that follow, which are arranged by topic area, we summarize the comments we received on the background section and policies, proposals and solicitations summarized there and provide our responses to the comments. (In each section in II.B.11.c through w, we summarize the proposals from the corresponding section of the proposed rule, the applicable comments, and our responses.)

Comment: Most commenters supported both the principles and the decision to codify the methodology for the Part C and D Star Ratings. Of the commenters who supported those aspects of our overall proposal, a few suggested adding principles, such as the measure data should be timely and that distinctions between measure-level Star Ratings (cut points) should be meaningful.

Response: CMS appreciates the support to codify the methodology for the Part C and D Star Ratings. We will codify the methodology in this final rule as outlined in this preamble, and will consider the additional principles raised by the commenters for adoption in the future as we continue to refine the principles in consultation with experts and stakeholders through the regulatory process.

Comment: Several commenters requested CMS to continue updating the methodology though the Call Letter instead though regulation. Commenters were concerned that the regulatory process would lead to CMS not being able to act quickly when there are public health or patient safety concerns or when treatment guidelines are changed. Commenters also cited other concerns, including introducing a burdensome regulatory process that delays the implementation of essential measures which can improve the quality of care for patients with chronic illness, as reasons to not to finalize this proposal but to continue using the Call Letter process to modify the Star Ratings methodology. They also noted that there are already multiple opportunities for comment on new measures; thus, the regulatory process does not create additional transparency. A few commenters supported the general effort to put the Star Ratings principles and process into regulation, but encouraged CMS to adopt a few exceptions (such as allowing new measures (but not measures with substantive changes) to enter Star Ratings through the Call Letter process).

Response: CMS understands the commenters' concerns about how the regulatory process may, in some cases, prevent CMS from quickly changing or adopting measures. However, given the Start Printed Page 16522level of support for the proposal and the need to provide the industry with longer lead times for new measures, we will finalize the proposal to implement substantive changes through regulation and use the Call Letter to make non-substantive changes, suggest and solicit feedback on new measures that will be proposed in regulation, and address emergent public health or patient safety concerns by retiring existing measures as needed or introducing new measures for the display page that will be proposed for Star Ratings as appropriate. We also address comments on our proposals related to the type of updates and changes that we proposed to adopt without rulemaking, pursuant to specific rules proposed for §§ 422.164 and 423.184, in section II.A.11.h.

Comment: A commenter requested that measure changes take 3 years to implement in the Star Ratings and that five years should elapse before those changes could impact payment.

Response: We thank the commenter for the suggestion, but are finalizing the timeframes proposed in the proposed rule because the majority of commenters supported the proposed timeframes. Some of the commenters did raise concerns about extending the timeframes for implementing and updating measures. Changing the timeframes for measures updates to at least 3 years will significantly slow the implementation of substantive and non-substantive changes, in particular, when the changes are non-substantive.

Comment: A commenter encouraged CMS to adopt financial incentives for stand-alone prescription drug plans based on Part D Star Ratings.

Response: CMS thanks the commenter for the suggestion, but CMS cannot adopt such financial incentives without statutory authority. The Quality Bonus Payment (QBP) program for MA plans is statutory and the statute does not allow CMS to pay QBPs to stand-alone prescription drug plans.

Comment: We solicited comments on potentially adding measures in the future that evaluate quality from the perspective of adopting new technology. Many commenters supported adding a measure related to the use of technology, but multiple commenters cautioned that CMS rely on and use evidence that technology impacts health outcomes or improves the experiences of beneficiaries in order to adopt specific measures of that type. A number of commenters cautioned CMS to move carefully and slowly on promoting technology due to the potential for unintended consequences. A few commenters did not support measuring the adoption of technology, because such adoption may not always be in the best interest of the patient or enrollee. A few commenters did not support such measurement because adoption of technology is hard to measure well and may not lead to greater member satisfaction or correlate with other measures of plan performance. Those commenters discouraged such a focus, believing that beneficiaries will vary in their interest in whether plans and providers adopt new technologies, so measures of such adoption many not inform plan choice. A few commenters also feared that measures of adoption of technology may end up reflecting geographic differences and the socioeconomic status of members enrolled in the plan rather than the quality or performance of the plan itself. With respect to CMS' proposal to possibly add new measures that address the issue of new technology in the future, such as telemedicine, a commenter pointed out that “Use of new technologies” is not clearly defined and can span a number of technologies implemented across plans but not in a uniform manner or across all service areas. A commenter recommended that CMS continue to look at the incorporation of new technologies into Star Ratings measures but withhold any proposals for CY 2019 and CY 2020 until more formal proposals can be put forth for notice and comment prior to adoption. A commenter specifically urged measures of e-prescribing and e-prior authorization in Star Ratings. Another commenter urged CMS to explicitly capture in CAHPS composites (that is, the combination of two or more survey items into a measure) the use of telemedicine, as current survey wording may not do so.

Response: CMS appreciates comments received on adding measures that evaluate quality from the perspective of adopting new technology and will continue to monitor developments in this area for future consideration. Although we are not finalizing the adoption of such a measure in this rule, we will continue to investigate how best to address incorporating new technologies into the Star Ratings measures. We note that for HEDIS 2019, NCQA is examining the addition of telehealth services in existing HEDIS measures where appropriate. NCQA's proposed method would use specific codes and code modifiers to clearly define which telehealth services would be allowed for each specific measure. Proposed changes to incorporate telehealth services will be posted for the HEDIS 2019 public comment period in February. We appreciate receiving the comment about telemedicine and CAHPS; we recognize telemedicine is an evolving area and may propose changes to CAHPS survey questions in the future after discussions with the Agency for Healthcare Research and Quality.

Comment: A commenter specifically requested CMS provide certified software for measures not developed by external stewards, such as the Medication Therapy Management (MTM) and SNP Care Management measures.

Response: These measures are based on data reported to CMS through the Part C and D Reporting Requirements. CMS is not clear how providing certified software for these measures will facilitate the submission of these measures. CMS also notes that the MTM measure is developed by an external steward (PQA).

Comments: Many commenters indicated the need for greater alignment with providers (physicians, hospitals, medical groups, accountable care organizations, and plans) to make the quality measures more consistent, both to reduce burden and duplication and to more effectively incentivize behavior. For example, a few commenters urged use of measures aligned with the Merit-based Incentive Payment System (MIPS) program.

Response: CMS thanks the multiple commenters for these suggestions and appreciate the concern about burden and duplication, as well as the potential value of consistently reinforcing the same message. CMS is continuing to work with measure developers to increase consistency in measurement across settings.

Comment: Several commenters encouraged CMS to develop measures related to how well the care that is received by beneficiaries reflects the beneficiaries' concerns, values, and goals.

Response: CMS is tracking work by measure developers in this area and thanks the commenters for the suggestion.

Comment: Many commenters supported CMS continuing to develop and implement new measure concepts beyond those in current or currently anticipated measure sets. Among the most common suggestions were outcome measures, especially new patient-reported outcome measures, quality of life, and functional status measures (including Healthy Days at Home). Several commenters also encouraged measuring care for cancer, prevention of diabetes and other chronic conditions, long-term management of chronic obstructive pulmonary disease (COPD), as well as advanced care Start Printed Page 16523planning, advanced directives and palliative care. A few other commenters highlighted concerns about measure gaps, such as for pain management, autoimmune disorders, mental illness, dementia/cognitive impairment, anticoagulation drug safety, and measures specific to patients with multiple co-morbidities, especially co-morbid diabetes and cardiovascular disease. A few commenters referred to NQF-endorsed measures used in other programs, such as change in functional status after spine or hip replacement surgery. A commenter encouraged CMS to utilize a comprehensive measure of adult vaccination, while another encouraged adoption of a vaccine cost-sharing measure. A commenter urged CMS to develop more medication adherence and appropriate use measures and to assign a high weight in the Star Ratings program. Another commenter suggested that any future transition of care measures include detailed information on all drug therapies prescribed and broader sharing of discharge information.

In addition, a few commenters urged CMS to provide quality and performance information about physicians within plans or to measure plans on the engagement of their network of physicians in value-based purchasing designs (that is, payment designs that reward or increase payments based on quality or capitated payments to physicians/practitioners, medical groups and ACOs).

Several comments highlighted promoting and measuring network adequacy and potential delays in care or medication related to this, and a few encouraged CMS to reward plans that maintain adequate networks with increased Star Ratings. A number of commenters urged CMS to measure access to medical specialists and subspecialists, such as Mohs surgeons, cataract surgeons, and ophthalmologists, while a couple of commenters supported the assessment of pharmacy networks broken down by specialty drug access. The two comments about networks of physician and surgeon specialists urged CMS to leverage extant measurement with the MIPS and Quality Payment Program (QPP) to also help measure plan network adequacy. A commenter urged CMS to look beyond simple numbers of physicians and specialists, since contracting and affiliation in medical groups and ACOs may effectively limit the access patients have to the full network.

Response: CMS appreciates the breadth of suggestions for new measures and will take these under consideration, including internal discussion and sharing them with the measure developers. We will also study the value and feasibility of deriving additional metrics (such as additional patient-reported outcome measures) from existing data collection efforts, like HOS.

Comment: Several commenters urged the development of geographic and/or provider market characteristic adjusters in order to normalize variations outside plans' control. Some stated such adjustments would specifically prevent measure bias against state-contracted SNPs.

Response: CMS appreciates this comment and will take it into consideration. As we consider adjustments to the Star Ratings measures, we need to ensure that the adjustments do not mask true differences in the quality of care across the country.

Comment: A few commenters requested information about a Star Ratings policy for natural disasters.

Response: CMS provided a detailed proposal concerning treatment of Star Ratings measures for contracts affected by disasters in the 2019 draft Call Letter that would apply to the 2019 and 2020 Star Ratings. We plan to propose codifying this policy through future rulemaking for performance periods after 2019 and ratings after the 2021 Star Ratings.

Comment: Several commenters questioned whether the Star Ratings regulations apply to PACE organizations.

Response: The MA Star Ratings regulations do not apply to PACE organizations but to the extent that a PACE organization offers a plan including qualified prescription drug coverage, it is a Part D sponsor and therefore subject to the Part D regulations. This would include the Part D Star Ratings regulations adopted in this final rule as 42 CFR 423.182-423.186. We have not produced Star Ratings for PACE organizations to date and are exploring the PACE waiver authority to continue to exclude PACE organizations from this requirement.

Comment: Several commenters made suggestions for possible Medicare Plan Finder enhancements, including adding the capability to compare plans by population type as well as mobile enhancements. A commenter suggested including the overall Star Ratings in the Medicare & You handbook.

Response: We appreciate these comments, but believe they are outside the scope of the proposed rule. However, we note that CMS is currently exploring options for improving the Plan Finder experience for Medicare beneficiaries, and that, although the timelines for publishing the Medicare & You handbook do not allow for including the overall Star Rating in the initial release that occurs in the fall, the overall Star Ratings are included in updated versions of the handbook that are released after the initial release and publication.

Comment: We received one comment that PBMs and Part D plan sponsors have delegated their responsibilities for the Star Ratings program to network pharmacies without providing the pharmacies with additional compensation.

Response: CMS appreciates these comments, but due to the non-interference clause, CMS is prevented from interfering in contract arrangements between sponsors, pharmacies and other providers. CMS has indicated to measure stewards and other stakeholders that if such pharmacy performance metrics are used as a condition of pharmacy network status, measure specifications should be appropriately scaled, for example, ensure adequate sample size, and that incentives to achieve performance should be appropriately allocated.

Comment: We received several comments recommending beneficiaries designated for lock-in be excluded from certain Star Ratings measures.

Response: Thank you for the comment. Our Star Ratings proposal did not address this topic, and we plan to take these comments under advisement. For more information about CARA, please see section B.

Comment: CMS had solicited feedback on the potential development of a physician survey to gather information for Star Ratings measures. The majority of commenters opposed the development of a physician survey due to the increased financial and administrative burden it would entail for both plans and health care providers/physicians who would be surveyed. Other commenters raised concerns about the ability of physicians to differentiate across plans when physicians interact with multiple plans. Multiple commenters were concerned that a physician could not accurately complete a survey on this topic since physicians often do not personally know the plan in which a beneficiary is enrolled. Some commenters noted that it may be difficult to determine who within a provider's practice should complete the survey. Other concerns raised include small sample sizes, subjectivity of responses, and potential for incomplete data.

Response: CMS appreciates the input provided by commenters regarding the Start Printed Page 16524burden and multiple challenges in developing a survey to evaluate physician experience interacting with both Medicare health and drug plans. We are not finalizing any aspect of the physician survey in this rule, but will take these comments into consideration as we continue to explore the feasibility and the value to the Star Ratings program in collecting feedback through a physician survey.

Comment: A handful of commenters were concerned about the administration of a physician survey in integrated plans where the physician is employed by the plan which may bias the survey results.

Response: We acknowledge that responses may not be unbiased in situations when the physician is employed by the plan. CMS will take this into account as we consider whether to develop a physician/clinician survey in the future.

Comment: Among the commenters supporting the development of a physician survey, commenters noted that the physician is in close contact with plans on behalf of their patients so this would complement the existing CAHPS survey for enrollees. A couple of commenters noted that a physician survey would be a way to measure network adequacy, appeals, benefit limit exceptions, and grievances. A few commenters recommended that CMS consider a broader survey of clinician experiences, including nurses, therapists, care coordinators, and pharmacists from a variety of settings. A commenter requested that a physician survey be voluntary.

Response: CMS appreciates the support for the development of a physician survey and will solicit feedback from the industry on additional topics to be included on the survey if we move forward with the development in the future. We believe obtaining feedback from physicians is important; however, we will consider all of the comments provided before we make a determination about proceeding with developmental work.

Comment: A commenter suggested the development of a general physician survey regarding experiences with managed care compared to fee-for-service to understand the larger healthcare landscape, while another commenter suggested obtaining feedback through other avenues outside of the Star Ratings program.

Response: CMS appreciates these suggestions but they are out of scope for the potential development of surveys for the purpose of Star Ratings.

We specifically address adoption of the Star Ratings System regulations for the MA and Part D programs in sections II.B.11.c through w.

c. Basis, Purpose and Applicability of the Medicare Advantage and Prescription Drug Plan Quality Rating System

We proposed to codify regulation text, at §§ 422.160 and 423.180, that identifies the statutory authority, purpose, and applicability of the Star Ratings system regulations that we proposed to add under part 422 subpart D and part 423 subpart D. Under our proposal, we are continuing to apply the existing purposes of the quality rating system, which are to provide comparative information to Medicare beneficiaries pursuant to sections 1851(d) and 1860D-1(c) of the Act, identify and apply the payment consequences for MA plans under sections 1853(o) and 1854(b)(1)(C) of the Act, and evaluate and oversee overall and specific performance by MA and Part D plans. To reflect how the Part D ratings are used for MA-PD plan QBP status and rebate retention allowances, we also proposed specific text, to be codified at § 423.180(b)(2), noting that the Part D Star Rating will be used for those purposes.

We proposed, broadly stated, to codify the current quality Star Ratings system uses, methodology, measures, and data collection beginning with the measurement periods in calendar year 2019. We proposed some changes, such as how we handle consolidations from the current Star Ratings program, but overall the proposal was to continue the Star Ratings system as it has been developed and has stabilized. Under the proposal, data would be collected and performance measured using these proposed rules and regulations for the 2019 measurement period; the associated quality Star Ratings will be used to assign QBP ratings for the 2022 payment year and released prior to the annual election period held in late 2020 for the 2021 contract year. Because of the timing of the release and use in conjunction with the annual coordinated election period, these would be the “2021 Star Ratings.”

We proposed that the current quality Star Ratings system and procedures for revising it remain in place for the 2019 and 2020 Star Ratings. Section 1853(b) of the Act authorizes an advance notice and rate announcement to announce and solicit comment for proposed changes to the MA payment methodology, which CMS has interpreted to include the Part C and D Star Ratings program because of the payment consequences of Star Ratings under section 1853(o) of the Act. The statute identifies specific notice and comment timeframes, but that process does not require publication in the Federal Register. We have used the draft and final Call Letter, which are attachments to the Advance Notice and final Rate Announcement respectively,[33] to propose for comment and finalize changes to the quality Star Ratings system since the ratings became a component of the payment methodology for MA and MA-PD plans. (76 FR 21487 through 89). Because the Star Ratings system has been integrated into the payment methodology since the 2012 contract year (as a mechanism used to determine how much a plan is paid, and not the mechanism by which [or a rule about when] a plan is paid), the Star Ratings are part of the process for setting benchmarks and capitation rates under section 1853 of the Act, and the process for announcing changes to the Star Ratings system falls within the scope of section 1853(b) of the Act. Although not expressly required by section 1853(b) of the Act, CMS has historically solicited comment on significant changes to the ratings system using a Request for Comment process before the Advance Notice and draft Call Letter are released; this Request for Comment [34] provides MAOs, Part D sponsors, and other stakeholders an opportunity to request changes to and raise concerns about the Star Ratings methodology and measures before CMS finalizes its proposal for the Advance Notice. We intend to continue the current process at least until the 2019 measurement period that we proposed as the first measurement period under these new regulations, but we may discontinue that process at a later date as the Advance Notice/Call Letter process and rulemaking process may provide sufficient opportunity for public input. In addition, CMS issues annually the Technical Notes [35] that describe in detail how the methodology is applied from the changes in policy adopted through the Advance Notice and Rate Announcement process. We intend to continue the practice of publishing the Technical Notes during the preview periods. Our proposed rule included continued use of the draft and final Call Letters as a means to provide subregulatory application), Start Printed Page 16525interpretation, and guidance of the final version of these proposed regulations where necessary. Our proposed regulation text does not detail these plans for the RFC and Technical Notes because we believe such regulation text will be unnecessary. We proposed to codify the first performance period (2019) and first payment year (2022) to which our proposed regulations will apply at § 422.160(c) and § 423.180(c).

We received no comments on our proposed basis, purpose, and applicability regulations. For the reasons outlined in the proposed rule and summarized here, we are finalizing the regulation text proposed at §§ 422.160 and 423.180 with one significant modification regarding the applicability of the regulations governing the Star Ratings of a surviving contract in a contract consolidation. In light of the passage of section 53112 of the Bipartisan Budget Act of 2018 (Pub. L. 115-123), the consolidation policy described at §§ 422.162(b)(3) and 423.182(b)(3) will be implemented for the 2020 QBP ratings and 2020 Star Ratings. We will finalize additional text at §§ 422.160(c), 422.162(b)(3)(v), 423.180(c) and 423.182(b)(3)(iii) to apply the regulations that govern the calculation of Star Ratings for surviving contracts when the contract consolidation is approved on or after January 1, 2019, consistent with the ACCESS Act provision.

d. Definitions

We proposed the following definitions for the respective subparts in part 422 and part 423 in paragraph (a) of §§ 422.162 and 423.182 respectively.

  • CAHPS refers to a comprehensive and evolving family of surveys that ask consumers and patients to evaluate the interpersonal aspects of health care. CAHPS surveys probe those aspects of care for which consumers and patients are the best or only source of information, as well as those that consumers and patients have identified as being important. CAHPS initially stood for the Consumer Assessment of Health Plans Study, but as the products have evolved beyond health plans the acronym now stands for Consumer Assessment of Healthcare Providers and Systems.
  • Case-mix adjustment means an adjustment to the measure score made prior to the score being converted into a Star Rating to take into account certain enrollee characteristics that are not under the control of the plan. For example age, education, chronic medical conditions, and functional health status that may be related to the enrollee's survey responses.
  • Categorical Adjustment Index (CAI) means the factor that is added to or subtracted from an overall or summary Star Rating (or both) to adjust for the average within-contract (or within-plan as applicable) disparity in performance associated with the percentages of beneficiaries who are dually eligible for Medicare and enrolled in Medicaid, beneficiaries who receive a Low Income Subsidy or have disability status in that contract (or plan as applicable).
  • Clustering refers to a variety of techniques used to partition data into distinct groups such that the observations within a group are as similar as possible to each other, and as dissimilar as possible to observations in any other group. Clustering of the measure-specific scores means that gaps that exist within the distribution of the scores are identified to create groups (clusters) that are then used to identify the four cut points resulting in the creation of five levels (one for each Star Rating), such that the scores in the same Star Rating level are as similar as possible and the scores in different Star Rating levels are as different as possible. Technically, the variance in measure scores is separated into within-cluster and between-cluster sum of squares components. The clusters reflect the groupings of numeric value scores that minimize the variance of scores within the clusters. The Star Ratings levels are assigned to the clusters that minimize the within-cluster sum of squares. The cut points for star assignments are derived from the range of measure scores per cluster, and the star levels associated with each cluster are determined by ordering the means of the clusters.
  • Consolidation means when an MA organization/Part D sponsor that has at least two contracts for health and/or drug services of the same plan type under the same parent organization in a year combines multiple contracts into a single contract for the start of the subsequent contract year.
  • Consumed contract means a contract that will no longer exist after a contract year's end as a result of a consolidation.
  • Display page means the CMS website on which certain measures and scores are publicly available for informational purposes; the measures that are presented on the display page are not used in assigning Part C and D Star Ratings.
  • Domain rating means the rating that groups measures together by dimensions of care.
  • Dual Eligible (DE) means a beneficiary who is enrolled in both Medicare and Medicaid.
  • HEDIS is the Healthcare Effectiveness Data and Information Set which is a widely used set of performance measures in the managed care industry, developed and maintained by the National Committee for Quality Assurance (NCQA). HEDIS data include clinical measures assessing the effectiveness of care, access/availability measures, and service use measures.
  • Highest rating means the overall rating for MA-PDs, the Part C summary rating for MA-only contracts, and the Part D summary rating for PDPs.
  • Highly-rated contract means a contract that has 4 or more stars for their highest rating when calculated without the improvement measures and with all applicable adjustments (CAI and the reward factor).
  • HOS means the Medicare Health Outcomes Survey which is the first patient reported outcomes measure that was used in Medicare managed care. The goal of the Medicare HOS program is to gather valid, reliable, and clinically meaningful health status data in the Medicare Advantage (MA) program for use in quality improvement activities, pay for performance, program oversight, public reporting, and improving health. All managed care organizations with MA contracts must participate.
  • Low Income Subsidy (LIS) means the subsidy that a beneficiary receives to help pay for prescription drug coverage (see § 423.34 for definition of a low-income subsidy eligible individual).
  • Measurement period means the period for which data are collected for a measure or the performance period that a measures covers.
  • Measure score means the numeric value of the measure or an assigned `missing data' message.
  • Measure star means the measure's numeric value is converted to a Star Rating. It is displayed to the nearest whole star, using a 1-5 star scale.
  • Overall Rating means a global rating that summarizes the quality and performance for the types of services offered across all unique Part C and Part D measures.
  • Part C Summary Rating means a global rating that summarizes the health plan quality and performance on Part C measures.
  • Part D Summary Rating means a global rating of the prescription drug plan quality and performance on Part D measures.
  • Plan Benefit Package (PBP) means a set of benefits for a defined MA or PDP service area. The PBP is submitted by PDP sponsors and MA organizations to CMS for benefit analysis, bidding, Start Printed Page 16526marketing, and beneficiary communication purposes.
  • Reliability means a measure of the fraction of the variation among the observed measure values that is due to real differences in quality (“signal”) rather than random variation (“noise”); it is reflected on a scale from 0 (all differences in plan performance measure scores are due to measurement error) to 1 (the difference in plan performance scores is attributable to real differences in performance).
  • Reward factor means a rating-specific factor added to the contract's summary or overall (or both) rating if a contract has both high and stable relative performance.
  • Statistical significance assesses how likely differences observed in performance are due to random chance alone under the assumption that plans are actually performing the same. Although not part of the proposed regulatory definition, we clarify that CMS uses statistical tests (for example, t-test) to determine if a contract's measure value is statistically different (greater than or less than depending on the test) from the national mean for that measure, or whether conversely, the observed differences from the national mean could have arisen by chance.
  • Surviving contract means the contact that will still exist under a consolidation, and all of the beneficiaries enrolled in the consumed contract(s) are moved to the surviving contracts.
  • Traditional rounding rules mean that the last digit in a value will be rounded. If rounding to a whole number, look at the digit in the first decimal place. If the digit in the first decimal place is 0, 1, 2, 3 or 4, then the value should be rounded down by deleting the digit in the first decimal place. If the digit in the first decimal place is 5 or greater, then the value should be rounded up by 1 and the digit in the first decimal place deleted.

We received no comments on the proposed definitions in paragraph (a) of §§ 422.162 and 423.182 and are therefore finalizing without modification.

e. Contract Ratings

Star Ratings and data reporting are at the contract level for most measures. Currently, data for measures are collected at the contract level including data from all plan benefit packages (PBPs) under the contract, except for the following Special Needs Plan (SNP)-specific measures which are collected at the PBP level: Care for Older Adults—Medication Review, Care for Older Adults—Functional Status Assessment, and Care for Older Adults—Pain Assessment. The SNP-specific measures are rolled up to the contract level by using an enrollment-weighted mean of the SNP PBP scores. Although we discussed and solicited comment on the feasibility and burden of collecting data at the PBP (plan) level and the reliability of ratings at the plan level, we proposed to continue the practice of calculating the Star Ratings at the contract level and that all PBPs under the contract would have the same overall and/or summary ratings at paragraph (b)(1) of §§ 422.162 and 423.182.

However, beneficiaries select a plan, rather than a contract, so we discussed in the proposed rule how we considered whether data should be collected and measures scored at the plan level. We have explored the feasibility of separately reporting quality data for individual D-SNP PBPs, instead of the current reporting level. For example, in order for CAHPS measures to be reliably scored, the number of respondents must be at least 11 people and reliability must be at least 0.60. In the proposed rule, we summarized our findings. Our current analyses show that, at the PBP level, CAHPS measures could be reliably reported for only about one-third of D-SNP PBPs due to sample size issues, and HEDIS measures could be reliably reported for only about one-quarter of D-SNP PBPs. If reporting were done at the plan level, a significant number of D-SNP plans will not be rated and in lieu of a Star Rating, Medicare Plan Finder will display that the plan is “too small to be rated.” However, when enough data are available, plan level quality reporting will reflect the quality of care provided to enrollees in that plan. Plan-level quality reporting will also give states that contract with D-SNPs plan-specific information on their performance and provide the public with data specific to the quality of care for dual eligible (DE) beneficiaries enrolled in these plans. For all plans as well as D-SNPs, reporting at the plan level will significantly increase plan burden for data reporting and will have to be balanced against the availability of additional clinical information available at the plan level. Plan-level ratings will also potentially increase the ratings of higher-performing plans when they are in contracts that have a mix of high and low performing plans. Similarly, plan-level ratings will also potentially decrease the ratings of lower-performing plans that are currently in contracts with a mix of high and low performing plans. Measurement reliability issues due to small sample sizes will also decrease our ability to measure true performance at the plan level and add complexities to the rating system. We solicited comments on balancing the improved precision associated with plan level reporting (relative to contract level reporting) with the negative consequences associated with an increase in the number of plans without adequate sample sizes for at least some measures; we asked for comments about this for D-SNPs and for all plans as we continue to consider whether rating at the plan level is feasible or appropriate. In particular, we solicited feedback on the best balance and whether changing the level at which ratings are calculated and reported better serves beneficiaries and our goals for the Star Ratings system.

We also indicated that we were exploring whether some measure data could be reported at a higher level (parent organization versus contract) to ease and simplify reporting while continuing to remain useful (for example, call center measures as we anticipate that parent organizations use a consolidated call center to serve all contracts and plans) for the Star Ratings. Further, we said we are exploring if contract market area reporting is feasible when a contract covers a large geographic area. For example, when HEDIS reporting began in 1997, there were contract-specific market areas that evolved into reporting by market area for five states with large Medicare populations.[36] We are planning to continue work in this area to determine the best reporting level for each measure that most accurately reflects performance and minimizes to the extent possible plan reporting burden. As we consider alternative reporting units, we solicited comments and suggestions about requiring reporting at different levels (for example, parent organization, contract, plan, or geographic area) by measure. In addition, section 50311(d) of the Bipartisan Budget Act of 2018 after publication of the proposed rule, amended section 1853 to require the Secretary to determine the feasibility of quality measurement at the plan level for all MA plans. CMS will use the feedback received from the proposed rule as we consider reporting options in the future and continue to evaluate this issue consistent with the Bipartisan Budget Act provision.

We proposed to continue calculating the same overall and/or summary Star Ratings for all PBPs offered under an MA-only, MA-PD, or PDP contract and Start Printed Page 16527to codify this policy in regulation text at §§ 422.162(b) and 423.182(b). We also proposed a cost plan regulation at § 417.472(k) to require cost contracts to be subject to the part 422 and part 423 Medicare Advantage and Part D Prescription Drug Program Quality Rating System. Specifically, we proposed, at paragraph (b)(1) that CMS will calculate overall and summary ratings at the contract level and proposed regulation text that cross-references other proposed regulations regarding the calculation of measure scoring and rating, and domain, summary and overall ratings. Further, we proposed to codify, at (b)(2) of each section, that data from all PBPs offered under a contract will continue to be used to calculate the ratings for the contract. For SNP specific measures collected at the PBP level, we proposed that the contract level score will be an enrollment-weighted mean of the PBP scores using enrollment in each PBP as reported as part of the measure specification, which is consistent with current practice. The proposed text is explicit that domain and measure ratings, other than the SNP-specific measures, are based on data from all PBPs under the contract.

We received the following comments related to our proposals, and our responses follow:

Comment: Most commenters opposed moving to plan-level reporting and expressed overwhelming support for retaining the current contact-level measurement. Commenters raised concerns about the additional complexity, administrative burden and reporting requirements of plan-level reporting. Additionally, commenters reiterated our concerns regarding the reliability of the scores at the plan level, as well as the inability to report some measure due to inadequate sample sizes. A commenter urged CMS to continue reporting Star Ratings at the contract level for PDPs.

Response: CMS appreciates commenters' support for contract-level reporting and acknowledge the complexities of moving to plan-level reporting given the challenges of accurately measuring quality with smaller groups and sample sizes and the additional administrative burden that would be placed on contracts.

Comment: A handful of commenters supported plan-level reporting also recognized it may not be practical for all quality measures. Some of the commenters noted the utility for beneficiaries who choose among plans. A commenter suggested CMS require Part D plans to report certain medication-related measures at the Formulary ID level.

Response: We agree that ideally for consumer choice, plan-level reporting or Formulary ID level reporting for Part D plans would be preferable, because it provides more detailed and targeted data. However, we need to consider the operational and methodological challenges of reporting at the plan level, including the ability to accurately measure performance at that level.

Comment: A commenter stated that plan-level reporting would be open to potential gaming by contracts constructing the plan-level geographic areas to maximize Star Ratings for the greatest number of enrollees. The commenter suggested that contracts would consider how well each plan was performing in the Star Ratings program to determine the geographic area of each plan.

Response: We appreciate this comment and will take it into account as we consider this issue in the future.

Comment: A commenter noted that plan-level reporting would stifle innovation and discourage plans from serving difficult areas. This would limit the ability of contracts to implement innovative models in one plan prior to expanding.

Response: We appreciate this comment since we clearly do not want our Star Ratings policies to stifle innovation. We will take this comment into consideration as we continue to consider options for different levels of reporting.

Comment: A handful of commenters expressed interest in measurement at the local health services area, including by state. Many of these commenters noted that it will be challenging to move to reporting at the local geographic area. Issues to be considered include how to handle contracts that serve major metropolitan areas that cross state lines. A couple of commenters suggested that CMS consider creating additional contract numbers or market-level designations for a contract. A commenter recommended that CMS discontinue the moratorium that does not allow for existing H numbers to be split to allow more meaningful measurement.

Response: CMS is committed to examining the feasibility of alternative levels of reporting, including by geographic area. The suggestions provided by commenters through the proposed rule will be taken into consideration as alternatives are explored. Additionally, section 50311(d) of the Bipartisan Budget Act of 2018 (P.L. 115-123) enacted after publication of the proposed rule, amended section 1853 to require the Secretary to determine the feasibility of quality measurement at the plan level for all MA plans. CMS plans to obtain additional feedback from stakeholders on this issue given the challenges of developing options that would be feasible for both the industry and CMS. CMS' contractor for the Star Ratings program is planning to convene a Technical Expert Panel following the publication of the final rule and this is one of the issues the panel will address. This panel will periodically meet to provide feedback on different critical Star Ratings issues. Information from the Technical Expert Panel will be publicly shared.

Comment: A commenter expressed concern about pursuing market area reporting as such reporting could result in limiting the health care options for higher-need populations.

Response: CMS appreciates this comment and does not want to limit options for higher-need populations. We will take the comment into consideration as we continue to consider options for different levels of reporting.

Comment: A handful of commenters recommended adjusting the Star Ratings to account for variables that contribute to underperformance in certain geographic areas, network characteristics and patient characteristics by applying, for example, the case-mix adjustment process currently used for the CAHPS measures.

Response: CMS appreciates this comment and will take it into account as we continue to consider options for different levels of reporting. As we contemplate case-mix adjustment, we need to ensure that we are not adjusting away true differences in the quality of care across contracts in different geographic areas or with different network structures.

Comment: A commenter raised concerns of the possibility for gaming in connection with separate ratings for new contracts. If CMS is to proceed, the commenter would like to see simulations of the ratings.

Response: CMS appreciates this comment and clearly does not want to implement changes that would encourage gaming of the Star Ratings system. We will take this comment into consideration as we continue to analyze different ways to rate contracts.

Comment: A commenter raised a question about a potential error on page 82 FR 56380 in the sentence that reads “For SNP specific measures collected at the PBP level, we propose that the contract level score would be an enrollment-weighted mean of the PBP Start Printed Page 16528scores using enrollment in each PBP as reported as part of the measure specification, which is consistent with current practice.” The commenter noted that the current practice weights the PBP scores by eligible population.

Response: The text from the proposed rule is correct. The eligible population and the enrollment reported as part of the measure specification are the same.

Comment: A handful of commenters from sponsoring organizations suggested separate reporting by Dual SNPs and non-Dual SNPs, and rolling up all Dual SNP PBPs and non-Dual SNP PBPs separately within a contract. A couple of commenters noted that moving to plan level reporting for all SNPs is complex with many pros and cons so they recommended that CMS continue contract-level reporting until all of the consequences can be fully evaluated.

Response: CMS appreciates these comments, including the issues raised by commenters regarding the complexities of moving to plan/PBP-level reporting by SNPs and non-SNPs. Given that some contracts just have SNP PBPs and other contracts offer both SNP and non-SNP plans, CMS needs to evaluate how this would impact reporting of measures and calculations. We agree that all of the benefits and disadvantages need to be weighed before a final decision is made about how to proceed and CMS is committed to continuing to obtain feedback from the industry on changes to the level of reporting. CMS continues to evaluate this issue. Additionally, in light of the passage of the Bipartisan Budget Act of 2018, CMS is required to examine the feasibility of plan-level reporting for both SNP and non-SNP plans. Any related changes would be proposed through future rulemaking.

Comment: A couple of commenters supported the idea of reporting the call center and appeals measures at the parent organization level since in most cases these functions are organized at the parent organization level, while a couple of commenters did not like having different levels of reporting for different measures, arguing that it would create more complexity in the Star Rating program.

Response: CMS appreciates the suggestions received from commenters and will continue to look at the advantages of moving to a different level of reporting for these and other measures. Any related changes would be proposed through future rulemaking.

Comment: A commenter supports CMS' current process for rolling up SNP plan-benefit package level information to the contract level.

Response: CMS thanks this commenter for their support for our current policy of calculating SNP measures.

Comment: A handful of commenters recommended that CMS not make any changes in the unit for reporting until additional analyses are completed that ensures that any changes are fair and equitable to all sponsors. A commenter suggests an industry-wide workgroup to discuss potential changes to reporting levels and operational challenges.

Response: We acknowledge these comments and agree that we need to do more analysis and obtain additional feedback from sponsors before we make any changes in the level of reporting. We support the desire to make sure that any changes are fair and equitable to all sponsoring organizations. As noted in a previous response, CMS' contractor for the Star Ratings program is planning to convene a Technical Expert Panel following the publication of the final rule and this is one of the issues the panel will address.

For the reasons indicated in the proposed rule and our responses to the related comments, we are finalizing the provisions as proposed in paragraphs (b)(1) and (2) of §§ 422.162 and 423.182 and § 417.472(k) without substantive modification. However, we realized that paragraphs (b)(1) as proposed did not specify that summary ratings also include the reward factor and the Categorical Adjustment Index as described in §§ 422.166(f) and 423.186(f); we are finalizing additional text to clarify that in paragraphs (b)(1). In addition, we are slightly revising the last two sentences of paragraphs (b)(2) of the same regulation sections to clarify that the rule for including plan-level only measures is applicable to the SNP-specific measures that are reported only at the plan level.

f. Contract Consolidations

We proposed a change in how contract-level Star Ratings are assigned in the case of contract consolidations. We noted in the proposed rule how we have historically permitted MAOs and Part D sponsors to consolidate contracts when a contract novation occurs to better align business practices. As noted in MedPAC's March 2016 Report to Congress (http://www.medpac.gov/​docs/​default-source/​reports/​march-2016-report-to-the-congress-medicare-payment-policy.pdf), there has been a continued increase in the number of enrollees being moved from lower Star Rating contracts that do not receive a QBP to higher Star Rating contracts that do receive a QBP as part of contract consolidations, which increases the size of the QBPs that are made to MAOs due to the large enrollment increase in the higher rated, surviving contract. We are worried that this practice results in masking low quality plans under higher rated surviving contracts. This does not provide beneficiaries with accurate and reliable information for enrollment decisions, and it does not truly reward higher quality contracts. We proposed to modify the calculation of Star Ratings for surviving contracts that have consolidated to address these concerns. Instead of assigning the surviving contract the Star Rating that the contract would have earned without regard to whether a consolidation took place, we proposed to assign and display on MPF Star Ratings based on the enrollment-weighted mean of the measure scores of the surviving and consumed contract(s) so that the ratings reflect the performance of all contracts (surviving and consumed) involved in the consolidation. Under our proposal, the calculation of the measure, domain, summary, and overall ratings will be based on these enrollment-weighted mean scores. We estimated that the number of contracts impacted by the proposal would be small relative to all contracts that qualify for QBPs. During the period from 1/1/2015 through 1/1/2017 annual consolidations for MA contracts ranged from a low of 7 in 2015 to a high of 19 in 2016 out of approximately 500 MA contracts. As proposed in §§ 422.162(b)(3)(i)-(iii) and 423.182(b)(3)(i)-(iii), CMS will use enrollment-weighted means of the measure scores of the consumed and surviving contracts to calculate ratings for the first and second plan years following the contract consolidations. We believe that use of enrollment-weighted means will provide a more accurate snapshot of the performance of the underlying plans in the new consolidated contract, such that both information to beneficiaries and QBPs are not somehow inaccurate or misleading. We also proposed, however, that the process of weighting the enrollment of each contract and applying this general rule will vary depending on the specific types of measures involved in order to take into account the measurement period and data collection processes of certain measures. Our proposal was to treat ratings for determining Quality Bonus Payment (QBP) status for MA contracts differently than displayed Star Ratings for the first year following the consolidation for consolidations that involve the same parent organization and plans of the same plan type.Start Printed Page 16529

We proposed to codify our new policy at §§ 422.162(b)(3) and 423.182(b)(3). First, we proposed generally, at paragraph (b)(3)(i) of each regulation, that CMS will assign Star Ratings for consolidated contracts using the provisions of paragraph (b)(3). We proposed in § 422.162(b)(3) both a specific rule to address the QBP rating for the first year after the consolidation and a rule for subsequent years. As Part D plan sponsors are not eligible for QBPs, § 423.182(b)(3) was proposed without the QBP aspect. We proposed in § 422.162(b)(3)(iv) and § 423.182(b)(3)(ii) the process for assigning Star Ratings for posting on the Medicare Plan Finder for the first 2 years following the consolidation.

For the first contract year following a consolidation, we proposed to use the enrollment-weighted means as calculated below to set Star Ratings for MPF publication:

  • The Star Ratings measure scores for the consolidated entity's first plan year will be based on enrollment-weighted measure scores using the July enrollment of the measurement period of the consumed and surviving contracts for all measures, except the survey-based and call center measures.
  • The survey-based measures (that is, CAHPS, HOS, and HEDIS measures collected through CAHPS or HOS surveys) will use enrollment of the surviving and consumed contracts at the time the sample is pulled for the rating year. For example, for a contract consolidation that is effective January 1, 2021 the CAHPS sample for the 2021 Star Ratings will be pulled in January 2020 so enrollment in January 2020 will be used. The call center measures will use mean enrollment during the study period. We stated that we believed that these proposals for survey-based measures are more nuanced and account for how the data underlying those measures are gathered and that the enrollment-weighted means better reflect the true underlying performance of both the surviving and consumed contracts.

For the second year following the consolidation, for all MA and Part D Sponsors, we proposed to calculate the Star Ratings will be calculated as follows:

  • The enrollment-weighted measure scores using the July enrollment of the measurement period of the consumed and surviving contracts will be used for all measures except HEDIS, CAHPS, and HOS.
  • We proposed that HEDIS and HOS measure data will be used as reported in the second year after consolidation. The current reporting requirements for HEDIS and HOS already combine data from the surviving and consumed contract(s) following the consolidation, so we did not propose any modification or averaging of these measure scores. For example, for HEDIS if an organization consolidates one or more contracts during the change over from measurement to reporting year, then only the surviving contract is required to report audited summary contract-level data but it must include data on all members from all contracts involved.
  • We proposed to require that the CAHPS survey sample (that would be selected following the consolidation) would include enrollees in the sample universe from which the sample is drawn from both the surviving and consumed contracts. If there are two contracts (that is, Contract A is the surviving contract and Contract B is the consumed contract) that consolidate, and Contract A has 5,000 enrollees eligible for the survey and Contract B has 1,000 eligible for the survey, the universe from which the sample will be selected will be 6,000.

CMS proposed that these rules would be used to calculate the measure scores in the first and second year after consolidation; following those two years, CMS proposed to use the other rules proposed in §§ 422.166 and 423.186 to calculate the measure, domain, summary, and overall Star Ratings for the consolidated contract. In the third year after consolidation and subsequent years, the performance period for all the measures will be after the consolidation, so our proposal limited the special rules for calculating post-consolidation the Star Ratings to the Ratings issued the first 2 years after consolidation.

When consolidations involve two or more contracts for health and/or drug services of the same plan type under the same parent organization combining into a single contract at the start of a contract year, we proposed to calculate the QBP rating for that first year following the consolidation using the enrollment-weighted mean, using traditional rounding rules, of what would have been the QBP ratings of the surviving and consumed contracts using the contract enrollment in November of the year the Star Ratings were released. In November of each year following the release of the ratings on Medicare Plan Finder, the preliminary QBP ratings are displayed in the Health Plan Management System (HPMS) for the year following the Star Ratings year. For example, if the first year the consolidated entity is in operation is plan year 2020, the 2020 QBP rating displayed in HPMS in November 2018 will be based on the 2019 Star Ratings (which are released in October 2018) and calculated using the weighted mean of the November 2018 enrollment of the surviving and consumed contracts. Because the same parent organization is involved in these situations, we believe that many administrative processes and procedures are identical in the Medicare health plans offered by the sponsoring organization, and using a weighted mean of what will have been their QBP ratings accurately reflects their performance for payment purposes. In subsequent years after the first year following the consolidation, QBPs status will be determined based on the consolidated entity's Star Rating posted on MPF. Under our proposal, the measure, domain, summary, and (in the case of MA-PD plans) the overall Star Ratings posted on Medicare Plan Finder for the second year following consolidation would be based on the enrollment-weighted measure scores so would include data from all contracts involved. Consequently, we stated that we believed the ratings used for QBP status determinations would reflect the care provided by both the surviving and consumed contracts.

In conclusion, we proposed a new set of rules regarding the calculation of Star Ratings for consolidated contracts to be codified at paragraphs (b)(3) of §§ 422.162 and 423.182. We solicited comment on this proposal and whether our separate treatment of different measure types during the first and second year adequately addresses the differences in how data are collected (and submitted) for those measures during the different periods. We also solicited feedback on whether sponsoring organizations believe that the special rule for consolidations involving the same parent organization and same plan types adequately addresses how those situations are different from cases where an MA organization buys or sells a plan or contract from or to a different entity and whether these rules should be extended to situations where there are different parent organizations involved. For commenters that support the latter, we also requested comment on how CMS should determine that the same administrative processes are used and whether attestations from sponsoring organizations or evidence from prior audits should be required to support such determinations.

Following publication of our proposed rule, Congress enacted the Bipartisan Budget Act of 2018. Section 53112 of the Act amended section 1853(o) to require an adjustment to the Star Ratings, quality bonus under Start Printed Page 16530section 1853(o) and rebate allocation under section 1854 based on the quality rating to “prevent the artificial inflation” of Star Ratings after consolidation. That required adjustment applies for consolidations approved on or after January 1, 2019. The statutory change requires the adjustment be applied when a single MA organization consolidates contracts and reflect an enrollment-weighted average of scores or ratings for the underlying contracts. We believe that our proposal is generally consistent with the new statutory requirement, with minor exceptions. The proposal would not have applied until a later period, but, as noted in section II.A.11.c of this final rule, we will finalize these provisions to be applicable beginning with the 2020 QBPs and 2020 Star Ratings produced in fall 2019 to be consistent with the statute. Our proposal was for consolidations involving a single parent organization while the statute focused on consolidations involving a single MA organization; applying the proposed policy to consolidations at the level of the parent organization instead of the specific MA organization captures more consolidations. We read the Bipartisan Budget Act as setting a floor rather than a ceiling on our authority to establish and set the rules governing the Stars Rating system. In addition, our proposal also was more specific as to how enrollment-weighted ratings at the measure and contract level would be used following the consolidation. We believe the additional detail in our proposal is explicitly authorized as the statutory change leaves it to the Secretary to identify the specific appropriate adjustments.

We received the following comments on our proposals and solicitations for feedback, and our responses follow:

Comment: Commenters expressed overwhelming support for our rules outlined at §§ 422.162(b)(3) and 423.182(b)(3) to calculate contract-level Star Ratings in the case of contract consolidations. Commenters stated that this would be a more accurate picture of the performance of the underlying contracts. Commenters noted that this would help eliminate the gaming that can occur when consolidations of multiple contracts in distinct geographic areas result in artificial increases the Star Ratings and Quality Bonus Payment (QBP) ratings. A number of commenters suggested that this approach was fair and equitable to all stakeholders. Some commenters supported this change as a short-term solution, but they wanted CMS to consider how in the future the ratings could more accurately reflect the care provided at the local market area. Commenters recognized that quality reporting at the local market area is a sizeable change and would not be feasible for a number of years.

Response: CMS appreciates the commenters' support for revising how Star Ratings and QBP ratings are calculated when two or more contracts consolidate. We believe that the Bipartisan Budget Act indicates that Congress is similarly concerned about these issues and our proposal to address them. We also agree with commenters that local market area reporting would be preferable in cases when the contracts are geographically dispersed. Although moving to local market area reporting has many challenges, CMS is committed to work with stakeholders to examine the feasibility of local market area reporting. Any potential changes that would change the consolidation policy in the direction of local market area reporting would be proposed in future rulemaking.

Comment: A commenter recommended that CMS issue contract numbers at the state level and then base Star Ratings at the state level to avoid consolidations across disperse geographic areas.

Response: State-based contract numbers would be administratively burdensome for both contracts and CMS, would significantly increase reporting burden of contracts, and would create measurement challenges since many contracts at the state level will not have a sufficient number of enrollees by state to calculate reliably the quality measures that are part of the Part C and D Star Ratings program. Contracts that serve disperse geographic areas often have the majority of their enrollees in one or two states with smaller enrollment in other states.

Comment: A commenter suggested using the unrounded final summary mean rather than the rounded final Star Rating.

Response: CMS is assuming this commenter is referring to the QBP rating for the first year of the consolidation. For all other years, the QBP rating of the contract would be based on the Star Ratings posted on Medicare Plan Finder; therefore for the second year following a consolidation, the same rules for calculating the Star Ratings for QBP and for MPF posting would apply (that is, §§ 422.162(b)(3)(iii)). The preliminary QBP rating is produced and posted in HPMS in November of each year for the bids that will be submitted the following year. The QBP appeals process is based on these ratings posted in November. In April prior to the bids being due, CMS would update the QBP rating using an enrollment-weighted QBP ratings of all contracts involved in the consolidation which are already rounded.

Comment: A commenter asked CMS to consider a grace period that would neither reward nor disadvantage the surviving contract as a result of acquiring a poor performing contract.

Response: Under our current policy, a sponsor can gain financially by consolidating enrollees from a poor-performing contract into a contract that receives a QBP and thereby receive bonus payments that it would not have been entitled to receive had the consolidation not occurred. The revised methodology for calculating Star Ratings and QBPs for the surviving contract takes into consideration the performance of all contracts involved; thus, it is a more accurate measure of performance. We do not believe that a more accurate reflection of performance can be fairly termed a “reward” or a “disadvantage” of contract consolidation.

Comment: A handful of commenters expressed concern regarding the consolidation policy stating that they thought the calculations were too complex. A commenter stated it would limit the beneficiary options to enroll in plans with richer benefits since there would not be the same incentives to consolidate lower performing contracts into higher performing ones receiving QBPs.

Response: Most of the calculations for the revised consolidation policy will be handled by CMS, though contracts will have an opportunity to review the calculations as part of the normal Star Rating review process. The consolidation policy should not make it more difficult for contracts to produce the data that are needed for the Star Ratings program. The premise behind all of the calculations is to combine the already gathered (or currently gathered) data from all contracts involved in the consolidation using an enrollment-weighted average. This policy should not create a situation which limits options for beneficiaries to enroll in plans with richer benefits. As always, beneficiaries may is able to choose in their service area any plan that best meets their needs. If a beneficiary decides to remain in a contract that consolidates, the ratings for that contract will now more accurately reflect performance of that contract.

Comment: A commenter suggested that CMS post by year end in HPMS a worksheet with the exact enrollment and overall Star Rating values which CMS intends to use for determining QBP ratings for consolidated contracts.Start Printed Page 16531

Response: In November of each year, CMS posts in HPMS the preliminary QBP ratings for the bids that will be submitted the following year. This starts the QBP appeals process. In April of each year prior to bids being submitted, CMS posts in HPMS the final QBP rating following the appeals process. In November of each year or at year end, CMS would not be aware of future consolidations that would be announced near the time of the bid so would be unable to post a combined rating for the consolidated contracts at this time. As long as CMS is aware of the consolidation by April at the time of the HPMS posting, the combined rating for the consolidated contracts would be posted at that time. A parent organization would have sufficient information to calculate the enrollment weighted QBP rating of a consolidated contract using the preliminary QBP ratings posted in HPMS in November of each year.

Comment: A handful of commenters requested that CMS clarify the timing of this provision. These commenters expressed a preference for it not to begin until the 2021 Star Ratings and 2022 QBPs.

Response: The proposed rule stated that all of the changes related to Star Ratings would go into effect for performance periods in 2019 (thus, for the 2021 Star Ratings and 2022 QBPs). However, in light of the passage of the Bipartisan Budget Act provision which requires enrollment-weighted adjustments to the Star Ratings for contract consolidations approved on or after 1/1/19, we are finalizing the regulation text on this policy to be applicable to consolidations that occur on or after the same date. The final regulations at §§ 422.162(b)(3) and 423.182(b)(3) will apply to the star ratings of surviving contracts from contract consolidations that are approved on or after January 1, 2019. Thus, the policy will be implemented for the 2020 Star Ratings and the 2020 QBPs. We note that while the statute is specific to MA ratings, we are finalizing the same policy for Part D Ratings on the same timeframe to have consistent methodology across Part C and D for beneficiaries choosing a contract.

Comment: A few commenters were interested in a similar policy for consolidations between different parent organizations.

Response: We treat the purchase of a contract, multiple contracts or all of the contracts offered by a parent organization by different parent organization is known as a novation, not a consolidation, even though the consolidation will generally also require similar contract documents and approvals from CMS. Where one entity is buying all or part of the business of another entity, we did not propose and do not intend to apply the consolidation policy finalized in this rule. In novations, the structure of each of the individual contracts being purchased does not change and the contracts still provide the same services within the same service area before and after the novation is completed, only the company that owns the business and is the MA organization under the contract has changed. The Star Rating for each individual contract transfers with the contract and remains intact until the next rating cycle. Novations can occur at any point during the calendar year.

A consolidation by contrast is when two or more contracts owned by the same parent organization are combined into a single contract. The overall service area of the two contracts are combined, the contract number of the consumed contract(s) is retired and the contract number of the surviving contract now provides all of the services in the combined service area. To consolidate contracts, all of the contracts must be owned by the same parent organization. Consolidations can only occur at the change from one year to another year and must be submitted and approved by CMS by a specific deadline in the annual contracting process. If one parent organization buys another contract owned by a different parent organization, the sponsor could consolidate multiple contracts using the rules outlined in this rule the year after the novation takes place. With a consolidation, the rule finalized here for the calculation of the Star Rating of the surviving contract would apply.

Comment: A commenter wanted CMS to propose other alternatives and offer additional opportunities to comment, but no additional detail was provided on suggested alternatives.

Response: CMS appreciates the request for other alternatives. Commenters to the proposed rule did not suggest other ways to handle contracts that consolidate and expressed overwhelming support for this policy. CMS will continue to consider if there is a better way to account for differences in performance across geographic areas and will provide opportunities to engage stakeholders and obtain additional input.

For the reasons set forth in the proposed rule and our responses to the related comments summarized earlier, we are finalizing the provisions as proposed at §§ 422.162(b)(3) and 423.182(b)(3), except for modifying the timeframe applying these new rules. The revised consolidation policy would be applicable for the Rating for any surviving contract after a consolidation that is approved on or after January 1, 2019. Although the statute related to consolidations is specific to MA ratings, we are finalizing the same policy for Part D ratings on the same timeframe to have consistent methodology across Part C and D for beneficiaries choosing a contract.

g. Data Sources

Under 1852(e) of the Act, MA organizations are required to collect, analyze, and report data that permit measurement of health outcomes and other indices of quality. The Star Ratings system is based on information collected consistent with section 1852(e) of the Act. Section 1852(e)(3)(B) of the Act prohibits the collection of data on quality, outcomes, and beneficiary satisfaction other than the types of data that were collected by the Secretary as of November 1, 2003; there is a limited exception for SNPs to collect, analyze, and report data that permit the measurement of health outcomes and other indicia of quality. The statute does not require that only the same data be collected, but that we do not change or expand the type of data collected until after submission of a Report to Congress (prepared in consultation with MA organizations and accrediting bodies) that explains the reason for the change(s). We clarify here that the types of data included under the Star Ratings system are consistent with the types of data collected as of November 1, 2003. Since 1997, Medicare managed care organizations have been required to annually report quality of care performance measures through HEDIS. We have also been conducting the CAHPS survey since 1997 to measure beneficiaries' experiences with their health plans. HOS began in 1998 to capture changes in the physical and mental health of MA enrollees. To some extent, these surveys have been revised and updated over time, but the same types of data—clinical measures, beneficiary experiences, and changes in physical and mental health, respectively—have remained the focus of these surveys. In addition, there are several measures in the Stars Ratings System that are based on performance that address telephone customer service, members' complaints, disenrollment rates, and appeals; however these additional measures are not collected directly from the sponsoring organizations for the primary purpose of quality measurement so they are not information collections governed by Start Printed Page 16532section 1852(e). These additional measures are calculated from information that CMS has gathered as part of the administration of the Medicare program, such as information on appeals forwarded to the Independent Review Entity under subparts M, enrollment, and compliance and enforcement actions.

The Part D program was implemented in 2006, and while there is no parallel provision regarding applicable Part D sources of data, we have used similar datasets, for example CAHPS survey data, for beneficiaries' experiences with prescription drug plans. Section 1860D-4(d) of the Act specifically directs the administration and collection of data from consumer surveys in a manner similar to those conducted in the MA program. All of these measures reflect structure, process, and outcome indices of quality that form the measurement set under Star Ratings. Since 2007, we have publicly reported a number of measures related to the drug benefit as part of the Star Ratings. For MA organizations that offer prescription drug coverage, we use the same Part D measures focusing on administration of the drug benefit as is used for stand-alone PDPs. Similar to MA measures of quality relative to health services, the Part D measures focus on customer service and beneficiary experiences, effectiveness, and access to care relative to the drug benefit. We believe that the Part D Star Ratings are consistent with the limitation expressed in section 1852(e) of the Act even though the limitation does not apply to our collection of Part D quality data from Part D sponsors.

We intend to continue to base the types of information collected in the Part C Star Ratings on section 1852(e) of the Act, and we proposed at § 422.162(c)(1) that the type of data used for Star Ratings will be data consistent with the section 1852(e) limits and data gathered from CMS administration of the MA program. In addition, we proposed in § 422.162(c)(1) and in § 423.182(c)(1) to include measures that reflect structure, process, and outcome indices of quality, including Part C measures that reflect the clinical care provided, beneficiary experience, changes in physical and mental health, and benefit administration, and Part D measures that reflect beneficiary experiences and benefit administration. The measures encompass data submitted directly by MA organizations (MAOs) and Part D sponsors to CMS, surveys of MA and Part D enrollees, data collected by CMS contractors, and CMS administrative data. We also proposed, primarily so that the regulation text is complete on this point, a regulatory provision at §§ 422.162(c)(2) and 423.182(c)(2) that requires MA organizations and Part D plan sponsors to submit unbiased, accurate, and complete quality data as described in paragraph (c)(1) of each section. Our authority to collect quality data is clear under the statute and existing regulations, such as section 1852(e)(3)(A) and 1860D-4(d) and §§ 422.12(b)(2) and 423.156. We proposed the paragraph (c)(2) regulation text to ensure that the quality ratings system regulations include a regulation on this point for readers and to avoid confusion in the future about the authority to collect this data. In addition, it is important that the data underlying the ratings are unbiased, accurate, and complete so that the ratings themselves are reliable. This regulation text will clearly establish the sponsoring organization's responsibility to submit data that can be reliably used to calculate ratings and measure plan performance.

We received the following comments on this proposal, and our responses follow:

Comment: A few commenters supported codifying language to clearly establish the sponsoring organization's responsibility to submit data that can be reliably used to calculate ratings and measure plan performance.

Response: CMS appreciates stakeholders' support of our effort to codify language to ensure that that the data submitted are accurate and reliable. We are finalizing the language as proposed.

Comment: Responses were mixed on whether audit data should be used in the Star Ratings. A couple of commenters opposed including measures in the Star Ratings program that rely on audit findings as a data source. Other commenters stated given the Beneficiary Access and Performance Problems measure that previously included enforcement actions was moved out of the 2019 Star Ratings and to the display page, they strongly urged CMS to re-incorporate audit information, including information about enforcement actions, in Star Ratings. Those in favor of using audit information noted that the key purposes of Quality Rating System are to provide comparative information to Medicare beneficiaries, to base payment on quality, and to oversee the overall performance of plans. These commenters opposed CMS removal of audit findings and enforcement actions from the Star Ratings since deficiencies, in particular repeat deficiencies, may impact beneficiary access to drugs and services and the Star Ratings will not reflect these issues.

Response: We appreciate the commenters' feedback and concerns received on the use of audits, compliance actions, and enforcement actions in the Star Ratings. In the proposed rule, the Beneficiary Access and Performance Problems measure was not proposed for the 2021 Star Ratings even though some stakeholders strongly support including some recognition in the Star Ratings program when serious or repeat deficiencies are uncovered in audits or other means. These stakeholders argue that such deficiencies directly impact beneficiary access to needed services and drugs and therefore should be part of the Star Ratings program. We will continue to consider the comments as we continue our dialogue with stakeholders on this issue and any future changes will be proposed in future rulemaking.

For the reasons set forth in the proposed rule and our responses to the related comments, we are finalizing the provisions regarding the data sources for measures and ratings as proposed in §§ 422.162(c) and 423.182(c) with two modifications. In § 422.162(c)(1), we are finalizing additional text to clarify that CMS administrative data will be used in the scoring for measures; the new text aligns the Part C regulation with the parallel Part D regulation. As noted in the proposed rule (82 FR 56382), some measures are based on data that CMS (or a contractor) has related to performance by sponsoring organizations and we are including a reference to CMS administrative data consistent with that longstanding policy. In addition, in § 423.182(c)(2), we are finalizing additional text to clarify that the reported data permit measurement of health outcomes and other indices of quality, consistent with the scope of the measures in the Star Ratings program.

h. Adding, Updating, and Removing Measures

We are committed to continuing to improve the Part C and D Star Ratings system by focusing on improving clinical and other outcomes. We anticipate that new measures will be developed and that existing measures will be updated over time. NCQA and the Pharmacy Quality Alliance (PQA) continually work to update measures as clinical guidelines change and develop new measures focused on health and drug plans. To address these anticipated changes, we proposed in §§ 422.164 and 423.184 specific rules to govern the addition, update, and removal of measures. We also proposed to apply these rules to the measure set proposed Start Printed Page 16533in this rulemaking, to the extent that there are changes to the measure set between the effective date of this final rule and the Star Ratings based on this final rule (that is the ratings based on the performance periods beginning on or after January 1, 2019).

As discussed in more detail in the following paragraphs, we proposed the following general rules to govern adding, updating, and removing measures:

  • For data quality issues identified during the calculation of the Star Ratings for a given year, we proposed to continue our current practice of removing the measure from the Star Ratings.
  • That new measures and substantive updates to existing measures would be added to the Star Ratings system based on future rulemaking but that prior to such a rulemaking, CMS would announce new measures and substantive updates to existing measures and solicit feedback using the process described for changes in and adoption of payment and risk adjustment policies in section 1853(b) of the Act (that is the Call Letter attachment to the Advance Notice and Rate Announcement).
  • That existing measures (currently existing or existing after a future rulemaking) used for Star Ratings would be updated (without rulemaking) with regular updates from the measure stewards through the process described for changes in and adoption of payment and risk adjustment policies in section 1853(b) of the Act when the changes are not substantive.
  • That existing measures (currently existing or existing after a future rulemaking) used for Star Ratings would be removed from use in the Star Ratings when there has been a change in clinical guidelines associated with the measure or reliability issues identified in advance of the measurement period; CMS would announce the removal using the process described for changes in and adoption of payment and risk adjustment policies in section 1853(b) of the Act. Removal might be permanent or temporary, depending on the basis for the removal.

We proposed specific rules for updating and removal that would be implemented through subregulatory action, so that rulemaking would not be necessary for certain updates or removals. CMS proposed to announce application of the regulation standards in the Call Letter attachment to the Advance Notice and Rate Announcement process issued under section 1853(b) of the Act.

First, we proposed to codify, at §§ 422.164(a) and 423.184(a), regulation text stating the general rule that CMS would add, update, and remove measures used to calculate Star Ratings as provided in §§ 422.164 and 423.184. In each paragraph regarding addition, updating, and removal of measures and the use of improvement measures, we also proposed to make certain of these changes without future rulemaking by applying the standards and authority in the regulation text. CMS proposed to solicit feedback of its application of such rules using the draft and final Call Letter each year. In addition, CMS proposed in paragraph (a) of each section to issue a complete list of the measure set for each year in the Technical Notes or similar guidance document.

Second, we proposed, in paragraph (b) of these sections, that CMS would review the quality of the data on which performance, scoring, and rating of measures is done each year. We proposed to continue our current practice of reviewing data quality across all measures, variation among organizations and sponsors, and measures' accuracy, reliability, and validity before making a final determination about inclusion of measures in the Star Ratings. We explained that this rule was designed to ensure that Star Ratings measures accurately measure true plan performance. If a systemic data quality issue is identified during the calculation of the Star Ratings, paragraph (b) would authorize CMS to remove the measure from that year's rating.

Third, we proposed to address the addition of new measures in paragraph (c).

In the proposed rule, we explained that our proposal regarding the addition of measures was guided by the principles we reiterated in this final rule in section II.A.11.b. Measures should be aligned with best practices among payers and the needs of the end users, including beneficiaries. Our strategy is to continue to adopt measures when they are available, that are nationally endorsed, and in alignment with the private sector, as we do today through the use of measures developed by NCQA and the PQA, and the use of measures that are endorsed by the National Quality Forum (NQF). We proposed to codify that CMS would continue to review measures of this type for adoption at §§ 422.164(c)(1) and 423.184(c)(1). We do not intend this standard to require that a measure be adopted by an independent measure steward or endorsed by NQF in order for us to propose its use for the Star Ratings, but that these are considerations that will guide us as we develop such proposals. We also proposed that CMS would develop its own measures as well when appropriate to measure and reflect performance in the Medicare program. For the 2021 Star Ratings, we proposed to have measures that encompass outcome, intermediate outcome, patient/consumer experience, access, process, and improvement measures. It is important to have a mix of different types of measures in the Star Ratings program to understand how all of the different facets of the provision of health and drug services interact. For example, process measures are evidence-based best practices that lead to clinical outcomes of interest. Process measures are generally easier to collect, while outcome measures are sometimes more challenging requiring in some cases medical record review and more sophisticated risk-adjustment methodologies.

Over time new measures would be added and measures would be removed from the Star Ratings program to meet our policy goals. As new measures are added, we noted in the proposed rule that our general guidelines for deciding whether to propose new measures through future rulemaking would use the following criteria:

  • Importance: The extent to which the measure is important to making significant gains in health care processes and experiences, access to services and prescription medications, and improving health outcomes for MA and Part D enrollees.
  • Performance Gap: The extent to which the measure demonstrates opportunities for performance improvement based on variation in current health and drug plan performance.
  • Reliability and Validity: The extent to which the measure produces consistent (reliable) and credible (valid) results.
  • Feasibility: The extent to which the data related to the measure are readily available or could be captured without undue burden and could be implemented by the majority of MA and Part D contracts.
  • Alignment: The extent to which the measure or measure concept is included in one or more existing federal, State, and/or private sector quality reporting programs.

As explained in the proposed rule, CMS would balance these criteria as part of our decision-making process so that each new measure proposed for addition to the Star Ratings meets each criteria in some fashion or to some extent. We intend to apply these criteria Start Printed Page 16534to identify and adopt new measures for the Star Ratings, which would be done through future rulemaking and include explanations for how and why we propose to add new measures. We also proposed to follow the process in our proposed paragraphs (c)(2) through (4) of §§ 422.164 and 423.184 when a new measure has been identified for inclusion in the Star Ratings. We proposed to initially solicit feedback on any potential new measures through the Call Letter and to codify that as a requirement at paragraph (c)(2) of each section.

As new performance measures are developed and adopted, we proposed, at §§ 422.164(c)(3) and (4) and 423.184(c)(3) and (4), that they would initially be incorporated into the display page for at least 2 years but that we would keep a new measure on the display page for a longer period if CMS finds there are reliability or validity issues with the measure. As noted in the Introduction, the rulemaking process creates a longer lead time for changes, in particular to add a new measure to the Star Ratings or to make substantive changes to measures as discussed later in this section. Here is an example timeline for adding a new measure to the Star Ratings. In this scenario, the new measure has already been developed by the NCQA and the PQA, and endorsed by the NQF. Otherwise, that process may add an extra 3 to 5 years to the timeline.

  • January 2019: Solicit feedback in the draft 2020 Call Letter on whether to add the new measure.
  • April 2019: Summarize feedback in the 2020 Call Letter on adding the new measure.
  • 2020/2021: Propose adding the new measure to the 2024 Star Ratings (2022 measurement period) in a proposed rule; finalize through rulemaking (for 1/1/2022 effective date).
  • 2020: Performance period and collection of data for the new measure and collection of data for posting on the 2022 display page.
  • 2021: Performance period and collection of data for the new measure and collection of data for posting on the 2023 display page.
  • Fall 2021: Publish new measure on the 2022 display page (2020 measurement period).
  • January 1, 2022: Applicability date of new measure for Star Ratings.
  • 2022: Performance period and collection of data for the new measure and collection of data for inclusion in the 2024 Star Ratings.
  • Fall 2022: Publish new measure on the 2023 display page (2021 measurement period).
  • Fall 2023: Publish new measure in the 2024 Star Ratings (2022 measurement period).
  • 2025: QBP status and rebate retention allowances are determined for the 2025 payment year.

Fourth, at §§ 422.164(d) and 423.184(d) we proposed to address updates to measures based on whether an update is substantive or non-substantive. Since quality measures are routinely updated (for example, when clinical codes are updated), we proposed to adopt rules for the incorporation of non-substantive updates to measures that are part of the Star Ratings system without going through new rulemaking. As proposed in paragraphs (d)(1) of §§ 422.164 and 423.184, we would only incorporate updates without rulemaking for measure specification changes that do not substantively change the nature of the measure.

Substantive changes (for example, major changes to methodology or specifications) to existing measures would be proposed and finalized through rulemaking. In paragraphs (d)(2) of §§ 422.164 and 423.184, we proposed to initially solicit feedback on whether to make the substantive measure update through the Call Letter prior to the measurement period for which the update would be initially applicable. For example, if the change announced significantly expands the denominator or population covered by the measure (for example, the age group included in the measures is expanded), the measure would be moved to the display page for at least 2 years and proposed through rulemaking for inclusion in Star Ratings. We noted in our proposal that this process for substantive updates would be similar to the process proposed for adopting new measures under proposed paragraph (c). As appropriate, the legacy measure may remain in the Star Ratings while the updated measure is on the display page if, for example, the updated measure expands the population covered in the measure and the legacy measure remains relevant and measures a critical topic for the Star Ratings. Adding the substantively updated measure to the Star Ratings would be proposed through rulemaking.

We proposed to adopt rules to incorporate specification updates that are non-substantive in paragraph (d)(1). Non-substantive updates that occur (or are announced by the measure steward) during or in advance of the measurement period would be incorporated into the measure and announced using the Call Letter. We proposed to use such updated measures to calculate and assign Star Ratings without the updated measure being placed on the display page. Our proposal was explained as consistent with current practice.

In paragraphs (d)(1)(i)-(v) of §§ 422.164 and (d)(1)(i)-(v) of 423.184, we proposed to codify a non-exhaustive list of non-substantive updates announced during or prior to the measurement period and how we will treat them under our proposal. The list includes updates in the following circumstances:

  • If the change narrows the denominator or population covered by the measure with no other changes, the updated measure would be used in the Star Ratings program without interruption. For example, if an additional exclusion—such as excluding nursing home residents from the denominator—is added, the change will be considered non-substantive and will be incorporated automatically. In our view, changes to narrow the denominator generally benefit Star Ratings of sponsoring organizations and should be treated as non-substantive for that reason.
  • If the change does not meaningfully impact the numerator or denominator of the measure, the measure would continue to be included in the Star Ratings. For example, 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. This type of administrative change has no impact on the current clinical practices of the plan or its providers, and thus will not necessitate exclusion from the Star Ratings system of any measures updated in this way.
  • The clinical codes for quality measures (such as HEDIS measures) are routinely revised as the code sets are updated. For updates to address revisions to the clinical codes without change in the intent of the measure and the target population, the measure would remain in the Star Ratings program and would not move to the display page. Examples of clinical codes that might be updated or revised without substantively changing the measure include:

++ ICD-10-CM (“ICD-10”) code sets. Annually, there are new ICD 10 coding updates, which are effective from October 1 through September 30th of any given year.

++ Current Procedural Terminology (CPT) codes. These codes are published and maintained by the American Medical Association (AMA) to describe Start Printed Page 16535tests, surgeries, evaluations, and any other medical procedure performed by a healthcare provider on a patient.

++ Healthcare Common Procedure Coding System (HCPCS) codes. These codes cover items, supplies, and non-physician services not covered by CPT codes.

++ National Drug Code (NDC). The PQA updates NDC lists biannually, usually in January and July.

  • If the measure specification change is providing additional clarifications such as the following, the measure would also not move to the display page since it does not change the intent of the measure but provides more information about how to meet the measure specifications:

++ Adding additional tests that will meet the numerator requirements.

++ Clarifying documentation requirements (for example, medical record documentation).

++ Adding additional instructions to identify services or procedures that meet (or do not meet) the specifications of the measure.

  • If the measure specification change is adding additional data sources, the measure would also not move to the display page because we believe such changes are merely to add alternative ways to collect the data to meet the measure specifications without changing the intent of the measure.

We solicited comment on our proposal to add non-substantive updates to measures and using the updated measure (replacing the legacy measure) to calculate Star Ratings. In particular, we noted our interest in stakeholders' views whether only non-substantive updates that have been adopted by a measure steward after a consensus-based or notice and comment process should be added to the Star Ratings under this proposed authority. Further, we solicited comment on whether there are other examples or situations involving non-substantive updates that should be explicitly addressed in the regulation text or if our proposal is sufficiently extensive.

In addition to updates and additions of measures, we proposed rules to address the removal of measures from the Star Ratings to be codified in §§ 422.164(e) and 423.184(e). In paragraph (e)(1) of each section, we proposed the two circumstances under which a measure will be removed entirely from the calculation of the Star Ratings. The first circumstance we identified was a change or changes in clinical guidelines that mean that the measure specifications are no longer believed to align with or promote positive health outcomes. We explained that as clinical guidelines change, we would need the flexibility to remove measures from the Star Ratings that are not consistent with current guidelines. We proposed to announce such subregulatory removals through the Call Letter so that removals for this reason are accomplished quickly and as soon as the disconnect with positive clinical outcomes is definitively identified. We noted that this proposal is consistent with our current practice. For example, previously we retired the Glaucoma Screening measure for HEDIS 2015 after the U.S. Preventive Services Task Force concluded that the clinical evidence is insufficient to assess the balance of benefits and harms of screening for glaucoma in adults.

In the proposed rule, we also explained how we currently review measures continually to ensure that the measure remains sufficiently reliable such that it is appropriate to continue use of the measure in the Star Ratings. We proposed, at paragraph (e)(1)(ii), authority to subregulatorily remove measures that show low statistical reliability so as to move swiftly to ensure the validity and reliability of the Star Ratings, even at the measure level. We explained that we would continue to analyze measures to determine if measure scores are “topped out” (that is, showing high performance across all contracts decreasing the variability across contracts and making the measure unreliable) so as to inform our decision that the measure has low reliability. Although some measures may show uniform high performance across contracts and little variation between them, we noted we seek evidence of the stability of such high performance, and we noted we want to balance how critical the measures are to improving care, the importance of not creating incentives for a decline in performance after the measures transition out of the Star Ratings, and the availability of alternative related measures. If, for example, performance in a given measure has just improved across all contracts, or if no other measures capture a key focus in Star Ratings, a “topped out” measure with lower reliability may be retained in Star Ratings. Under our proposal to be codified at paragraph (e)(2), we would announce application of this rule through the Call Letter in advance of the measurement period. Below, we summarize the comments we received on adding, updating, and removing measures, and provide our responses and final decisions.

Comment: Commenters agreed with the criteria CMS proposed to select new measures for the Star Ratings program. Commenters also agreed with the proposed measure categories (the measure categories used to assign weights to measures as noted in §§ 422.166(e) and 423.186(e)), though a few commenters asked CMS to include more outcome measures. A few commenters also requested that measures be claims-based and not based on medical chart review.

Response: CMS appreciates the support for our criteria for selecting new measures. CMS agrees with the desire to add more outcome measures to the Star Ratings program and welcomes all suggestions (submitted through the annual Call Letter process) for outcome measures to include in the Star Ratings program. We realize that medical chart review is burdensome and we are continuing to look at ways to minimize chart review measures. For example, CMS is exploring whether using encounter data for quality measurement would minimize burden for plans while resulting in equally accurate and appropriate reflections of performance and quality.

Comment: The majority of commenters agreed with CMS' proposal for selecting new measures, announcing and soliciting feedback on new measures, finalizing new measures through rulemaking, reporting new measures on the display page for a minimum of 2 years prior to becoming a Star Rating measure, and keeping new measures on the display page if CMS finds reliability or validity issues with the measure specifications. Supporters of these proposals noted that the introduction of new measures through rulemaking allows greater lead time for plans to incorporate new measures, supports stability in the Star Rating program, maximizes stakeholder input, and provides additional transparency in the Star Ratings selection process. Commenters mentioned that increased lead time for the introduction of new measures is important especially in any payment program. Commenters noted the need for plans to have sufficient time to allocate resources, make changes to operations, adjust supporting information systems, and plan any specialized educational materials and events. A commenter suggested that new measures remain on the display page for 3 years which would allow plans to develop internal processes for quality measurement and improvement, which the commenter suggests would lead to improved health outcomes for beneficiaries; another commenter expressed the opinion that reporting a new measure on the display page for 2 years is too long. Commenters who expressed concern that the time on Start Printed Page 16536display was too long or suggested exceptions to allow for shorter times on display both referred to the need to reflect changes in clinical standards and to respond to public health urgencies.

Response: CMS appreciates receiving feedback on the proposed policy to introduce new measures into the Star Ratings program through rulemaking. We acknowledge that there is some desire and policy rationale to keep measures on the display page for longer than 2 years, but CMS is trying to balance the need to introduce new measures in a timely manner with giving sponsors sufficient lead time for the introduction of new measures. We believe that a 2 year period provides the appropriate balance.

Comment: Some commenters opposed the requirement to propose new measures through rulemaking rather than continuing to announce new measures through the Call Letter process. The commenters cited the long lag between the time measures are developed/approved and the time they are included in the Star Ratings, and requested a more expedited approach for the inclusion of new measures. Commenters noted that adding more lead time would stifle the adoption of new quality measures aligned with the latest innovative advances in medicine and technology and, thus, prevent Star Rating measures from reflecting the latest treatment guidelines and current standards of care. Further, commenters mentioned introducing new measures through rulemaking could unnecessarily delay implementation of measures needed to address clinical area gaps, preventable safety issues, emerging public health concerns, and the adoption of evidence-based measures. As a result, commenters believed CMS' ability to incentivize improvements in the quality of care for Medicare beneficiaries would decrease. A few commenters suggested that, if CMS does implement the rulemaking process for the introduction of new measures, CMS should consider granting exceptions in circumstances in which there are urgent public health and patient safety issues to be addressed through quality measures.

Response: CMS recognizes that introducing new measures through rulemaking will make the process longer than CMS' former process of introducing new measures through the Call Letter, but we believe doing so balances the need for expediency with the need for greater transparency and stability for the ratings program. CMS also believes the rulemaking process adds an additional opportunity to fine tune measures and thus ensure greater measurement accuracy and enhanced stability in the Star Ratings program. We note that using rulemaking to adopt measures will bring the MA and Part D quality ratings system in line with other quality ratings systems and quality data collection programs that are used for Medicare payment. We understand the desire to have measures that address public health concerns adopted quickly in the Star Ratings program. CMS is committed to implementing these types of measures as quickly as possible so they can at least be publicly reported on the display page prior to being a Star Ratings measure.

Comment: A few commenters requested that new measures be fully defined, tested, and validated by measure stewards prior to being considered for Star Ratings, even for CMS developed measures. A commenter requested that CMS adopt only measures which have been NQF endorsed, publicly reported by NCQA (or the measure steward) for at least one measurement period, and reported on the CMS display page for at least one measurement period. The commenter also recommended that CMS not report new (first year) measures on the display page.

Response: CMS agrees that measures need to be fully defined, tested and validated by measure stewards before used as the basis for Medicare payment. Placing new measures on the display page provides transparency about CMS' intention to use the measure in the future as part of Star Ratings and an opportunity for sponsors to see their scores and performance before the measure is used in the Star Ratings. The display measures are not assigned Star Ratings or used in the development of measure, domain, summary, or overall Star Ratings, so there are no payment consequences. Retaining new measures on the display for two years gives CMS additional opportunities to identify any data issues prior to the measures being included in the Star Ratings program. CMS will use endorsed measures as they are available. For some areas which CMS judges to be important for the Star Ratings program, endorsed measures may not be available. CMS emphasizes that if reliability issues with a display measure are identified, the regulations proposed and finalized in this rule at §§ 422.164(c)(4) and 423.184(c)(4) prevent the measure from moving to a Star Ratings measure. Although a number of commenters to the proposed rule were concerned about the rulemaking process preventing CMS from quickly responding to public health and patient safety issues, CMS believes that reporting new measures as soon as possible on the display page will addresses these concerns.

Comment: The majority of commenters agreed with the process for updating existing measures.

Response: We appreciate the support for the process for updating existing measures.

Comment: Some commenters objected to the proposal for updating measures through rulemaking because of the delay between the time measures are updated/approved and the time they are re-introduced into the Star Ratings program. These commenters requested a more expedited approach for updating measures. Most commenters supported CMS in its proposal to codify a non-exhaustive list for identifying non-substantive measure updates. Some commenters requested additional information on how the determination is made as to whether a change is substantive versus non-substantive. A few commenters wanted a more exhaustive list of what are considered non-substantive changes.

Some commenters expressed the opinion that all measure updates, even non-substantive changes, should be announced in advance of the measurement period. In addition, a few commenters expressed the opinion that all measure updates, whether substantive or non-substantive, should be subject to rulemaking. These commenters noted some of the same concerns expressed for supporting the addition of new measures through rulemaking rather than through the Call Letter process. These concerns included allowing plans greater lead time to incorporate updates, have sufficient time to allocate resources to incorporate updates, make changes to operations, adjust supporting information systems, and plan any specialized educational materials and events. A commenter, however, expressed the opinion that no measure updates, substantive or non-substantive, should be required to go through rulemaking, because this would lead to unnecessary gaps in measurement for critically important issues.

Response: CMS appreciates the comments we received on our proposal for updating measures. Although there is some disagreement among commenters on whether and which updates should go through rulemaking, we believe our proposal balances the commenters' concerns by only requiring substantive measure updates to go through the rulemaking process. Non-substantive updates, such as coding updates, which are not significant changes to the measure specifications would continue to be announced Start Printed Page 16537through the Call Letter process. CMS does not have authority to determine or direct when measure stewards update measure specifications. If non-substantive measure specifications are made during the measurement period, CMS believes it is of value to incorporate those measure specification updates in that year's Star Ratings measures. Non-substantive updates are most often minor code updates and are not significant changes to the measure specifications. CMS proposed and is finalizing in this rule a comprehensive list of measure changes it considers non-substantive in §§ 422.164(d)(1) and 423.184(d)(1); we explained (above and in the proposed rule) the basis for our determination that these changes and others like them should be implemented without delay or additional rulemaking. The list is not exhaustive because additional situations or types of changes may also result in little or no change to the results of measurement (or generally benefit sponsoring organizations) in a similar way. We believe that the standard adopted here—that of non-substantive changes—is adequately clear to provide notice to stakeholders and balance the competing policies identified by commenters. CMS encourages plans and other stakeholders to provide suggestions for additional non-substantive measure updates to add to the current list through future rulemaking.

Comment: A few commenters expressed disagreement with the proposal to continue collecting a legacy measure until an updated measure has been on display for 2 years.

Response: CMS appreciates comments on its proposal to keep legacy measures in the Star Ratings during the period when the related updated measure goes through rulemaking and is placed on the display page for 2 years. We intend that a legacy measure may remain in the Star Ratings until the updated measure is ready to move into Star Ratings only when the area covered by the measure is critical to reflecting whether plans are providing appropriate care or for a similar reason that the information provided by the legacy measure is important to the Star Ratings.

Comment: There was general agreement among commenters with CMS' proposed process for removing measures from the Star Ratings program and for announcing the removal in advance of the measurement period. However, some commenters did question the criteria for how CMS judges measures to be `topped out' or have low statistical reliability.

Response: CMS appreciates the overall support for its proposal for removing measures from the Star Ratings program. Measure scores are determined to be `topped out' when they show high performance and little variability across contracts, making the measure statistically unreliable. However, although some measures may show uniform high performance across contracts and little variation between them, CMS needs to balance these concerns with how critical the measures are to improving care, the importance of not creating incentives for a decline in performance after the measures transition out of the Star Ratings, and the availability of alternative related measures which address the specific clinical concerns.

For the reasons set forth in the proposed rule and our responses to the related comments summarized earlier, we are finalizing the provisions related to the adoption, update, and removal of measures as proposed at paragraphs (c), (d), and (e) of §§ 422.164 and 423.184 with a minor modification to add the phrase “nationally endorsed” to § 422.164(c)(1) so that the regulation text is identical to the parallel Part D provision at § 423.184(c)(1).

i. Measure Set for Performance Periods Beginning on or After January 1, 2019

We proposed the measures included in Table 2 to be collected for performance periods beginning on or after January 1, 2019 for the 2021 Part C and D Star Ratings. The CAHPS measure specification, including case-mix adjustment, is described in the Technical Notes and at ma-pdpcahps.org. The HOS measure specification, including case-mix adjustment, is described at (http://hosonline.org/​globalassets/​hos-online/​survey-results/​hos_​casemix_​coefficient_​tables_​c17.pdf). These specifications are part of our proposal.

As indicated in the proposed rule, CMS will not codify a list of measures and specifications in regulation text in light of the regular updates and revisions contemplated by the rules we have finalized at paragraphs (c), (d) and (e) of §§ 422.164 and 423.184. We would, as finalized in §§ 422.164(a) and 423.184(a), issue annually the full list of measures in the Technical Notes for each year's Star Ratings.

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We summarize the comments received on the proposed measures and respond to them by measure in Table 3C for the Part C measures, for performance Start Printed Page 16547periods beginning on or after January 1, 2019.

Table 3C—Part C Measures

Measure
Breast Cancer Screening (BCS)Comment: A commenter expressed concerns that due to physical and mental limitations, all permanently institutionalized beneficiaries, including those under age 65, should be excluded from the Breast Cancer Screening measure. This commenter suggested that rather than undergo a mammogram, an alternative screening option would be an Automated Breast Ultrasound (ABUS).
Response: CMS appreciates this feedback. CMS has shared comments received on this measure with NCQA, the measure steward, for consideration when their advisory panels re-evaluate this measures, as part of the standard HEDIS process.
Colorectal Cancer Screening (COL)Comment: CMS received no comments on this measure.
Annual Flu VaccineComment: CMS received a number of general comments on CAHPS measures.
Response: CMS appreciate